United Airlines Rejects Unions’ Ownership Plan

United Airlines rejected an employee ownership offer from its pilots and ground crew unions late Friday, calling it “substantially deficient.”

The International Assn. of Machinists and the Air Line Pilots Assn. then rejected United’s counterproposal, the company said.

Consequently, United said, it will proceed with a planned sale of 15 of its 17 flight kitchens to Dobbs International Services Inc., a move the unions have said would trigger a labor confrontation.

The unions’ offer, which they had valued at $5 billion, “was substantially deficient from the standpoint of providing adequate value to shareholders,” United’s parent company, UAL Corp., said in a statement. It did not elaborate.

Under the unions’ proposal, the company had until midnight CST to cancel the $119.4-million kitchen sale.

UAL has said it would consider a range of unilateral cost-cutting moves, including a restructuring of United into at least two airlines, following the collapse of talks with the unions.

The union proposal called for UAL stockholders to receive cash, notes, preferred stock and a substantial minority common stock interest in a reorganized company.

In exchange, the pilots and ground crews would have made significant wage concessions to help boost the airline’s competitiveness against low-cost carriers, the unions said.

The unions had said they would withdraw the offer if the flight kitchens, which employ 5,200 machinists union members, were sold to Dobbs, a division of Phoenix-based Dial Corp.

Chicago-based UAL has lost more than $1.2 billion since the beginning of 1991.