United CEO Oscar Munoz Plans First-Quarter Return

November 6, 2015 | Wall Street Journal

United Continental Holdings Inc. Chief Executive Oscar Munoz on Thursday said he plans to return to his job at the airline in the first quarter, breaking his silence after suffering a heart attack three weeks ago.

“I am excited to tell you that I am on the road to recovery,” Mr. Munoz said in a memo to employees. “My time away will be a little longer than I would like, but based upon discussions with my doctors, I will be back in the first quarter.”

The four-paragraph memo was the first public statement from Mr. Munoz since the 56-year-old was hospitalized on Oct. 15, just 37 days after becoming CEO of the No. 2 U.S. airline by traffic. Mr. Munoz’s health status since then had been a mystery.

Four days after Mr. Munoz was stricken, the Chicago-based airline company said he was on indefinite medical leave, and named Brett Hart, then its general counsel, as acting CEO.

Mr. Munoz’s letter offered no new information about what happened to him. He thanked Mr. Hart and the management team for their leadership in his absence and “for embracing United’s new direction.”

On taking the job, Mr. Munoz pledged to quickly work to fix operations and labor relations troubles that had plagued United since its 2010 merger with Continental Airlines, and Mr. Hart vowed to continue those efforts. Still, some employees and investors worried about Mr. Munoz’s health and fretted about the lack of disclosure about his condition.

“It’s incredibly abnormal” for a seriously ill chief executive to suddenly announce his expected return after three weeks of silence, said Jeffrey Cohn, who handles the CEO succession planning practice for recruiters DHR International. More typically, Mr. Cohn said, a company board and its ailing leader quickly issue a statement reassuring the public that the CEO expects to recover and resume work.

United Continental has been experiencing C-suite turbulence since Sept. 8, when former CEO Jeff Smisek was abruptly ousted as a result of an internal inquiry related to a federal corruption probe involving the Port Authority of New York and New Jersey.

The airline plucked Mr. Munoz, a United director and then-president of railroad operator CSX Corp., to replace Mr. Smisek, who had run the company since the 2010 merger and was CEO of Continental before that.

United’s tight-lipped disclosures about Mr. Munoz’s condition have spotlighted the dilemma companies face when top leaders experience serious illnesses and their need to balance an executive’s right to privacy and investors’ right to information.

The company didn’t acknowledge that Mr. Munoz had been hospitalized until after The Wall Street Journal reported, a day later, his heart attack on Oct. 15. And it didn’t publicly acknowledge that he had suffered a heart attack until its Oct. 19 announcement of Mr. Hart’s appointment as acting CEO, when it said of Mr. Munoz’s condition was that it was “too soon to know the course of treatment and timing of recovery.”

That same day, United distributed to employees a message it said was from Mr. Munoz’s family, which thanked employees for their encouragement and said “we look forward to a healthy recovery.”

 

Mr. Munoz was frank in his assessment that United Continental’s business wasn’t working well when he took over the airline, and he promised to listen more to its 85,000 employees. Such comments made Mr. Munoz instantly popular with many in the dispirited workforce. He also apologized directly to United customers and solicited their ideas and feedback on a new website.

Mr. Munoz’s letter on Thursday sought to build on the goodwill with employees, thanking them for their support and for “continuing to focus on building and delivering our shared purpose of making United not only the best airline to fly, but also the best place to work.”

Mr. Hart presided over the conference call after United Continental announced its third-quarter results on Oct. 22. While other executives did the bulk of the talking, Mr. Hart said the news of Mr. Munoz’s heart attack was “hitting us hard,” and that the company would continue to push forward with Mr. Munoz’s agenda. United earned $4.8 billion in its third quarter on revenue of $10.3 billion, compared with profit of $924 million a year ago on revenue of $10.5 billion.

Under Mr. Hart’s watch, United Continental has temporarily stopped its practice of outsourcing the jobs of check-in agents and ramp workers at smaller airports and reached a possible agreement on a new contract with its 9,000 mechanics. It also turned in strong operational results in October, posting its best arrival punctuality in five years and canceling far fewer flights than a year ago.

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