In September 2015, United’s former CEO, Jeff Smisek, stepped down. Smisek had been involved in a scandal with the Chairman of the Port Authority of New York and New Jersey, where they had essentially scheduled a flight as a bribe in exchange for favorable terms for the airline. While that was the reason Smisek ultimately stepped down, most employees and customers would agree that this was long overdue.
United under Smisek’s leadership was toxic. The merger between Continental and United had just been completed, employee morale was low, and the airline was trailing competitors with several important metrics.
Oscar Munoz walks in, and we’re all in love
Once Jeff Smisek resigned, Oscar Munoz was immediately announced as United’s new CEO.
Munoz had been on the United board since 2010, and served as president and COO of CSX, a railroad company.
But my gosh, suddenly we all fell in love. We all liked Munoz and wanted him to succeed. He seemed like such a kind and caring guy who wanted to turn the airline around. Unfortunately just a couple of weeks after being appointed CEO of United he tragically had a heart attack. Fortunately he has made a recovery, and returned to United.
United employees love(d?) Munoz
It’s exceedingly rare for an airline to have a CEO who employees like. That just doesn’t fit into the typical dynamic between management and unions. But suddenly United went from having a CEO that almost all employees hated, to one that they almost all loved. I spoke to so many United employees, and without exception they said things along the lines of “we love Oscar, he’s such a nice guy who really wants to turn things around. He makes me proud to work for United.”
Obviously an airline CEO isn’t doing all the work themselves, and it can be valuable for a CEO to be likable. That goes a long way when it comes to creating goodwill.
But my gosh, Munoz had big promises for the future. Let’s just pick a few:
“Simply put, we haven’t lived up to your expectations… That’s going to change.”
“Our employees and competitors thought we were docile. We want to be defiantly disruptive. I don’t mean necessarily by launching price wars but by being the best at the basics – having the best customer service, the best on-time performance, the best coffee – in a thoughtful, not a testosterone-laced, way.”
“We are dedicated to setting the standard for customer service among U.S. airlines, as we elevate the experience our customers have with us from booking to baggage claim.”
“I was hired to make United better, and that’s what we’ll do.”
“We were like a bunch of nomads wandering through the desert. All with good intentions, but not moving in the same direction,” Munoz said to employees at a recent conference.”
Not only did employees love Munoz, but at first it seemed like United would actually be reinvented under him. In some ways he was lucky regarding when United Polaris was announced. He was able to reveal their new business class concept just months after taking the job, even though the previous management team had been working on it for years prior. Still, understandably some of the goodwill went to him.
Fast forward to August 2016, when Scott Kirby was appointed as president of United. Kirby was formerly the president of American, and prior to that was at America West, alongside Doug Parker. Bless him on his success, but the guy is best at spreadsheets. He’s not a people or product person, and he has little interest in morale or customer experience, but rather is exclusively focused on the bottom line (and I’m not necessarily saying that’s wrong for the leader of an airline, but it’s different than the vision that Munoz painted for the airline).
Since then, I can’t help but feel like United has been a complete you-know-what-show:
- United has had terrible press regarding several incidents that happened on their planes, which hasn’t helped the airline at all when it comes to their customer service image
- The rollout of Polaris has been horrible (from reconfiguring planes to opening to lounges to the amenities), and United hasn’t stuck to the promises they’ve made to their customers
- United tried to pull a fast one on their employees by introducing a lottery bonus system, which left a lot of people feeling bitter
- United tried to aggressively roll out basic economy, only to realize that passengers actually do have a choice of airlines
- Last October Munoz said on an earnings call that the airline had dug themselves into a hole, causing shares to drop by more than 12%
United is annoying their customers, their employees, their shareholders, and the general public, for that matter.
Who is to blame?
Oscar Munoz said that they “were like a bunch of nomads wandering through the desert, not moving in the same direction.” Scott Kirby’s appointment as president contributes to that problem, and doesn’t solve it.
When Munoz started, he said United hadn’t lived up to expectations, and that would change. Has it?
When Munoz started he said that he wanted United to set the standard for customer service in the US airline industry. Does anyone think that has happened?
Here’s the thing — I’m not necessarily so quick to blame Munoz here. I get that airline CEOs make promises they can’t keep (like Jeff Smisek promising that they’d make changes that we like under his leadership), and that they’re perpetually aspirational. Most leaders at big companies are like that.
I think the problem is that many of us assumed Munoz was different, that he wasn’t like “the other guys.” Actually, I think his ability to create that impression is exactly why he was hired, and what set him apart.
But as time passes, it’s clear United’s vision has changed. It’s clear that when Kirby was appointed as president, it was with the intention of eventually replacing Munoz. By doing that, I think United’s BOD is also offsetting any goodwill that Munoz created.
We all wanted to like Munoz. Fixing United was a tall order. Even though his intentions may have been good, I can’t help but feel like this “vision” of a new United has been a failure. I don’t think it’s fully his fault. Even if he wanted United to “sail in one direction,” United’s BOD undid that when they appointed Kirby as president. Kirby doesn’t care if the airline lives up to peoples’ expectations, as long as it’s profitable. Kirby doesn’t want to be “disruptive.” Kirby doesn’t care about making anything but United’s bottom line better.
All of that is totally fine (at least within the context of typical corporate laziness and greed), but that eliminates anything that Munoz has worked towards, or may have wanted to work towards.
What do you think — has Munoz’s tenure as CEO been a success or failure? At this point is it too late for him to turn things around?
We all know Kirby is next in line, and Munoz doesn’t have much to show for his vision, unfortunately. If I were a betting man, I’d guess that Munoz will step down within a year, and Kirby will be at the helm, and the old America West gang will be running two of the “big three” US carriers.