UAL Names New CEO After Goodwin Resigns

UAL Corp., parent of United Airlines, over the weekend named a new chairman and chief executive after James Goodwin resigned under fierce pressure from the carrier's labor unions. John W. Creighton, a UAL director since 1998 and former president and CEO of Weyerhauser Corp., was appointed by a unanimous board vote and faces the immediate and immense challenge of stabilizing the company's battered finances.

The move is the latest development in a tumultuous 18 months for United that has seen labor acrimony and a failed merger attempt with US Airways.

Meanwhile, chief rival American Airlines acquired Trans World Airlines, gained market share in the highly competitive Chicago market and surpassed United as the world's largest airline. The series of failures and challenges, compounded by the traffic drop-off in the wake of Sept. 11, will be put into numbers later this week when UAL announces a third-quarter loss likely to exceed half a billion dollars. The company was more than $600 million in the red in the first half of the year.

"I intend to serve until we are confident that the company is on the road to financial stability and has the leadership in place to ensure a thriving United," Creighton said. He told reporters on a teleconference that he did not accept the position to preside over a bankruptcy. It remains to be seen, however, if the carrier--losing money at a rapid pace, particularly dependent on business travelers and facing huge labor costs--can avoid reorganization. A loan guarantee from the federal government could play prominently in the airline's attempt to recover.

Creighton has early labor support. The 12-member board, which unanimously voted him in, includes three employee seats, two of which are union representatives. Both the pilots and the machinists unions quickly released statements backing Creighton. Tom Buffenbarger, president of United's machinists union, said the management shake-up was necessary, but added, "The new leadership has time, but not much time." The union, 45,000 strong, will seek to re-open stalled negotiations on a new contract.
Goodwin left United after a 34-year career, including just over two years at the helm. Ironically, United's labor unions opposed former CEO Gerald Greenwald's chosen successor in March 1999 and instead threw their support behind Goodwin, a move that solidified his nomination as CEO. United was profitable and growing quickly at the time, however, trouble started last summer when a bitter contract dispute resulted in severe service disruptions. Goodwin had been on uneven footing since, but opposition from labor unions peaked last week when his dire, pessimistic letter to employees--predicting a complete failure next year absent a drastic turnaround--was leaked to the press.