United CEO Oscar Munoz Will Not Automatically Become Board Chair in 2018

When Oscar Munoz joined United Airlines as president and CEO in September 2015, he was promised he would serve as chairman beginning this year. After he suffered a massive heart attack less than two months later, the board pushed it back one year, to 2018.

Now, United said in a filing Friday, Munoz may never become chairman. His employment contract no longer guarantees he’ll take the position, and if he does some day get it, it’ll be the board’s decision, rather than an automatic elevation.

United said in a filing that Munoz “initiated” the move, though it did not say exactly why. United did not reply for a request for comment.

“The Board believes that separating the roles of Chief Executive Officer and Chairman of the Board is the most appropriate structure at this time,” United said Friday in a separate filing. “Having an independent Chairman of the Board is a means to ensure that Mr. Munoz is able to more exclusively focus on his role as Chief Executive Officer. ”

Chicago incident

United and Munoz have had a rough time since April 9, when United employees at Chicago O’Hare called airport security officers to remove a passenger from a United Express flight to Louisville, Kentucky. The passenger, Dr. David Dao, refused to leave the airplane after United employees told him they needed the seat at the last minute for an airline crew members. Security officers violently removed him, and he was seriously injured during the altercation. He may sue United. 

Another passenger took video, and it went viral the next day. At first, in a statement, Munoz blamed Dao for being “disruptive” and “belligerent.” He also defended United’s employees in Chicago, arguing they had no choice but to call authorities.

It was a public relations disaster. Not until two days later — after some consumers called for boycotts of United — did Munoz issue a real apology. “It’s never too late to do the right thing,” Munoz said, promising United would no longer call for security or police except for matters involving safety and security. A couple of days after that, United’s board chairman, Robert Milton, wrote a letter defending Munoz and saying Munoz would keep his job.

But by some accounts, Munoz’s third apology was too late. In her widely-respected industry newsletter called Plane Business, Holly Hegeman, a former communications consultant to American Airlines, criticized Munoz for his response.

“If there is one man in this industry who understands the importance and the power of perception, my bet, until [April 10], would have been on United CEO Oscar Munoz,” she wrote. “But a rather unfortunate thing happened. As the nightmare at United got worse and worse, Oscar was nowhere to be found.”

Already reduced role

Still, United’s filings gave no indication the decision was related to the Dao matter. And Munoz has — since his heart attack and subsequent heart transplant — reduced his duties. In August, he gave up the president title to Scott Kirby, whom he hired from American Airlines.

Munoz has also, over time, acquiesced as United has built a stronger board of directors. Munoz, a former board member, only got the top job after ex-CEO Jeff Smisek resigned amid allegations he had kept a poorly performing flight to South Carolina because the head of the Port Authority of New York and New Jersey had a second home there. Afterward, some investors criticized the board for not closely monitoring United’s executive team.

In 2016, a group of active investors sought to change the composition of the board, and eventually the company agreed to add more members with airline and travel industry experience. In March and April of 2016, the board added five new members, including Milton, a former Air Canada CEO, James Whitehurst, an ex-Delta Air Lines COO, and Barney Harford, former CEO of Orbitz Worldwide.