Allegis, Avolar.... When will they learn? ---------------------------------------------------------------------- This article was sent to you by someone who found it on SF Gate. The original article can be found on SFGate.com here: http://www.sfgate.com/cgi-bin/article.cgi?file=3D/chronicle/archive/2002/03= /23/BU129880.DTL ---------------------------------------------------------------------- Saturday, March 23, 2002 (SF Chronicle) United plans to call back 1,300 workers/Tough times force UAL Corp. to canc= el luxury jet program David Armstrong, David R. Baker, Chronicle Staff Writers UAL Corp. dropped a controversial time-share program yesterday for priva= te corporate jets and announced separately that it is bringing back 1,300 furloughed workers to its main holding, United Airlines, to help handle an anticipated seasonal rise in summer traffic. The corporate jet program, Avolar, had been criticized by unions at the financially battered carrier for supposedly catering to corporate fat-cats at a time when United, like most other major carriers, was receiving federal bailout money and asking its unions for givebacks to help stanch the flow of red ink. The employee recall comes as United, which scaled back operations following last year's terrorist attacks, rebuilds its hubs in such key markets as San Francisco, Chicago, Denver, Los Angeles and Washington, D.C. A United spokeswoman said yesterday the company had not determined how many Bay Area employees furloughed last year would be affected. Despite the latest pickup in hiring, United remains 17 percent below its capacity from this time last year, before terrorist attacks grounded flights, scared potential travelers and forced the airline to cut 20,900 employees. In addition to the 1,300 called back to their jobs -- positions that ran= ge from work on the tarmac to customer service -- the company may have to hire an additional 900 people for those jobs. The new recruits may be necessary should many of the workers furloughed last year prove unwilling to move to the cities in which United has openings. United spokeswoman Susana E. Leyva said the recall was unrelated to the contentious contract talks between the airline and its ramp workers, some of whom would be brought back from furlough. Separately, UAL said yesterday it will close Avolar, a wholly-owned subsidiary that began last spring "to capitalize on opportunities in the fast- growing fractional-ownership market," the Chicago company carrier said in a statement. UAL Chief Executive Officer Jack Creighton said the airline looked at every option before deciding to drop Avolar. "Unfortunately, none of them proved financially viable in the current airline operating environment created by the downturn in the economy and exacerbated by the Sept. 11 terrorist attacks." UAL posted a staggering loss of $2.1 billion in 2001, a record in the aviation industry. Closing Avolar, Creighton said, "supports United's efforts to pursue its financial stability and recovery, and enables United to focus on its core competencies." UAL allocated a reported $250 million to start the Avolar last May, and spent $102 million, according to the Wall Street Journal. UAL did not confirm the figures. The business-jet unit was created to cater to corporate customers by selling the equivalent of time-share interests in specially built jet aircraft. Avolar was to have purchased nine different jet types from four manufacturers -- Dynamics Corp.'s Gulfstream, Dassault Aviation SA, Raytheon Co. and Bombardier Inc. Some of the jets had been scheduled for delivery this year. Since Sept. 11, UAL, with its finances worsening, sought private equity investors in Avolar, but that option did not work. Earlier this month, UAL announced it would no longer seek private investors, and Avolar president Stuart Oran left the company. Yesterday's announcement effectively ends Avolar before it ever got off the ground. "When you eliminate investment, and you don't have a white knight on the horizon, it sends a pretty clear signal where you are headed," said Richard Aboulafia, a consultant for Teal Group, A Fairfax, Va., firm which has worked for planemakers. "It was very late to the game and over ambitious." Analysts had said Avolar would face tough competition from Executive Jets Inc., a business-jet company backed by billionaire investor Warren Buffett's Berkshire Hathaway Inc. In addition to selling shares of business jets to corporate clients and wealthy individuals, Avolar planned to offer charter flights and provide fleet management services. UAL's shares rose 56 cents to $15.70. News of Avolar's shutdown came aft= er the close of trading. Bloomberg News contributed to this report.=20 ---------------------------------------------------------------------- Copyright 2002 SF Chronicle