Oscar Munoz is stepping down as CEO of United Airlines after a dramatic four-year run in which he weathered multiple customer relations disasters and oversaw a return to growth at the third-largest U.S. airline by revenue. He will be replaced in May by President Scott Kirby, the architect of an aggressive effort to reclaim market share from other carriers, United announced Thursday morning. Munoz, 60, will become executive chairman of the board.
Hired in September 2015 to fix festering problems resulting from United’s poorly executed 2010 merger with Continental Airlines, Munoz was sidelined a month later by a heart attack and received a heart transplant.
Following his return to work in March 2016, he concentrated on smoothing out the airline’s relationship with its workers, negotiating new contracts with labor unions, and improving on-time performance and business class service. But the company’s financial performance and stock price remained stagnant, and it suffered a PR fiasco in April 2017 when Dr. David Dao was dragged off a plane bleeding to make way for a United employee to take his seat.
Wall Street analysts’ patience was wearing thin by the end of the year amid skepticism of a campaign spearheaded by Kirby to reclaim market share from other carriers by expanding service 4% to 6% a year through 2020, risking a fare war that could further hurt its thin profits.
Two years later and the expansion strategy is looking like a winner. United has overhauled its hubs in Chicago, Denver and Houston, adding hundreds of connecting flights first to larger cities and now to smaller ones that it retreated from in the wake of the Continental merger. And it’s doing so in a way that’s boosted margins: passenger revenue per available seat mile grew 4.3% in 2018, outpacing rivals American and Delta, with revenue breaking out of a seven-year holding pattern to rise 9.5%, and the stock climbing over 30% in 2018.
This year the company has logged strong quarterly earnings growth but stock performance has been choppier, with the shares up 5%, hurt by the 737 MAX grounding and worries over its China exposure, with growth in passenger revenue per available seat mile slowing to 1.7% in the third quarter.
“With United in a stronger position than ever, now is the right time to begin the process of passing the baton to a new leader,” Munoz said.
Kirby joined United in 2016 after he was pushed out at American Airlines, where he’d served in a similar role under CEO Doug Parker. Kirby has a reputation as a blunt and hard-charging executive, but he’ll step into the CEO role after Munoz has made great strides in improving what had been a fractious relationship between management and labor at the airline.
Sara Nelson, a United flight attendant who heads the Association of Flight Attendants-CWA, offered praise for both executives on Twitter.