Former Continental Airlines CEO Gordon Bethune’s attack on United Airlines this week is troubling.
Bethune has put his support behind two United Continental shareholders, Altimeter Capital Management and PAR Capital Management, which have voiced their deep dissatisfaction with the direction of United Airlines, and proposed putting six new directors on the board of parent United Continental Holdings, including Bethune.
Bethune himself appeared on the CNBC television network and said the United board “hasn’t been paying attention, hasn’t set the right goals, frankly hasn’t followed good governance processes and procedures.”
To which the question might be posed, why weren’t Bethune, Altimeter and PAR themselves paying attention years ago?
United’s problems are far from new. There was a long decline – in labor relations, customer service and financial performance relative to its main competitors – that was well documented and which happened under the leadership of CEO Jeff Smisek.
Smisek, a former Continental CEO who worked alongside Bethune before the merger acquisition, resigned unexpectedly in September, a sudden departure that United said was in connection with the internal investigation related to the federal investigation associated with the Port Authority of New York and New Jersey. The investigation centers on regular United Express flights former Port Authority chairman David Samson took between United’s Newark, hub and Columbia, South Carolina.
No one can or should take away Bethune’s industry achievements. In particular, he led Continental on a stunning turnaround that is detailed in his book From Worst to First.
But the time to challenge United’s direction was while Smisek was at the helm. This week, Smisek’s successor, Oscar Munoz, announced he plans to return to work on a full-time basis on March 14 following medical leave after suffering a heart attack in October 2015. In his short – and incredibly personal challenging -- time at United, Munoz appears to have grasped what Smisek never did; that United’s people are in need of a healing and intensive care somewhat akin to the medical miracle he has survived.
Look after your people, give them the right resources, and the customer service (and profits) will follow. Shareholders should give Munoz the chance to follow through on that because he has indicated he knows what needs to be done and demonstrated remarkable determination to follow through.
Bethune, for all his talents and industry knowledge, should support Munoz – and United -- by staying in the background. It’s a proven fact that Bethune can turn round an airline; now is Munoz’s moment to show what he can do.