Two large investors in United Continental Holdings (UAL - Get Report) served notice Tuesday that they are nominating a slate of directors led by former Continental Airlines CEO Gordon Bethune to the airline's board.

Altimeter Capital Management and PAR Capital Management, who together own about 7.1% of United's shares outstanding, intend to push candidates Bethune, Altimeter CEO Brad Gerstner, SherpaFoundry CEO Tina Sharkey, Carnival Cruise Lines (CCL - Get Report) executive Brenda Yester Baty, former Orbitz Worldwide (OWW) CEO Barney Harford and one-time Delphi Automotive (DLPH - Get Report) CEO Rodney O'Neal.

The funds said they are taking the action because United "has a clear record of sustained and substantial underperformance" and "an underqualified, ineffective and entrenched board." The company, they say, has been the worst-performing U.S. airline stock over the last five years, "despite premier, industry-leading strategic assets."

The announcement comes after weeks of private conversations, and one day after Chicago-based United named three new independent directors. Altimeter's Gerstner in a statement announcing the planned proxy contest called that move a "last-ditch effort" and "a cynical attempt to preserve power by this entrenched board."

"As long-term United stockholders, we have been greatly disappointed with United's poor performance and bad decisions over the last several years," Gerstner said. "Stockholders and employees deserve a proactive, well-crafted, and diverse board that has the experience required to end years of chronic underperformance."

United non-executive chairman Henry L. Meyer III in a statement called the nomination a "hostile action," warning that a proxy fight would distract management attention.

Chicago-based United Continental has been the laggard among the big four large airlines created via a round of consolidation in the last decade, with the company plagued by labor issues that have slowed integration following the former UAL's 2010 acquisition of Continental Airlines. The company, thanks to its Houston hub, has also been hit harder than most by the energy slowdown.

More recently, the company has been hit by criticism from investors after CEO Oscar Munoz, who took over last September after Jeff Smisek was replaced, went on medical leave after suffering a heart attack. Some investors have complained the airline did not offer enough timely disclosure on Munoz's health and prognosis.

Munoz is set to return to full-time duty on March 14. Bethune, who was CEO of Continental from 1994 to 2004, on CNBC Tuesday morning noted that he helped recruit Munoz to the Continental board last decade, saying the proxy fight "is about governance" and the board's "country club atmosphere" and is not a criticism of the CEO.

Altimeter, of Menlo Park, Calif., is no stranger to the travel industry, with Gerstner, an early investor in travel brands including Kayak Software, HotelTonight and Room 77. Boston-based PAR meanwhile is a veteran airline investor, contributing part of the $565 million in new equity America West Airlines and US Airways raised in 2006 to complete their merger. The firm also was an early investor in Virgin America (VA) , which went public in 2014.

PAR has been an investor in United Continental since the company was formed, and it invested in Continental prior to the merger. Altimeter has been an investor in United Continental since at least 2012, the first year the firm was required to report holdings.

United in a statement said that it held discussions with the investors, trying to negotiate a compromise, and even offering to amend its bylaws to extend its March 12 director nomination deadline. "Despite the company's offer, not only were PAR and Altimeter uninterested in extending the deadline, but they also refused to cooperate in making their nominees available to be interviewed ... before launching a proxy context," United said.

The airline's move to expand its board from 12 to 15 without a shareholder vote and ahead of a potential proxy contest is sure to be a matter of contention, and may not be met with much support in Delaware, where United is incorporated, if the activist investors choose to file a lawsuit.

United may need to worry about a 2003 Delaware Supreme Court decision finding that a move by Liquid Audio to expand its board "impeded and interfered" with shareholder efforts to exercise their voting rights in a contested board election. In that situation, the Delaware-incorporated company expanded its board to seven seats from five without seeking shareholder consent while it was faced with a pending proxy fight by activist funds seeking to elect dissident directors.

Gerstner and PAR CEO Paul A. Reeder in the letter to the board called the board additions "seemingly desperate actions" that they say "appear as a transparent and cynical attempt to maintain your official privileges" and power.

"When exactly did you determine that the board was so inadequate as to need four new directors, all at once, and without an annual meeting or a stockholder vote?" the activists wrote.

United Continental's annual meeting is likely to take place in June or July.

-- Ron Orol contributed to this story.