United Picks Counsel Hart as Acting CEO to Fill In for Munozby
More details due later Monday or Tuesday, airline says
Board is said to have discussed interim chief or replacement
United Continental Holdings Inc. said it expects to reach a decision as soon as Monday on how the airline will proceed after Chief Executive Officer Oscar Munoz was hospitalized.
Munoz, 56, suffered a heart attack on Thursday, according to a person familiar with the matter. Last week, United directors were at an impasse on whether to appoint an interim CEO or start seeking a new one, another person familiar with the situation said. The board lacked enough information then on how to proceed, the person said.
“The company anticipates it will today conclude the corporate governance process necessitated by the hospitalization of President and CEO, Oscar Munoz,” Chairman Henry L. Meyer III said in a statement Monday. “The company expects to release more details either later today or tomorrow. In the meantime, the United family’s thoughts and well-wishes are with Oscar.”
United’s response extends the uncertainty surrounding Munoz’s condition and how the airline will respond to the absence of the CEO it hired just last month. Munoz, the former president of railroad CSX Corp. was plucked from the board to run United after former CEO Jeff Smisek was dismissed amid a federal investigation into the airline’s ties to the former chairman of the Port Authority of New York & New Jersey.
The Munoz family sent a note to United workers thanking them for their support and words of encouragement. “We look forward to a healthy recovery,” the family said in the message posted on an internal employee website.
Munoz has confronted not only the turmoil generated by that probe but United’s existing struggles with union integration and computer breakdowns since being created in the 2010 merger between former United parent UAL Corp. and Continental Airlines Inc.
United’s board also felt the ripple effects from the ouster of Smisek, who had held the chairmanship as well as his CEO’s role. Meyer, the former chairman and CEO of Cleveland-based KeyCorp, became non-executive chairman at the airline in September.
The shares rose 1.4 percent to $56.75 at the close in New York. The stock’s 15 percent drop this year lags behind the Bloomberg U.S. Airlines Index, which is down 4 percent.
United’s trickle of news on Munoz’s condition -- the airline didn’t disclose his hospitalization until a day later, and hasn’t confirmed that he suffered a heart-attack -- spurred some corporate-governance scholars to question the strategy.
“They needed to remain in front of the information,” Laura Pincus Hartman, a business ethics professor at Boston University Questrom School of Business, said in a telephone interview last week. “Otherwise, aren’t we left with the perception no one is in charge?”
Munoz had been moving quickly to fill the vacuum created by Smisek’s surprise dismissal. When he was stricken on Thursday, his day’s schedule included a meeting with labor leaders -- part of his early campaign to soothe strained union ties as he works to improve customer service at the world’s second-largest airline.
With or without a board decision on leadership, Munoz’s illness is poised to change United’s third-quarter earnings presentation on Thursday. Vice Chairman James Compton, who is also chief revenue officer, typically shared responsibility with Smisek in discussing the results on quarterly conference calls.
Smisek and two lieutenants left United last month amid a federal probe into whether ex-Port Authority chief David Samson got the airline to restart a money-losing route to his weekend home in South Carolina in exchange for political favors. United dropped the service, once known as “the chairman’s flight,” days after Samson left the agency in 2014.