Pilots Take Big Steps Toward Buying United : Arrange for Syndication of Financing; Hire Away Piedmont’s CEO Howard

NEW YORK —  United Airline’s pilots union announced Thursday that it has taken two major steps toward its goal of buying the airline by arranging financing for the deal and hiring a respected industry executive to run United if the pilots succeed in acquiring it.

Although United’s present owner, Chicago-based Allegis Corp., reiterated that the airline is not for sale, the actions were viewed by industry analysts as giving credibility to the pilots’ quest to win control of the airline.

The pilots said they have hired William R. Howard, who resigned Thursday as head of Piedmont Airlines, as chairman and chief executive of Airline Acquisition Corp., the company they formed in April to pursue their proposed acquisition of United. The union also said that Chemical Bank of New York has agreed to syndicate the bank financing needed to complete the purchase.

The two moves make the pilots’ offer “much more serious than it was a few months ago,” airline analyst Robert Decker of the independent Chicago investment research firm of Duff & Phelps said. “It gives credence to the proposal. The current Allegis management will have to think more seriously about it.”

‘Not For Sale’

But a spokesman for Allegis, Daniel D. Sheehy, said: “The airline is not for sale. That is the bottom line.” Allegis has said, however, that it plans to sell its Hertz rental car business and its Hilton International and Westin hotel subsidiaries.

In a letter to Allegis Chairman Frank Olson disclosing Chemical Bank’s involvement in the financing, the pilots said the bank is “highly confident” of its ability to raise the necessary funds. Chemical will also lend the union $500 million of its own funds.

Exactly how much the airline would cost the pilots was not clear Thursday. When the pilots made their original offer in April, they said their bid was worth $4.5 billion.

However, Allegis has since said it would restructure the corporation, so it is difficult to place a price on any of its components. In addition to the Chemical Bank financing, the pilots have said that they were assured of $1.5 billion in financing from Salomon Bros., the investment banking firm.

Capt. F. C. (Rick) Dubinsky, chairman of the United Airlines Pilots Master Executive Council, warned in an interview Thursday that if Allegis management does not cooperate, the union plans to take its proposal to buy United directly to Allegis’ shareholders.

“If the Allegis board were willing to work with us today,” Dubinsky said, “shareholders could realize value for their stock well in excess of the current market price.” Allegis stock closed Thursday at $95.50, up $1.25.

Howard’s announcement that he was quitting Piedmont, headquartered in Winston-Salem, N.C., to join United’s pilots in their acquisition effort surprised many in the airline industry even though Piedmont has agreed to be taken over by Arlington, Va.-based USAir Group. The deal is awaiting regulatory approval.

Howard, who smokes expensive Jamaican cigars, owns four homes, collects motorcycles and antique cars and has been a pilot since he was 16, joined Piedmont in 1978 after having been senior vice president of Eastern Airlines. In 1981 he became Piedmont’s president and chief executive officer; last year, he was made chairman as well. During his years at Piedmont, the airline has been consistently profitable.

He is greatly respected by labor in an industry that has been beset by union unrest. “He created jobs and growth without any ugly confrontations,” one airline observer said Thursday.

Pending a successful conclusion of the pilots union’s effort to buy United, Howard, as head of Airline Acquisition, will be paid “a large salary,” according to one person close to the pilots union.

Dubinsky said he and Howard “are parallel in our philosophies--that an airline should make money and that its employees should be happy and be well paid.”

There is a certain irony in Howard’s selection by the pilots. Allegis has also had a search committee scouting for an executive to head United, and Howard was one of those reported to be high on the list. Observers said the only thing that might have disqualified him was his age. He is 65.

“He was at the top of everybody’s lists,” Dubinsky said.

In a telephone interview Thursday, Howard said he has long been an admirer of United. “I feel that United has a lot of good things going for it,” he said, but it “needs to get its people pulling together. Management needs to get the confidence of those people so that United can get on with the competitive battle with fierce American Airlines.”