© St. Petersburg Times, published October 29, 2001
CHICAGO -- United Airlines replaced embattled chairman and chief executive James Goodwin on Sunday with board member John Creighton, less than two weeks after Goodwin's warning that the carrier could "perish" next year sent its stock into a tailspin.
The parent company of the nation's second-biggest airline, UAL Corp., said Goodwin had resigned and released a statement quoting him as saying it was "the right time for a new leader."
But its choice of the 69-year-old Creighton, the retired head of Weyerhaeuser Co., came with the company under pressure from shareholders and employees to oust Goodwin.
Creighton, who was CEO and president of the timber giant from 1991-97 and a UAL board member since 1998, acknowledged he is an interim leader. He said he will head Elk Grove Village, Ill.-based United "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 his immediate goal is to restore United's financial stability. While he remains chairman of Unocal Corp., he said that post won't prevent him from being a full-time chairman and CEO of UAL.
Goodwin's departure ends his stormy 2 1/2 years as United CEO, including a failed merger with US Airways and labor turbulence that resulted in 26,000 canceled flights in the summer of 2000. That operational turmoil ended only when the airline reached a costly contract settlement with its pilots that helped send industry costs spiraling out of control.
But what hastened his departure was a letter to employees which became public Oct. 16, in which he said the airline was hemorrhaging cash after the terrorist attacks and could "perish" by next year.
Two unions representing United employees called for his resignation, saying he had panicked investors and employees alike without justification. The company's stock has fallen 25 percent since the letter went public, closing Friday at a 14-year low of $13.93 on the New York Stock Exchange.
"It was the letter that prompted it, of course," airline analyst Ray Neidl, of ABN Amro, said of Goodwin's departure. "But I think he had lost the confidence of all his constituents with the failure of that deal.
"That letter was a little blunt, but it was true," he said. "To save the company, everybody's going to have to start pitching in a little."
While avoiding any dire assessment, Creighton echoed his predecessor's remark that more difficult measures will be needed, saying in a conference call Sunday that "some tough compromises will be required by all of us at United in the short run." He declined to be more specific.
The airline has announced layoffs of about 20,000 of its 100,000 employees since the attacks caused a drop-off in air travel. It also is making the biggest schedule cutbacks in its 75-year history, trimming its daily schedule to 1,654 flights as of Wednesday, down about 30 percent since the attacks.
According to his employment contract, Goodwin, 57, is entitled to a lump sum payment equal to three times his salary and bonus, which amounted to just more than $1-million last year. But Goodwin, along with other airline executives, had agreed to give up his salary after Sept. 11 for the rest of the year. "Jim had an employment contract," Creighton said, "and we will honor it."
Analysts expect UAL to post an operating loss of $500-million to $600-million for the third quarter when it reports results Thursday.