United Airlines: Failure in the face of historic success

First Quarter earnings last year in 2013 for United Airlines was a disappointing loss of $362 million.  United worked extra hard to deliver even worse results in 2014 with a loss of $580 million.

All of this in the face of historic and near historic profits being enjoyed by airlines across the United States.  American Airlines Group is having a banner day but we’ll have to excuse some of that blistering performance as it’s most recently out of bankruptcy and it has yet to stabilized in its merger.  Regardless of my dampening the mood on AAG, they have done far better out of the gates than virtually any other airline and that ain’t nothin’.

It bets the question of what will happen to United Airlines and I keep visiting this subject as things keep getting worse.  I strongly suspect we will see a change in leadership in the near future at that airline as these results won’t be tolerated for very much longer.

That won’t solve the problem, however.  United’s problems are both organizational as well as culture based.  This isn’t an airline whose employees want transformative change.  In fact, there is a belief that if the leadership would just get out of the way and give them what they want in salaries, the airline will operate profitably. Each union holds the company hostage with poor performances and behavior that is a patient wait for the company to start to teeter again.

Overthrowing leadership rarely gets you what you want.  An ailing airline doesn’t provide leadership in salaries, growth or quality of life.

It will take a transforming leader to turn United Airlines around at this point and I think that person will be very hard and very elusive to find.  Such a leader will have to gain the trust of both sides of the company (United and Continental) will simultaneously imposing change and bringing about vastly better operational efficiency.

That’s a tall order for that airline.  Who do you hire?

It will be tempting for someone to hire a CFO from another airline.  United has enough financial management to run 4 or 5 airlines.  Those good enough for the job have the dream jobs of their careers already.

And the excellent Continental Airlines leadership is just kind of . . . gone.

It will be tempting to find someone who is already a top CEO or who has retired from an already successful company.  I believe United will need someone hungry to lead and transform rather than someone who has the mission to act as steward for the airline.

The right leader is always out there.  The trick is to find her or him in time.  The UAL Board will have to remove the current leadership, find a steward and then go on a search to find the right person for the company.  Waiting very long simply means that the company loses more money.  The merger is almost 4 years old now and no modern airline merger had bled red ink like this one.

I would go look at the leadership at airlines such as American Airlines Group (but be prepared to fight Doug Parker hard for any of them), Southwest Airlines and Delta Airlines.  I would look hard at Alaska Airlines as well.  Find your man, give him carte blanche to execute change and step back to see what happens.

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