UAL’s Largest Shareholder Gives Unions Ultimatum : Airlines: Coniston said it might help finance an employee stake. But it will press for a financial overhaul if unions don’t make a bid by Jan. 8.

The takeover struggle for UAL Corp., the parent of United Airlines, heated up Wednesday as the airline’s largest shareholder gave United’s unions until Jan. 8 to come up with a buyout proposal.

Coniston Partners, a New York money manager, said it would push for a financial overhaul of the airline if the unions fail to meet its deadline. Coniston owns 11.8% of UAL’s shares through an entity called Condor Partners.

Coniston said, after meeting with UAL’s financial advisers, that it favors the sale of a controlling interest in UAL to the airline’s employees and that it might be willing to help finance such a transaction. However, Paul Tierney, one of Coniston’s owners, declined to say how much the investment firm might contribute to an employee buyout.

“We’ve got $400 million invested in the company right now,” he said. “Some portion of that would be available.”

Coniston said that if United’s employees do not make an “acceptable acquisition proposal” by Jan. 8, it intends to work with UAL’s board to “develop and promptly implement” a financial overhaul. If that is not possible, Coniston said it would go ahead with its previously announced plan to replace UAL’s board.

Those familiar with UAL speculated that Coniston might seek to sell the airline’s computerized reservation system or other valuable assets, such as its Pacific routes or its spots on manufacturers’ lists for delivery of new airliners, and use the proceeds to make a payout to shareholders.

Brian Freeman, an adviser to United’s machinists union, questioned Coniston’s deadline. “It is not clear it will prove productive,” he said.

Chicago-based UAL has been a takeover target since August, when Los Angeles billionaire Marvin Davis offered $240 a share for the company. He was outbid by an employee group that included United’s top managers and pilots, but the $300-a-share employee bid collapsed in October when banks refused to finance it.

Since then, United’s managers, led by Chairman Stephen M. Wolf, have tried to revise the bid, but progress has been slow. The airline’s machinists have opposed a debt-financed buyout, and the pilots are interested only in a deal that gives employees control.

Patricia Friend, president of United’s flight attendants union, said she views the deadline as a negotiating tactic.

“I don’t feel pressured by them,” she said. “This doesn’t mean the situation won’t heat up, but it’s not going to alter anyone’s strategy in the short run.”

Friend said there have been no recent union meetings with Coniston or with United’s management. She said her union has continued to meet with the pilots to discuss a possible employee buyout.

Despite increased pressure from Coniston, Freeman said, a transaction is not inevitable. He would disclose no details of his talks with Coniston but added: “I wouldn’t attach any significance to these discussions. Talk is cheap, especially in Chicago and New York.”