In 2016, United Airlines didn’t get Gordon Bethune back after all, but instead, they’ll end the year with Scott Kirby as the new President of the Chicago-based airline
Welcome to installment number “we lost count” in the latest edition of Airline Executives in transition, this time taking place between the world’s #1 and #2 largest carriers.
The past 12 months have been pretty remarkable, between Jeff Smisek resigning from United (and his successor, Oscar Munoz, going on an intermittent health leave in the aftermath), Bob Fornaro replacing Ben Baldanza at Spirit Airlines, Christoph Mueller voiding his position at Malaysia Airlines roughly one year in to head to Emirates, and now Kirby’s rather sudden departure from Fort Worth. I could go on,
To dovetail off Matt’s post yesterday, where you can read the finer details about Kirby’s lateral move to Chicago, there are still many unknowns circulating about what prompted the “Kexit.”
While messages from both carriers seem to indicate that the break was amicable, the abruptness of the situation is what seems to be raising eyebrows. After all, this is an Executive who has invested over 20 years of his career with the American Airlines brand, either working directly for the company, or for its vestiges by ways of America West Airlines and US Airways, now merged into the new American’s DNA. Alongside Kirby the entire way was Doug Parker, current CEO of American Airlines.
As of Monday, for the first time in over two decades, the two peas in a pod will be split between different competitors. Some theories suggest that Doug Parker is still far off the peak period in his career as the head honcho at American, and as #2 guy, Kirby faces a much shorter runway to ascension in a separate environment.
Others have hinted at the fact that his skill sets are desperately needed at the rebuilding United, who, despite having made tremdendous progress in repairing the damage inflicted by former CEO Jeff Smisek, still needs additional resources to tighten the ship in areas that mandate improvement. Moreover, while Oscar Munoz has been venerated for his ability to mend the mangled relations with his workforce, and help roll-out product improvements in an attempt to win back lucrative customers, the carrier is still deficient in creating a commercial and operational roadmap to put United on a path to sustained excellence. Since Kirby will be overseeing United’s operations, marketing, sales, revenue management, and network planning divisions, his addition will give Munoz some breathing room.
Whether this was an American-driven move or a United-driven move is ultimately irrelevant, in the grand scheme of things. In all likelihood, it is a combination of both. Kirby’s impact at American has certainly garnered plenty of attention in North Texas upon his arrival in 2013. Some has been received positively, some not so much. He’s been adulated for his operational mastermind capabilities, but critiqued for his personable skills and penchant for cost containment.
But Kirby wasn’t drafted to come to United to roll-out Polaris 2.0 or wrap up the joint ratification accord between the sCO and sUA cabin crews. Rather, he was brought on board to bridge the gap between United’s operational performance and Delta’s (let’s excuse the latter’s outage earlier this month for S and Gs) and lift its OTP percentage out of the 60 and 70 percentile doldrums and into the 80s and above.
If there is any feather that United would love in its cap, it would be bragging rights to improvements in its on-time performance from middle of the pack to top 3 among U.S. carriers, and it needed to happen yesterday.
In fact, if Kirby is able to make that type of magic happen, it would be a first for United , independently of its historical merger events. People might even write of the Summer(s) of Hell from 2000 onwards as buried memories. It’s a sweet taste of victory that sCO campers of the house certainly are familiar with from the Gordon Bethune and Larry Kellner days. For the sUA folks? Not quite so.
With Munoz having solved the vast majority of woes among United’s labor forces, and the introducing new product enhancements to come, many of the softer components of the core operation are out of the Intensive Care Unit. And, at a 79% OTP for 2016, United’s track record of delays and cancellations is no longer a sight for sore eyes.
But it doesn’t take a genius to understand that strong operational reliability creates massive shareholder value. Happy customers are the ones who arrive to their destination on time, on the same flight as their luggage. It is this, not the on-board bloody mary bar, that will make them want to consider flying United again next time they shop for travel. And, in turn, happy workforces become happy-er when their profit sharing checks reflect big bumps year-over-year with fewer cancelled/delayed flights, disruptions, mishandled bags, last minute equipment swaps, and pissed-off customers.
Just ask anyone who works for Delta or Alaska, and they’ll tell you Christmas came early in 2016.
Cascading from this, Kirby’s involvement in overseeing the commercial side of United’s organization will likely come with some cosmetic changes within the marketing/sales/inventory/planning sides of the house. Expect to see some changes that are fairly surgical, perhaps a bit invasive, cosmetic at vest. We may finally see some truncating of routes that either have been rumored from underperforming hubs, such as Los Angeles or Washington Dulles, or whose strategic importance has waned over time, such as Tokyo Narita.
Tallying all of this up (and I probably haven’t even captured half of it) it’s fair to say that the pool is much larger up in Chicago for Kirby (albeit frozen six months out of the year) than it is for him in Fort Worth at American.
Given the time-lapse between United’s merger culmination in 2010 and its passenger servicse system cutover in March 2012, which is nearing its five-year anniversary in six month’s time, the carrier should still be miles ahead of where it currently stands today.
But, the good news for United is that it has many of the tools that it needs in place. It just needs a more specialized leader to harness the right people with the right competencies to do the right things at the most optimal times in order to make it all fly.
Taking all of this in context, the situation is much messier at American right now than it is at United (which is tough to believe for some, others not so much). At American, the carrier is building a new Flight Operating System, which is still split between two platforms servicing L-US and L-AA aircrafts and crews. Without a unified contract, neither sets of crews can be swapped out for the other in case of irregular operations.
In the end, what’s important is not so much the why behind Kirby’s sudden departure from American, but rather, the how in terms of what value he will bring to United in a manner that supports Munoz’ vision. After all, Kirby will still be reporting to Oscar, the latter who has demonstrated his likeability very quickly in a short period of time. However, let’s hope that Kirby’s focus is more revenue-driven by identifying inefficiencies and fixing gaps rather than restoring the glory days of Jeff Smisek’s death by 1000 cuts. That may be a challenge for a leader who has a penchant running mega carriers like LCCs.
Smart move by Oscar, wise decision by Kirby. Now, its up to both of them to make the chemistry work despite their varied personalities. I’m excited to see what that future brings.