United CEO Jeff Smisek Resigns amid Investigation

United Airlines chief executive Jeff Smisek has stepped down in connection with a federal probe of the airline, with two other senior executives also leaving. Oscar Munoz, a United board member and CSX chief operating officer, was appointed as CEO.

"The departures announced today are in connection with the company's previously disclosed internal investigation related to the federal investigation associated with the Port Authority of New York and New Jersey. The investigations are ongoing and the company continues to cooperate with the government," United said.

United's executive vice president of communications and government affairs, Irene Foxhall, and its senior vice president of corporate and government affairs, Mark Anderson, also were leaving, according to a person familiar with the matter.

The executive departures come just after its chief financial officer left for the same role at PayPal.

"I think some investors are going to be concerned given that degree of management turnover," said Joseph DeNardi, an analyst with Stifel Nicolaus. "I was surprised" by the news of Smisek's departure, he added. "I would imagine most people were."

Smisek, who has been the company's CEO since 2010, will also step down as chairman and president, United said in a statement.

UAL's general counsel, Brett Hart, declined to elaborate on the reasons for the departures or the status of a federal investigation into United's relationship with David Samson, a former chairman of the Port Authority of New York and New Jersey.

In February, the carrier had opened an internal investigation into its relationship with Samson, following a government probe.

Media reports have said the government probe focused on whether United added direct flights to Columbia, South Carolina, from Newark to accommodate Samson, who had a home there.

The route was cancelled after Samson resigned in early 2014 following news of a federal probe into the potential conflict of interest between his role as port authority chairman and his private law firm.

The investigations are ongoing and United's internal probe and the related circumstances do not raise any accounting or financial reporting concerns, United said.

"We don't expect it to impact our operations," Hart said.

United under Smisek had faced mounting pressure from investors to improve its day-to-day operations and financial performance.

About 75 percent of United's flights arrived on time during the first half of this year, according to federal data, the worst record among the four largest US airlines.

United executives said last month they planned a series of changes to schedules to improve on-time performance.

Smisek will receive a separation payment of USD$4.9 million, payable as a lump sum in cash, the company said in a regulatory filing. The company also said it will give Smisek stock worth nearly USD$3.5 million.

Source: Reuters