Investors decided Tuesday that adding Scott Kirby to the United Airlines turnaround formula made the company worth $1.5 billion more.
Shares of the airline rose as much as 9.58% in trading Tuesday against the stock’s previous closing price—sending the airlines market cap up to $16.6 billion on news that it had hired Kirby as president, away from rival American Airlines. The decision came as part of an ongoing reshuffling process within United.
Wall Street seemed to approve of United’s decision to hire American’s No. 2 executive, with Raymond James upgrading the stock to the equivalent of “Buy” following the news.
“Shares are likely to respond favorably to the appointment of Scott Kirby as President, a strong industry veteran and former President of American Airlines,” wrote the team led by Savanthi Syth. “Following recent management announcements, we have increased conviction that United will be successful in diminishing its margin gap relative to its peers over the next 12 to 18 months.”
Kirby began his career at the Pentagon, and has spent over 20 years working at in the airline industry.
The executive has also long been linked with the American’s CEO, Doug Parker. The two formed a partnership that was instrumental in two deals that created today’s American Airlines—the 2005 merger between America West and U.S. Airways, the other between U.S. Airways and American Airlines in 2013. Some assumed Kirby would eventually succeed Parker—though the role of heir apparent at American Airlines seems to have fallen to newly appointed president Robert Isom.
The Wall Street Journal reported that Kirby may have been asked to leave his position behind, according to people familiar with the matter.
Though analysts say it’s a gain for United Airlines.
Kirby is also known as “one of the best revenue managers in the industry,” wrote a team of Credit Suisse analysts led by Julie Yates. “Few anticipated CEO Munoz would be able to land Scott Kirby.”
Those skills will likely help United deal with its pre-tax margins, which have been lagging behind its peers since at least 2013.
Kirby’s background is also said to fill a gap on the executive board of United. The firm’s CEO Oscar Munoz joined the company in 2015 from the railroad industry, prompting activist investors to push the travel giant to bring more airline veterans into the fold. Critics also noted a lack of successors to Munoz, who is 57.
Kirby’s appointment also comes after United brought in a new chief financial officer, and new chief commercial officer.