United To Pay $2.4 million to Settle Bribery Case
Airline received approval for new hangar project after launching route specifically for Port Authority boss

The U.S. Securities and Exchange Commission on Friday announced that the parent company of United Airlines has agreed to pay $2.4 million to settle a case in which UAL re-instated a money-losing route to curry favor with the then-chairman of the Port Authority of New York and New Jersey, David Samson.


According to the SEC’s order instituted today, United reinstated a nonstop flight between Newark, New Jersey, and Columbia, South Carolina, at the behest of Samson, who sought a more direct route to his home in South Carolina.  Continental Airlines canceled the route due to poor financial performance prior to its merger with United, and a preliminary financial analysis conducted after Samson began privately advocating for the route’s return revealed it would likely lose money again.


Nevertheless, the SEC found that United officials feared Samson’s influence could jeopardize United’s business interests before the Port Authority, including the approval of a hangar project to help the airline at Newark’s airport.  The company ultimately decided to launch the route despite the poor financial projections.  The same day that United’s then-CEO Jeff Smisek approved the route's reinstatement, the Port Authority’s board approved the lease agreement related to the hangar project.  United employees received “no proactive communications” about the new route, said the SEC.


According to the SEC’s order, United circumvented its standard process for initiating new routes, and no corporate record at United accurately and fairly reflected the authorization to approve the money-losing flight route from Newark to Columbia.  The route ultimately lost some $945,000 before it closed again roughly around the time of Samson’s resignation from the Port Authority.


“United disregarded the books and records and internal accounting controls provisions of the securities laws while casting aside its normal decision process to re-enter one of its hub’s poorest performing markets,” said Andrew Ceresney, Director of the SEC’s Division of Enforcement.


Samson has pleaded guilty to bribery in a criminal case announced in July by the U.S. Attorney’s Office in New Jersey. United entered into a non-prosecution agreement with the U.S. Attorney and paid $2.25 million.