United Airlines CEO resigns amidst corruption probe
Two other senior officials also stepped down on Tuesday, according to United Airlines.
United’s Jeff Smisek, the former CEO, will walk away with a $4.8 million “separation payment,” according to a public filing from the company, CNN Money reported. He was paid $12.7 million in 2014.
The airline is being investigated by both the FBI and the US attorney’s office in New Jersey in connection with the ouster of executives at the Port Authority, a transportation agency for New York and New Jersey that runs several airports.
The investigation is an outgrowth of the “Bridgegate” probe, in which critics said aides for New Jersey Governor Chris Christie ordered the closure of lanes on the George Washington Bridge as political retribution against a Democratic lawmaker who hadn’t endorsed Christie’s re-election in 2013.
The federal investigation, in part, concerns David Samson, the former Port Authority chairman who stepped down in 2014 amid fallout from the Bridgegate scandal. Among many other allegations, Samson stands accused of using his position to get United Airlines to create a new flight from Newark to South Carolina, which was conveniently located near a home he owned. United allegedly agreed to the request to curry favor with Samson and the Port Authority.
United’s CEO will be replaced by Oscar Munoz, who headed the CSX Corporation, a transportation company.
The shakeup in leadership is just the latest scandal to plague United Airlines, coming 2 months to the day after a computer problem grounded all of the company’s flights worldwide in July.
The airline is also at the center of a Justice Department investigation into possible price fixing.
The anti-trust probe began in May 2015 to determine whether major US airlines were colluding in creating new flights and routes or limiting available seats to keep airfares artificially high, according to a document obtained by the Associated Press in July.
Lawmakers and consumer advocates have routinely called for investigations into whether airlines limit the number of tickets they sell to boost prices.
A series of airline bankruptcies and mergers since 2008 have led to a consolidation of US carriers, cutting the number from nine to four: American, Delta, Southwest and United. These four carriers now control 80 percent of the seats in the US’ domestic air travel market.
The consolidation has led to record-making profits. In the past two years, the four carriers earned a combined $19.7 billion, as airlines have taken advantage of historically low prices for jet fuel, saving $3.3 billion in the first quarter of 2015 alone.
Airlines have also increased add-on charges for travelers in the form of baggage and reservation-change fees. Over the past 12 months, they have collected $3.6 billion in bag fees and $3 billion in change fees.