United Hedge Fund Investors Attempt to Pip Chairman to Post

Pick one: The two hedge funds have asked United to accept either of their new board members as chairman before the carrier’s shareholders have even met.

Earlier this week, PAR Capital Management and Altimeter Capital Management, the two hedge funds currently vying for control of United Continental Holdings, called on United Airlines to accept either one of its two new board members as chairman before United’s annual shareholder meeting.

In a regulatory filing, the two companies asked that either James Whitehurst, former chief operating officer of Delta Air Lines, or Robert Milton, former CEO of Air Canada, be selected prior to the meeting in which shareholders would have been due to decide upon a slate of six directors. These other six directors, the filing stated, had actually already been proposed by the hedge funds two weeks ago.

United, however, has not yet announced the date of this annual meeting.

This latest development comes after talks between the carrier and the funds, which collectively own a 7.1 percent share in United, broke down earlier in March. Sources say that this was due to the airline’s refusal to appoint former Continental Airlines chief Gordon Bethune as its chairman.

In light of what they believe to be the airline’s poor performance record as well as the carrier’s current “underqualified” board, both Altimeter and Par have expressed their concerns over plans for United’s CEO Oscar Munoz to take up the role of chairman in 2017. Despite this, Munoz enjoys widespread support among United employees.

The carrier told Reuters that, “We are engaged in discussions with our shareholders. We continue to focus on improving our operational and financial performance, as well as elevating the experience of our employees and customers.”

In a letter to United’s current board, the funds clarified their stance, saying, “We believe that anyone considering the best interests of the Company and its stockholders would conclude that Mr. Bethune is a far better Chairman choice than either the current Chairman … or the sitting United CEO.”

The funds added that, “Our campaign is not a campaign against Mr. Munoz. To the contrary, our campaign is aimed at maximizing Mr. Munoz’s probability of achieving success.”

[Photo: United]