A management change in the works?
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United Airlines Grapples With Crisis
By Dave Carpenter
AP Business Writer
Wednesday, Oct. 24, 2001; 9:23 a.m. EDT
CHICAGO –– Officials of United Airlines' parent company headed into a meeting Wednesday amid the worst crisis in company history – and an uproar over a letter from United chief executive James Goodwin that sent the airline's stock plunging.
United officials declined to say whether the UAL Corp. board of directors was considering replacing Goodwin, despite widespread industry speculation.
Two unions representing United employees called for his resignation and the company's stock fell more than 20 percent last week after Goodwin said in a letter to employees that the airline was hemorrhaging cash and "will perish" sometime next year if it doesn't stem huge losses that have worsened dramatically since the Sept. 11 terrorist attacks.
United union leaders accused Goodwin of panicking customers and workers unjustifiably, and questioned his dire assertions. They claim his remarks were made to get contracted employees to agree to lower wages, gain negotiating leverage or get more government assistance.
United already was in deep trouble before the attacks, severely hurt by a downturn in business travel – upon which it depends more heavily than other airlines – and the highest costs of any major U.S. carrier.
Analysts expect United to report a quarterly loss of close to $1 billion or more when it releases third-quarter results on Nov 1. Included in that total will be a hefty charge for the costs of laying off about 20,000 of its 100,000 employees after the attacks. The airline also is trimming its daily schedule to 1,654 flights, down about 30 percent since the attacks, as of Oct. 31.
The Elk Grove Village, Ill.-based airline lost more than $700 million in the first half of the year – including as much as $116 million from the failed merger with US Airways, which Goodwin proposed last year. United was surpassed by American Airlines this year as the biggest U.S. airline.
UAL shares, which closed Tuesday at $15.50 on the New York Stock Exchange, have lost two-thirds of their value since January. They were at $73.50 before Goodwin's appointment on March 25, 1999.
Goodwin was the unexpected compromise choice to succeed retiring CEO Gerald Greenwald in 1999, getting the job after unions blocked the choice of Greenwald's hand-picked heir, United president John Edwardson.
It has been speculated that Greenwald – who headed UAL from 1994-99, a time of record profits and good labor-management relations – could return to replace Goodwin. Greenwald declined Monday through a spokeswoman to speak to a reporter.
[ 24 October 2001: Message edited by: Airbubba ]