United Once More

Look out, Texas Air and American! Fasten your seat belts, TWA and Delta! The old United Airlines is aiming to make a comeback -- under new leadership. And forget about that weird name Allegis, which Builder Donald Trump said was "better suited to the next world-class disease." The new chairman plans to scuttle that moniker, along with the company's dubious strategy of being a sprawling travel conglomerate that rents cars and runs hotels. From now on, United will concentrate on the airline business, this time with its pilots eyeing roles in the boardroom as well as in the cockpit. After years of inner turmoil, the company is determined to recapture its onetime dominance of the friendly skies.

Just as a starter, the airline last week flew some of the fanciest loops and passes ever seen in corporate aviation. After a pressurized seven-hour meeting of its board of directors, the 52-year-old firm announced that Chairman Richard Ferris, 50, had resigned and would be replaced by Frank Olson, 54, who is currently head of the company's Hertz rental-car subsidiary. At the same time, for-sale signs were tacked onto Hertz as well as the Westin and Hilton International hotel chains, whose 149 hostelries constituted the third branch of the firm. Management also said it would seriously consider demands by the pilots for employee ownership. Finally, Olson recommended that the company's name, which had been changed only six weeks ago from UAL to Allegis (a combination of the words allegiance and aegis) at a cost of some $7.3 million, be returned to what it was originally: United Airlines.

The upheaval was the almost inevitable result of attacks on Allegis from all sides. Its pilots were pressing to buy the airline because they felt Ferris was spending too much time and money buying hotels, to the detriment of the company's core business. Meanwhile, dissident shareholders, led by a trio of Manhattan-based investors called Coniston Partners, launched a campaign to oust management, arguing that the company would be worth far more if it were broken into pieces and sold. The critics pointed to the firm's lackluster financial performance: its net income was only $11.6 million last year on revenues of $9.2 billion, and the airline itself lost $80.6 million.

The 7,000 United pilots had never forgiven Ferris for a bitter 1985 labor confrontation. The chairman demanded that United employees accept a two-tier wage system that would relegate newly hired pilots to a lower pay scale. In protest the pilots staged a 29-day strike, but Ferris prevailed and set up the new wage system anyway. He insisted that the carrier needed lower costs to meet the challenge of cut-rate competitors like Texas Air, which through a series of mergers has eclipsed Allegis to become the largest U.S. airline company, with both Continental and Eastern now under its wing.