Shares of United Continental (UAL) are rising this morning after the airline named the president of American Airlines (AAL) as its new company president. The appointment is the latest management shake-up at United, following this month's appointments of a chief financial officer and chief commercial officer. Shares of American Airlines dropped, but later rebounded, following its president's departure.

WHAT'S NEW: United Continental yesterday announced that it named J. Scott Kirby as its president, a new position with the company, effective immediately. Kirby will be responsible for operations, marketing, sales, alliances, network planning and revenue management, United said in a statement. Kirby was most recently president at American Airlines Group, a title he held since American Airlines merged with U.S. Airways in 2013. Kirby began his career at America West Airlines in 1995 and was named president of US Airways in 2006, American said in its own statement. Robert Isom will replace Kirby as president of American Airlines, effective immediately.

WHAT'S NOTABLE: While United CEO Oscar Munoz described Kirby's appointment as "the culmination of the formation of my leadership team," American said in a statement that its management changes are the result of its board of directors' ongoing succession planning process and that the board "chose to act proactively" to establish a team that would best serve the company for the longer-term future. According to an airline industry source familiar with the changes, "it was mutually beneficial all the way around," The Wall Street Journal said this morning, citing people familiar with the matter. Kirby was told that he needed to "transition out" of American Airlines after the company's board decided it wouldn't be able to retain the executive team in their current roles for the long term, according to the report, which noted that Kirby did not have an employment contract or noncompete agreement at American "and he was free to make the lateral move to United." United, meanwhile, is looking to bolster its management team under CEO Munoz, who took over in September 2015. Earlier this month, the company appointed Andrew Levy, the former president and chief operating officer of Allegiant Travel (ALGT), as its new CFO, succeeding acting CFO Gary Laderman. United also said at the time that Julia Haywood, a partner and managing director for Boston Consulting Group, would become United's chief commercial officer. In April, United Continental announced a settlement agreement with activist investors Altimeter Capital and PAR Capital, under which two of their designees immediately joined the airline operator's board.

ANALYST REACTION: Following United's announcement, Savanthi Syth upgraded the stock to Outperform from Market Perform with a $65 price target. The analyst has increased conviction United will reduce it margin gap relative to its peers over the next 12-18 months and expects that competitive capacity pressures will likely improve and easing comps should benefit sequential revenue trends in 2017. Morgan Stanley analyst Rajeev Lalwani said his perspective on the leadership changes is that they are "supportive of the margin potential" at United, but "invites uncertainty to the revenue narrative" at America and "creates more downside than upside risk for the industry."

PRICE ACTION: United shares are up 7% to $50.23 in morning trading, while American bounced back from earlier declines and is now up 1.3% to $36.64.