United pilots call Bethune a diversionary tactic by investors

Bloomberg

Lining up Continental former Chief Executive Officer Gordon Bethune as part of a board slate for United Airlines is merely a ruse by two hedge funds to “smash and grab from United’s coffers,” according to the carrier’s pilot union.
The funds enlisted Bethune “to play on employees’ good will and feelings of nostalgia,” leaders of United’s chapter of the Air Line Pilots Association said in a letter to its more than 11,000 members. By seeking to place six directors on the United Continental Holdings Inc. board, the investors may interfere with the changes being implemented by Chief Executive Officer Oscar Munoz, the union said.
“We also have received a firm commitment from Munoz to address and fix the myriad problems that have been obvious to all employees for some time,” the union said.
The union’s rebuke could be a blow to PAR Capital Management Inc. and Altimeter Capital Management LP, putting a key employee group firmly with United management rather than Bethune, a pilot who enjoyed stellar relations with workers when he ran Continental from 1994 to 2004.
“We are not interested in handing over hard-earned profits to those looking to raid the corporation,” according to the union letter. A spokesman declined to elaborate.
PAR, Altimeter and Bethune weren’t immediately available for comment.
The hedge funds, which have added to their holdings substantially since last summer, account for 7.2 percent of United’s stock, according to data compiled by Bloomberg. The investors said on March 8 that they would nominate the board slate, after talks with management broke down. United has been the worst-performing U.S. airline stock over the last five years, despite having strong brand recognition and hubs in key business markets, the investors wrote in a letter to Chairman Henry Meyer III.
The board is “underqualified, ineffective and entrenched,” the investors’ letter said. PAR and Altimeter didn’t criticize Munoz, who returned March 14 from five months of sick leave, during which he had a heart transplant. He met with union leaders on his first day back.
Bethune “inarguably created a wonderful legacy for Continental airlines and himself,” the pilot union’s letter said Monday. The letter criticized former chief executive, Jeff Smisek, who the union said was “handpicked” by Bethune and created or ignored problems that Munoz is trying to fix. Smisek left the company in September amid an investigation into the airline’s dealings with the Port Authority of New York & New Jersey.