The SEC announced an unusual and interesting administrative proceeding today against United Continental Holdings, Inc., the parent company of United Airlines. According to the SEC’s order, United reinstated a money-losing nonstop flight between Newark, N.J., and Columbia, S.C., to accommodate David Samson, the then-chairman of the Port Authority of New York and New Jersey. The SEC alleges that Samson privately advocated to United that he wanted the route reinstated because he sought a more direct route between New Jersey and his home in South Carolina.
The flight in question had been previously canceled by Continental Airlines prior to its merger with United due to poor financial performance, and another preliminary financial analysis conducted by United after Samson asked for the route’s return revealed it would likely lose money again. Nonetheless, the SEC alleges, United agreed to to reinstate the flight because its 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.”
