As United Names New Chair, a Reminder Why CEO Was Passed Over

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United Continental Holdings Inc. (NYSE: UAL) has named Jane Garvey as its board chair. She is a former head of the FAA and a United board member since 2009. CEO Oscar Munoz did not get the job, although it had been his to lose.

Munoz officially lost out last April. Even his employment agreement stipulated he get the job. However, a series of public relations disasters and poor corporate performance undermined his opportunity.

It is not worthwhile to repeat all the mistakes United made as it repeatedly undermined its brand. The most famous was when an elderly man was physically pulled off a flight. United has been in the headlines too many times for the wrong reasons.

A more damning view of Munoz is that United has been crushed by its rivals, as the stock price and its financial performance show. In the past year, the share price has dropped 13%. For most of the past several years, both Delta and American Air have outperformed it.

Finally, in an industry in which customer service is a key to success, a recent survey showed United at the bottom among large carriers. In the American Customer Satisfaction Index report on airlines for 2018, United’s score had fallen to 67. Southwest had an 80 rating, and American and Delta each rated 74.

Munoz lost out on the chairperson’s job. He has to contend with whether he can hold on as chief executive. Another year of poor performance may mean an end to his position at the top of the carrier.

United Continental’s description of itself:

World’s most comprehensive global route network, including world-class international gateways to Asia and Australia, Europe, Latin America, and the Middle East with non-stop or one-stop service from virtually anywhere in the United States.

A modern fleet which is the most fuel-efficient among U.S. network carriers (when adjusted for cabin size)
Industry-leading loyalty program that provides more opportunities to earn and redeem miles worldwide
Optimal hub locations, including hubs in the four largest cities in the United States.

Approximately 88,000 employees reside in every U.S. state and in countries around the world.

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