Media Moves

Coverage: United appoints acting CEO

October 20, 2015

Posted by Meg Garner

General counsel Brett J. Hart was named acting CEO of United Continental Holdings Inc. Monday after the company’s CEO Oscar Munoz suffered a heart attack, placing him on indefinite leave. Munoz was CEO for just over one month before suffering a heart attack.

The announcement comes after questions continued to mount about the airline’s ineffective plan of succession.

Doug Cameron and Jason Dean of The Wall Street Journal had the story:

United Continental Holdings Inc. said Chief Executive Oscar Munoz is on medical leave indefinitely following a heart attack last week, and it named the company’s general counsel as acting CEO.

The company said late Monday that Brett J. Hart was taking up CEO duties immediately. It was United’s first public statement on leadership plans since Mr. Munoz, 56 years old, suffered a heart attack Thursday. He had been named CEO just 37 days earlier and had pledged to fix operational problems and poor labor relations that had plagued the No. 2 U.S. airline by traffic since its formation in a 2010 merger.

“Oscar’s agenda is focused on customer service, teamwork and innovation and I, along with the executive team, will continue to move quickly to implement it,” Mr. Hart said in a company statement.

United provided little new information about Mr. Munoz’s health—although it did, for the first time, confirm that Mr. Munoz had suffered a heart attack, which The Wall Street Journal reported on Friday. Two brief prior statements had said only that he was hospitalized. Monday’s statement said that it is currently “too soon to know the course of treatment and timing of recovery.”

Paul R. La Moncia and Jackie Wattles of CNN Money described the acting CEO’s qualifications for the job:

United said Monday that Hart, the acting CEO, has had a broad role at the company, which he joined in 2010.

In addition to serving as United’s top lawyer, Hart has been its chief lobbyist — responsible for government and regulatory affairs. He has also overseen corporate real estate and security, among other things.

“I am confident in his ability to continue to implement the company’s strategy and Oscar’s mission,” said Henry L. Meyer III, non-executive chairman of the board.

Earlier in his career, Hart, 46, was special assistant to the general counsel at the U.S. Treasury Department. He came to United after seven years with Sara Lee, rising to be executive vice president.

Hart was at Sara Lee when its CEO, Brenda Barnes, suffered a stroke and resigned in July 2010. Hart announced he was leaving for a position at United three months later.

CNBC explained why shareholders are upset with United for providing more clarifications about its CEO’s health:

United has been criticized for not updating shareholders fully on its leadership situation.

“We need to know who is speaking on the behalf of the company and who is accountable for the decisions of this great airline,” said Jeffrey Sonnenfeld, a corporate governance expert and a professor at the Yale School of Management, told Reuters.

While United might be waiting to provide comment out of respect for Munoz’ privacy, the company also has an obligation to shareholders, Sonnenfeld said.

“Munoz is entitled to his privacy if he doesn’t want to be CEO,” he said.

Gregory Karp of The Chicago Tribune detailed Munoz’s health problems highlighted a flaw in the airline’s succession plan:

The decision to appoint Hart acting CEO could affect the morale and culture of United Airlines.

“This is not just about who’s going to navigate the organization until Mr. Munoz can return, if and when he can return, but this is about what are we saying to our people, who have been the backbone of the airline for years,” Northwestern’s Pearce said.

The episode highlights the apparent fact that United did not have a solid succession plan for temporary or permanent absences of the CEO, even one who had been on the job for just 41 days. Munoz was so new to the job that his compensation package hadn’t been filed with Securities and Exchange Commission.

At least one industry watcher said United’s lack of communication is becoming a problem, Vicki Bryan, a senior bond analyst at Gimme Credit, wrote in a note to clients on Monday. She rates United as “underperform.”

The absence of Munoz comes as United is due to report quarterly earnings Thursday, one of the regular appearances for the airline’s CEO and what would have been the first for Munoz since his appointment in September.

Subscribe to TBN

Receive updates about new stories in the industry daily or weekly.

Subscribe to TBN

Receive updates about new stories in the industry.