New $6.5-Billion United Bid Reported

The pilots union at United Airlines, together with British Airways, reportedly is set to make an offer worth up to $6.5 billion for the carrier, trumping a $6.19-billion offer from Los Angeles investor Marvin Davis.

The New York Times reported in today’s editions that the pilots union planned to make the offer today and that UAL’s board was expected to approve it soon.

The Times, quoting unidentified Wall Street and investor sources, said that the offer would be worth about $300 a share, topping Davis’ $275-a-share offer. It said that senior UAL officials participated in the discussions and endorsed the bid.

Under the bid, the Air Line Pilots Assn. would put up as much as $1 billion, which would come from two of the union’s pension funds, one of which is overfunded, the newspaper said. British Airways PLC would put up as much as $1.5 billion, while the rest would be borrowed, according to the report

The Times said that a spokesman for British Airways had no comment on the report. A UAL spokesman said late Thursday that he also could not comment.

Earlier Thursday, UAL spokesman Rob Doughty declined to comment on whether the board would meet an informal deadline for responding Davis’ $6.19-billion offer for the nation’s second-largest airline.

Davis asked UAL’s board on Aug. 25 to respond by Thursday to his bid. But an individual close to the Davis group said the request should not be viewed as an ultimatum.

“I wouldn’t regard this as a hard-and-fast deadline that if they don’t respond, Mr. Davis is going to go away in a huff,” said the source, who asked not to be identified.

Davis has so far taken a friendly tack in his efforts to acquire UAL and his offer includes a promise to establish an employee stock ownership plan to give United’s union workers a stake in the company, a goal the pilots have been pursuing for at least two years.

The California investor also has met with representatives of United’s pilots, machinists and flight attendants unions and said on Tuesday he did not plan to seek contract concessions from workers.

But Davis also has threatened to take a hostile route to a takeover. On Aug. 17, he announced his intention to possibly launch a shareholder-consent solicitation aimed at ousting all 15 UAL board members except Chairman Stephen N. Wolf.