United Airlines ready to wage war for USAir
Saturday 11 November 1995
United Airlines will hold a board meeting on Monday to consider whether to start a multi-billion dollar bidding war with American Airlines for control of USAir, the financially strapped airline. British Airways holds a key 25 per cent stake, worth more than pounds 400m ($631m) in USAir.
Senior pilots of United Airlines have been briefed about the company's takeover plans at a closed-door meeting at a hotel near Chicago's O'Hare Airport. The meeting was led by Gerald Greenwald, chief executive of United, and attended by other top executives and 30 pilots.
Union officials and others at the meeting were required to sign confidentiality agreements. Sources close to the situation said that the pilots did not vote on the potential transaction at the two-hour meeting.
The pilots did, however, raise several concerns about seniority and the blending of corporate cultures, which could lead to redundancies if an acquisition occurred.
The board of United is also understood to have held briefing sessions with other groups of workers, who collectively own 55 per cent of the company following last year's employee buyout. Mr Greenwald has stressed that a transaction would not take place without the full support of all United's employees.
A spokesman for USAir said yesterday that he was aware of the briefings, but could not comment on whether United would make a hostile takeover move after Monday's meeting.
He added that takeover talks were still being held with American Airlines. Robert Crandall, chairman, has sent a memo to American's staff saying that the company would not stand idly by if United made a bid for USAir.
"If United seeks to acquire USAir, we will be prepared to respond with a bid, or by other means as necessary, to protect American's competitive position," he said in the memo.
The main takeover attraction for either American or United is USAir's extensive network on the eastern seaboard. USAir is based in Virginia.
USAir's finances have been improving recently, but not fast enough to counter the cumulative $3bn (pounds 1.9bn) of losses suffered in the last six years.
The company is also saddled with heavy long-term debts, and has the highest cost base among all the main American carriers.
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