Smisek was not the problem
 

http://www.chicagobusiness.com/artic...oreUserAgent=1

September 12, 2015
JOE CAHILL ON BUSINESS
This is not the change United Airlines needs
Comments Email Print

JOE CAHILL ON BUSINESS

United Airlines Transportation Airlines Jeff Smisek Joe Cahill on Business Opinion & Columnists Oscar Munoz
Uniteds-new-CEO-Munoz-is-wrong-executive-to-fix-the-airline.jpg
Photo by Bloomberg News
What United Continental Holdings needs is a high-level housecleaning that brings fresh perspective and superior talent to its executive suite. What it's getting is a new CEO with no airline operating experience but long ties to incumbent managers who bungled a merger that should have created the world's greatest airline.

Railroad executive Oscar Munoz was a director of Continental Airlines for six years before it merged with United in 2010. He was part of the board that handed control to a group of former Continental managers led by Jeffery Smisek, who resigned Sept. 8 under a cloud of suspicion stemming from investigations into the company's dealings with New Jersey airport officials.

Smisek's sudden ejection was only the latest in a string of fiascoes overseen by his management team. IT snafus, woeful on-time performance, labor acrimony and dismal customer service scores have plagued Chicago-based United Continental since the merger.

-
Financial results have been equally unimpressive. Although plunging oil prices have inflated United's profits, its profit margins are subpar and its revenue is falling while competitors' rise.

All in all, United has fallen far short of the promise of its merger. With an enviable route system and deep base of lucrative business customers, the carrier was expected to dominate rivals like Delta and American. Instead, it's playing catch-up, and observers blame management. “This was a merger made in heaven that was basically destroyed,” says Vicki Bryan, a debt analyst who follows airlines at bond research firm Gimme Credit. “And that comes from the top.”

United declines to comment.

-
Ironically, many believed Continental's management talent all but ensured the merger would come together smoothly. At the time, Continental was a Wall Street darling. United, meanwhile, had a long history of operational and financial underperformance.

Who better to run the combined carrier than the self-assured Texans who turned around Continental? Acting on that premise, directors gave the reins to Smisek, who quickly installed top lieutenants from Continental in senior posts. United veterans disappeared from upper management.

Apparently nobody gave much thought to the fact that Continental was smaller and less complex than United, let alone the combined carrier. Smisek's team soon proved unequal to the task of merging and running an airline so large.

A 2012 computer integration failed miserably, causing flight cancellations and stranding customers. Using Continental's revenue management system, the company cut prices unnecessarily, leaving millions of dollars on the table. Union negotiations dragged on, engendering worker resentment that spoils customer relations. Chronically late flights alienated the business travelers the new United was built to serve.

Operational and technical glitches persist. United's website crashed on the day Smisek resigned, and a malfunctioning computer router grounded flights in July.

Through it all, Smisek stuck with his Continental crew. Today, four of the six top executives listed with Munoz on the company website hail from Continental.

Given their repeated failures, you might have expected United to look outside the company for Smisek's replacement. But a board dominated by former Continental directors—including newly named Chairman Henry Meyer—chose one of its own.

Some suggest that Munoz's experience in a transportation industry—he had been president and chief operating officer of Jacksonville, Fla.-based CSX—prepares him for the job. I don't buy it. The differences between airlines and freight railroads vastly outweigh the similarities.

To fix United, Munoz must surround himself with top-notch airline executives capable of running the world's second-largest carrier. He won't find them down the hall from his new office.

Doesn't paint a rosy picture going forward. Hope management takes a good hard look at what needs to change

This is what I thought when I read who took over...another serial CEO.

Maybe not THE problem, but certainly the MAIN problem.

Cahill ignores or maybe didn't know that most of the former Continental management ( wall street darlings) left when the merger was agreed to ( some to Delta), with the leftovers running the show- which also included UAL's Pete McDonald and his toadies. Some of those remain today.

The assertion that Continental was "less complex" ( read less top heavy) was by design and part of the success story there.

The colossal IT failures began shortly after the CAL IT dept was displaced to Chicago. It was not a matter of IT scaling up, but new ( UAL IT management)

No one knows what was being said in the boardroom prior to the merger, and it may well be that Munoz was a dissenter from the start who is now saying, "I told ya so",, along with the CAL management that left when they learned of the merger proposal and Larry Kellner's refusal to participate.

Less complex in Planes, Employees, Route structure etc etc. UAL pre 9/11 was larger than the now combined company. The IT network at sUAL had already proven capable whereas the sCAL system was stretched beyond it's limits. Not meant as a slam to sCAL employees, but I have to agree that much of the senior management had bitten off more than they could chew. It's a moot point now. We're all UCH. I'm ready for less excuses from management and more doing.

Lets not forget how much LUAL had shrunk. Massive losses of Capitol, furloughed thousands. No thanks to that!!

captain Sleeves the unity man! Nice. Class act all the way. Can't you guys drop the crap?

Yes we had shrunk post 9/11. Went through a nasty BK and emerged more financially sound. Just like CAL did twice. What's your point? The author is making some true statements that the management team was in over their heads in dealing with a combined company more than twice the size that they'd ever operated and were not prepared to handle it.

This place as we all know needs a senior management team who possess the capability and desire to operate a major airline as a customer service entity. Secondly, the management team, middle and upper need a paradigm shift in how they interact with and motivate employees. Third, the silos need to come down.

A perfect example, why are the flight attendants afraid to tell the gate "not" to board when the aircraft is 85+° and the pilot's aren't onboard?

Agreed.
Snarky crap from both sides is just snarky crap. I am tired of the bad attitudes and negative comments. Its just not constructive. Frankly its pathetic. Lets move on and make it better. Identify the problem, look for solutions and try to avoid being the problem. Be professional. Wear the right wings (goes for both sides). We are now one big labor group. Like it or not we are in this for the long haul. Lets make it a good one.

My point is I do not believe we would be any better shape had the mgt. Come from the Blue team. Why is it ok to speak negatively about anything LCAL but nothing can be said to counter that if it speaks bad of LUAL.

Not speaking bad of anyone here...unless you were in MGT. at the time.

Agreed. How can we attract such a group? Throwing boat loads of money at someone has not worked. We had a pretty good group that left when ol'Jeff and the merger came to pass. I am hopeful Oscar does not belong in a trash can.

It's possible a bit of reality come home to roost when he called CAL a regional airline with poor management. He put the blame squarely where it belongs on an inept management team using systems and methods that should have been abandoned forthe more capable LUAL stuff.

I've said it before, the only reason United is doing ok is that DL, AA and SW have not launched a major competition plan to increase capacity on competing routes.

sleeves, your biggest problem is believing the stuff you dream up instead of accepting the facts. :D

Not so unifying, classy or forward looking either amigo.

Opening letters in April 2016, right????

Not intended to be classy or unifying. Just summarizing the initial post to the thread for the gentleman. He seems to lose focus after about the first paragraph.

BTW, we lost the opportunity for unity on day one, but we can still put a good face on it.

The reality is that LCAL was successful with good MGT. When they looked at merging with you our good MGT said NO we would rather quit. You have not had decent MGT for decades. Why?? Because smart MGT wants nothing to do with this toxic environment. We are now tied to the titanic. That is reality. Those are the facts.

Are we really going down this road again?

Remember Ratt? 'Round and 'Round.....

Sleeves I clearly remember a long layover in SFO in early April of 2010. I was out to dinner with two other crews, and we had all known each other for a long time. The topic of conversation that night was the news that had broken earlier in the day. The news was that UAL was in deep merger negotiations with USAirways. So much for any chance of a CAL merger being revived we figured. Obviously, Glen was serious about moving on. Given all of the previous work that had been done on a USair deal, we figured this was going to happen fast. Remember, this is already pushing two years since DAL/NWA.

That weekend, Glen was tending to his horses on his Santa Fe ranch when Jeff called. He begged him not to marry the "ugly girl." Tilton reversed course, and the rest was history.

Evidently, your management team was not comfortable with CAL and AAL being the last two legacy carriers standing alone. With major overlaps in NY, Latin / South America, and two large hubs close together in Texas, that seems understandable.

If you would have rather gone down that road, then just say so. I'm sure you would have been thrilled with APA.

LOL! you were in the room for that conversation with Glenn?

Funny, the insiders in the Wall Street Journal had a different take altogether on that US AIR deal.

IF there is any truth to your story, it is only because Smisek knew the CAL mgt would bail rather than do it and this was his only chance to sit in the big chair. Shows the kind of guy he is.

Larry Kellner told me personally he refused to do the deal because it was not a good deal and offered his resignation.

I saw him two years later and he said he was glad he left, but felt bad for the friends he left behind.

It's water under the bridge now anyway- some, like divorced wives can't let go. They are too fat and ugly to get picked up.

Wow line pilots all cozy with the suits!

Personally I don't believe squat that a suit tells me. If it's not painted in our colors on our ramp, or listed in our contract, I tend to take everything they say with a grain of salt.

Over the last 20+ yrs I've heard lots of suits say lots of things and most have been BS. It carries about as much weight as a TK rumor.

If Kellmer actually told you that he was lying. More like he knew he couldn't manage a company the size of a United then adding CAL to it would have overwhelmed him. The only people that thought merging CAL into United were the money people of both airlines. Tilton was happy to let JS run the merged company because of CAL's rough-shot treatment of employees. Something Tilton was unable to accomplish at UAL.

Would you care to give reference to the Wall Street Journal insider article you referenced?

"Kellner" dude. If you're going to bag on him at least get it right.

And to caveat your bogus caveat...you have no idea what LK thought or didn't think.

We can argue how we got here all day. You are right, it is water under the bridge now. What is undeniable though is that since the merger, UAL Management has made decisions that have alienated customers in ways that NEITHER company did before the merger. Both CAL and UAL, despite their respective Chapter 11 events, did find ways to take care of their best customers. Since the merger, UAL has left many of them feeling alienated. I believe our now departed CFO was even quoted as calling them "over entitled." The result is predictable.

http://www.nytimes.com/2015/09/15/bu...eep-climb.html

Neither do you nor does it matter. "LK" as you call him was gone before the MAD.

CEOs come and go. Yet the United Airlines name lives on. CAL is as dead as PAA, EAL, TWA etc etc. Let's try to be "United". Wear your pin, PSIS on the SCABs, and work towards flying the contract and look to be a unified group as openers will be here before we know it.

Of course I don't know, that's the whole point. No one does unless you were upper mgt at the time and in the room when the deal went down (or didn't, as in the first go-around). No one in these prior posts knows...yet they all claim to. I'll give you another acronym besides LK...how about GMAFB.

Don't have to know what Kellmer thought, he cut and ran leaving JS to create the biggest failure of an airline merger since FL created CAL/EAL merger. GUAFB GB or Kellmer are no better than the clowns we had running UAL over that period and in many ways worst.

Thank you.

Let's add their slowness in adapting to the current situation. They KNEW from the jump that their IT system which was based on Servers to a data Dump wouldn't fill the Bill. They Knew it Weeks befoe the last test, when they did the last Data test and the entire system crashed.. The new computer center at Elk Grove was already under construction. The Electronic log book is getting the once over by the FAA and it will work OR?
We'll quickly adopt the ELB United (S-UA) is already using.
I don't necessarily think Management was in over their heads as much as I think they were stubborn in wanting to ONLY do things Continental's way when much of S-CO's stuff wasn't "UP TO Snuff" for the operation we're running. (and it's still not!)

What's the difference between AMIS and SCEPTRE from a maintenance point of view?

Why not migrate sCO to AMIS, and then once everybody is on an ELB, migrate to SCEPTRE if that was to be the end-state?

Scepter has plenty of scalability to it. I belive DAL has recently migrated to Scepter also. Has anyone used the new ELB on the 777 yet? How does it compare to the old ELB?

I think Smizek put "yes men" all around him. to both protect him and inoculate him from the peasants. the result was a man lost in his own ivory tower of incompetence surrounded by a quagmire of underperformers and underachievers.

Listen, I've had lunch with two former airline CEO's. One Kellner, and one Gordon. It's OK to speak with the suits. They won't lie to you (they can't.) I woudn't disbeleive things senior managers or CEO's say, I would couch it, chew on it, and think about it. Sometimes they say things to get you to repeat them, other times it's different. it's all about the relationship. It's really up to you if you want to believe someone or not, it's also up to you weahter you should repeat something or not.

I wouldn't talk to either Jeff due to his arrogance or Lorenzo due to his breaking of ALPA. But, anyone else, I'd entertain what they had to say over lunch or a scotch. I actually had a captain invite Lorenzo into the cockpit. I left and went for a walk around the terminal. Same happened with Smizek. I went to the lav for while....seemed appropriate.

Um, sure.

FWIW, I've had an airline CEO directly and personally lie to my face and have it exposed ---very publicly--- as a lie exactly a week later.

Some of these claims would be a little more creditable if you'd included a selfie. Having dinner or drinks with a couple hundred of the CEO's most loyal employees doesn't count.

The answer lies in the age old problems of Silos within the airline (and most large companies) and the lack of leadership on the top of those silos.

It would have been extra work for the Maintenance division to migrate the sub CO 777s over to AMIS and then start working on getting an ELB for SCEPTRE. That work would have cost Maintenance time and money as a division so they didn't want to do it. Unfortunately the buffoonery of our leadership lets such "good for the division - bad for the airline" decisions go all the time! So all of the increased crew cost that Flt Ops dealt with, all of the lost revenue due to extra DH segments, and all of the QOL destruction that the pilots endured dramatically exceeded the cost that would have been borne by Maintenance, but that doesn't matter. Maintenance still came in on budget!!