Parent UAL Cites ‘Serious Issues’

UAL Inc. said late Monday that a proposal by pilots to purchase its United Airlines subsidiary “raises a number of serious issues,” among them the huge debt the airline would take on as an independent company.

UAL, whose name will be changed to Allegis Corp. if shareholders approve on April 30, said that if the pilots’ union can finance the $4.5-billion offer it made Sunday, it would commit the airline to a level of indebtedness equal to 90% or more of its total capitalization.

“With debt at that level, the airline’s ability to compete might be seriously impaired,” the company said. “In addition, the airline would no longer have insulation against down cycles currently provided by its diversified partnership with Hertz, Westin and Hilton International; nor would it have the competitive advantages created by this combination of travel companies.”

The company said it would “fulfill its responsibility to represent the best interests of its shareholders, employees and customers” in studying the proposal.