United CEO steps down amid Port Authority probe

Last Updated Sep 8, 2015 6:49 PM EDT

United Continental Holdings (UAL) CEO Jeff Smisek is stepping down amid a federal investigation into the airline's handling of a case involving the former chairman of the Port Authority of New York and New Jersey.

Oscar Munoz, chief operating officer of railroad giant CSX (CSX), is replacing Smisek as CEO, United said. Smisek is also vacating his position as the carrier's chairman, president, effective immediately.

In a conference call to discuss the management change, Munoz said late Tuesday that both the railroad and airline industries "are incredibly capital intensive, are heavily regulated and have very large organized labor forces, and of course safety is paramount in both." The railroad industry over the past several years has "transformed itself, and the airline industry is doing the same," he added.

Smisek's abrupt resignation after five years at United's helm follows an ongoing controversy over what became known as "the chairman's flight," a money-losing route involving service between United's Newark hub in New Jersey and Columbia, South Carolina, not far from where the wife of former Port Authority chief David Samson has a home.

The New Jersey Record first reported in February that the Port Authority had received a federal subpoena related to Samson's personal travel and his communications with United and its former lobbyist. The nonstop flight between Newark and Columbia began while Samson was chairman of the Port Authority, the operator of the region's major airports, and stopped three days after he resigned in March of last year.

Federal aviation data shows that the flights were, on average, only half full, the newspaper reported.

Bloomberg News in April reported Samson's alleged request for the Newark-to-South Carolina flight, which the news service said came at a dinner with Smisek at a Manhattan Italian restaurant.

United also said its executive vice president of communications and government affairs, Nene Foxhall, and its senior vice president of corporate and government affairs, Mark Anderson, have stepped down.

The departures "are 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," the airline said in a news release.

Federal prosecutors are investigating links between United and Samson. United received a subpoena for "communications with certain United Airlines executives and/or lobbyists," according to a bond prospectus issued by the Port Authority earlier this year.

United announced earlier this year that it would conduct its own probe after getting subpoenas from federal authorities.

"There is no indication that we have a financial issue that is material to the company, but that is based on information that we have available today," Brett Hart, United's executive vice president and general counsel, said in the conference call.

Republican presidential candidate and New Jersey Governor Chris Christie appointed Samson as chairman of the Port Authority in 2011. Samson resigned from the position in March of last year in wake of the scandal involving lane closures on the George Washington Bridge in 2013.