United CEO Jeff Smisek resigns in federal corruption probe

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United Continental Holdings Inc said Tuesday that Jeff Smisek and two other senior executives had resigned
United began a direct flight from Newark, New Jersey, to Columbia, South Carolina, when David Samson became Port Authority chairman
Twice-weekly flight was canceled just days after Samson resigned last year in the fallout from the 'Bridge-gate' scandal
Samson bought a villa in suburban Aiken, South Carolina, for $1.7million in 2010
As part of Jeff Smisek's separation agreement with United, he will receive nearly $4.9million, keep his flight benefits for life and his company car
United said it will also give Smisek stock worth nearly $3.5million

By Associated Press and Dailymail.com Reporter

Published: 16:11 EST, 8 September 2015 | Updated: 22:19 EST, 9 September 2015

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The chairman and CEO of United Airlines stepped down Tuesday in connection with an ongoing investigation into dealings with the agency that operates New York airports revolving around allegations of special treatment.

United Continental Holdings Inc. announced that Jeff Smisek and two other senior executives had resigned and railroad executive Oscar Munoz was named CEO and president.

United disclosed earlier this year that the company and some of its executives had received subpoenas from a federal grand jury for information about dealings with the Port Authority of New York and New Jersey. United said it was conducting its own internal investigation.

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Ousted: Jeff Smisek (left), the chairman and CEO of United Airlines, is stepping down after being accused of adding direct flights from New Jersey to South Carolina's state capital where former Port Authority Chairman David Samson (right) owns a high-end vacation home

Luxury home: According to the real estate website Zillow.com, Samson purchased this sprawling 4,463-square-foot estate in the Columbia suburb of Aiken, South Carolina, for $1.7million in 2010

Real estate gem: Built in 1900, the luxury vacation home is described as 'one of the most spectacular estates in the historic district'

Former Port Authority chairman David Samson's activities have been subject of document requests from the US attorney's office in New Jersey, including Samson's votes on United Airlines projects at Newark Airport at the same time United was restarting flights from Newark to Columbia, South Carolina, near where Samson has a vacation home.

United began an about twice-weekly direct flight from Newark to Columbia that began after Samson became chairman and was canceled days after he stepped down from his post last year.

According to the real estate website Zillow.com, Samson purchased a sprawling 4,463-square-foot estate in the tony Columbia suburb of Aiken, South Carolina, for $1.7million in October 2010.

Built in 1900, the luxury vacation home is described as 'one of the most spectacular estates in the historic district' featuring three bedrooms with high ceilings, five bathrooms, a fireplace and a traditional colonnaded Charleston-style porch.

Samson, 76, a former state attorney general in New Jersey, headed New Jersey Gov. Chris Christie's transition team and was appointed chairman of the Port Authority by Christie in 2011.

Appointee: Samson (center) headed New Jersey Gov. Chris Christie's transition team and was appointed chairman of the Port Authority by Christie (left) in 2011

The twice-weekly flight from Newark to Columbia was canceled just days after Samson resigned in March 2014 in the fallout from the infamous 'Bridge-gate' scandal

He resigned in March 2014, several months after the so-called ‘Bridge-gate’ scandal surrounding politically motivated lane closures at the George Washington Bridge the previous September.

Smisek was CEO of Continental Airlines before it merged with United in 2010. His departure comes as United shows signs of a financial turnaround. It earned $1.7billion in the first half of 2015, a nearly 10-fold increase over the first half of 2014, helped by lower fuel costs.

Smisek has been under pressure for several years as United was slower than Delta Air Lines to return to profitability and also suffered several embarrassing computer outages, the latest in June and July, that led to large numbers of delays and canceled flights.

About 75 per cent of United's flights arrived on time during the first half of this year, according to federal data, the worst record among the four largest US airlines.

United Continental's shares fell 2.8 per cent in trading after the bell Tuesday.

A regulatory filing with the Securities and Exchange Commission described the terms of Smisek's separation agreement.

He'll receive a separation payment of just under $4.9million in cash, and remain eligible for a pro-rated bonus.

Smisek, 61, will have health insurance until his is eligible for Medicare, and maintain flight benefits and parking privileges for the remainder of his lifetime. He also gets to keep his company car.

In addition, United said it will give Smisek stock worth nearly $3.5million.

New chief: Smisek (left) is being replaced by Oscar Munoz (right), a United board member and COO at freight railroad CSX Corp

Smisek also agreed to cooperate fully with United ‘in the defense, prosecution or conduct of any claims or investigations which relate to events or occurrences that transpired’ while Smisek was employed.

Smisek’s replacement, Oscar Munoz, 56, was a United board member and chief operating officer at freight railroad CSX Corp. Another director, Henry L. Meyer III, was named non-executive chairman.

On a call with analysts, the new United CEO insisted, 'We're really not that unstable.'

'Clearly there have been organizational changes, operational-systems issues and all that,' Munoz said, 'but we've made significant progress.'

In a letter to United's 84,000 employees, Munoz said that executive vice president Nene Foxhall and senior vice president Mark Anderson also stepped down. Both oversaw government affairs at the Chicago-based airline.

Munoz said the company had an ‘incredible opportunity’ to increase earnings and improve the flying experience.

The flight attendants' union cheered the change in CEOs, saying that labor relations had languished under Smisek. The chairman of United's pilot union called the shake-up a new beginning for the airline, its employees and passengers.