By Drew Harwell and Katie Zezima,
United Airlines chairman and chief executive Jeff Smisek and two other senior officials have resigned amid a federal corruption probe, the company said Tuesday, a major shake-up at the top of one of America’s largest airlines.
The resignations were linked to an investigation exploring whether the air carrier launched a money-losing flight from Newark to Columbia, S.C., to benefit the influential then-chairman of the Port Authority of New York and New Jersey, who owned a vacation home near Columbia.
The route, which became known as the “chairman’s flight,” became a bargaining chip in the thorny relationship between the then-struggling airline and Newark Liberty International Airport, one of its key profit centers.
In 2011, United was pushing for massive improvements to the airport, where it is the largest carrier, when David Samson became chairman of the Port Authority, which operates all New York-area airports.
After Smisek and Samson had dinner in Manhattan, the Chicago-based airline launched the low-traffic Newark-Columbia route. The direct flight, which left Newark on Thursday and returned Monday, was canceled days after Samson resigned from his post last year.
A longtime ally of New Jersey Gov. Chris Christie, Samson resigned in the wake of Bridgegate, a 2013 scandal in which Christie staffers and appointees appeared to collude to create traffic jams, allegedly to hurt the mayor of Fort Lee, who had not endorsed Christie in that year’s gubernatorial campaign.
The issue engulfed Christie’s administration at the time and sorely damaged his presidential prospects. The federal probe, launched by the U.S. attorney for the District of New Jersey, initially centered on the Fort Lee lane closures, but it has expanded into other behavior by the Port Authority, including its dealings with United.
[Justice Dept. investigating potential airline price collusion]
United Continental Holdings, which owns the airline, said in a February filing that a federal grand jury had subpoenaed the company and its executives during a probe into whether the airline had attempted to sway public officials.
The company said Tuesday that it is cooperating with that ongoing investigation and is conducting its own investigation. The U.S. attorney’s office in New Jersey declined to comment Tuesday.
Smisek, the company’s chief executive since United merged with Continental Airlines in 2010, will pocket a separation payment of about $4.9 million, payable as a lump sum in cash, a company regulatory filing said. As part of the agreement, Smisek will maintain his lifetime flight and parking benefits as well as his company car.
Smisek, 60, agreed to cooperate fully with United “in the defense, prosecution or conduct” of any investigations relating to events during his leadership of the airline, filings show.
United said Nene Foxhall, executive vice president for communications and government affairs, and Mark R. Anderson, senior vice president for corporate and government affairs, have also stepped down.
The “internal investigation and the related circumstances” did not raise any accounting or financial reporting concerns, the company said in a statement. In a conference call Tuesday, the airline’s general counsel, Brett J. Hart, said, “We don’t expect it to impact our operations.”
Under Smisek, United has struggled with routinely late flights and technical problems, including a worldwide two-hour grounding of its jets in July due to a network glitch.
[Automation problem led to ground stop for United Airlines]
But super-low fuel prices, coupled with less airline competition, helped the carrier’s profits surge to a record high of about $1.2 billion in the most recent quarter.
United shares fell about 2 percent in after-hours trading.
Oscar Munoz, the chief operating officer of railroad giant CSX, will succeed Smisek as chief executive, the airline said. In a letter to employees, Munoz, 56, said he recognizes that “this news is unexpected.”
“It is certainly a new chapter for United,” Munoz said on a conference call Tuesday, “and I hope to make you as optimistic as I am about our future here and the things we can accomplish at the airline. I’m ready to get to work.”
Samson is one of New Jersey’s most powerful political players, having worked for both Democrats and Republicans, and the law firm he founded, Wolff and Samson PC, is one of the most influential in the state.
Samson, a former New Jersey attorney general, has long been a confidant of Christie, chairing the governor’s 2009 transition team.
The “chairman’s flight” allowed for a more direct route to Samson’s million-dollar weekend home in Aiken, S.C., a picturesque town an hour’s drive from Columbia known for its equestrian community.
The Samsons’ estate was built in 1900 by the founder of a stable for polo ponies and was named Rest Period, after a polo term. The historic home was widely celebrated: In an Augusta Magazine story last year, a writer said of the home, “A gentleman might describe her as captivatingly elegant.”
The flight to whisk Samson there, however, was less treasured. The Bergen Record, which first reported on the investigation, said federal records showed the money-losing flight’s 50-seat planes usually were only about half-full.
The Port Authority and the airline negotiated a number of issues while Samson was the chairman, including extending the PATH rail system, which operates in New York City and New Jersey, to the Newark airport and expanding service at the Atlantic City airport.
At the beginning of his administration, Christie made revitalizing the seaside casino destination a top priority but lost much of his bet when a massive casino he pushed closed last year.
In 2014, United complained to the Federal Aviation Administration about skyrocketing fees at the Newark airport, where it was the largest carrier, blaming “unwise choices, inefficiencies and political influences” for the steep increases.
United asked the FAA to declare that the Port Authority had violated federal law by increasing the fees, which the airline said made it prohibitively expensive to fly out of Newark.
Samson’s place of prominence in Christie’s orbit has been established over the past two decades, with the two Garden State lawyers repeatedly turning to each other for counsel as Christie has ascended in state and national politics. According to many of their associates, the dynamic has at times been part father-son, with the older Samson providing a steady, seasoned presence at the side of the gregarious and combative Christie.
In their biography “Chris Christie: The Inside Story of His Rise to Power,” New Jersey reporters Bob Ingle and Michael G. Symons wrote that “Samson and Christie became close when they ran the federal and state prosecutors’ office in New Jersey in 2002 and 2003, and Samson was chairman of the New Jersey Domestic Security Preparedness Task Force.”
“We enjoyed a death threat together. That brings you together,” Christie said in the book.
Robert Costa contributed to this report.
This entry passed through the Full-Text RSS service – if this is your content and you’re reading it on someone else’s site, please read the FAQ at fivefilters.org/content-only/faq.php#publishers.