Employee Groups May Sell More UAL Shares
In another blow to beleaguered airline shares, the employee stock ownership plan of United Airlines parent UAL Corp. said it may sell as much as 20% of its stock because of the risk of a bankruptcy filing by UAL.
State Street Bank & Trust Co., hired in August by a committee representing the employee-shareholders, registered to sell as many as 11 million of the 58 million UAL shares the plan holds for company workers, the machinists union said Monday. State Street has started selling the shares, officials said.
The machinists, Unit- ed’s largest union, told members that State Street decided to sell some of the shares to diversify the plan’s holdings.
A committee that includes the machinists, pilots union and UAL representatives hired the State Street Corp. unit after the company said Aug. 14 it might have to file for bankruptcy protection.
Employee groups own a 55% stake via preferred shares that are convertible to common shares. Besides those groups’ stock, UAL has 57 million common shares outstanding.
UAL said it may seek bankruptcy protection if it can’t cut costs and win a federal loan guarantee that would help it raise $2 billion before year’s end.
UAL shares fell 9 cents to $2.50 in New York Stock Exchange trading Monday. The price has plunged 81% this year. Though the employee ownership plan is selling at a deeply depressed price, if UAL were to file bankruptcy the stock could become worthless.