United To Pay USD$2.4 Million To Settle SEC Case

The parent company of United Airlines will pay USD$2.4 million to settle charges it restarted a loss-making route so that a public official could get more convenient flights.

The Securities and Exchange Commission said the airline reinstated a nonstop flight between Newark and Columbia, SC, at the behest of David Samson, the then-chairman of the Port Authority of New York and New Jersey who sought a more direct route to his home in South Carolina.

The route had been cancelled by Continental Airlines prior to its merger with United because of its unprofitability. The SEC said a preliminary financial analysis conducted after Samson began privately advocating for the route’s return revealed it would likely lose money again.

The route subsequently lost about USD$945,000 before it was again cancelled, around the time of Samson’s resignation from the Port Authority, the SEC said in a statement.

“United initiated a money-losing flight solely to curry favour with a public official,” SEC New York director Andrew Calamari said. It failed to reflect “a fair and accurate depiction of the rationale behind the decision and its projected financial impact” he added.

The SEC said it would continue its investigation into the matter.