UAL Corp To Pay $250 Million To Shareholders
United Airlines parent UAL Corp said
it has paid down $500 million in debt, and has approved a $250
million special distribution to shareholders on the basis the
airline now has good cash flow, according to the Associated
Press.
The distribution underscores the company's commitment to its
investors, said UAL Chairman and Chief Executive Officer Glenn
Tilton.
"On behalf of our board of directors, we are pleased to make
this decision to provide a distribution to our shareholders while
strengthening our balance sheet and investing in our business,"
Tilton said, noting the $250 million includes $20 million to
employee shareholders.
United's unions want more of the company's cash to be
distributed to employees who agreed to pay cuts in bankruptcy. The
union also wants less paid out to shareholders and in high
executive pay.
"We compete for shareholders just as we compete for customers.
Building a successful, sustainable enterprise, and providing a
return on investment, is what shareholders expect and deserve," he
said.
Officials with the unions shot sharp criticism of the
payout.
"The best shareholder initiative would be one that invests in
the employees for the long-term success of the airline," said Greg
Davidowitch, president of the Association of Flight Attendants at
United.
Pilots with the airline called the plan "ludicrous."
"Management has now told us that they will value their own
interests and short-term shareholder returns over anything else --
over stronger employee motivation and engagement, over a better
customer experience, over the long-term health of the company,"
said Mark Bathurst, head of the United branch of the Air Line
Pilots Association.
Wall Street sees things differently. Morgan Stanley analyst
William Greene called United a "shareholder friendly" company.
"We believe that the market will likely now give more credit to
the company's indications of intent to divest noncore assets, which
could further benefit shareholders and act as a catalyst for the
shares," he said.
Distributions of $2.15-per-share will be sent to UAL Corp.
shareholders on January 23.
A term loan was paid down $500 million by UAL under an
unspecified credit agreement. UAL Corp. has reduced its total net
debt by $2.7 billion as of the third quarter's end after exiting
bankruptcy.
The company's shares rose $1.76, or 4.3 percent, to $42.39 in
trading on Friday after the announcement.