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United CEO Steps Down Amid Claims Of Favors For Port Authority Chief

The company said his departure is "related to the federal investigation associated with the Port Authority of New York and New Jersey."

Posted on September 8, 2015, at 6:56 p.m. ET

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United Continental's chief executive officer stepped down unexpectedly today, in the wake of allegations the airline introduced a special flight route to win favor from the head of the Port Authority of New York and New Jersey, who wanted a faster way to get to his South Carolina vacation house on weekends.

CEO Jeff Smisek left the airline "in connection with the company's previously disclosed internal investigation related to the federal investigation associated with the Port Authority of New York and New Jersey," United said in a statement.

Two other United officials also stepped down: the company's executive vice president of communications and its senior vice president of government affairs. Smisek will be replaced by Oscar Munoz, the former president of the rail company CSX. Munoz also worked at Coca-Cola, Pepsi, and AT&T.

United's general counsel Brett Hart said on a call with analysts that both an internal investigation and a federal law enforcement probe are ongoing. The company's non-executive chairman, Henry Mayer, said it was "not going to provide further detail on that subject at this time." The U.S. Attorney in New Jersey is investigating Samson over his dealings at the Port Authority.

The airline's problems stem from a meeting four years ago, the New York Times reported, when Port Authority chief David Samson had dinner with Smisek and the other two United executives who resigned today.

Bloomberg News reported that at the dinner, the United officials were pushing for Port Authority funding for projects at New Jersey's Newark International Airport, where United is the largest carrier.

Samson reportedly mentioned that it was harder to reach his South Carolina vacation home after Continental had cancelled a flight from Newark to Columbia, SC. Flying into Charlotte, Samson said according to Bloomberg, had made he and his wife "weary" of their vacation home 150 miles away from the larger airport.

Samson asked, in a "playful, but not joking," tone according to Bloomberg, for United to restore the flight. United later restored a limited service on the route, departing Newark on Thursday afternoons and returning on Mondays. "The twice-weekly flight began on Sept. 6, 2012. Two weeks later, the Port Authority approved a study to extend the PATH rail service to the Newark airport," Bloomberg reported.

Samson resigned from the Port Authority in March, 2014, in connection to the scandal over New Jersey officials shutting down lanes on the George Washington Bridge. United cancelled the Newark-Columbia route a few days later.

Karen Kessler, a spokesperson for Samson's lawyers, told BuzzFeed News that today's announcement "is a United Airlines matter." In the past, Samson and his representatives have declined to comment on the federal investigation into his time at the Port Authority.

Samson was a longtime ally of New Jersey Governor Chris Christie and was named chairman of the Port Authority, which oversees transportation infrastructure in New York and New Jersey, after chairing Christie's transition team and serving as counsel to his gubernatorial campaign in 2009.

United said in a regulatory filing that Smisek will receive a $4.875 million lump sum cash payment and remains eligible for performance-based compensation for the 2015 fiscal year. The company said he will retain "flight priviliges" and "parking benefits" for life along with the title to his company car.

Smisek has "agreed to cooperate fully with the Companies in the defense, prosecution or conduct of any claims or investigations which relate to events or occurrences that transpired while Mr. Smisek was employed by the Companies," United said.

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