The longer the board of United Continental Holdings Inc. (NYSE: UAL) keeps CEO Oscar Munoz, the more questionable its judgment on behalf of shareholders and employees becomes. After a string of incidents that show he should not lead the carrier, and subpar share results, it is time for Munoz to be pushed out.
The latest news about Munoz is humiliating, and a reflection of his character. According to The Florida Department of Environmental Protection, Munoz and his wife have been moving sand from public beaches to build a dune in front of their $6.8 million home, which sits on the ocean at Ponte Vedra. Three of his neighbors were accused as well. Each homeowner apparently lost beach front during Hurricanes Matthew and Irma. People who do not have the millions of dollars Munoz has from his tenure at United would not be able to afford to surreptitiously improve their properties and allegedly broke the law.
After public incidents that embarrassed the airline, Munoz was told by the board that he would not get the board chair title to go with his position as chief executive officer. The board clearly already has started to question his ability to lead the carrier. Among the incidents that buckled the public’s faith in United was a passenger who was violently dragged off one of its planes, the death of a dog on a flight and another dog that was sent to Japan instead of Kanas City.
Munoz’s performance as reflected by United’s stock price is as bad, if not worse, than his public relations problems. In the past year, the carrier’s stock has fallen 4% to $67. Shares of its rivals American Airlines Group Inc. (NASDAQ: AAL) and Delta Air Lines Inc. (NYSE: DAL) are up between 15% and 20%. Stifel analyst Joseph DeNardi recently wrote in a note to investors:
Clearly, patience with executing the turnaround at United is wearing thin. While we believe management has the support of some of its larger shareholders, it’s not absolute support by any means.
That patience is gone.