Activists Push United...And United Pushes Back

Shares of United Continental Holdings Inc UAL fell as much as 4 percent as two shareholders nominated a slate of six directors for the airline's board, triggering a potential proxy war at its 2016 Annual Meeting.

Altimeter Capital Management, LP and PAR Capital Management, Inc., which together own about 7.1 percent of United's outstanding common stock, wanted the airline to add six new directors including Gordon Bethune, former CEO of Continental, which merged with United in 2010.

Bethune will lead the dissidents' slate, which includes Altimeter founder Brad Gerstner and former Orbitz CEO Barney Harford.

The shareholders' announcement came after the company added three new directors to its Board on March 7, 2016, while simultaneously expanding its Board size from 12 to 15 directors.

"As long-term United stockholders, we have been greatly disappointed with United's poor performance and bad decisions over the last several years," said Brad Gerstner, Founder and CEO of Altimeter Capital. "Yesterday's last-ditch effort – adding just three people to its now 15-person Board – is a cynical attempt to preserve power by this entrenched Board."

United Issues Response

In a response, United Airlines said it is "disappointed." The airline said it clearly communicated its interest in negotiating a reasonable settlement and, in a show of good faith, offered to amend its bylaws to extend its March 12 director nomination deadline. But, PAR and Altimeter were uninterested in extending the deadline.

United expects to appoint a fourth new independent director in the near term, who would also be nominated for re-election at the 2016 Annual Meeting.

Oscar Munoz, who plans to resume the role of President and Chief Executive Officer on March 14, 2016, said, "United's 2015 earnings were one of the best in the Company's history, and we made progress shrinking the margin gap with our closest competitors, strengthening our balance sheet, and returning significant cash to shareholders."

Shares of United were currently down 1 per cent at $57.14. They have dropped 14 percent in the last one year.