Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: THURSDAY, December 23, 1993 TAG: 9312230179
SECTION: BUSINESS PAGE: B-6 EDITION: METRO
SOURCE: The New York Times
DATELINE: NEW YORK LENGTH: Medium
Labor leaders at United now face the task of selling their offer to stockholders of United's parent company, UAL Corp., as well as to members of the pilots and machinists unions.
Their proposal, which offers deep wage cuts and work rule changes in exchange for 53 percent of the company, was prompted to a large degree by fundamental changes for United and other large airlines forced by new competition.
If a deal is reached, United would join an emerging trend in employee ownership that is being fanned by the Clinton administration's desire to preserve jobs.
Transportation Secretary Federico Pena and Labor Secretary Robert Reich have met on several occasions with the management of United and its union leaders.
They, like many industry analysts, see employee ownership as the best solution to some of the industry's baked-in problems.
One alternative for lowering airlines' high-cost structure - layoffs - may offer short-term gains, but employee ownership holds out more potential, Reich said during a recent interview.
"When employees feel a greater stake, they see their futures linked to the future profitability of the company, and they are more productive because they have a greater stake," he said.
If United's employees succeed in acquiring control, it would be the first time that airline employees have agreed to swap large concessions for a stake in a healthy company. In all previous cases at other airlines, including Eastern, TWA and Northwest, employees were told such cuts were required to either avoid filing for bankruptcy protection or to help emerge from bankruptcy.
by CNB