Seat 2B By Joe Brancatelli
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At United, Meet the New Boss, Same As the Old Boss
September 17, 2015 -- United Airlines hired a new intern last week and on Tuesday he wrote to tens of millions of members of the MileagePlus program. He promised to learn all about running airlines, promoting teamwork and satisfying customers.

The problem? The new intern is Oscar Munoz and he's the boss of the joint, hired in a panic to run the listing carrier that trails the industry in virtually all financial, operational and customer-satisfaction metrics.

It's never wise to judge a hire, intern or chief executive, on first impressions. It's certainly not smart to make major pronouncements about the future of a stumbling airline based on a born-to-be-bland, platitude-packed first communiqué between the new leader and a disaffected customer base.

But United (NYSE: UAL) is in such trouble and the hiring of Munoz is so illuminative of everything the airline has done wrong in recent years that it's impossible not to make some dire observations and first-guess prognostications.

"First," Munoz told every United flyer the airline could reach, United "must focus on our customers." And since United hasn't focused on customers for the better part of 15 years, the new CEO promised to work on it as soon as he figured out how things work. "If our performance has not met your expectations, I want you to know I'm committed to learning how to better meet your needs and desires."

Good lord, kill me now.

I'm all for humble CEOs who don't profess to know everything and Munoz also conceded in his first call with securities analysts last week that he really doesn't know much about United Airlines. In fact, he's about to embark on a 90-day learning tour.

Yet that begs the obvious question: When the hell is United going to hire a boss who knows anything about running an airline?

The 56-year-old Munoz is the third consecutive top man with little or no hands-on experience in the airline business. He's the third chief executive in succession at the airline who comes from outside the company. He's the third suit in a row with zero street cred with United's fractious airline unions, unhappy customers and dysfunctional organizations. In other words, meet the new boss, same as the old boss. Don't get fooled again.

Munoz replaced Jeff Smisek, jettisoned from the emergency exit last week because he was enmeshed in a bizarre bribery/shake-down scandal involving the Port Authority of New York and New Jersey, the quasi-public agency that runs the region's major airports. Smisek had come to United as chief executive via the 2010 merger with Continental Airlines. A lawyer by training, he had little practical experience running airlines and fewer people skills. He promptly and publicly made a hash of the merger and offended both carriers' labor unions and passenger bases.

Smisek himself had succeeded an airline-ignorant oil executive named Glenn Tilton. He took over United in 2002 and quickly put it into what was then the longest, most expensive and most chaotic bankruptcy in aviation history. When the shriveled carrier limped out of Chapter 11 nearly four years later, Tilton cut himself a deal so sweet that The New York Times called it " insanity squared." The airline was running so poorly that in 2008 I dubbed it " Worst. Airline. Ever."

Now the newest newbie, Munoz, is being asked to figure out how to make sense of an airline that hasn't made sense for decades. Although cheap oil has made all carriers wildly profitable in the last two years, United is in dire need of fast repair.

  • It’s being lapped by Delta Air Lines, top of the class of the U.S. airline field.
  • The fleet is aging, often in disrepair and bizarrely configured. The pre-merger Continental aircraft have no first-class cabins on international flights, but pre-merger United planes are outfitted with an uninspired, uncompetitive first-class service. The pre-merger fleets have disparate business-class cabins, one fairly good (mostly former Continental) and one generally awful (former United).
  • Labor unions, several still working without unified, post-merger contracts, are angry and disillusioned. And it's not just old United versus old Continental. Continental's former workforce is split between a go-along/get-along cadre in Houston, where Continental was based, and a more contentious group based at Newark, its most important international hub.
  • The airline has lost several chief financial officers during Smisek's tenure and the position is currently manned by a temp.
  • Its information-technology is horrific and the airline has suffered several computer blackouts this year. Deployment of a long-overdue new website is still limping along spasmodically.
  • United has an unhappy base of business travelers, wary of frequent cuts to the frequency programs, indifferent service, too many delays and cancellations and too many regional jets
  • The airline has virtually no brand identity save its revived "friendly" campaign, which subliminally reminds customers of the airline's glory days when United could credibly invite passengers to "fly the friendly skies."
Other than his presence on the board of directors — Munoz has sat on United or Continental boards since 2004 — it's hard to see what the new guy brings to this decaying operation. His corporate background is almost exclusively financial and he was president of CSX, the freight railroad, when he was tapped last week for the United gig. As he admits, he doesn't know much about airlines in general or United operations in specific and there's no indication he ever opposed Smisek's blunders while sitting on the ousted CEO's boards.

Could Munoz fix United? Possibly. He was on the CEO track at CSX so at least one other organization thinks he's got the goods to be the boss. But it's not like United's board could know that he's the right man for the job. He didn't beat out a field of qualified candidates and certainly wasn't rigorously vetted. In fact, Munoz was hired so hastily last week that United told the Securities and Exchange Commission that he hasn't yet agreed to contract terms.

Scariest of all? Except for its relative financial prosperity, United is in worse shape than in 2002, when I wrote a column offering bullet points for the then-newbie Tilton. None of the 2002 issues were ever solved and now there are a dozen years of accumulated additional woes.

This column is Copyright © 2015 American City Business Journals. All rights reserved. Reprinted with permission. JoeSentMe.com is Copyright © 2015 by Joe Brancatelli. All rights reserved.