In an unexpected move, United Airlines announced today that CEO Jeff Smisek, along with two top lieutenants were “stepping down” (translation: fired). With record profit on the books and relative harmony between labor and management, what happened? Apparently, New Jersey politics, but as I argue below, that controversy may just be convenient subterfuge.
Smisek, along with Nene Foxhall, EVP of communications and government affairs, and Mark Anderson, SVP of corporate and government affairs, abruptly “resigned” in response to the controversy surrounding a special weekly flight from Newark to Columbia allegedly for David Samson, the former chairman of the Port Authority of New York and New Jersey. Samson had a summer home in Columbia and the story goes that at a Manhattan dinner, which Smisek was part of, Samson asked for the special route, implying special favors if the route was granted. Rather than rat him out to the FBI, the route was added and later pulled just days after Samson resigned from his position.
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.
Part of me thinks this controversy is just a tempest in a teapot, but then again — what was the big deal about a “third rate burglary” in the Watergate Complex? I think we are just seeing the tip of the iceberg here and that United’s internal investigation led to the termination may be seen as a foreshadowment of future grizzly revelations to come. United may well have canned Smisek to protect itself.
What Was Smisek Really Fired For?
So we have a delicious story of intrigue and stereotypical sleazy New Jersey politics, but let’s take a step back.
United has reported healthy profits, but here are five reasons Jeff Smisek should have been fired years ago–
1. United is only profitable due to low oil prices — the airline continues to face tremendous operational difficulties that have permanently driven away premium customers
2. Continental and United FAs are still under separate contracts and management has not shown sufficient leadership to work toward a joint contract
3. The open derision of “over-entitled elites” shows a fundamental misunderstanding of how loyalty works
4. United’s “innovation” is essentially copying what Delta has done — there is no innovation
5. Smisek has failed to inspire — instead he has just lied to customers
Maybe I am placing too little emphasis on the Port Authority scandal, as serious as I think it is, but I think a secret effort to dethrone Smisek has been festering and this event merely proved the breaking point, but was part of a wider web of incompetence. But I mean, come on, apparently Jeff Smisek was not smart enough to hide evidence from his dinner with Samson, but he thinks he can run world’s second largest airline?
President Harry Truman famously said “The Buck Stops Here” and whether it be the NJ Port scandal or his greater ineptitude that did him in, Smisek is now gone. I think he was fired for a failure of leadership that transcended his foolish move to add the Columbia route in exchange for political favors.
Oscar Munoz will take over as CEO and I will have a post on him shortly. I’ll also have a post on why I am not jumping for joy over this news.