WhiteRiverProductions RAILROAD NEWS AND COMMENTARY FROM WASHINGTON BY WES VERNON A Railroader Rescuing An Airline?


WHAT DOES ONE MAKE of a railroad boss’s de- cision to move on to an airline? Herewith the story of Oscar Munoz, who does not shrink from new challenges, nor is he likely to dream fond dreams of that gold watch at the end of a near life-long stint of loyalty to the same company. After all, he was a rising star at CSX and thought likely to be the next CEO of that freight rail company. His appointment instead as the new CEO of the merged Unit- ed-Continental Holdings airline company was totally unexpected, and came not long after he had been named CSX president (2015), chief operating officer (2012), and until then, had been the company’s chief financial offi- cer (since 2003) of this same CSX, the largest Class I freight railroad in the eastern U.S. Now he is number one at United, the world’s largest airline “as measured by revenue pas- senger miles.” A man in his “one heartbeat” or one retire-


ment away” position — and thought to be the on a glidepath to succeed CSX CEO Michael J. Ward — normally would not be an obvi- ous candidate to switch jobs to another rail- road, let alone to an entirely different mode of transportation. For all that, the revolving doors between executive suites in the railroad and the airline industries are by no means necessarily “out of service.” Moreover, as one veteran railroader has


opined, “He [Munoz] is not stepping into a world that’s alien” in the sense that both railroads and airlines have plenty of capi- tal requirements, regulatory oversight, and organized workforces. Add to that Mr. Mu- noz’s time of service as a director on United and the later merged United-Continental Holdings. All that and more (still?): Nonetheless, questions remain as to what would induce the 56-year-old Mr. Munoz to leave a lofty perch, where it was assumed he was being groomed for the next corporate ladder step upward for becoming “the man.” An obvious guess would be the green stuff


that funds the economy. Umm — well, it’s probably not that cut and dried. The man whom Mr. Munoz is replacing at United, Jef- frey Smisek, submitted his resignation, as two others with the airline also were out the door, amidst public speculation and federal investigations into whether the leadership of United had improperly, and perhaps illegally, traded favors with Chairman David Samson of the New York/New Jersey Port Authority. Beyond that, United was (and likely still is) in public relations trouble with its customers and shareholders. We’ll get to that later in this column. Specifics: Veteran columnist Holman Jenkins accorded an odious designation to the United scandal issue in his Wall Street Journal article headlined “The Friendly Skies Meet the Sopranos.” A group of major players from the airline, the NY/NJ Port Authority, and other interested parties met at Novita, a high-end Italian restaurant in Manhattan, to exchange ideas that have since managed to make their way to the cu- rious ears of investigators whose probe is aimed at determining if a crime was com-


mitted in the course of informal agreements that may have emerged from the conver- sation at that dinner table. That prompt- ed the WSJ, New York Times, Bloomberg News, New Jersey newspapers, and various other sources to cite the following: (1) As part of the ongoing probe by law enforcement authorities, the U.S. attorney for New Jersey, Paul Fishman, has instruct- ed the Port Authority to save all material bearing on a request by United’s Smisek to the P.A.’s Chairman David Samson to re- vive the long-dormant plan to extend the NY/NJ subway rail link (the PATH) beyond its current last stop at Newark Penn Sta- tion to Liberty Newark International Air- port. The point of Smisek’s $600 million re- quest (at least one source puts the estimate at $1.5 billion) was to secure a “one-seat ride” to the Newark airport convenient to riders from Wall Street and other venues in lower Manhattan. (2) Halfway through the Manhattan din-


ner, it was the turn of the Port Authority to request something from the airline. Seems the P.A.’s Samson said he and his wife were going through a lot of unaccustomed hassle making their way to and from their weekend home in Aikin, S.C., an old countrified, well kept-up “horsey” town. You see, they used to be able to fly from Newark to Columbia, S.C., just 50 miles away from Aiken. But that route was unprofitable, so it was scrubbed from the timetable. Now they have to take the plane from Newark to Charlotte, N.C., 150 miles away from their country home. In a tone that Bloomberg News quotes


one dinner guest describing as “playful but not joking,” Samson asked something to the effect of could United revive the (mon- ey-losing) route? That prompted a reaction that observers at the table described as “an awkward silence.” The commuter plane to South Carolina


— sarcastically (and informally) dubbed by the crew as “the chairman’s flight” — was revived. In March of 2014, Chairman David Samson resigned his top post at the Port Au- thority, claiming — as did New Jersey Gov- ernor Chris Christie (R) who had originally appointed him — that he had been saying for months that he wanted out. The “chairman’s flight” was gone again (April 1, 2014, April Fool’s Day) within three days of Samson’s exit from the P.A. The other shoe appears to have dropped


(about a year and a half later) when just recently — in September of 2015 — Smisek resigned as top man at United. There had been snickers and grumbling about “the chairman’s flight” which Smisek had reluc- tantly granted after Samson’s “joking” re- quest. Smisek drew concern for appearing to have acceded to the request. There was also criticism for putting the long-delayed (and expensive) PATH exten- sion back in play, however temporarily. That plan, meanwhile, appears to have been quiet- ly sidelined (again) because it would “dupli- cate” rail service to the airport on Amtrak and New Jersey Transit. (Umm, not exactly; nei- ther of them ends or originates at Wall Street,


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