Facing heat from the government, pressure from shareholders and anger from customers, United Airlines is turning to someone who has lived this story before: a banker who survived the bailout era.
Henry Meyer, 65, who stepped down as KeyCorp's chief executive in 2010, was made nonexecutive chairman of the troubled airline Tuesday in a management shake-up that also saw Chairman and CEO Jeff Smisek and two senior officials resign amid a federal corruption investigation.
United is undoubtedly a company in crisis, and Meyer is no stranger to managing crises. His decade leading KeyCorp overlapped with two recessions, and he is generally given fine marks for helping put the Cleveland company on sturdier footing in the years after the 2008 crisis.
He also made some missteps, analysts say, like green-lighting far too much mortgage lending and pushing to expand into riskier lending niches, both of which came back to hurt KeyCorp in the crisis.
But Meyer's reputation as a solid corporate citizen may be more important for United than his banking strategy moves as the airline confronts a federal investigation into whether its executives swapped favors with the chairman of the Port Authority of New York and New Jersey. The airline has also underperformed its rivals financially and faces a raft of operational problems that have caused vocal customer dissatisfaction.
Meyer is personally well-regarded by those who knew him in the banking industry, said Steve Bartlett, a senior adviser with Treliant Risk Advisors and a former president of the Financial Services Roundtable, for which Meyer served as a director. Managing a board is one of his strong suits, Bartlett said.
"He's a person who believes in consensus building and collective wisdom, and who is not authoritarian," he said. "He's not a one-man band."
How far Meyer, or any one board member, can help solve the problems at United is an open question. The U.S. attorney for New Jersey is reportedly investigating whether the airline added a money-losing flight to Columbia, S.C., at the behest of former Port Authority Chairman David Samson in exchange for renovations United wanted at Newark Liberty International Airport.
The allegations are extremely serious, and the board — possibly under investor pressure — appears to be trying to reassert its control, said Pace University professor John Alan James, who specializes in corporate-governance issues and has consulted with United.
Tapping a banker as chairman could increase investor confidence because banks "are the lifeline of airlines" and financial expertise is crucial for the transportation industry, he said.
The board "is trying to show the shareholders that they're in charge, and that they have two heavyweights, a banker and a guy who understands transport law," leading the reforms, James said in reference to Meyer and Oscar Munoz, a former president of the railroad company CSX who was named United's CEO.
They succeed Smisek, who had been in charge of Chicago-based United for the five turbulent years since it merged with Continental Airlines. Meyer had been a Continental director and eventually became United's lead independent director.
United did not respond to a request for comment on Meyer's new role.
Meyer spent his entire career with KeyCorp and its predecessor Society National Bank in Ohio, which he joined out of college in 1972. He worked his way up to chairman and CEO of Society National by 1994 when it and KeyCorp in Albany, N.Y., merged to form a national franchise. He became CEO of the combined company in 2001.
In nearly 40 years at KeyCorp and its predecessors, Meyer saw it evolve from a regional player to one of the largest banks in the country. He spurred on its geographic expansion as CEO, a strategy that eventually attracted criticism for resulting in a far-flung and relatively inefficient operation by the end of his tenure. He handed the reins to Beth Mooney, his handpicked successor, in 2010.
Along with the overstretched branch network, the 2008 crisis and its aftermath also exposed problems in some of KeyCorp's loan products, like student, RV, marine and payroll lending, that Meyer had targeted and was then forced to scale back. KeyCorp also took $2.5 billion in Troubled Asset Relief Program money and was one of the last major banks to repay the government, ultimately doing so in 2011.
But KeyCorp's troubles during the crisis were not unique, particularly in its core Rust Belt markets, which were hit hard by the downturn. And Meyer deserves credit for managing to navigate the crisis without being forced to sell, and for establishing governance structures to fix the bank's lending practices and manage bad loans, said Bartlett.
"Key had some troubles and in a very methodical, workmanlike way he managed to address them," he said.
United and its board are now betting that he can do a similar job for the troubled airline.