By Alison Sider and Doug Cameron
United Airlines Holding Inc. said its chief executive, Oscar
Munoz, will step down after four-and-a-half years at the helm,
promoting an air-travel veteran to continue one of the industry's
biggest turnarounds.
Scott Kirby, who joined United from American Airlines Group Inc.
three years ago, will assume the top job in May, the Chicago-based
carrier said Thursday. The leadership change follows sustained
improvements in the company's performance, plus aggressive growth
-- overseen by Mr. Kirby -- that has made United the second-largest
U.S. carrier by traffic.
Strong profit has helped the company's stock outperform that of
rivals. United has beat analysts' earnings expectations in 11 of
the past 12 quarters. During Mr. Munoz's tenure, United's shares
have risen 53%, compared with a 24% rise in the NYSE airline stock
index.
"With United in a stronger position than ever, now is the right
time to begin the process of passing the baton to a new leader,"
said Mr. Munoz, who will stay on as executive chairman for a
year.
Mr. Kirby, who is well-known to investors, will take over amid a
series of challenges facing the air-travel industry, including cost
pressures from coming new labor deals and slowing global economic
growth that could hit domestic and international traffic. Investors
have bid down airline shares in recent weeks over concerns about
passenger growth.
The global grounding of Boeing Co.'s 737 MAX aircraft also has
scrambled carriers' schedules and crimped growth plans. United,
whose fleet numbers more than 1,300 aircraft, has received 14 of
the troubled jets and is due to take dozens more.
Mr. Kirby has a reputation as one of the most detail-oriented
airline executives, and had made no secret of his ambition to lead
a major airline. However, as United's president he has made some
missteps, including a new employee bonus system that was abandoned
in the face of staff complaints.
Mr. Kirby, who is 52 years old, joined United in 2016 after
being abruptly let go as American's president as part of succession
planning at the company.
He quickly made his presence felt at United. On one of his first
days on the job, he realigned operations to focus on departing
exactly on time, a key attraction for high-paying business
passengers, according to people familiar with the matter. He also
instituted a daily 7:45 a.m. call during which managers had to
account for every widebody aircraft that wasn't in service.
Last year Mr. Kirby led an overhaul of United's routes to boost
hubs that he said had been under-utilized for years. Investors said
they worried the plan would spark a fare war, but that didn't
happen and United shares kept rising.
People who have worked with Mr. Kirby describe him as one of the
airline industry's smartest strategists. He graduated from the Air
Force Academy and obtained a master's degree in operations research
from George Washington University. A frequent gambler in his youth,
he has said he was banned from casinos around the world decades ago
due to a penchant for counting cards.
Mr. Kirby started his career at the Pentagon and joined America
West Airlines in 1995. He and Doug Parker, the CEO of American,
orchestrated two mergers that yielded the world's largest airline
by traffic, a mantle American has since lost.
Executives who have worked with Mr. Kirby said he can be bold
but brash, and some executives and board members at American saw
him as unprepared to take the top job at the carrier, some of these
people said. Mr. Kirby has received executive coaching at United,
people familiar with the matter said.
Mr. Kirby left American with $13 million in severance and was
free to take a comparable position at a competitor. He was paid
$5.5 million by United last year, while Mr. Munoz received $10.5
million.
When Mr. Munoz was appointed CEO in September 2015, he inherited
a troubled airline. United had struggled since its 2010 merger with
Continental Airlines. Operations were strained, employees were
bitter and United's reputation with customers was in shambles.
Mr. Munoz, 60, had served for years on the board of Continental
and later of United Continental, but he didn't have any experience
running a commercial airline. He had held financial and strategic
positions at AT&T Inc., Coca-Cola Co. and PepsiCo Inc. before
joining railroad operator CSX Corp.
At the helm of United, Mr. Munoz took swift action to lift
workforce morale, make operations more reliable and improve
customer service. He also brought in outside executives to bolster
United's leadership ranks.
Mr. Munoz spends much of the year on the road visiting
employees, including dropping in to chat with ground workers at
airports hit by extreme weather like last winter's polar vortex in
Chicago.
Less than six weeks after his appointment he suffered a heart
attack in Chicago. Three months later he received a heart
transplant, returning to work in early 2016.
While Mr. Munoz was recovering, two hedge funds started a
campaign to win seats on United's board and install former
Continental CEO Gordon Bethune as nonexecutive chairman, alleging
that the company's board and management was ill-equipped to turn
the airline around.
A truce was declared in April 2016. United agreed to appoint two
directors chosen by the activists to its board along with a third
that both sides agreed on. United also elected Robert Milton, a
former Air Canada CEO, as nonexecutive chairman.
A year later, United and Mr. Munoz came under intense scrutiny
after a 69-year-old passenger was dragged off an overbooked United
Express flight in Chicago after he refused to give up his seat. A
video of the incident went viral. Mr. Munoz's initial response --
defending his staff and describing the passenger as disruptive --
touched off the airline's biggest public-relations crisis in
years.
Mr. Munoz later apologized repeatedly.
Some passengers still threatened to boycott the airline and
called for Mr. Munoz to resign. United's board dropped plans to
give him the additional role of chairman and changed its executive
compensation incentives to focus more on customer service.
Write to Alison Sider at alison.sider@wsj.com and Doug Cameron
at doug.cameron@wsj.com
(END) Dow Jones Newswires
December 05, 2019 14:34 ET (19:34 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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