Greenwald Says He’s Sure UAL Buyout Can Fly
The newly named leader of the proposed union buyout of UAL Corp. said Thursday he agreed to give up his post as Chrysler Corp.’s No. 2 executive only because his analysis persuaded him that the takeover of United Airlines’ parent could succeed.
In a press conference here, former Chrysler Vice Chairman Gerald Greenwald said he had conducted “my own sort of due diligence” analysis of the proposed $4.38-billion deal, including phone calls and visits to principals in the proposed leveraged buyout.
Now, “I’m absolutely convinced that the financing can be done and will be done,” said Greenwald, 54, who had been been widely expected to succeed Chrysler Chairman Lee A. Iacocca when Iacocca retires. He said late Wednesday that he would leave Chrysler to lead the effort to buy UAL.
Many outsiders believe that the choice of Greenwald, an experienced administrator and financier, will help the buyout effort, and United’s stock jumped $4.625 to $155.50 in New York Stock Exchange trading Thursday. However, that remains significantly below the unions’ offer of $201 a share.
And even the most enthusiastic analysts believe that formidable obstacles remain to the financing of the deal, which the UAL board has said must be completed by Aug. 9.
Greenwald was flanked at the press conference by officials of the machinists’, airline pilots’ and flight attendants’ unions, which chose him for the post after considering a list of executives.
Greenwald ducked all questions about the compensation contract he has signed.
Of UAL’s present management team, he said, only Chairman Stephen M. Wolf will have to go, Greenwald said. It is understood that if the buyout succeeds, Greenwald would become chairman of the UAL board and chief executive.
He acknowledged that his own lack of airline experience is a negative factor but said he brought a number of strengths to the job. Greenwald said he has long experience with organized labor and was involved in a huge and difficult financing during the early 1980s in the Chrysler bailout negotiations.
He was first approached by the unions only 10 days ago and said he had hardly begun work on the next and critical phase of the effort--lining up bank lenders to finance the buyout. He is expected to soon begin showing major U.S. banks UAL’s cash-flow and growth projections. If he wins the support of the domestic banks, he is expected to seek financing from Japanese and European lenders as well.
Greenwald, who has recently earned $1.1 million a year at Chrysler, insisted that he had not taken the UAL buyout job for the compensation or because he feared that Chrysler’s prospects were poor or that he would not succeed Iacocca.
He said Iacocca had told him about a year ago that the top job would “be mine unless I really screwed up. . . . He said, ‘It’s yours to lose.’ ”
The executive said he took the UAL buyout job only after he was assured that the union’s ownership of the airline would not interfere with management’s goal of making it profitable. The unions “will be investors but not managers,” Greenwald said. UAL “will be run like any other company . . . for profits and cash flow,” he added.
Greenwald has gotten mixed reviews from union leaders during his tenure at Chrysler, but the three union officials at Thursday’s news conference said their members were delighted to hear the news that an executive of such stature had joined the effort.
