United Airlines settles its board dispute with investors.
CHICAGO — United Continental Holdings settled a very public dispute with two big investors over its board, a fight CEO Oscar Munoz faced just as he was returning to work fulltime last month after a heart transplant.
The Chicago-based airline said Wednesday that three of its independent directors, including Henry Meyer, the board’s nonexecutive chairman, would retire from the board and not stand for re-election at the company’s annual meeting. Also stepping down are directors John Walker and Charles Yamarone.
Robert Milton, a former chairman and CEO of ACE Aviation Holdings as well as Air Canada and a recent addition to United’s board, will succeed Meyer as nonexecutive chairman at the annual meeting. Airline experience sought
That move, along with the addition of two outside directors named Wednesday and a third to be named later, settles a proxy battle with Altimeter Capital Management and PAR Capital Management, two shareholders that together own about 7 percent of the airline’s stock. Last month, they detailed plans to seek six seats on the board.
The funds had argued that United’s board lacked airlineindustry experience and was complacent for years while the carrier fell behind in reliability, customer service, profitability and stock performance.
Joining the board are Edward Shapiro, PAR’s managing partner and portfolio manager, and Barney Harford, former CEO of Orbitz Worldwide. Harford was on the slate of nominees originally proposed by Altimeter, as was Gordon Bethune, former CEO of Houston-based Continental Airlines.
“Together, these moves put the proxy contest behind us and represent a new day for United’s board,” Munoz said in a letter to employees Wednesday. “And as we continue to move full speed ahead in running a great airline, our focus on taking care of each other and our customers has never been more important and our future has never looked more exciting.”
As a result of the agreement, Munoz, who was scheduled to take over as board chairman in 2017, is not expected to step into that role until 2018, according to the airline. Rocky merger
The announcement seemingly puts another contentious issue behind Munoz, who has grappled first with labor issues and then with the two shareholders, as well as a heart attack and subsequent heart transplant, since taking over the airline in September.
Saturday, the airline announced employees represented by the International Association of Machinists and Aerospace Workers overwhelmingly ratified seven new labor contracts. It recently also negotiated labor contracts with its pilots and dispatchers, and remains in talks with flight attendants and technicians.
“United has great potential, and we’re confident that these meaningful board-level changes will help the company reach that potential,” Paul Reeder, PAR Capital’s founder and CEO, said in a news release. “We are eager to see the new board turn its attention to creating stockholder value, improving labor relations, and enhancing customer satisfaction.”
The 2010 merger of United and Continental has been among the rockiest in the airline industry. Computer problems after the two systems were merged have created massive flight delays, but United has struggled even without technical glitches.
More than one-fifth of its flights arrived late last year, worst among the nation’s four dominant airlines.
The workforce of the two airlines has yet to be completely knitted together, and United was slower to return to profitability than rivals Delta and American.