Last updated: 08:00 PM ET, Tue October 20 2015

United Airlines Has Bevy of Problems Beyond CEO

Airlines & Airports | Rich Thomaselli | October 20, 2015

United Airlines Has Bevy of Problems Beyond CEO

The saving grace of United Airlines – like virtually every other domestic carrier – is that it's making money hand-over-fist.

If it wasn’t, if the Chicago-based airline wasn’t pulling a profit in the last year or so, these would be dire times at United instead of just being awfully critical.

Which might be just as bad.

United Airlines is on its third CEO in less than two months after the forced resignation of Jeff Smisek in early September, and the heart attack suffered last week by the man who succeeded Smisek, CEO Oscar Munoz.

The new acting CEO of United is its general counsel, Brett Hart.

But the world’s fourth-largest airline has had a bevy of problems, many still to be solved, beyond just who’s calling the shots this week. To wit:

• Start with what got Smisek ousted – a federal corruption probe. Both the feds and United itself are looking into allegations that the airline engaged in an aviation version of payola. United airline allegedly traded a new route between Newark, New Jersey and Columbia South Carolina. in exchange for favorable treatment at Newark-Liberty International Airport when it came time for slots and a new hangar. Columbia is near where the then-Port Authority of New York-New Jersey chairman owned a weekend home.

• Customer service is lacking. United ranked last among major domestic carriers in this year’s J.D. Power airline satisfaction survey, which, among other categories, measures in-flight service.

• Many observers have questioned why Smisek decided on a $3 billion buyback in stock when some of that could have been invested in the airline’s flagging infrastructure, including reservations.

• United has failed to negotiate contracts with its 21,000 flight attendants or its 9,000 mechanics. Munoz called a summit of sorts with representatives of both unions, which he missed when he suffered his heart attack. Whether that still takes place with a CEO present remains to be seen.

• Five years after the merger with Continental, things still aren’t as seamless as United had hoped, something the company addressed when, at Munoz’s direction, it took out ads in eight major U.S. papers to apologize for not meeting customers’ expectations.

• And now the airline is being criticized for being late, and not entirely forthcoming, about Munoz’s health when it took 24 hours to deliver the news to shareholders.

It remains to be seen whether Hart, as “acting” CEO, has the authority to begin moving the company along and implementing some of Munoz’s ideas and resolving some of the problems.


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