United Continental Attracts Activist Group in Altimeter, PAR

  • Altimeter Capital, PAR Capital together own about 5.5%
  • Hedge funds have held talks with United management, board

United Continental Holdings Inc., the airline holding company struggling with leadership and merger transitions, has attracted an activist investor group.

Altimeter Capital Management LP, the hedge fund founded by Brad Gerstner, has amassed about 3.1 percent of the airline, and has held talks with PAR Capital Management Inc., a shareholder with about 2.4 percent of the stock and another 0.8 percent exposure through options, the pair disclosed Tuesday in separate activist 13D regulatory filings. The funds, which together own about 5.5 percent of United stock, are working as an activist group.

The funds “have engaged, and intend to continue to engage, in discussions” with United’s management, board and other shareholders about “business, management, capital structure and allocation, corporate governance, board composition, strategic alternatives and direction, and strategies to enhance shareholder value,” according to the twin filings. PAR Capital’s filing was signed by Steven M. Smith, that firm’s chief operating officer and general counsel.

United’s senior leadership has been in flux in recent months, fallout from a federal probe into the airline’s ties to the former chairman of the Port Authority of New York & New Jersey. United’s board replaced former Chief Executive Officer Jeff Smisek in September with railroad executive Oscar Munoz. About a month later, Munoz suffered a heart attack, went on medical leave and underwent heart transplant surgery earlier this month.

Aside from the management turmoil, the company has struggled to integrate its 2010 merger of United and Continental Airlines. The deal’s aftermath has been marked by labor friction and profits that lagged behind those of industry rivals.

“We actively engage in dialogue with our shareholders, and welcome their constructive suggestions and feedback,” United spokeswoman Megan McCarthy said in an e-mail. “United’s board and management are committed to acting in the best interests of our shareholders and are focused on continuing to execute on our plan to create long-term value for all our stakeholders.”

Representatives of the activist funds didn’t immediately respond to requests for comment.

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