The world is huge

Don't miss any of it

Travel news, itineraries, and inspiration delivered straight to your inbox.

By proceeding, you agree to our Privacy Policy and Terms of Use.

X

United Board in Battle for Control of Company

Things seemed to be looking up for United. The company’s CEO, Oscar Munoz, had announced his imminent return to the job, less than three months after a heart transplant. In a news release announcing Munoz’s return, a United board member gushed thusly:

The Board is confident in the strength and potential of United’s business – and very pleased that Oscar will be returning to the roles of President and Chief Executive Officer on a full-time basis. We expect him to continue leading the company’s improving operational and financial performance, driving increased shareholder value, and innovating and elevating United’s customer and employee experience.

The “new United” looked to be cleared for take-off.

This morning, any rosy hopes of cloudless skies ahead were dashed by a shareholder revolt, headed by none other than the former chief executive of Continental, Gordon Bethune.

RELATED: If the U.S. Airlines Could Vote for President…

The revolt takes the form of a proposal by two hedge funds, Altimeter Capital Management and PAR Capital Management, to add six of their own candidates, including Bethune, to United’s board. According to an Altimeter statement, “As long-term United stockholders, we have been greatly disappointed with United’s poor performance and bad decisions over the last several years… Stockholders and employees deserve a proactive, well-crafted, and diverse Board that has the experience required to end years of chronic underperformance.”

In a letter to United’s board, Altimeter takes the airline to task for its substandard operational and financial performance over the past five years, and its “underqualified, ineffective, and entrenched” board, citing the urgent need for a “course correction.”

United responded, via news release, that the company was “deeply disappointed” by the hedge funds’ initiative, citing United’s recent attempts to negotiate with the funds, and yesterday’s appointment of three new independent directors to the board. (Altimeter dismissed the new board appointments as “a knee-jerk response to the stockholders’ efforts.”)

And so the back and forth will continue, until United’s stockholders vote on the matter at the company’s 2016 annual shareholder meeting.

So What?

While there have been glimmers of improvement in recent months, United has unarguably been a disappointment, to customers, employees, and shareholders, at least since its 2010 merger with Continental. So, it might be argued, any change is likely to be a change for the better. And Gordon Bethune was well regarded for his management of Continental, which was named among the 100 Best Companies to Work For and Most Admired Global Airline multiple times by Fortune magazine during his tenure. He might be just what the airline needs to right itself.

On the other hand, throwing current CEO Munoz under the bus, and scrapping his plan to revitalize the airline, could be premature. He hasn’t been in his position long enough to fairly judge his capabilities. He could turn out to be the solution to United’s problems as well.

Longer term, there’s no telling which side will the proxy battle, or how the winner’s vision for the airline will play out. The only certainty is that there will be plenty of drama in the short term.

Reader Reality Check

Does United need a new board, and a new direction?

More from SmarterTravel:

After 20 years working in the travel industry, and 15 years writing about it, Tim Winship knows a thing or two about travel. Follow him on Twitter @twinship.

We hand-pick everything we recommend and select items through testing and reviews. Some products are sent to us free of charge with no incentive to offer a favorable review. We offer our unbiased opinions and do not accept compensation to review products. All items are in stock and prices are accurate at the time of publication. If you buy something through our links, we may earn a commission.

Top Fares From