United willing to fold Avolar


Moo, Moo
Dec 6, 2001
Total Time
United willing to fold business-jet venture Struggling airline tells unions unit will close unless investor found
By Marilyn Adams

United Airlines CEO John Creighton has told union leaders in recent days that the company is prepared to close its business-jet venture if an investor isn't found in the next few months.

After the Sept. 11 attacks, officials at United's parent, UAL, said they were seeking a majority investor to underwrite the Avolar unit, which is marketing shares of private jets to corporate executives, professional athletes, entertainers and others who prefer private, on-demand flights.

In recent meetings with the Association of Flight Attendants and the Air Line Pilots Association, Creighton said the company would close or consider closing Avolar if no investor is found, union leaders who attended those meetings say. In a Jan. 16 meeting with the flight attendants union, Creighton said the company believes in Avolar's potential and wants to find an investor to make it work. If that doesn't happen this quarter, ''we will shut it down,'' he said, according to Bobbie Pilkington, the union's secretary-treasurer.

This week, Creighton told the governing body of the pilots union that UAL would have to consider writing off the investment if no buyer is found, union Chairman Paul Whiteford said.

Avolar CEO Stuart Oran called the reports ''moot'' Thursday because a majority stake will be sold this quarter. ''We've been working with a number of investment entities, and the process is moving exactly as it's supposed to. We want to achieve the best price, the best return for the company and a partner who shares our vision.''

UAL's management and directors saw Avolar as a potential source of revenue from passengers who don't fly commercial airlines. Avolar launched last spring in a bid to capture a share of the fractional-ownership market in business jets, which has shown double-digit growth in recent years. That business is dominated by Executive Jet, the successful corporate-jet company owned by investor Warren Buffett's Berkshire Hathaway. After Sept. 11, some union members criticized the company for spending money on a new venture when United is losing millions of dollars a day.

Avolar has firm or conditional agreements to acquire up to 306 business jets. Deliveries are to start in April. Oran said Avolar has 200 people ''in the pipeline'' who have received proposals or signed letters of intent or contracts.

Avolar's charter flights, using leased planes, have generated more than $500,000 in revenue in the last month, he said.