Lacking Offers, UAL to Consider Recapitalization : Airlines: With an employee buyout plan apparently dead, directors seek ways to benefit shareholders.

Employee efforts to buy UAL Corp., the parent of United Airlines, apparently failed Monday, but the airline’s board said it would consider a recapitalization plan.

The board acted under pressure from Coniston Partners, a New York money manager and large shareholder, that said it would come up with its own plan for the company if the board failed to act Monday.

The board told its advisers, First Boston Corp. and the New York law firm of Davis Polk, Wardell to propose a change in UAL’s financial structure that would benefit shareholders. The board suggested a swap of new debt for a significant amount of UAL stock.

The board said it wants the plan ready by Jan. 25. If approved, the board said the plan would be “implemented as promptly as practicable.”

It wasn’t clear whether Coniston would go along with a swap, which would leave the investor with paper securities instead of cash. Repeated calls to Coniston’s office were not returned.

A recapitalization has been widely expected on Wall Street, where professional stock traders have long doubted any new employee bid for the airline would materialize. Many traders expect the payout to shareholders will be a combination of cash and securities worth between $200 and $240.

Such a payout would involve a sizable premium over the price of UAL’s shares, which closed at $156.625 on Monday, down $2.875 on the New York Stock Exchange. The announcement from the UAL board did not come until after the stock markets closed.

If completed, UAL’s financial overhaul would be its second since 1987. Under pressure from Coniston three years ago, UAL sold its hotel and car rental businesses and bought back a large amount of stock. The board also replaced UAL’s top management and brought in Stephen M. Wolf, the former head of Flying Tiger Line, as chairman.

The board’s action Monday seems to mark the end of drawn-out employee efforts to buy the company. The employee group, led by United’s pilots and Wolf, almost claimed victory in September when its $6.75-billion offer topped a bid from Los Angeles billionaire Marvin Davis. But the unfinanced employee bid fell apart in October after banks deemed it too risky.

The group faced a number of obstacles in its effort to come up with a new offer. The airline’s machinists union opposed an employee buyout, and the flight attendants were unenthusiastic. The group also lost the support of British Airways, a major financial backer of the original bid.

Three weeks ago, Coniston said it considered a partial employee buyout the best alternative for the airline, but the employee group has apparently made little progress on such a proposal. UAL’s board said it received no employee ownership plan Monday.

The board also said it would consider buyout offers from employees or from third parties, but such offers seem unlikely. Though Los Angeles billionaire Marvin Davis, Texas billionaire Robert M. Bass and other takeover experts have eyed UAL, most face opposition from one or more of the airline’s unions.