United explores possible spinoff

By The Associated Press

CHICAGO – United Airlines is considering spinning off most of its maintenance operations, a published report said Thursday.

Such a move would include the carrier’s huge repair base at San Francisco International Airport and would affect 2,800 employees based mostly in the Bay area, the Chicago Tribune said.

Exploration of a spinoff comes after the nation’s No. 2 airline hired consultants McKinsey and Co. to examine strategic options for its maintenance, repair and overhaul operations, which employ about 5,500 mechanics and handle much of the airline’s routine repair work as well as maintenance for about 150 other carriers.

The Tribune, citing unidentified sources, said United executives are believed to favor pursuing a joint venture that would allow the airline to retain a minority stake in the maintenance operations while turning over control to an outside investor such as a hedge fund, third-party contractor or even another airline. Such a change would reportedly require union approval.

Asked to comment on the report, United spokeswoman Jean Medina said the Chicago-based carrier is contemplating bringing in third parties who can invest in the maintenance, repair and overhaul business.

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“This will enable us to continue to provide the highest quality maintenance to United and our customers,” she said. “We are working cooperatively with our labor groups to ensure that any arrangement would be for the long term with a partner that creates value for our customers, investors and employees.”

United officials notified the mechanics union of the strategic shift at an Aug. 10 meeting, according to the Tribune. The two sides are discussing the details of the strategy and its implications in San Francisco.