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.