UPDATE 4-United Airlines bows to activists, adds directors
(Recasts throughout; adds comments on new chairman's record at Air Canada, background on hedge funds.)
By Jeffrey Dastin and Michael Flaherty
April 20 (Reuters) - The agreement by United Continental Holdings Inc to install airline industry veteran Robert Milton as non-executive chairman represents a partial victory for two first-time activist hedge funds, and puts an expert at turnarounds in the seat next to Chief Executive Oscar Munoz as he tries to fix United's operational problems.
People familiar with Milton's record as chief executive of Air Canada pointed Wednesday both to his success restructuring the once bankrupt carrier, and his battles with labor unions there.
"He wanted to make as much money for shareholders at the expense of the workers," said Carlos DaCosta, the Canadian airline coordinator for the International Association of Machinists and Aerospace Workers (IAM).
Henri Courpron, chairman at Plane View Partners LLC, said he expects Milton would work with Munoz to improve operations and narrow the gaps in performance with larger rivals Delta Air Lines Inc and American Airlines Group Inc.
"I do not expect Robert Milton to interfere with the CEO, but rather use his insight and experience to support and encourage Munoz to re-evaluate the overall post-merger strategy for the airline as it appears to be lagging its peers on several fronts," Courpron said.
Company officials said the agreement does not mean a sharp change in strategy for the No. 3 U.S. airline by traffic. Milton joined United's board in March along with former Delta Chief Operating Officer James Whitehurst. Milton will take over as non-executive chairman when Henry Meyer steps aside at the company's June annual meeting, the company said.
Activists PAR Capital Management Inc and Altimeter Capital Management LP, which together own 7.1 percent of United, had pushed for Meyer's replacement, saying United needed more airline expertise on the board to guide Munoz. Continued...