Those efforts were already faltering before United said on Tuesday that Mr. Smisek had been replaced as the result of an internal investigation prompted by a federal corruption probe of the Port Authority and its former chairman, David Samson.
Advertisement
After years of discussions with Port Authority executives about the high cost of operating out of Newark, United filed a protest with the Federal Aviation Administration last December that accused the authority of charging airlines excess fees at the airport and of improperly redirecting airport revenues to other uses. United Continental Holdings Inc. said Tuesday that Jeffery Smisek and two other senior executives had stepped down.
The move is surprising to some analysts, who are asking why would he leave CSX (NYSE: CSX), a railroad giant, when he was likely to be tapped as CEO Michael Ward’s successor.
United began a direct flight between Newark, New Jersey, and Columbia, South Carolina, where Samson has a summer home, while he was chairman and ended it days after he resigned previous year.
United agreed to add the flight to Columbia, S.C., from the airline’s Newark hub after Mr. Samson twice threatened to block Port Authority consideration of one or more of the airline’s favored projects, according to details gleaned from Port Authority records, people involved in talks between United and the authority, and others close to the investigation.
Three Christie allies – his former deputy chief of staff and two former top executives at the Port Authority – were charged last spring with closing lanes and engineering all-out gridlock at the foot of the nation’s busiest bridge in September 2013 to exact revenge on a Democratic mayor who declined to endorse Christie’s re-election bid.
Both Samson and Christie, who is running for president, deny any wrongdoing. Samson had been since then under monitoring of the New Jersey attorney’s office.
United posted a record profit in the second quarter and earned $1.7 billion in the first six months of 2015.
On Wednesday, Munoz told the company’s employees in a letter that he would meet as many workers as possible and “hear about operations directly from you”.
In 2010, United merged with Continental Airlines, where Smisek was CEO. The criticism was compounded by several embarrassing computer outages, the latest in June and July, that led to hundreds of delayed and canceled flights. The chief financial officer quit to join PayPal, and now the CEO is out. In a hastily arranged conference call, the new executive reiterated his plans for the carrier that operates over 700 planes.
In a regulatory filing, United said Smisek’s would get a severance payment of $4.9 million and be eligible for a bonus.
He’ll receive perks including flight benefits, tax reimbursements on those benefits, and parking privileges for the remainder of his life, in addition to the title to his company vehicle, according to the statement. Many believe that Smisek’s departure comes at a time when United shows strong signs of a financial turnaround on the back of the plunge in oil prices which has helped the airline to improve its margins.
Munoz’s appointment was so sudden that no pay package had been worked out.
Advertisement
Analysts were also pleased that the new CEO, a longtime UAL board member, was familiar with the airline carrier.
