United Airlines faces board fight over poor performance
By Alwyn Scott and Michael Flaherty
(Reuters) - Two investment funds with major stakes in United Continental Holdings Inc (UAL.N: Quote) launched a fight for control on Tuesday, proposing a slate of directors led by industry legend Gordon Bethune to shake up the board of the poorly performing airline.
PAR Capital Management Inc and Altimeter Capital Management LP, which together own 7.1 percent of the second-largest U.S. airline, said its "underqualified, ineffective, complacent and entrenched" board had caused years of "inexcusable company underperformance" and needed an overhaul.
"We believe that our conclusion is shared by many of United's long-suffering stockholders, customers and 80,000-plus dedicated employees," the funds said in a letter to United's board.
United has badly underperformed other U.S. airline stocks since its 2010 merger with Continental Airlines. It has suffered from a series of computer problems and poor employee morale, and its on-time performance and profits have lagged its peers.
Bethune is known for leading Continental through a dramatic turnaround from 1994 until his retirement in 2004, during which the stock soared.
Bethune said he was asked to help by longtime United shareholders PAR and Altimeter, which lack a track record of starting the kind of proxy battle typical of so-called activist investors. Saturday is the deadline for board nominations. The annual meeting is expected in June.
United Chief Executive Oscar Munoz warned the proposal by the Boston-based asset managers could wrest away control of the airline, and urged employees to keep improving United, which fared better in late 2015 after years of underperformance.
"This situation shouldn't change your focus," he said in an email to employees. Continued...