Opposition surfaces to UAL plan

June 09, 1994|By New York Times News Service

The second-largest shareholder of United Airlines' parent, UAL Corp., said yesterday he will vote against the proposal by two of the company's unions to gain majority control of the carrier.

The pledge by John B. Neff, manager of Vanguard/Windsor Funds Inc., which owns 9.7 percent of the airline's stock, cast a new measure of doubt over the fate of the proposal to create the nation's largest employee-owned company.

Vanguard/Windsor Funds is one of four big shareholders that will have strong influence on the plan when it comes to a vote.

Timothy Pettee, an industry analyst at Alliance Capital Management LP, UAL's largest shareholder, has signaled in the past that he will vote in favor of the deal, in part because the alternative -- a broad restructuring over union opposition -- probably would cause costly labor strife. Mr. Pettee was out of the country yesterday and could not be reached.

The two other large shareholders in UAL are Sanford C. Bernstein & Co., a Wall Street investment firm, and FMR Corp., the parent company of Fidelity Investments. Sanford C. Bernstein declined to disclose its voting plans on the deal. FMR Corp. did not return phone calls yesterday.

Mr. Neff said that he had long been uncomfortable with the deal, which will be put to a shareholder vote as early as June 30. But recent changes to the terms of the proposal have made him oppose it.

"We just don't think it's a very good deal," Mr. Neff said in a telephone interview.

UAL recently agreed to increase the unions' share of the company to 55 percent from 53 percent in return for roughly $5 billion in concessions the employees would make over six years. The change also made it easier for employees to gain additional shares if the stock price rises.

The pilots union insisted on the change after the company's stock fell sharply in recent months, prompting many members to feel they would be paying too much for a 53 percent stake under the original agreement.

Shares of UAL closed at $116.75 yesterday, down 75 cents.

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