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United Airlines Changes CEO In Planned Transition

United Airlines Changes CEO In Planned Transition

United Airlines (NASDAQ: UAL) said Dec. 5 it is promoting President Scott Kirby to succeed Chief Executive Oscar Munoz, effective May 20.

Munoz, 60, a former railroad executive who took United's reins in September 2015 and recruited Kirby, 52, from American Airlines, will transition to the role of executive chairman of the board for a one-year term.

"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," Munoz said in a statement. "One of my goals as CEO was to put in place a successful leadership transition for United Airlines. I brought Scott to United three years ago, and I am confident that there is no one in the world better equipped to lead United to even greater heights."

Munoz, with Kirby's help, implemented a turnaround strategy two years ago that has led to significant improvement in United's operational and financial performance. The board's decision indicates its support of management's direction.

United post a strong third quarter, with net income growing 23% to $1 billion. For the first nine months of 2019, net income grew 43% to $2.4 billion. Last year, United set internal records for most revenue passengers flown, mainline departures and fewest cancellations.

Under CEO Oscar Munoz and President Scott Kirby, UAL's stock price has doubled since mid-2016.

As part of this transition, United's current chairman, Jane Garvey, will retire in May 2020 after more than a decade on the board. At the board's request, she had remained in her role for a year beyond the board's mandatory retirement age.

Munoz was supposed to become chairman under his original contract, but after video of a passenger being dragged off a flight at Chicago O'Hare International Airport went viral, the board decided to keep the top roles separate.

"Oscar became CEO at one of the most challenging points in United's history, and his focus on putting customers and employees first has transformed United's culture today and successfully positioned the company for tomorrow. One of Oscar's greatest legacies is the best-in-class leadership team he has built, and we have full confidence that Scott is the ideal candidate to lead United into the bright future that lies ahead," Garvey said.

Munoz took over an airline struggling with integration problems since its 2010 merger with Continental. Then-CEO Jeff Smisek had been removed after a federal probe into whether he authorized favors to personnel at the Port Authority of New York/New Jersey to secure slots at Newark International Airport.

Critics questioned United's decision in 2016 to hire someone without any experience running an airline, although Munoz had served on the board of Continental and United Continental.

Munoz got off to a rocky start after leaving Class I railroad CSX Transportation, where he spent 12 years, including nearly four years as chief operating office. He previously held executive positions at AT&T, U.S. West and Coca-Cola. Less than two months after his appointment at United, Munoz suffered a heart attack. He eventually received a heart transplant and returned to work in early 2016. During that period, United fended off Wall Street activists looking to exert more control over the company.

But he was quickly able to win employee confidence, instill a culture of customer service and reliability and build up the domestic route network.

United confirmed this week that it plans to buy 50 Airbus A321XLR aircraft to expand its reach into Europe. The airline plans to upgauge aircraft on certain domestic routes to increase operating efficiency.

Image by kikkuru0606 from Pixabay


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