Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: THURSDAY, November 2, 1995                   TAG: 9511020094
SECTION: BUSINESS                    PAGE: B-8   EDITION: METRO 
SOURCE: The New York Times
DATELINE: CHICAGO                                LENGTH: Medium

UNITED CHIEF STUDIES USAIR MERGER FROM GROUND UP

What could Gerald Greenwald, chairman of UAL Corp., possibly be thinking?

That is the question of the moment in the airline industry, as UAL, parent of United Airlines, ponders whether to proceed - in the face of considerable skepticism from both insiders and outsiders - with a possible acquisition of USAir.

But Greenwald, who promises to announce a decision by the middle of November, is going about this process in a different fashion from the typical chief executive.

He is actively soliciting opinions, not just from board members and investment bankers, but also from the employees who own a majority of the airline's stock and who hired him in the first place, more than a year ago.

And Greenwald is finding considerable opposition among the rank and file to the idea of acquiring USAir, a purchase that some industry analysts have estimated could cost about $2 billion plus the assumption of USAir's debt.

Kit Darby, a United captain who has worked at the airline 10 years, said 95 of the 100 or so pilots he has talked to in the past few weeks are dead set against the idea.

``If we were to take a vote tomorrow morning,'' Greenwald said in an interview at UAL headquarters in Elk Grove Township, ``I don't think it would pass.''

Wednesday, United said that of about 250 employees who responded to a survey, only 50 were clearly in favor of it. The rest expressed a range of reservations and concerns.

The fact that Greenwald is continuing to pursue the idea is part of the delicate balancing act he faces as leader of the nation's largest employee-owned company, a position that requires him to simultaneously lead and follow.

United's decision on USAir is therefore a test of whether such companies can manage to satisfy the immediate needs of their workers while also looking beyond the horizon. And Greenwald knows it.

There are several reasons Greenwald is even considering the merger, and the least obvious one may also be the most important.

USAir's interest in being acquired by UAL has effectively handed Greenwald an opportunity to make good on one of the overarching goals of his tenure: to demonstrate to workers that they will no longer have to read about their bosses' decisions in the newspaper. Rather, he has promised that they will have a voice in making those decisions.

Greenwald has been personally seeking out those voices. He answered employees' questions for two hours last week on CompuServe. He has invited employees to send him their opinions. And he is conducting informal polls, sharing the results with workers.

``This acquisition, if it ever happens, is going to happen with their endorsement,'' Greenwald said. ``And it isn't going to happen without their endorsement.''

His efforts to include employees in decision-making are starting to pay off. ``There are people who talk the talk but don't walk the walk,'' said Cindy Miller, an 18-year United employee and supervisor at the reservations facility in Washington, D.C. ``He seems to do both.''

Greenwald says it is worthwhile to invest the time of about 40 to 50 UAL executives - as well as investment bankers at Merrill Lynch - to study the USAir deal.

USAir is worth considering for several reasons, Greenwald said: United may someday want to grow in East Coast markets where it now has little presence.

Acquiring capacity through an acquisition may be a lot more efficient than buying new planes and forcing them into an already crowded market, at the risk of adding to UAL's already heavy debt. And USAir may not necessarily be cheaper in the future.

Finally, the airline business is a dynamic industry, and the market domination that United enjoys today may not last. The recent announcement by USAir that it was talking to UAL, for example, was prompted by the interest of another suitor, AMR Corp., parent of American Airlines. But unlike UAL, American has remained silent on the issue of merger.