- The Washington Times - Wednesday, September 4, 2002

CHICAGO (AP) United Airlines' new chief executive told employees yesterday that difficult decisions must be made immediately regarding the financially troubled carrier, the nation's second-largest.
On his first day in charge, Glenn Tilton did not immediately say whether he seeks the same $9 billion in labor cuts over six years that his predecessor proposed last week.
The former vice chairman of ChevronTexaco Corp. instead was diplomatic, albeit sobering, in his initial message to workers of the majority employee-owned company. He pledged to work with employees closely as he contemplates his "important first steps."
"We have to make some difficult, but critical, decisions right away to make our company more competitive and to address the critical financial issues we face," the 54-year-old career oil executive said in a taped telephone message.
"There's only one way we can get this done and that's together. We must have a partnership based on mutual trust and mutual respect."
Mr. Tilton's appointment Monday as CEO, chairman and president of UAL Corp., the holding company for United, received positive early reviews from the airline's unions, analysts and investors. Despite a big sell-off in the stock market, UAL's long-sagging shares rose 7 cents to close at $2.94 yesterday on the New York Stock Exchange.
Union officials were particularly enthused about the accompanying management shake-up that resulted in the resignations of two controversial senior executives President Rono Dutta and Chief Operating Officer Andy Studdert.
But the honeymoon could be short-lived if Mr. Tilton can't accommodate both powerful unions and heavily owed financiers.
Interim CEO Jack Creighton's proposal to reduce annual costs by $2.5 billion, including $1.5 billion from labor, got a rocky reception from pilots and flight attendants last week. Without dramatic cost-slashing this month, United says it won't get a $1.8 billion government loan guarantee that's needed to help it pay off $875 million in looming debt payments and keep it from filing for Chapter 11 bankruptcy protection.
While US Airways' unions have approved comparable cuts, some analysts doubt reductions that steep can be achieved in United's fractious labor environment on short notice, even if the Sept. 16 deadline for agreeing on cost cuts gets pushed back.
Mr. Tilton is expected to talk today with United's top union leaders, who are gathering to discuss potential concessions.
"UAL's unions remain in deep denial about the dire circumstances in which their company finds itself, and we believe it nearly impossible that UAL will gain labor-cost savings that will pass muster with the Air Transportation Stabilization Board," said Credit Suisse First Boston analyst James Higgins. Mr. Higgins called bankruptcy "almost inevitable."
Mr. Tilton's lack of experience in the airline business is viewed as both a disadvantage and a potential plus.
Trying to hastily revive a money-hemorrhaging company in an unfamiliar industry is seen as a herculean task.
"He doesn't have a real history of corporate turnarounds or any experience in the airline business, so nobody really knows the steps he will take when faced with seemingly impossible problems," said Joseph Schwieterman, an aviation expert and professor at DePaul University in Chicago.
Others, however, said the industry's worst slump in years makes proven expertise in financial crises and labor relations at least as important for a CEO as an airline background.


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