United Airlines Studies Unions’ $5-Billion Offer

United Airlines studied a $5-billion employee ownership offer Friday from its pilots and ground crew unions, which faced a midnight deadline for cutting a deal.

Should United’s parent company, UAL Corp., fail to reach an agreement with the unions, it has a range of unilateral cost-cutting moves under consideration, including a restructuring of United into at least two carriers.

Union leaders have said the talks will collapse if United proceeds with the sale of 15 of its 17 flight kitchens, which will take place at midnight Chicago time unless United backs out.

The airline has said it would drop the kitchen sale to Dobbs International Services Inc. if the machinists union agrees to 15% wage cuts for the kitchen workers.

Neither side would say whether the unions’ $5-billion offer includes the kitchen wage cut.

“This proposal meets the financial targets which United claims would be required to meet the approval of the board of directors and shareholders,” Ken Thiede, president of the United chapter of the machinists union, said in a letter to members.

He wrote that “there should be no financial reason” for United to reject the proposal.

The unions said they would settle for nothing less than “substantial majority ownership” of UAL by all employees.

The union proposal calls 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 make significant wage concessions to help boost the airline’s competitiveness against low-cost carriers, the unions said.