Unions back United board against shareholder revolt

Kim Janssen

3/10/2916

United Continental Holdings may have its problems with big labor, but in the fight for control of the airline's board, the unions say they'd rather stick with the devil they know.

That was the message Thursday from the Air Line Pilots Association, which followed unions representing United mechanics and flight attendants in backing United CEO Oscar Munoz and Chairman Henry L. Meyer III in fighting the attempt by a pair of hedge funds to gain six seats on United's 15-member board.

"United's pilots have grave concerns about the sudden attempt by two activist investors to gain effective control of United's board of directors," said Todd Insler of the Air Line Pilots Association in a news release.

"This coup attempt, being done for their own benefit and without publicly stating their intentions for the future of the airline, unnecessarily distracts all employees from our commitment to improve customer service and grow United Airlines," added Insler, who himself has a seat on the airline's board and represents 12,000 members.

Shareholders Altimeter Capital Management and PAR Capital Management — which own 7.1 percent of United between them — vowed to shake up the Chicago-based airline when they announced on Tuesday their intention to install former Continental Airlines CEO Gordon Bethune and five other representatives on a United board they harshly criticized as "underqualified" and "ineffective."

Meyer on Tuesday characterized the aggressive move as a "hostile action that ... could distract the company from executing on Oscar's strategic plan."

Unions that loudly welcomed Munoz's appointment as CEO in September, after a fraught relationship with his predecessor, Jeff Smisek, have echoed that message. They're worried that Munoz, who is due to return to work on Monday after recovering from a heart attack and heart transplant, could be forced out if Altimeter and PAR's move is successful.

While the pilots union has agreed to a new deal and flight dispatchers have approved a contract extension with United since Munoz took over, flight attendants and maintenance workers backed the current board and management despite needing deals.

On Tuesday, Sara Nelson, president of the Association of Flight Attendants, which represents 24,000 United employees who are in arbitration over their new contract with United, said Munoz "has presented a vision for United Airlines that passengers and employees can believe in."

"Even during his recovery and sick leave, Munoz engaged meaningfully in repairing labor relations and getting flight attendant contract negotiations on track to conclusion," she added in a statement. "These investors are creating a distraction at just the wrong time."

That message was also reiterated by the International Association of Machinists and Aerospace Workers, which represents 28,000 United workers and is negotiating a contract with United. "Munoz has demonstrated by his actions, not merely words, that he believes employees make the difference in the success of an airline," said IAM District 141 President Mike Klemm. "The progress we have already made in working with his team is proof of his commitment to United's most important asset — its employees. This challenge to United's board has the potential to distract the company and derail the progress we have made."

A spokesman for Altimeter and PAR did not immediately respond to a request for comment. But Bethune said on Tuesday that he was a fan of Munoz's and had no intention of replacing him if elected to the board at United's annual meeting this summer. PAR and Altimeter said they wanted change at United because they had run out of patience with United's poor performance against the other "big four" airlines.