For United, this went about as well as the airline could have hoped. Now the airline can refocus its attention on winning back customers.
United Airlines will not be charged in connection with a special flight the airline operated from Newark to Columbia, South Carolina to appease a senior New Jersey political appointee, but the carrier will pay a $2.25 million penalty as part of a deal with the government, New Jersey’s U.S. Attorney announced Thursday.
U.S. Attorney Paul Fishman made the announcement after David Samson, formerly the chairman of the Port Authority of New York and New Jersey, pleaded guilty to charges he coerced United into flying to the South Carolina airport, near where he had a vacation home. According to Fishman’s office, United executives initially told Samson the route would not be profitable, but the airline relented due to political pressure, timing flights exactly when Samson requested. United began flying Newark to Columbia in September 2012 and stopped in March 2014, just days after Samson resigned. Samson took the flights 27 times, the government said, and the route, nicknamed “the chairman’s flight” lost money.
After an internal investigation, United CEO Jeffrey Smisek resigned in September 2015, as did Nene Foxhall, executive vice president of communications and government affairs, and Mark Anderson, senior vice president of corporate and government affairs. According to reports, all three were present at September 2011 dinner when Samson requested the route. United also docked $1 million in pay from COO Greg Hart, who remains at the company.
United’s executives could still be charged individually with crimes, but during a Thursday afternoon press conference, Fishman suggested the U.S. Attorneys office has not found reason to charge the executives. Smisek received a package worth $36.8 million in severance and benefits when he resigned, but the airline could recoup a chunk of that amount if he pleads guilty or is convicted of a crime.
“We only bring criminal charges when we believe we are in a position to prove the guilt of a person beyond a reasonable doubt,” Fishman said at the news conference. “Unless or until we have evidence that we believe is sufficient to do that, we don’t charge.”
However, the government announced Thursday that it did charge a United consultant, Jamie Fox. He was charged with conspiracy to commit bribery.
According to the government, both Fox and Samson suggested United would have difficulty getting what it wanted in Newark if it did not start the South Carolina flight. As one example, Fox and Samson threatened to hold off approval on a new widebody hanger United sought at Newark Airport, the U.S. Attorney’s office said.
“On multiple occasions, Fox communicated to United that its failure to reinstate the route had made Samson angry and was having a negative impact on United’s relationship with the Port Authority,” the U.S. Attorney’s office said in a release.
In a statement, new United CEO Oscar Munoz said, “We will continue to act with the utmost integrity in everything we do, ensuring that we are always conducting business ethically and with the best interests of all of our stakeholders in mind.”
In addition to paying the fine, United also promised to make “substantial reforms” to its compliance system, the government said. If United complies with the terms of its non-prosecution agreement for two years, the airline will not be prosecuted.
Following is the non-prosecution agreement between United and the U.S. Attorney’s Office for the District of New Jersey. It includes detailed accounts of interactions between United employees and Port Authority personnel involving “the chairman’s flight” and difficulties getting a hangar project approved at Newark Airport.
Tags: united airlines
Photo credit: Former United Airlines CEO Jeff Smisek speaking at Newark Liberty International Airport, in 2013. The 'chairman's flight' episode occurred during Smisek's tenure although no airline employees were charged over the incident. Mel Evans / Associated Press