United Airlines parent UAL Corp. gave a four-year contract extension to Chief Executive Officer Glenn Tilton, who led the carrier through bankruptcy reorganization.
Tilton, who joined UAL in September 2002 from Texaco Inc., also serves as president and chairman of Elk Grove, Illinois- based UAL. Directors approved the extension to Sept. 1, 2011, today at a meeting in Washington, the company said.
Tilton, 58, has been an advocate of U.S. airline-industry consolidation, urging the U.S. government to lift limits on foreign investment and make it easier for carriers to combine. His extension came five days after a report that UAL hired Goldman Sachs Group Inc. to advise on possible transactions.
“He kind of hit a home run with that one,” Robert Mann, head of consulting firm R.W. Mann & Co., said of the extension in an interview.
The contract of Peter McDonald as chief operating officer also was extended by four years after he received a job offer from another company, UAL said.
Tilton was hired by UAL on Sept. 2, 2002, three months before the company filed the largest airline bankruptcy in history. United spent three years under court supervision before exiting Chapter 11 in February.
“Under Glenn Tilton’s leadership, United completed a $23 billion restructuring and returned to profitability, and we look forward to Glenn’s ongoing leadership,” James J. O’Connor, a UAL director, said in a statement.
Tilton’s new contract contains provisions for his compensation if he leaves before 2011 except as part of a merger or acquisition.
Risks in a Merger “He needs to be either a player or it’s just possible he’ll be collateral damage,” said Mann, a former airline executive whose Port Washington, New York-based firm works with airlines and unions. “You don’t want to be collateral damage. You want to have a good game plan in your back pocket.” Analysts this week said UAL’s reported hiring of Goldman was to gauge the interest of potential partners before combinations that may occur when Delta Air Lines Inc. and Northwest Airlines Corp. leave bankruptcy protection next year.
In a recorded message to United employees today, Tilton said “continuity of management is key” to reach its goals for increasing revenue, reducing costs and improving service.
UAL shares fell 25 cents to $26.57 at 4 p.m. in New York in Nasdaq Stock Market composite trading. The stock has declined 34 percent since UAL exited bankruptcy.
