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Airline Company United Continental Appoints Two Directors Following Activist Pressure

In a freshly-amended 13D filing, Brad Gerstner’s Altimeter Capital Management LP disclosed owning 11.51 million shares of United Continental Holdings Inc. (NYSE:UAL), which accounted for 3.2% of the company’s outstanding common stock. Although the position remained intact since the previous 13D filing on the company was filed in early March, which also disclosed that Altimeter submitted a notice of intention to nominate six director nominees for election to the company’s Board at the 2016 annual meeting of shareholders, the 13D was amended to include that Altimeter and the airline sealed a settlement agreement.

In fact, United Continental reached an agreement with both Altimeter Capital and Paul Reeder and Edward Shapiro’s PAR Capital Management LP, which owns 14.39 million shares of the airline company, under which the size of the Board was increased to 17 directors and Mr. Shapiro and Barnaby Harford, one of the six Altimeter-director nominees mentioned above, were appointed to the Board. Under the terms of the agreement, United Continental Holdings Inc. (NYSE:UAL) will add an additional mutually-agreed independent director to the Board within six months. As a result of this settlement agreement, Altimeter withdrew its notice of nomination sent in early March.

The shares of United Continental plummeted nearly 10% on Thursday, after the airline company issued a weaker-than-expected guidance for the second quarter. The stock is 7% in the red year-to-date and trades at a forward PE multiple of only 5.8, which is significantly below the forward PE ratio of 18.5 for the S&P 500 Index. David Keidan’s Buckingham Capital Management cut its stake in United Continental Holdings Inc. (NYSE:UAL) by 45% during the March quarter to 45,345 shares.

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