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Activist investors want new United Airlines chairman before shareholder vote
[WASHINGTON] The two hedge funds that have launched a boardroom fight with United Continental Holdings Inc on Tuesday called on the airline to immediately appoint one of its two new board members as chairman, according to a regulatory filing.
The funds asked that either James Whitehurst, former chief operating officer of Delta Air Lines Inc, or Robert Milton, former CEO of Air Canada, be appointed chairman before shareholders vote on a slate of six other directors that the funds proposed two weeks ago, the filing said.
United has yet to announce the date of its annual meeting when new board members can be elected.
The funds, PAR Capital Management Inc and Altimeter Capital Management LP, had called United's board "underqualified"because it lacked what they considered experienced airline executives until the No.3 US carrier appointed Mr Whitehurst and Mr Milton on March 7. The funds collectively own 7.1 per cent of United's stock. "We are engaged in discussions with our shareholders," said United, which has suffered from flight delays and satisfaction scores lower than its peers in recent years.
"We continue to focus on improving our operational and financial performance, as well as elevating the experience of our employees and customers."
Weeks of talks between United and the funds broke down in early March after the airline refused to agree to the funds'demand to appoint former Continental Airlines chief Gordon Bethune as its chairman, people familiar with the matter have said.
PAR and Altimeter oppose plans for United's current CEO Oscar Munoz - a former president at railroad operator CSX Corp - to become chairman in 2017. They also questioned the board's decision last year to give Mr Munoz a US$12 million signing bonus, not tied to performance goals, while he was on medical leave following an October heart attack.
"We believe that anyone considering the best interests of the Company and its stockholders would conclude that Mr Bethune is a far better Chairman choice than either the current Chairman (a former commercial banker with zero airline operating experience) or the sitting United CEO," the funds said in a letter to United's board, included in the regulatory filing.
"Our campaign is not a campaign against Mr Munoz. To the contrary, our campaign is aimed at maximising Mr Munoz's probability of achieving success," the letter said.