Chicago, Ill. Oct. 29, 2001 (AP by Dave Carpenter)--United Airlines hopes a midcourse correction in top management will help regain the shaken confidence of investors, passengers and employees.
Struggling through a catastrophic year, parent company UAL Corp. replaced James Goodwin on Sunday, and named board member John W. Creighton as its interim chairman and chief executive after a hurried search.
The move was aimed at stopping the damage done to the company's stock and relations with United unions and passengers by Goodwin's blunt warning less than two weeks earlier that the carrier was hemorrhaging cash and could ``perish'' sometime next year.
Investors cheered the move, sending UAL stock up 9 percent Monday morning.
Creighton, 69, the retired head of timber giant Weyerhaeuser Corp., has no experience running an airline and said he will hold the post only until United is ``on the road to financial stability.'' But he moved quickly to try to dissolve public fears that the nation's No. 2 airline might go under.
``There's nothing wrong with United Airlines that can't be turned around by what is right with United Airlines,'' he said. ``We have great routes and outstanding cities, an enviable route network and a great group of employees.''
Creighton emphasized he plans to pursue more tough measures and said ``everything is on the table'' as the airline heads into another period of potentially difficult talks with its unions.
``I didn't take this job to preside over a bankruptcy,'' he told reporters on a conference call.
Goodwin's dismissal had been widely expected since his tough talk in a letter to employees went public, prompting calls by two unions for his ouster and sending the stock into free fall. UAL's stock plummeted 25 percent in 10 days, closing Friday at a 14-year low of $13.93 a share. In Monday morning trading, the shares surged $1.26 to $15.19 on the New York Stock Exchange.
The shares, which were at $73.50 before Goodwin's appointment on March 25, 1999, lost 81 percent of their value during his time in control.
The bad news for investors isn't likely to end soon.
Analysts expect UAL to report a record operating loss of $500 million to $600 million when it discloses third-quarter results Thursday. And Creighton said the carrier will continue to be hurt over the next year by the decline in business travel compounded by the falloff in passengers since last month's terrorist attacks.
But Goodwin's resignation under pressure is likely to halt, at least temporarily, the panic on Wall Street about UAL's stock.
``It was the letter that prompted it, of course,'' airline analyst Ray Neidl, of ABN Amro. ``But I think he had lost the confidence of all his constituents with the failure of the US Airways deal'' _ the ill-fated merger proposed by Goodwin last year that was scuttled in the face of regulatory disapproval.
``That letter was a little blunt, but it was true,'' Neidl said. ``To save the company, everybody's going to have to start pitching in a little.''
The airline already has announced layoffs of about 20,000 of its 100,000 employees since the attacks caused a steep drop-off in air travel. It also is making the biggest schedule cutbacks in its 75-year history, trimming its daily schedule to 1,654 flights as of Wednesday, down about 30 percent since the attacks.
Goodwin's departure ends a stormy 2 1/2 years as CEO, including the failed merger and labor turbulence that resulted in 26,000 canceled flights in the summer of 2000. That operational turmoil ended only when the airline reached a costly contract settlement with its pilots that reverberated throughout the industry.
He said in the company's statement that he was ``proud to have contributed to the tremendous growth of United during my 34 years. ... United is a great company and it is the right time for a new leader to guide the organization through the challlenges that lie ahead.''
Until Sunday, industry experts had been expecting that leader to be an experienced airline executive, such as possibly Goodwin's predecessor Gerald Greenwald. But outside directors settled on Creighton after a series of meetings last week.
``Jack'' Creighton was chief executive officer and president of timber giant Weyerhaeuser from 1991-97 and has been a UAL board member since 1998. He remains chairman of Unocal Corp., although he said that post won't prevent him from being full-time chairman and CEO of UAL.
He also serves as a director of SaltChuk Resources Inc., the Madrona Venture Group and the Oregon Shakespeare Festival.
He said his immediate goal is to restore United's financial stability, noting ``several times that ``collective, creative solutions'' will be needed.
``Some tough compromises will be required from all of us at United in the short run,'' Creighton said.
His election was applauded by both the pilots' union and the International Association of Machinists and Aerospace Workers, which represents more than 45,000 United employees in deadlocked contract talks scheduled to resume this week.
``Today's management shake-up was necessary for United Airlines, its employees and investors,'' said IAM president Tom Buffenbarger. He said Creighton ``displayed a unique concern for employees'' at Weyerhaeuser and United employees should benefit from that perspective.
Copyright (c) 2000 The Associated Press