United CEO Is No Stranger to Bankruptcy

Published December 09, 2002

| Reuters

Glenn Tilton, chief executive of UAL Corp. for just three months, is no stranger to massive corporate bankruptcies, having lived through one during a career at oil company Texaco.

An aviation rookie who built his career on refining and marketing crude oil, Tilton joined UAL's United Airlines in September and is described by some who knew him in the oil industry as a superb communicator.

Tilton's first act after the world's No. 2 airline officially filed for Chapter 11 bankruptcy protection in Chicago early Monday was to step into that role. He went to one of United's busiest hubs, its terminal at O'Hare airport, and held an impromptu news conference.

"The most important thing for me to do today is to be here, to be with our customers and employees," Tilton said before going to a hearing at bankruptcy court.

Going forward, Tilton is sure to face some tough decisions that could hit those same workers and passengers with deep wage cuts and reductions in schedules in order to bring a restructured airline out of bankruptcy.

That task has knocked off course several United chief executives of the past because of the airline's history of management-union friction. UAL is 55 percent owned by its employees and has gone through four chief executives in the last decade.

Oil Man

Tilton started his career in 1970 at Texaco, the oil company that filed for Chapter 11 bankruptcy in the 1980s and was hit by a huge racial discrimination lawsuit a decade later. Under Chapter 11 of the federal bankruptcy code, a company can continue operating and keep creditors at bay while it reorganizes.

A Washington, D.C., native who grew up in Latin America as the son of a CIA agent, Tilton worked his way up through marketing, European operations and eventually the domestic unit at Texaco over a span of 30 years.

Tilton was named Texaco's chairman and chief executive in February 2001 during a period that many observers considered one of the lowest points for the oil company. Controversial CEO Peter Bijur had just resigned after agreeing to sell Texaco to Chevron Corp., and many of the company's workers were uncertain about the takeover.

Almost immediately, Tilton called a meeting at the company's auditorium in White Plains, New York. "When he walked into the auditorium, some 400 people gave him a standing ovation," said one company executive. "It was the first time in 11 years I had seen such a thing."

Tilton was named vice chairman of the combined company soon afterward.

Troubleshooter

Shortly after the creation of ChevronTexaco Corp., Tilton found himself facing the confusion and collapse of the power trading industry. ChevronTexaco holds a 26.5 percent stake in Dynegy Inc., the power company caught up in trading scandals, a slowdown in business and credit problems that threatened it with bankruptcy.

Last spring, Dynegy board members tapped Tilton for another tough job, naming him the company's chairman to replace Chuck Watson.

In the same month, UAL Chairman and CEO Jack Creighton — another airline industry outsider who had been a timber company executive — announced that he planned to leave the airline.

Four months later, Tilton agreed to replace Creighton, leaving ChevronTexaco. He and his wife, Jacqueline, who have two grown children, moved to UAL's home base of Chicago from San Francisco.

United granted Tilton a $3 million signing bonus, along with a $950,000 annual salary and another possible 100 percent bonus, based on performance.

"This is a guy who has been under fire for a while in several situations, so he's not scared of bankruptcy — he's lived through it," said Fadel Gheit, a longtime energy analyst with Fahnestock & Co. in New York who has known Tilton for years.

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