=20 ---------------------------------------------------------------------- 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/2003/02= /25/BU147383.DTL ---------------------------------------------------------------------- Tuesday, February 25, 2003 (SF Chronicle) More United turmoil/Pilots denounce low-cost proposal David Armstrong, Chronicle Staff Writer Ailing United Airlines on Monday appointed a chief for its fledgling, unnamed low-cost carrier -- and flew right into fierce opposition from a major union and a reported potential investor opposed to the plan. United, whose parent company, UAL Corp., entered Chapter 11 bankruptcy protection Dec. 9, is counting on the low-cost carrier to help it compete with other mainline carriers, as well as low-fare airlines such as Southwest Airlines and JetBlue. The company reaffirmed that commitment in the face of union and potential investor opposition, characterizing a low-cost carrier as key to its recovery in a recorded telephone message to United employees and news media Monday. United, based near Chicago, is the largest carrier at San Francisco International Airport, accounting for half of all passengers and flights. UAL on Monday named Sean Donohue, a 19-year veteran of United, as vice president for the startup, code-named Starfish. UAL President and Chief Executive Officer Glenn Tilton said the low-cost carrier would be fully integrated into United's airport hubs and schedules, but would have its own management and staff and operate with lower wages and reduced benefits. The Air Line Pilots Association, which represents 8,000 United pilots, denounced the plan. In a letter to Tilton released Monday, ALPA Chairman Paul Whiteford wrote: "ALPA and the company do not share a common vision for a low-cost carrie= r. We question the business wisdom of the concept; we are concerned about the execution risk inherent in the program and we are fundamentally and unequivocally opposed to any separate airline entity within United that operates under a separate labor agreement, seniority list or corporate structure." The flight attendants union, which also has resisted the low-fare carrie= r, plans to issue its own contract proposals later this week. The machinists union hasn't publicly commented, but Randy Canale, president of the union district representing baggage handlers and public contact workers, told members earlier this month that the low-cost carrier "could prove to be the only viable alternative to a competitively irrelevant, shrinking UAL." One reported potential investor, according to the Wall Street Journal, is Texas Pacific Group, a private equity firm based in San Francisco and Fort Worth that has invested in troubled airlines, notably Continental Airlines in the 1990s. A knowledgeable source said Texas Pacific has met with United's unions, but any deal is far off. The source said Texas Pacific is not interested in investing if UAL star= ts a low-fare carrier. It would prefer a much smaller airline with deep union concessions on wages and benefits and a unified structure. "Equity financing is essential to United and our significant constituent groups, including our unions, as we successfully exit Chapter 11," United said Monday in a statement. "Conversations with interested parties continue and will continue to take place." UAL shares rose 4 cents to close at $1.10 on the New York Stock Exchange on Monday. E-mail David Armstrong at davidarmstrong@sfchronicle.com., The Associated Press contributed to this report.=20 ---------------------------------------------------------------------- Copyright 2003 SF Chronicle