Holy Smokes: Jeff Smisek Out as United’s CEO, A Change Frequent Flyers Are Going to Like

United Chairman and CEO Jeff Smisek is out. So are United’s executive vice president of communications and government affairs and their senior vice president of corporate and government affairs. Smisek is replaced as President and CEO by board member Oscar Munoz and board member Henry Meyer III becomes non-executive Chairman.

The departures announced today are in connection with the company’s previously disclosed internal investigation related to the federal investigation associated with the Port Authority of New York and New Jersey. The investigations are ongoing and the company continues to cooperate with the government.

Smisek actually sat at dinner with the Chairman of the Port Authority which is in charge of United hub Newark airport, and listened to the Chairman’s request for a special flight to and from his vacation home in exchange for official actions. And instead of notifying the FBI, United provided the flight.

If fuel prices hadn’t come down, Smisek would have been replaced long ago. In the end it’s the company’s need to distance themselves from illegal activities that turned out to be his undoing.

For United flyers, though, it’s hard not to breath a little bit of a sigh of relief although it’s not clear what changes in company culture – any any – we’ll see.

If the Continental board hadn’t pushed out Larry Kellner prior to the United merger I tend to think United, and in some ways the industry, would be different today. Kellner was a great student of Gordon Bethune — who incentivized and inspired the best from his employees and drove everyone to operational excellence. Under Bethune and then Kellner Continental was the best airline in the U.S. That — and keeping United from merging with US Airways (which wasn’t really going to happen) — was the idea behind their merger with United. United had been badly run for awhile, and the thinking was that United’s problems would be fixed by that same leadership.

But the leadership of Bethune and Kellner was already gone by the time of the merger. And under Smisek management came to resent their customers and their employees.

A month ago I wrote that Smisek’s United wants to become more like AT&T, but its customers stand in his way.

Oscar Munoz has been a Continental (and then United) board member since 2004 and has served as president of CSX Corporation and previously worked at AT&T, Coca Cola, and Pepsi.

It’s my hope, and for all United customers, that a change in leadership at the top represents an opportunity to bury the past several years — as well as stop ‘managing by doing what Delta does’ — and bring United back to greatness.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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  1. Probably the first original thing UA has done in years. I half expected to hear that Delta fired their CEO first and United just followed their lead. 😀

  2. Interesting situation. Smisek made no one happy (investors, employees, frequent flyers), but his job didn’t seem particularly threatened — probably because, as you note, the USA airline industry became insanely profitable in the past year due to falling fuel prices. But if the initial media stories are correct, he seems to have been done in by the federal investigation into UA’s dealings with the Port Authority. I’m skeptical that Smisek did anything illegal with regard to the PA chairman — who would seem himself to be in more legal jeopardy — but maybe the UA Board isn’t very enthusiastic in defending Smisek and this is an “excuse” to get rid of him.

    I’m a bit surprised that the UA Board picked a non-airline guy to replace him. This is a very difficult and intricate business, and I personally would not be comfortable with an outsider running “my” airline. Hopefully, Munoz is a very bright guy and learned a lot by being on the CO/UA boards for all these years.

  3. Good ridden to bad rubbish! I’m being civil here! Smisek was the absolute worst person to be leading United. While Continental was mostly non-union, United was mostly unionized. The management style from Continental was never going to work at United! Smisek was a trained leader, he was an attorney. And, being an attorney, this jackass should have known to never give in to David Samson (another jackass)!

  4. Good riddance!
    I flew United revenue first class home last night hating him all the way
    From the horrible snack brands on board (no food/meal) other than a banana which was good, poor soft drink choices a single glass of water in a 3 hour plus flight with no refresh or asked if I would like anything else. Then the remaining one glass snatched away without asking
    No one welcomed passengers or made conversation and they had an attitude
    They did seem to bond well with each other drinking and snacking in the gallery with each other though
    They did manage to say Buh Bye at the end of the flight as passengers exited (roll eyes) if that counts for anything
    Is been a while since I flew them. Id rather fly Alaska in coach!
    Hopefully someone can save this rotten airline and the former once great Mileage Plus and its reward redemption in partner premium cabin redemptions
    I swear I am considering Spirit or Southwest next time and dumping loyalty and programs
    cant be worse

  5. I am seeing a job that I will be no good at but will pay me handsomely. And, when I turn my company into a quagmire, I would also like this same job to pay me a lot of money to just go away. This qualifies me for United, correct?

  6. Well I’m not sad to Smisek go. But it remains to be seen whether there will be improvements on the customer end – whether hard/soft product or the FFP. The proof will be in the pudding.

  7. Hopefully they can bring some value back to that terrible airline. They lost me as a (paying) customer until things change massively

  8. FINALLY!! Just hope there is a Gordon Bethune Jr. waiting in the wings. Absolutely love the title of this post too, how apropos! 🙂

  9. @Marc Smisek’s benefits can disappear if he pleads guilty/is convicted/etc. Know very little about Munoz but is doing well so far on the investor call. He talks about traveling the system for his first 90 days, committing to excellence, responsibility to the customers flying United and delivering value to them as key to driving financial performance.

  10. Listening to the conference call, I’m struck by the fact that Munoz seems to know little about the nitty gritty of issues facing the company. Personally, that’s what I’d be worried about as a UAL stakeholder. There’s always a chance he’ll turn out to be a quick-learning visionary, but his lack of detailed industry knowledge is certainly “an issue.” Like I suspect most people reading this thread know more about UA’s frequent flyer program than Munoz.

  11. @iahphx He does know the macro issues though having spent 11 years on the board. And he’s run a large transportation company (CSX). Not surprising he doesn’t know the details yet, he has many smart people working for him, united’s problem IMHO has been the tone at the top which changes. So we’ll have to see what he learns over his first 90 days. But I suspect lots of people give them some space/benefit of doubt during that period. And that alone could make a big difference in improving labor relations for instance.

  12. Why does everyone seem to think that things will get better at United?
    I predict that they won’t. Business as usual and at the end of the day it might end up with “better the devil you know…”

  13. @ Gary Leff — His performance today reminded me of former Delta CEO Leo Mullin (another non-airline guy appointed to be CEO of a major airline) — and that’s NOT a good thing. Munoz did not come off as a deep thinker or someone qualified to step in right here and right now and “fix” UA.

    Wall Street will not be impressed.

  14. After being a loyal United flyer for years. I gave-up last year when they didn’t give me any mileage credit for a first class code share flight to Europe on Swiss Air. The ticket was purchased on the UAL website and the return flight was all UAL. This was the last straw of much nickeling of customers like me since Smisek took the helm. Hope the next one brings back the airline that fostered happy customers and employees.

  15. I wish Mr. Munoz well but hope his CSX background doesn’t give him a perspective on the passenger as self loading freight.

  16. I’m with @Brian L: I wonder what Tom Horton is up to.

    Not optimistic about much of a change for the better, especially since the new CEO has an air freight background. Still, it’s hard to see how the leadership could get worse and there’s a definite justice to this dismissal.

    Ironic that Smisek is a lawyer yet got himself and the company in a legal mess. But of course being a lawyer is certainly not mutually exclusive with being sleazy.

  17. Smisek was awful but does everyone have short memories? UAL, leading up to the merger with CO ( Smisek), was quite awful on their own….and losing billions of dollars. That management team was rightfully despised also.

  18. Didn’t Glenn Tilton have a railroad background?

    Personally I am optimistic that Munoz experience as a COO at a railroad company will lend itself to fixing the operations at UAL. Because the first thing you need to do is fix operations, then the customers will return…

  19. @RoloT – as I’ve written, the Continental merger was supposed to fix United. But Continental’s top leadership was gone by the time the merger was consummated.

  20. Guys,
    All those employees especially at JFK need to lose their job. Their all a bunch of ignorant, lazy garbage know it alls…who only say,”That’s not my job.” F off go work at Walmart. Losers at JFK

  21. @ BrianL: That would be a slam dunk for everyone to bring Horton on, IMO. Unfortunately, he signed a two year non-compete clause after leaving AA – correct?

  22. Count me among those that are happy to see Smisek gone but wary about Munoz’s background. With his background, you can bet there will be a greater focus on operational efficiency but I’m skeptical that he will do anything to improve the FF program. It’s obvious the airlines still see the FF programs as cost centers (despite your best efforts!) and as such try to squeeze as much as they can out of it.

  23. How ironic you used “Holy Smokes” — BA flight LAS-LGW burned on the runway after aborted take-off for left engine fire!

    Meanwhile, BOT, poor Jeffy — he finally got Jeff*d…

  24. holy smokes this is great news!!!
    united mileage program is one of the most worthless programs out there.

  25. WIll they pay big $$ and hire back the UAL management – they knew how to service elites…and by doing so, the rest will return. Maybe now would be a good time to suggest a peace offering to customers by bringing STARBUCKS coffee back !

  26. I hardly ever fly United anymore. One of the worst. But maybe there’s hope. Thank heavens the bastard’s gone… 😀

  27. Interesting industry similarities between rail and air. High labor and capital costs, for example, though probably not good news for the MP program. In fact, Munoz may push for revenue-based earn and burn just because it’s easier to understand.

    Glad to see Jeff gone, not for any personal animosity (I don’t fly United and only use their miles on partners for Y and J), but because he really seemed like a poor choice for his role. Pointy questions really were being asked up until fuel prices dropped. I only wish he’d gone earlier, instead of being pushed out now.

    Also, if I were a shareholder, I’d be EXCEPTIONALLY happy to see him gone because of an internal corruption probe. It means they probably know far more than we do, and that he probably really was an enormous liability to the airline. Time will tell.

    Goodbye, Jeff.

  28. As a retired employee of United/Continental, I have had the privilege of working with Gordon Berthune, Larry Kellner, and Jeff Smisek. While both Gordon and Larry were widely respected, Jeffie is despised and shunned by many of the workgroups. Jeffie is an excellent Peter Principal example (promoted to a point of incompetence). I hope he is prosecuted and found guilty, as this bribery thing is just what he has been caught on…there have been many more grievous wrong doings with his management.

  29. Why does he get a $ 4.9 M severance payment when the reason for forcing him out is a strong suspicion that he might have been involved in illegal activities to the detriment of the airline?

  30. with over 36 years at United, I have have seen a great deal. I am pleased Mr Smisek has left, but I heard the same voices rejoice when he became CEO instead of Mr. Tilton. At least this time it is not the pilots playing Russian CEO roulette! And time will tell, if many of the problems attributed to Smisek were not actually directed by the board.

    To clear up a couple fallacies stated above, neither myself or any known colleagues that I am aware of have ever desired to be anything but honest with our customers. We can only offer the information that is given to us, to provide to our customers. I am in a service business, I am human, I make mistakes everyday. There has never been a day that I have not done for one of my customers that I would not do for my parents, siblings, or children.

    If Mr Munoz has any sense at all, he will go back to United Airlines technology, abandon trying to make the square peg that we have for a Computer reservation system, fit in the round hole, which is our customers. Our employees, and our customers need the technology that United Air Lines used prior to the merger, to return to the level of service we are capable of providing.

  31. As someone who grew up flying both United and Continental primarily I have seen both airlines go from the company I aspired to work for to a company I wanted absolutely nothing to deal with. I too, like many frequent flyers, am overjoyed with Smisek’s departure (excuse the pun) form United. As a side note, the video posted at the end of the post is my all time favorite United commercial. “Here’s your beef medium. Your hot dog, medium – watch the jokes.” Hahaha.

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