United Airlines named its general counsel CEO while Oscar Munoz goes on medical leave
Munoz suffered a heart attack last week.
It is, as of yet, too soon to know how long Munoz will be on leave for. The change is effective immediately.
In a brief statement, Chairman Henry Meyer III said the board would finish a corporate-governance review and would likely say more in the next day or two. United provided no additional information about Munoz's condition.
Munoz, 56, became CEO in early September after Jeff Smisek abruptly stepped down amid a federal investigation.
Munoz vowed that he would deal with customer-service issues and other problems at the world's second-biggest airline. He was admitted to a hospital on Thursday. The company disclosed his hospitalization on Friday after The Wall Street Journal reported that he had suffered a heart attack, and shares fell 3 percent.
In Monday trading, shares of United Continental Holdings Inc. rose 78 cents, or 1.4 percent, to close at $56.75.
Publicly traded companies must disclose when there is a change in CEOs, but there is no legal requirement to disclose a health setback or hospitalization of a top executive. It is up to the board to decide whether the information is material - whether investors would consider it important.
"It's a judgment call," said Donna Dabney, executive director of The Conference Board, a business group that does research on management and other corporate topics. "Corporate governance usually goes beyond what the minimum legal requirements are."
Companies have tilted toward more disclosure ever since Apple Inc. was criticized for failing to provide more information about CEO Steve Jobs' pancreatic cancer, Dabney said. However, she said, boards are reluctant to comment if they believe they don't know all the facts about a situation, such as the extent of a CEO's health problems.
"You want to be transparent to your constituents; beyond even your shareholders but to the public and your employees," Dabney said.
Munoz took ill just five weeks after replacing Jeff Smisek, who departed during a federal investigation into whether the airline gave preferential treatment to a former chairman of the agency that operates the New York-area airports. The rapid-fire series of events complicates the job of the United board.
"They are concerned about the appearance of stability for the company and how it affects customers, suppliers and competitors," said Jill Fisch, a law professor and corporate-governance expert at the University of Pennsylvania.
Fisch said the United board may not have all the information it needs because Munoz's doctors are bound by their own confidentiality rules. The board could face liability if it is either too optimistic or too pessimistic about Munoz's health, she said.
Vicki Bryan, an analyst for bond-research firm Gimme Credit, said however that Monday's update was surprisingly sparse given that it came four days after Munoz entered the hospital, and it raised more concerns than it answered. She said the airline should be more communicative, "particularly in light of United's substantial management upheaval in recent months."
United said Friday that operations were continuing normally in Munoz's absence. United and United Express operate nearly 5,000 flights a day.
The Chicago company is scheduled to report third-quarter financial results Thursday. United has posted strong profits recently, earning $1.7 billion in the first half of 2015.
United has been plagued by technology challenges since its 2010 merger with Continental. More recently, federal prosecutors began investigating whether under Smisek the airline gave preferential treatment to a former chairman of the agency that operates the New York-area airports. The company cited the probe in announcing on Sept. 8 that Smisek and two top government-affairs executives had left the company.