United Airlines CEO building more unity
Munoz visiting frontline workers as carrier improves performance
Oscar Munoz began his tenure as CEO of United Airlines last year with an apology for the company’s lackluster performance. One year later, the airline boasts new labor contracts, record on-time performance and a recently created leadership position focused on customer service.
“I’ve had an interesting year, and all I can sort of hashtag it is #blessed,” Munoz said. “It’s just this personal level of engagement that we’ve been able to bring to the workforce that has created an energy and a momentum.”
Munoz visited the Chronicle Thursday to reflect on his year as CEO and discuss the future.
Key to his turnaround was
reaching out to employees, an effort that didn’t always succeed with the airline’s past leaders.
“We had clearly lost the engagement of our employees,” Munoz said.
Much of that stems from the 2010 merger of Chicagobased United Airlines and Houston-based Continental Airlines. Munoz wanted to eradicate the divide between former United and former Continental workers.
Before flight attendants of both airlines ratified a joint contract in August, they were unable to work side-by-side in the merged company under their premerger contracts. And if the mechanics ratify their contract, all United work groups will have contracts in place for the first time in nearly 10 years.
Munoz, who had a heart transplant in January, said he’s spent time with frontline employees and considers them professionals and experts in their work. This ultimately contributed to a boost in on-time performance, a metric United has struggled with since its merger.
In July, United’s on-time performance was 62.3 percent, up from 56.9 percent in July 2015. On-time performance in August was 61.9 percent, up from 61 percent, and September was 70.9 percent, up from 67.7 percent. Flights are considered on time if they depart from or arrive to the gate less than 15 minutes after schedule.
The Bureau of Transportation Statistics reported that 77.52 percent of United’s arrivals were on time during the first eight months of this year. United ranked sixth for its on-time performance, after Delta Air Lines, 79.91 percent, and Southwest Airlines, 79.85 percent. But its performance was ahead of American Airlines, 71.87 percent.
Houston-based airline consultant Pete Garcia credits this boost in performance results to leadership changes. Munoz was appointed to the position in September 2015 after former CEO Jeff Smisek left in the wake of alleged corruption involving the airline’s dealings with the Port Authority of New York and New Jersey.
Not only is Munoz encouraging frontline employees, but Garcia said he’s pushing that message down the chain of command. And he’s getting executives to cooperate, too.
“There’s a lot more working together,” Garcia said.
For all the improvements, United’s performance still isn’t impressive, said Michael Boyd, president of aviation consulting firm Boyd Group International. Regardless of where United and other airlines fall among the competition, a rather significant percentage of planes in the industry is more than 15 minutes late.
“That’s still not very good,” he said.
Stephanie Buchanan, vice president of United’s Houston hub, said the airline’s recent improvements also stem from employees who have figured out the best ways to work within new systems and procedures. The airline has invested in new technology, too, such as more modern scanners used to track bags.
Customer service is another area where the airline has faltered and is looking for improvement. Customers are particularly critical in Houston, comparing United to the heydays of Continental. Some travelers insist they can identify preUnited and pre-Continental flight attendants by their demeanor.
United announced Wednesday that Kate Gebo will be senior vice president of customer service delivery. She will oversee all of United’s customer-facing teams from booking to landing. Munoz said this will solve some of the fragmentation — “the left hand doesn’t know quite what the right hand is doing” — and Buchanan said it should speed up resolution and problem solving.
“Bureaucracy, corporate organizational structures are dangerous to themselves,” Munoz said. “Gone. One person has got all of this.”
Houston is also challenging the airline’s lucrative corporate travel. Low oil prices means fewer energy corporate fliers, and United reported a 14 percent drop in such travel during its thirdquarter earnings call.
United officials, who moved some planes from Houston as demand softened for corporate travel, are keeping a close eye on the energy sector. Munoz doesn’t know when United will move those aircraft back to Houston but insisted it will eventually happen.
“We will be back in this market very quickly when that jumps up,” he said. “It’s a huge market for us.”