NEW YORK (AP) -- Amid the threat of potential bankruptcy filing, there is a new class of shareholders selling the stock of United Airlines parent UAL Corp.: its employees.þþThe manager for UAL's employee investments has registered to sell 11 million of the 59 million UAL shares held for the workers, UAL and its mechanics' union said.þþUAL said in a regulatory filing Friday that the manager, State Street Corp.'s State Street Bank and Trust, has begun selling the shares on the open market.þþIt is the first time United workers' stake in UAL, awarded as part of a 1994 employee buyout, is being sold. In addition to the shares held for the workers, UAL, based in Chicago, has 57 million common shares outstanding.þþOwning nearly 55 percent of UAL, United workers face the possibility of seeing their stakes becoming worthless, as shares of a company in bankruptcy typically do.þþState Street determined that being solely invested in UAL stock was ``inconsistent'' with federal pension laws governing employee stock ownership plans, the International Association of Machinists union said in a note to members.þþUAL, parent of the world's second-largest carrier, has warned it may be forced to file for Chapter 11 later this year if it can't reduce costs, win $1.8 billion in federal loan guarantees and raise $2 billion in fresh capital.þþThe employee ownership ``caused the program participants to be less diversified than most investment advisers would recommend'' because they have both their jobs and a large part of their investment portfolio tied up with a single company, said Robert Mann, airline analyst and consultant at R.W. Mann & Co. in Port Washington, N.Y.þþUnited pilots own 25 percent of the UAL stock, while machinists hold 20 percent and nonunion salaried and management workers own a combined 9.2 percent. Those shares were acquired in a 1994 employee stock ownership plan, under which the workers agreed to wage and benefit cuts to help UAL restructure. The ownership plan bars the individual workers from selling their investments until retirement.þþDespite an early boost to employee morale and a temporary reduction in wages, there is much debate as to whether the employee buyout provided UAL meaningful long-term financial benefits or helped improve its contentious relationship with labor.þþUAL shares Wednesday fell 7 cents, or 3 percent, to end at $2.20 on the New York Stock Exchange.þþThe stock, which briefly topped $100 in 1997, reached a 52-week low of $1.42 on Oct. 18. þþ
Source: NY Times
