Joined APC: Feb 2005
CAL UAL merger - Bethune comments
This is an older article, although I thought the comments about UAL/CAL were interesting - and spot on regarding the ability of UAL management.
The former Continental Airlines CEO has some candid words on ...
Thursday, September 14, 2006
Gordon Bethune, who was revered as the chief executive at Continental Airlines, may not be sitting in a corner office anymore, but he still has plenty of opinions about the airlines, the industry's notorious egos and what it takes to effectively manage a business.
Nearly two years into retirement, Bethune, 65, still relishes the notion that he doesn't spend time arguing with government officials and doesn't go home with his stomach tied up in knots. Yet, he continues to entertain offers from the business world as if he might plunge back in any day -- if the right offer came along.
"What you got," he's apt to say, as if he's waiting for the perfect challenge.
Earlier this week, we caught up with Bethune in Newark where he was scheduled to attend a board of directors meeting at Prudential Financial.
-- Susan Todd --
You were recently named chairman of the board at Aloha Airlines. Is that a sign that you haven't got the airline business out of your system?
It just means the people at Aloha think I can provide some good advice and strategies for their future. I know the airline. It doesn't compete in any way and on any route or in any segment with Continental. I'm not in any -- forget the legal -- emotional conflict. I like Hawaii, and it's not a full-time job.
When you were headed out the door at Continental, it sounded like you might want another full-time job. Have you seriously considered any offers to run another airline?
There are a number of opportunities that may never materialize, mostly because of testoste rone in the business. People who are running these dysfunctional companies like running them. I think what I said was who knows what the future's going to be. I wasn't adverse to picking up the phone and saying hello and listening. The stuff I've been offered to do are things I don't want to do. One company wanted me to start nonstop service from the New York area to Europe. I won't mention who. It was funny be cause they had talked to Bob Crandall, who is the retired chairman of American Airlines. Bob e- mails me and says: "This guy is going to call you. He wants to start this new airline. He's got the money, and he seems very professional." I wrote Crandall back. I said: "I'm going to tell him no for two reasons, Bob. One, I don't want to compete with my old company and two, I don't want to help him lose all his money. It's a stupid idea." There are a lot of stupid ideas out there. I decline those opportunities.
How do you think the airline industry is doing these days?
It's evolutionary, just like it's always been. It's going through a lot of changes. 9/11 has forced a lot of companies to modify their behavior, both in the way they deal with their employees and the way they deal in the marketplace. Take a look at United, Delta, Northwest, US Air. Look at how much capacity they've pulled out. You know who made them do that? The bankruptcy courts, the creditors' committee, because the guys who are running the companies, they don't want to do it. They're all testosterone driven: Who's got the biggest airplanes, whose got the most, all that kind of crap. Well, that's never made anybody any money. Why are the carriers still struggling so with profitability? I think airlines are coming back because of the restructuring in the marketplace, the restructuring even in the way that unions see their relationships with the companies. Take a look at ALPA as a national organization. They've found they can't win if the company loses, nor can the company win if the union loses. That's the kind of mantra we had at Continental 12 years ago. Working together meant we all win or nobody wins. Take a look at the behavior in the marketplace and all the acrimony you're seeing and the restructuring and the lost pensions. You think people have learned anything here? There are no more pension plans. People have learned you shouldn't make promises you can't keep. People have learned promises, even though they're in writing and in contracts, don't mean anything. People have said, "We've got to work toward a different end." There's another wave of merger speculation moving through the industry.
Are more likely to happen?
That's logic. Have you ever tried to predict what a crazy person's going to do. You say ... he'll never do that, but he just did it. You think, rightfully, Continental and United are two companies that ought to get together and win the game decisively. But it takes two sets of intellect and objectivity to do that, and it's not going to happen. Why do we have six big airlines? Do we need six? No. Would the marketplace have the long-term stability of good employment and predictable careers and no bankruptcies, yes, it sure would. What keeps that from happening? The government has been almost paranoid about antitrust provisions, to the point where they stifle any kind of consolidation. I think they may be getting more amenable. (Doug) Parker's doing a good job at US Airways (which merged with America West last year). He's a smart man. But those companies didn't have any alternatives where other companies see alternatives.
You mentioned the pairing of Continental and United. Tell us more about that.
Well, it would be strategic. Just take a look at it. United has Chicago, a huge market, Denver, the West Coast. They have facilities in San Francisco and L.A. that you can't replicate and never will. They have access beyond Tokyo, which are governmental rights that Continental can't ever, ever get. They have access to London Heathrow, which Continental will never get. Continental owns New York, has the best European connections out of New York out of anybody. And Latin America? It's the No. 2 carrier. It's got a huge operation in Houston, which is contiguous to Mexico. You put these two companies together, it's called checkmate. You've got to have people with an IQ of over 40 to figure it out, and they kind of like what they're doing. I think Continental would be the management team, obviously, because they've got the expertise and the track record investors would like and employees would bet on.
Let's move away from airlines. Did you know Alan Mulally at Boeing?
Going to Ford isn't exactly like jumping from Boeing to an airline company, but what advice would you give him as he tries to turn Ford around? I'd tell him to use the judgment and the team-building and the customer focus that he used at Boeing. I mean, he doesn't need my advice, but certainly that's what got him a long, long way. Why would you change now? You've got to give Bill Ford a lot of credit. Here's a guy who is willing and, at least, cognizant of the fact that you can't reformulate a company with the same old guys. You've got to have some new thinking. That takes some courage, but at the same time with the belief that it couldn't be worse. If Ford now learns to build cars with the same customer appeal and integrity that Boeing builds airplanes, well ... wouldn't that be wonderful. So, I think, getting Mulally's a smart move. In the Navy, whey they shuffled people from one job to the other, we used to call it a new deal from the same old deck. You know, what difference did it make? Here, they've got a new player, a new way of looking at the business. It's got to be exciting for the people at Ford to think that something might just happen. What are your thoughts on the troubles at Hewlett-Packard's board? It just shows there's no substitute for good judgment. Judgment is just one of those things. Maybe you can learn from others. I think you can. Judgment isn't an acquired skill. It's an innate skill. In hiring executives, that's what I always look for, good judgment. You don't know what's going to happen tomorrow, but you know this guy usually has good judgment, he'll make the right call.
With all your free time, will you ever take up golf?
No. There's too many other things I like to do.