UAL Corp To Pay $250 Million To Shareholders

United Airlines parent UAL Corp said it has paid down $500 million in debt, and has approved a $250 million special distribution to shareholders on the basis the airline now has good cash flow, according to the Associated Press.

The distribution underscores the company's commitment to its investors, said UAL Chairman and Chief Executive Officer Glenn Tilton.

"On behalf of our board of directors, we are pleased to make this decision to provide a distribution to our shareholders while strengthening our balance sheet and investing in our business," Tilton said, noting the $250 million includes $20 million to employee shareholders.

United's unions want more of the company's cash to be distributed to employees who agreed to pay cuts in bankruptcy. The union also wants less paid out to shareholders and in high executive pay.

"We compete for shareholders just as we compete for customers. Building a successful, sustainable enterprise, and providing a return on investment, is what shareholders expect and deserve," he said.

Officials with the unions shot sharp criticism of the payout.

"The best shareholder initiative would be one that invests in the employees for the long-term success of the airline," said Greg Davidowitch, president of the Association of Flight Attendants at United.

Pilots with the airline called the plan "ludicrous."

"Management has now told us that they will value their own interests and short-term shareholder returns over anything else -- over stronger employee motivation and engagement, over a better customer experience, over the long-term health of the company," said Mark Bathurst, head of the United branch of the Air Line Pilots Association.

Wall Street sees things differently. Morgan Stanley analyst William Greene called United a "shareholder friendly" company.

"We believe that the market will likely now give more credit to the company's indications of intent to divest noncore assets, which could further benefit shareholders and act as a catalyst for the shares," he said.

Distributions of $2.15-per-share will be sent to UAL Corp. shareholders on January 23.

A term loan was paid down $500 million by UAL under an unspecified credit agreement. UAL Corp. has reduced its total net debt by $2.7 billion as of the third quarter's end after exiting bankruptcy.

The company's shares rose $1.76, or 4.3 percent, to $42.39 in trading on Friday after the announcement.

FMI: www.united.com, www.alpa.org, www.afanet.org, www.goiam.org