Gordon Bethune Making a Play to Return as Chairman of United

With Oscar Munoz set to return to United as CEO after a medical leave in a week, the airline is also planning to replace a few directors – the former head of T Rowe Price, the former Chairman of Air Canada, and the CEO of Red Hat. But the plan faces opposition.

“As long-term United stockholders, we have been greatly disappointed with United’s poor performance and bad decisions over the last several years,” Altimeter CEO Brad Gerstner said in a statement. “Yesterday’s last-ditch effort –- adding just three people to its now 15-person board –- is a cynical attempt to preserve power by this entrenched board.”

Altimeter Capital Management and PAR Capital Management which together own 7.1% of United are backing six new board members at the airline led by former Continental Airlines CEO Gordon Bethune.

The activist-backed slate isn’t specifically targeting United’s CEO, said Bethune, who recruited Munoz to Continental’s board more than a decade ago.

“I won’t stay for more than 2 years. I really am getting too old to do this,” Bethune, 74, said in an interview. “But I want to help the people who are my friends, who are the employees.”

Indeed, it was Bethune who first brought Munoz onto the Continental board. And he cut short a vacation in Croatia to return to Chicago and provide Munoz counsel when he was named CEO upon Jeff Smisek’s ouster. And Munoz is CEO but not Chairman.

Although the investors may not be as conciliatory,

Asked about Munoz’s good intentions, Gerstner of Altimeter Capital tells Skift: “Given that Oscar has never been a CEO or worked in an airline, it is even more essential to have a high-functioning and experienced Board to help fix this airline.”

Meanwhile Bethune isn’t running for a board seat to sit quietly at the table, either. He said that “talks with United to bring him in as chairman broke down.”

“You can’t be effective as one guy unless you come in as chairman,” Bethune said. “I would not go, nor think about going in just as a board member. I don’t need a job.”

Presumably the former Continental head is interested in returning as non-executive Chairman of Continental United in a desire to see it go ‘from worst to first’. The investors backing him presumably are interested in seeing its stock go to first as well.

While Bethune has legendary hero status within the industry and with customers, and did turn around an airline that suffered under the leadership of Frank Lorenzo, he also led the way in imposing fees during the industry downtown at the beginning of the last decade.

At the same time, United has been making many of the right symbolic gestures, like setting themselves on course to replace awful coffee that customers have complained about for years and to introduce snacks in economy.

And Munoz, a long-time board member but outsider to the airline industry began his tenure by talking to employees and talking about the need to give them tools to provide a good product and good service to customers.

It’s not at all clear what different direction the Bethune or the slate of directors supported by these activist directors would take.

(HT: @joesentme)

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. Yes, Gordon Bethune is a hero. I live in Atlanta and became a CO loyal customer, going to their top Frequent Flier level almost immediately. I saw CO get better and better and better under Gordon. They were very customer friendly too. They started the policy of complimentary upgrades to First Class when Delta still insisted on charging 10 x coach for First. After a couple of years of DL losing customers to CO, DL started complimentary upgrades too. Also, at one time DL and CO were in sort sort of alliance, where I could fly on DL but bank my points at CO. During this period of time I saw how absolutely awful DL was to its frequent fliers because I had frequent flier accounts and status with both airlines. Time after time, I would look at award seats in Biz to Europe on DL aircraft, and CO was offering those seats at half the miles DL insisted upon. And I’m talking about the exact same date, exact same flight, exact same aircraft, exact same seats (one could use CO miles to fly on a DL flight as an award). This was pretty much a universal finding year after year. Another very customer friendly thing CO did for its award tickets was to open up most of the vacant seat for award space at the saver level a few days before the flight. Now that’s really showing your customers you care for them and have their backs. So yes, Gordon Bethune is a hero and I cried when he left. He treated both his employees and his customers very, very well!

  2. I think that one of UA’s best chances is for Gordon to come on board ( no pun) for the two years that he said was it on CNBC this morning. He does know the industry as good as anyone currently around, with the ability to shape a near term and long term goals for the carrier. I was seriously looking at UA when Oscar came in and it appeared the rank and file was buying in, then his medical setback.

    Now with him coming back and Gordon on as Chairman it makes for interesting times for UA, they can turn it around.

  3. Interesting, the investment firms are doubling down on former airline executives. They’re also bringing Jim Whitehurst onboard – a former Delta Air COO, who was heir-(un)apparent to be CEO. Both Gordon and Jim are very talented, outspoken former airline leaders.

  4. Good, I hope that he will work to transition the company back to a more customer-centric organization that it appears that all ‘affordable’ airlines have gone away with in the recent years.

  5. I do remember the good experience flying with Continental and the good legacy of Mr. Bethune that United destroyed. If he comes back I may start flying United ( if it becomes friendly again) .

  6. Nobody in the airline industry has a better reputation..It was the last time you’d hear employees talking enthusiastically about their airline.

  7. Mr. Bethune is a visionary leader who respected employees and customers. It would be a refreshing change if he could be involved with Mr. Munoz in setting a new course for United.

  8. @Candy – #facts for you…it was the Continental leadership that headed United post-merger and absolutely ruined the airline in the 2012-2015 timeframe.

  9. United started improving the day that smisek (AKA FLIBS – Frank Lorenzo in a Better Suit) got fired. This looks and smells like hedge funds trying to greenmail United.
    Bethune’s defense of Smisek in the CNBC interview has made every United employee I’ve spoken to who’s aware of Bethune’s comments say that Bethune is NOT needed nor is he wanted. Oscar has started to get the ship turned around; performance numbers have been steadily improving under Oscar. That’s why several unions have come out in support of Oscar.

    Talk to any United employee or frequent flyer their opinion of Smisek and Oscar Munoz.

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