Two hedge funds, which own a combined 7.2 percent of United Continental Holdings’ shares, are waging a proxy fight to turn things around at the airline by electing six online travel and cruise veterans, as well as the former Continental Airlines CEO Gordon Bethune and a former automotive CEO, to the 15-director United board.

Altimeter Capital Management and PAR Capital Management argue “an under-qualified, ineffective and entrenched board” at United has been a major factor in United falling behind its peers among U.S. carriers in terms of operational reliability, customer satisfaction and stock price.

The board members that the two hedge funds are nominating include:

  • Gordon Bethune, the former Continental Airlines chairman and CEO who was instrumental in resurrecting Continental after two bankruptcies;
  • Brad Gerstner, founder and CEO of Altimeter Capital, former board member of Orbitz Worldwide, founder of Room77 and angel investor;
  • Barney Harford, former CEO and board member of Orbitz Worldwide and eLong;
  • Tina Sharkey, former HomeAway board member and CEO of SherpaFoundry;
  • Brenda Yester Baty, former senior vice president of revenue management at Carnival Cruise Lines and current head of strategic initiatives at Lennar Corp. and
  • Rodney O’Neal, former CEO of Delphi Automotive and ex-board member of Sprint and Goodyear.

The proxy fight takes place as United CEO Oscar Munoz returns to full-time work next week after being sidelined by a heart attack last year.

Before his illness and during the last few weeks as Munoz eased his way back into the CEO role, he has been outspoken about meeting with frontline United employees and other stakeholders in trying to resurrect the troubled airline.

Asked about Munoz’s good intentions, Gerstner of Altimeter Capital tells Skift: “Given that Oscar has never been a CEO or worked in an airline, it is even more essential to have a high-functioning and experienced Board to help fix this airline.”

“As you know I have a long history of business building and supporting great management teams in the travel industry. We are not activists. But as Warren Buffett said in his annual letter, there are those rare times when boards become so out of touch and stop acting like owners – and change is needed to save the company. That is precisely this situation at United. I wanted to help build one of the best boards and airlines the industry has ever seen.”

United expressed disappointment about the proxy fight, and claimed that Altimeter and PAR showed no interest in a settlement and declined to make their nominees available for interviews, which is customary.

“We are deeply disappointed that after United attempted to engage in a constructive, good-faith dialogue with PAR and Altimeter, repeatedly communicated our willingness to make meaningful changes in our Board, publicly announced our intention to name four new independent directors with deep relevant experience and named three of them yesterday, PAR and Altimeter have unilaterally taken this hostile action with no concern that a proxy fight could distract the Company from executing on Oscar’s strategic plan,” said United’s nonexecutive chairman, Henry Meyer III.

The director nomination deadline is March 12.

The hedge funds state they have lost confidence in the United board.

This United Continental Holdings Securities and Exchange Commission filing details the stock positions of Altimeter, PAR and Barney Harford in the airline.

Photo Credit: Gordon Bethune, former chairman of the Board and CEO, Continental Airlines. In a letter made public today, two activist investors said they are pushing United Continental to shake up its board by adding six new members, including Bethune. Pablo Martinez Monsivais / Associated Press