Image source:
What's going on?
United Airlines CEO Oscar Munoz is returning to work today after a 5-month medical leave of absence. He had a heart attack in October and a heart transplant in January. Hes going to have a lot on his plate
What does this mean?
Last week, two investment funds who together own about 7% of United publicly called for a shakeup of the Board of Directors (the board oversees the CEO and the general management of the company). The funds claim that the board lacks the necessary experience to turn around an airline that they (and many others) see as struggling to keep up with its peers. United has suffered particularly from poor customer service (delays, lost luggage, etc.) and employee discontent – both of which Munoz already began tackling in his short time as CEO before his health problems.
Why should I care?
The bigger picture: So-called activist hedge funds can kick up a big fuss. Such funds agitate for change within a company in an effort to, ultimately, boost the value of their investment. They are often aggressive in their approach in the sense that they air their grievances publicly in an effort to get other, perhaps larger, investors to agree with them and also pressure the company for change. Ultimately, these funds are (usually) trying to improve the companys stock price (normally a good thing), but they are sometimes criticized for a short-term approach that hurts the companys longer-term prospects.
For you personally: Apparently, the airline will focus on improving customer service. Uniteds CEO only served one month before his heart attack, so he didnt get a chance to put his turnaround plan into action. One of his main aims is to improve customer satisfaction. Munoz hopes that by turning this around, hell be able to improve sales. See if you notice any changes the next time you fly United
Originally posted as part of the Finimize daily email.
The top 2 financial news stories in 3 minutes. Join over one million Finimizers
