United’s CEO just resigned over allegedly restoring a route for a government official

Not flying so high anymore.
Not flying so high anymore.
Image: Reuters/Shannon Stapleton
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United Continental announced today that CEO Jeff Smisek has stepped down from the company, as have two senior executives in its communications and government affairs functions.

All three resignations are related to an internal investigation by the company, which is related to an ongoing investigation by the US federal government into alleged corruption involving the former head of the Port Authority of New York and New Jersey. Smisek will be replaced by former CSX chief operating officer Oscar Munoz, who has been on the company’s board since 2010.

The alleged wrongdoings don’t involve anything like stuffed envelopes of cash. Rather, United allegedly ressurected a previously shut-down flight to Columbia, South Carolina, for one man’s weekend getaways.

The whole affair started, according to Bloomberg, at a dinner at a New York Italian restaurant between Smisek and then Port Authority chairman David Samson. The airline very badly wanted the state to invest in Newark’s airport. At the dinner, Samson allegedly ”playfully” mentioned that he wished the airline would restore a discontinued route that had made it easier to get to his weekend home.

The route, which Bloomberg said was unprofitable, was eventually restored after Samson allegedly threatened to block projects important to the company. It was allegedly called “the chairman’s flight” internally. It was shut down again four days after Samson resigned his post in 2014.

United is being investigated over whether it improperly tried to influence Samson, who is being investigated over whether he used his public position for private gain.

The other two executives who are believed to be stepping down, Nene Foxhall, and Mark Anderson, were reportedly at that original dinner with Smisek and Samson.

Smisek leaves with a separation payment of $4,875,000, and other benefits.

This isn’t the only legal issue facing the company. It is also being investigated by the US Department of Transportation for price gouging, with five other airlines, and the US Department of Justice is looking more broadly at price collusion. Still, Munoz is coming in at a pretty good time for the industry. Low oil prices mean record profits for airlines, though ticket prices are under increasing pressure.

United declined to comment beyond their press release.