His latest blog post on the annual Shareholders Meeting and more.

Musings from the Friendly Skies

Sunday, June 15, 2014 If you could only ask one question...


Thank you all, once again, for your support of “Musings from the Friendly Skies.” Your kind words keep me driven, and with each post readership keeps going up. Today, as I write this, the blog has been seen by over 40,000 unique readers. The suits at WHQ know of this blog, and now thanks to Crain's Chicago Business and reporter Meribah Knight, the message is getting out and it is getting heard. Please keep reading and sharing because with each post, readership increases and that means there are more people out there that read about what is going on and agree that changes are needed.


Some of the responses I received to the last post, "Dear Mr. Smisek, It is about the Starbucks Coffee," have included a lot of inside information that sheds so much light on how Jeff and his “Team” operate. I have so much to write about now it was hard to decide on a theme for this article. For this post I will keep the focus on the Shareholders meeting last week, right of couple of wrongs on my part, and briefly talk about some of the inside information that has been leaked to me. I hope to be able to convey a comprehensive message that you all can take with you to keep putting pressure on UAL’s Board of Directors, the Institutional Shareholders, Mr. Smisek and his “Team,” and for United Airlines employees, your local MEC.

I am not leaving you

The first order of business to clear up is to let you all know that I am still loyal to United Airlines and you all. I have not defected, even though I did find out why other GS and 1K customers have defected. My decision to fly American Airlines to Chicago for the Shareholders meeting was solely to experience for myself what it is like to be a Priority Customer on another carrier. I could not go to the Shareholders to tell myopic Board of Directors that Jeff is letting United become a lousy product without having something to compare. It also did not help that the flights I would have taken on United were on planes that still do not have working entertainment systems. The one thing American and Delta cannot offer is the same personal connections I now have at United.

This was the first time in 20+ years that I have flown another airline, and sadly I have to report that American Airlines is the better travel experience. This trip reminded me of how good United used to be. There was a class and professionalism at American that over the last three years has been going away at United. At check-in, I was greeted by an American agent, not by an employee of an outside company. In fact, if American is outsourcing any part passenger check-in and baggage handling, I did not see it. Boarding seemed so much more efficient and we did not have to line up under numbered lanes like horses at a race track. It was also so very nice to actually have a red carpet for red-carpet service to Priority Access customers. United used to do that.

I went non-stop to Chicago on a 737-800, and for my return I wanted to see what it was like to connect through DFW. The ORD to DFW leg was on one of their old MD-80's and from DFW to LAX we were on a 757. The MD-80 was a blast from the past, but it was uncomfortable with less legroom and no entertainment system. On the 737-800 and 757, the domestic First Class seats are amazingly comfortable and the added 3 inches of leg room makes a huge difference. I was able to pre-order my meals, including the Snack on the ORD to DFW flight. As the flight attendants came through the cabin to take meal orders, when they reached my seat, with so much class they would say "Mr. Anderson, I see you have pre-ordered you meal, thank you." They use the overhead video systems to make automated pre-departure announcements, and while in-flight when the seat belt sign comes on, the movie was interrupted by an automated announcement asking us to return to our seats and fasten our seat belts. That little touch allowed the flight attendants to keep their attention on the passengers without missing a beat. I could even see how with automating that part of the job for flight attendants does allow American to staff some flights with one less crew member. I do not like to see anyone out of a job because of "automation," but if American has to make cuts, they sure are trying to make it less noticeable to the customer. It was also so very nice to be back on a 757.

The Shareholders Meeting
Meribah Knight at Crain's did a fantastic job of describing what a joke the meeting was. If you have not read the article, you can find a re-print here -

How United turned its biggest fan into a shareholder activist

Ms. Knight was so very kind and genuinely interested in what is going on. She follows this blog and what everyone is saying on Facebook, Twitter, Flyertalk and other social media forums. She also follows news coming out from the AFA, ALPA, IAM and other unions. She truly understands what we our fight is about.

Because the meeting was held at the Willis Tower, getting through building security up to the tenth floor had to be carefully choreographed. They set up a staging area in the First Floor lobby and then in small groups we were escorted to the security desk to obtain building passes, and then up the elevator to the meeting room. It was a small room, with a small podium set up in front of a whiteboard. All ten Directors were seated in the first row. Mr. Smisek, Brett Hart, Corporate Counsel and Secretary, and John Rainey, United's Chief Financial Officer were all seating on the podium facing the audience.

There were very few mangerial level employees in attendance. Surprising since they all worked in the same building. Mr. Compton was there, as well as Doug McKeen. I do not think there was more than 30 or 40 people in the room. I sat with someone I knew from Customer Service at O'Hare and an ORD based flight attendant. I did not see anyone there from the AFA.

Mr. Hart raced through the proposals on the agenda and then opened the meeting up for voting. I do not think it was even 30 seconds after the voting period was closed before Mr. Hart announced that all Board members had been re-elected and all the other proposals had passed. I asked Mr. Hart for the numbers, and his response was that they would be made available when the 8-K was filed with the SEC on Thursday. I was heartbroken when it was filed and found out that Mr. Smisek had received 90% of the vote to keep him as a Director and Chairman of the Board. That number was down from the 93% from the year before, but it just left me this feeling that there is nothing that can be done to get him out. Somehow he has locked in the vote from Institutional Shareholders, and I would sure like to find out how he managed to do so. For Shareholders that do not vote, those proxies automatically transfer to management, but I cannot believe that these funds that own huge blocks of shares do not concern themselves in these matters. There was something that came out of the Investor meeting held last November that influenced the big shareholders and Board of Directors enough to keep throwing their support behind Mr. Smisek.

Mr. Smisek then adjourned that portion of the meeting and then opened it up for questions. I raised my hand and was the first selected. This was my chance to ask my one and only question allowed. I held up a copy of the article that appeared last Monday in the Wall Street Journal, written by Susan Carey, the Journal's Aviation Reported based in Chicago. With my question and Ms. Carey's article in hand, I pointed out the fact that since the first quarter earnings announcement, all of the bad press that came from it and analyst opinions all came back to Mr. Smisek and his "Team" and their mismanagement. I asked the Board how they could still stand behind Mr. Smisek and his "Team." I sat down and looked up at Mr. Smisek. It may be wishful thinking and I was still pumping adrenalin, but I thinked he looked a little ashen. Mr. Hart appeared to give me a dirty look, and Mr. Rainey just held his head down. Mr. McKeen was just across the aisle and he would not even look at me. I could only see the back of Mr. Compton's head. Of course, Mr. Smisek's response was the same boilerplate answer he has been giving since the first quarter earnings announcement.

When the meeting was adjourned I met up with both Ms. Knight and Susan Carey from the Wall Street Journal. We were hurriedly shown the elevator and asked to take our discussion down to the lobby. Even though the meeting itself was fruitless and a joke, I will have to say I felt so very validated when both Ms. Knight and Ms. Carey took their time to ask me questions and actually understand my concerns. They both were in agreement with me that this new United does not have the right leadership and this product is only becoming worse.

I went back to my hotel and Ms. Knight called to confirm some background facts and told me she was going to be posting an article on-line that afternoon. She also said she she wanted to submit it to the New York Times and see if they would publish a personal profile piece. I was so thrilled to get her e-mail with the link and when I read the article I started to cry. I could not believe how much she had researched my efforts over the last six years and my personal background which shed some light on why I am fighting so hard. I then posted the link on my Facebook page, and the sharing began. By the time I landed in Dallas to change planes, I looked up the stats for my blog and there had been nearly a thousand referrals from Ms. Knight's article. By the time I landed at LAX that evening, the AFA had posted the article on their web site, and there was another thousand referrals to this blog. The message was getting out and Mr. Smisek was powerless to stop it. Going to this meeting was not a waste of time and money.


Going behind the scenes - Mechanics/Technicians


I said there were a couple of wrongs I needed to right. I have written so much about what is going on with the Flight Attendants, Pilots and Passenger Service, and have overlooked two very important parts of the airline, the Technicians and Flight Operations. Even though they are not on in direct contact with the passengers, they are very much on the front-line in the day to day workings of the airline.

The Technicians are the mechanics and others who make sure the planes are safe to fly and that everything is working properly. Customers do not get to see these highly skilled hard-working professionals in action other than an occasional minor on-board fix needed before a plane can push back from the gate. This group, from all three working divisions (pre-merger United, Continental and Continental Micronesia), is represented by the International Brotherhood of Teamsters. As with the Flight Attendants, negotiations to reach a Joint Agreement have been bogged down, and appear to be going nowhere. In the interim, management with their stubborn focus on cost-cutting, keeps pushing the limits of the three separate working Collective Bargaining Agreements. They too are dealing with forced cross-overs, furloughs and transfers. Yet, through all of this without hesitation, they do all they can to make sure every plane is safe.


The Technicians are highly skilled and have decades of experience. I have a lot of respect for them. From feedback I have received, the Technicians tell me that the Continental way of doings things is inefficient, and the penny pinching keeps the Technicians frustrated and lacking some of the tools they need to do their best work. For both pre-merger United and pre-merger Continental the focus was and still is on outsourcing as much as possible. So much so that management has lost sight of the real value of the assets they have on hand. In other words, they seem to think that the fewer higher paid company technicians on the payroll, the better it is for the company. The thing is though, is that the company has a need for fixed number of these technicians to be on duty every day to be available in the event a problem arises. There is a point where additional outsourcing cannot reduce the headcount. To do so means bringing down the standard of the product. If Technicians are not available to take care of these minor fixes, a flight can be delayed or canceled. That is a fixed cost that is not going away, so why doesn't United management give them the tools they need to do those same jobs that are being outsourced?


Additionally, with Jeff and his “Team” constantly looking for a way to cut costs, middle managers are being squeezed into choosing the lowest cost provider of services without thinking of costs that can creep up later and bite them in the a**. This does not mean that the planes are less safe, the FAA makes sure of that, but it answers a lot of questions as to why customers are seeing more minor issues with some flights going out with overhead reading lights that do not work, broken seats, inoperable lavatories or potable water supply systems. These are things will have to be fixed by a United Technician at the next available stop, which puts the plane out of service. That is an added cost that the middle managers do not concern themselves with; they just have to follow a mandate from above to keep costs in their department down.

When I met with with management back in April, they did point out that cuts that were made at pre-merger United did lead to a decreasing focus on regular, preventive maintenance programs which are now back in place. In particular they talked about the 747 fleet with its age and the countless number of parts and systems that have to be maintained. Ideally, an increased focus on preventive maintenance would mean fewer costly repairs later. However, I would guess that these preventive maintenance programs are outsourced off-shore where it can be done cheaper. I do know that jumbo jets undergo heavy maintenance with a contractor in Beijing, and the same goes for the Airbuses in Mexico City. I don't know though, by all appearances, I do not see where this purported increased focus on preventive maintenance programs is paying off. More and more I see posts on Facebook from Flight Attendants where one thing or another is not working. I have to laugh because the first two times I flew on Continental metal after the merger, the First Class lavatory was out of order. They did not even bother to have a technician look at them, they were only focused on an on-time departure.


cont'd next post