United Airlines' new leadership enjoyed only a brief honeymoon: incoming chairman John Creighton, a board member since 1998 and the retired chief of forest products giant Weyerhaeuser, took over four days before the airline posted its worst ever third-quarter loss. Sixty nine-year-old Creighton was named on 28 October to replace embattled Jim Goodwin, the life-long United employee who was forced out by the board under investor and employee pressure. The unions, which have a 55% stake in parent UAL Corp increased their cries for Goodwin's demise after he warned that the airline could cease to exist next year without basic changes to costs. Now Wall Street believes that Creighton who, given his age, is probably not much more than a caretaker, must make some fundamental changes in corporate governance. Given the current structure - in which the unions have three board members - a possible change, says Merrill Lynch analyst Mike Linenberg, is a capital restructuring to trim the employee stake. That could be achieved through a bankruptcy reorganisation, which Creighton explicitly ruled out saying "I didn't take this job to preside over a bankruptcy".
Nevertheless, United is in "desperate need of a total restructuring or at least a new arrangement with the labour force," says union expert Neil Bernstein of Washington University in St Louis.
Although Creighton has generally won high marks for handling touchy environmentalists and unions at Weyerhaeuser, his appointment changes little, given United's continuing losses, says Buckingham Research analyst Helane Becker.
Source: Flight International
