(Corrects spelling of Wyman in paragraph 5)
* COO Smisek succeeds Kellner Jan 1, 2010
* Kellner to head new private equity firm
* Continental's shares end down 1.8 pct
(Adds analyst comment, bylines)
By Deepa Seetharaman and Paritosh Bansal
NEW YORK, July 16 Continental Airlines Inc
(CAL.N) said on Thursday that Chairman and Chief Executive
Larry Kellner is leaving after 14 years at the airline, and
named Chief Operating Officer Jeff Smisek as its new head.
Kellner, 50, is leaving at year-end to head Emerald Creek
Group, a new private investment firm based in Houston. Smisek,
54, will become chairman and chief executive officer, effective
Jan. 1, 2010.
There is a sweeping effort by carriers to downsize to
regain pricing power as the airline industry grapples with the
sharp decline in travel due to the global recession.
Analysts said the CEO change would not likely pose problems
for Continental shareholders or alter the company's direction
dramatically, since both Kellner and Smisek have similar
approaches to the business.
Both executives were nurtured by former Continental CEO
Gordon Bethune, who headed the carrier from 1994 to 2004, said
Andrew Watterson, airlines consultant with Oliver Wyman.
Kellner joined Continental in 1995 as chief financial
officer and was named chairman and CEO in December 2004. Smisek
joined the airline in 1995 as general counsel.
"Given that it's the same kind of vein of development,
you'd expect there would be the same consistency of approach,"
Watterson said. "I wouldn't expect any change in the direction
of the company."
Last week, Continental and UAL Corp's UAUA.O United
Airlines won limited immunity from the U.S. Transportation
Department allowing Continental to join United in the global
Kellner said in a statement that that approval would allow
Continental "to continue as an effective global competitor."
"With DOT approval in place, Smisek has a terrific jumping
off board in the next year," said William Swelbar, researcher
for the International Center for Air Transportation at the
Massachusetts Institute of Technology.
Smisek has already had a slew of responsibilities at the
airline including overseeing airline operations, human
resources and labor relations.
"Smisek is the one who came through the ranks and has done
a number of jobs along the way," Swelbar said.
"I think that provides Continental with a guy who
understands that the company needs to change as the industry
changes and may be more in tune with the stakeholders that are
important to Continental."
Airline consultant Robert Mann noted that Smisek has been
instrumental in forging strong relationships between employees
and management, ties that helped the company restructure
outside of bankruptcy.
"He's part of the great relationship that exists," Mann
said. "That's what allowed them to get through 9/11 and
consensual restructuring periods."
Kellner described Smisek as a strong leader who could lead
Continental through the current difficult operating
"It is the right time for this transition," Kellner said.
Continental's shares closed down 18 cents, or 1.8 percent,
at $9.96 on the New York Stock Exchange.
(Additional reporting by Kyle Peterson in Chicago and Karen
Jacobs in Atlanta)