Daily Management Review

The Head of United Airlines Paid for Excessive Helpfulness


United Airlines announced the resignation of its CEO Jeff Smisek on Tuesday. One of the largest US carriers decided to change the head in connection with the federal anti-corruption investigation against the company, which was launched in February this year. Oscar Munoz has been appointed as the new CEO.

Six months after the start of the federal investigation against United Airlines, the US carrier has announced the resignation of CEO Jeff Smisek. Now the former head of the company has lose his position of Chairman of the Board of Directors, President and CEO. Executive Vice-President of Communications and Public Relations with the Government and Senior Vice President of Corporate and Government Affairs are leaving the company with him. General Director’s place takes Oscar Munoz, who is a member of United’s Board of Directors.

According to the company, the resignation of Mr. Smisek is associated with the ongoing federal investigation against United, as well as the internal investigation carried out in this regard. Recall that in February this year, prosecutors in New Jersey began to find out whether the third largest airline in the country went to the conspiracy with Chairman Port Authority of New York and New Jersey, David Samson. The essence of the deal was the fact that the airline has agreed to carry out knowingly unprofitable flights to the airport nearest to Samson’s country house. In exchange, the head of the Port Authority had to provide benefits to the carrier at the international airport Newark Liberty.

Implementation of the unprofitable flights stopped in March, when Mr. Samson was dismissed from the Port Authority over numerous cases of malpractice, being investigate since 2013. The investigation revealed that Samson, appointed head of the department in 2010 by New Jersey Governor Chris Christie, several times gave orders to close lane road leading to the George Washington Bridge under false pretenses. Thus Samson’s structure took revenge on the city’s mayor for the fact that he refused to support the candidacy of Christie during his re-election campaign.  

Lawyers believe that United Airlines itself will not be charged with any crime. They predicted Mr. Smisek’s resign at the outset of the investigation. In addition, the former CEO leaves the company not with empty hands: according documents filed to the Securities and Exchange Commission, United paid Mr. Smisek $ 4.9 million, and gave him a package of 60 thousand shares at a total cost of $ 3 million. After messages of Director General’s change, United Airlines stock price lost 1.5%, having fallen to a mark of $ 56.51 per security.

source: nytimes.com