A new chief executive took over yesterday at United Airlines, the world's second largest commercial carrier, and pledged to work to rescue the troubled company.
The board of United voted at an emergency meeting in Chicago to replace James Goodwin, who had been head of the airline for two and a half years, with John Creighton, a United board member and a veteran of the paper industry. The move was widely applauded, not least by the airline's unions, many of which had been agitating for Mr Goodwin's resignation. Wall Street also reacted positively as investors pushed up shares in United Airlines by almost 10 per cent in early trading in New York.
United lost two of its aircraft on 11 September when they were hijacked by terrorists. One crashed into a field in Pennsylvania while the other destroyed the south tower at the World Trade Centre. The other two aircraft involved in the hijackings belonged to American Airlines.
Mr Goodwin sealed his own fate two weeks ago when he wrote a letter to the 100,000 employees of the airline warning that it would "perish" over the course of next year if steps were not taken to stop it losing cash. The letter was leaked and triggered near-panic among investors. In just 10 days after the leaking of the letter, United saw its share value slump by 25 per cent. Since Mr Goodwin's appointment in March 1999, the airline's shares have lost 81 per cent of their value.
Mr Creighton was quick to repudiate the Goodwin message. "There's nothing wrong with United Airlines that can't be turned around by what is right with United Airlines," the new chief executive insisted. The aviation industry has suffered a huge drop-off in business since the 11 September attacks, which compounded a downturn in traffic that had occurred earlier in the year due to the slowing economy.
The extent of the damage at United, however, has shocked analysts. Wall Street expects the carrier to lose more than $2bn (£1.4bn) in 2001. By current estimates, it is losing about $25m a day. To avoid the catastrophe Mr Goodwin referred to, Mr Creighton will have to take harsh steps beyond those already initiated, which include laying off 20,000 employees and cutting operations by 30 per cent, which become effective tomorrow. "I did not take this job to preside over a bankruptcy," said Mr Creighton.Reuse content