Flying Through the Pandemic With the New United CEO
Scott Kirby took over the airline six weeks ago with coronavirus halting most travel— what he does next will help shape what fliers experience for years to come
There’s rarely an easy time to become chief executive of an airline, in an industry with near-constant turbulence. Try doing it during a pandemic. United Airlines promoted Scott Kirby to CEO six weeks ago in a long-planned transition. He had already slashed schedules 88%—far more aggressively than competitors. He took on a lot more debt, mortgaging its frequent-flier program and selling new shares of stock to raise $10.65 billion in cash in addition to a $5 billion federal bailout.
Mr. Kirby never promised an empty middle seat, instead filling up the few planes United was flying, but was among the first to require mask-wearing onboard.
United shares, up 38% through Wednesday since he took over May 20, have outperformed rivals Delta, American and Southwest.
“You play the cards you are dealt,” Mr. Kirby, 52, an occasional poker player, says in his first newspaper interview since becoming CEO. He succeeds Oscar Munoz, who is now United’s executive chairman.
Mr. Kirby is known more for quick, datadriven decisions than for nuance. But he also angered customers when United, which had pledged to be more customer-friendly after dragging a passenger off a plane in 2017, changed policies this spring to deny refunds and force vouchers for canceled flights.
United’s rules changes violated Transportation Department regulations and left millions of customers with significant dollars locked up at United for canceled trips they might never reschedule. The changes were ultimately rolled back under pressure from customers, Congress and the DOT.
United says customers who took vouchers for canceled flights can now get a refund if they prefer.
“Recognize we were in a different environment where the normal refund policy was definitely not built for a pandemic,” Mr. Kirby says.
The refund resistance came from a real worry that the airline would run out of cash. As United raised liquidity, and as it heard complaints from customers, it went back to its original policy.
Does he regret the unfriendly customer change? Mr. Kirby says he is committed to doing the right thing for customers.
“You have to judge decisions in the moment when you make them with what you know,” he says. “If we were doing it again, we know a lot more about it so we might make a different decision. But we just didn’t know much.”
Research shows there are advantages to taking over in a crisis, says University of Colorado business school associate professor Stefanie
K. Johnson, who studies leadership and is the author of the recent leadership book “Inclusify.”
“People tend to view you as more visionary and charismatic and they are looking to you to create change,” she says. “So that gives you the opportunity to do it and have very strong support, assuming you have a very clear, compelling vision that you are communicating.”
The downside, she says, is that success or failure may be determined by factors beyond the CEO’s capability—an economic collapse that cripples all airlines, for example.
Dr. Johnson, a frequent United flier herself, says Mr. Kirby’s challenge will be in creating and communicating a compelling vision for both employees and customers.
“Kirby could stand to be a bit more visionary than just action-oriented,” she says. “Especially in crisis, people need to understand where they are going because they feel so lost.”
Mr. Kirby says he has come to understand that the pandemic has made his job more meaningful. Instead of plans to grow earnings and improve United’s product, running an airline now is about health and safety as well as survival of the company and its 88,000 jobs.
“I hate being in this, but in a way it is energizing because the stakes are higher,” he says.
United has decided to beef up its schedule in August in recognition that there has been an increase in demand for summer travel.
The airline plans to add nearly 25,000 more flights for the month than it will operate in July— about a 45% increase. But it will still be more conservative than competitors, operating only 40% of the flights it flew in August 2019.
Business customers just aren’t flying, Mr. Kirby says.
“The only strategy is to wait and be patient,” he says. “It’s great to be optimistic and it’s great to hope and want demand to recover, and we do, of course. But you also have to be realistic. People aren’t going to travel in the same volume and the same type of travel, until they feel completely safe, which probably means a vaccine.”
United is at a disadvantage compared with competitors because its network is heavily oriented toward international flying, which has been hit harder than domestic trips. International cargo has mitigated the impact of a dearth of cross-border passengers, he says.
The next reckoning for the airline industry may come Oct. 1. The federal bailout money required airlines to keep workers employed until Sept. 30. Without an additional bailout, massive furloughs could happen industrywide. While summer has brought some passenger traffic back, travel typically drops after Labor Day and this year it’s expected to plunge with a lack of business trips.
Aboard airplanes, mask compliance is increasing, Mr. Kirby says. United put five customers on its no-fly list because they refused to wear masks onboard. They are banned until the airline no longer requires masks, which will probably be after a vaccine is widely available, he says.
“While masks were controversial a few weeks ago, much less so today, and with our policy of willing to ban someone, we have very high compliance,” he says.
The decision not to block middle seats “was an easy scientific call and a hard marketing call,” Mr. Kirby says. Was it the right call? “Yes. You can’t socially distance on airplanes. What makes an airplane safe is requiring a mask, air filtration and cleanliness onboard.”
Mr. Kirby, who calls himself an amateur scientist and nerd who has been reading Scientific American since high school, lives on data.
In February, when he charted the course of the pandemic, it seemed clear it would be worldwide and very difficult to stop, since the virus could be transmitted by asymptomatic people. So United went into immediate worst-case scenario mode.
“We’ve been realistic,” Mr. Kirby says. “If we bet the house on things improving tomorrow and we’re wrong, you put the company at risk.”
Cleanliness changes that airlines are making will have to be permanent, he says. This won’t be the last virus, and customers will demand cleaner airplanes.
But flying will be different in other ways, too. Mr. Kirby says United’s main priority when the industry rebounds will be paying down debt. That means the airline will keep flying older planes longer. Mr. Kirby says investment in other passenger areas will resume after the pandemic.
For travelers, it will be more like the postrecession years of the past—you take the small improvements where you can.
On Monday, Mr. Kirby approved putting ice back on airplanes and starting coffee and tea service.