United Airlines makes change at the top

By Dave Carpenter

Associated Press

CHICAGO – United Airlines hopes a change in top management will help the airline regain the shaken confidence of investors, passengers and employees. The early reaction from the stock market was positive.

Struggling through a catastrophic year, parent company UAL Corp. replaced chairman and chief executive James Goodwin on Sunday, and named board member John W. Creighton as interim head after a hurried search.

The move was aimed at stopping the damage done to the company’s stock and relations with United unions and passengers by Goodwin’s blunt warning less than two weeks earlier that the carrier was hemorrhaging cash and could “perish” sometime next year.

Investors cheered the move, sending UAL stock up 9 percent this morning.

Creighton, 69, the retired head of timber giant Weyerhaeuser Corp., has no experience running an airline and said he will hold the post only until United is “on the road to financial stability.” But he moved quickly to try to dissolve public fears that United might go under.

“There’s nothing wrong with United Airlines that can’t be turned around by what is right with United Airlines,” he said. “We have great routes and outstanding cities, an enviable route network and a great group of employees.”

Creighton emphasized he plans to pursue more tough measures and said “everything is on the table” as the airline heads into another period of potentially difficult talks with its unions.

“I didn’t take this job to preside over a bankruptcy,” he told reporters on a conference call.

Goodwin’s dismissal had been widely expected since his tough talk in a letter to employees went public, prompting calls by two unions for his ouster and sending the stock into free fall, dropping 25 percent in 10 days.

The shares, which were at $73.50 before Goodwin’s appointment on March 25, 1999, closed Friday at a 14-year low of $13.93 a share, down 81 percent during his time in control. In morning trading, the shares surged $1.26 to $15.19 on the New York Stock Exchange.

But the bad news for investors isn’t likely to end soon.

Analysts expect UAL to report a record operating loss of $500 million to $600 million when it discloses third-quarter results Thursday. And Creighton said the carrier will continue to be hurt over the next year by the decline in business travel compounded by the falloff in passengers since last month’s terrorist attacks.

The airline already has announced layoffs of about 20,000 of its 100,000 employees since the attacks caused a steep drop-off in air travel. It also is making the biggest schedule cutbacks in its 75-year history, trimming its daily schedule to 1,654 flights as of Wednesday, down about 30 percent since the attacks.

Goodwin’s departure ends a stormy 2 1/2years as CEO, including a failed merger with US Airways and labor turbulence that resulted in 26,000 canceled flights in the summer of 2000. That operational turmoil ended only when the airline reached a costly contract settlement with its pilots that reverberated throughout the industry.

He said in the company’s statement that he was “proud to have contributed to the tremendous growth of United during my 34 years. … United is a great company and it is the right time for a new leader to guide the organization through the challenges that lie ahead.”