United’s earnings-call shakes faith in CEO

Bloomberg

In the span of a one-hour conference call, Wall Street’s confidence in the leadership of United Airlines plummeted. Analysts pressed Chief Executive Officer Oscar Munoz and President Scott Kirby on how they planned to deal with rising costs and falling pricing power. Would they rein in growth in the face of fare weakness? Provide more detail on revenue initiatives? Revisit financial goals outlined last year?
Munoz asked for “a little bit more patience.” The exchanges turned testy. And what began in the morning as a moderate stock slide after a disappointing earnings report turned into the biggest tumble for United’s stock in eight years.
Before the call, “we had heard rumblings from the investment community about another potential management change at United
Continental,” Helane Becker, an analyst at Cowen & Co., said in a note
to clients.
United Continental Holdings Inc. declined to comment on analysts’ discussions of any management changes. On the call, Munoz said the current managers need more time after inheriting an industry laggard from previous leaders.
“We have dug ourselves in a hole from a competitive perspective, and the team that we’ve gathered to get out of here is about regaining that competitive advantage,” he told.
Munoz, 58, took over two years ago when his predecessor left amid an internal inquiry into the airline’s ties to the former chairman of the Port Authority of New York & New Jersey. Serious health problems struck: Munoz suffered a heart attack and underwent a heart transplant before returning to work in 2016. Undeterred, the former railroad executive set about forging labour peace, pushing operational improvements and drawing up turnaround plans.