United to pay $2.25M fine, won't be charged in flight case

AP News
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Posted: Jul 14, 2016 6:20 PM
United to pay $2.25M fine, won't be charged in flight case

United Airlines will pay a $2.25 million fine but won't be charged in connection with a special flight from Newark, New Jersey, that benefited the former head of the agency that runs the airport.

United Continental Holdings Inc. said Thursday that it reached a non-prosecution agreement with the U.S. attorney's office for New Jersey.

The agreement was accompanied by a narrative that described how United executives were pressured into adding a flight between Newark Liberty International Airport and Columbia, South Carolina, near where former Port Authority Chairman David Samson and his wife had a vacation home.

The executives knew that the route would lose money. They gave it fast-track approval anyway, however, because they were warned that failing to please Samson could hold up a new hangar that United wanted at the Newark airport.

The flight was canceled days after Samson resigned in 2014.

On Thursday, Samson pleaded guilty to a corruption charge, and a former lobbyist for United, Jamie Fox, was charged with conspiracy to commit bribery.

As a result of company and federal investigations, United ousted CEO Jeff Smisek and two other top executives last September.

Smisek's replacement, Oscar Munoz, said Thursday that the airline will make sure it acts ethically and gains people's trust.

The agreement between United and the U.S. attorney's office calls on the company to cooperate by providing documents and helping prosecutors get statements or testimony from airline employees and directors until all related investigations and prosecutions are closed. It is not clear, however, whether any other individuals will face charges.

"Our investigation is largely complete and we continue to cooperate with the government," said United spokeswoman Megan McCarthy.

An appendix to the agreement details months of discussions between United executives and the Port Authority about the route.

At a September 2011 dinner with four United employees including a "senior executive" from the airline's Chicago headquarters who had power to approve routes, the Port Authority official, who is unnamed but is clearly Samson, mentioned that United should fly between Newark and Columbia, South Carolina.

At least one of the United executives understood that the official wanted the route "only because it would be more convenient for him to travel to (his) house in South Carolina," according to the narrative.

United studied the route and concluded it would lose money.

Two months later, United officials were surprised when their proposal for a new hangar for widebody aircraft at Newark was not on the agenda of the Port Authority board. A lobbyist hired by United to work with the Port Authority reported that the Port Authority official was holding up the hangar approval because the airline had not started Newark-Columbia service.

According to the narrative, United's "senior executive" relented and decided to start the new route without following the airline's usual process for such a move. The "senior executive" was Smisek, according to a person familiar with the situation, who spoke on condition of anonymity because the executives were not identified by name in the narrative.

United flew the route twice a week for about 17 months, losing money on it.