My friend Ben at One Mile at a Time wrote a thoughtful but critical piece on the tenure of United Airlines’ CEO Oscar Munoz. While normally spot-on in his analysis, I view the matter differently.
I’m not going to dismiss the many unforced errors that turned into PR nightmares. Nor will I downplay unkept promises and the painfully slow rollout of Polaris Business Class.
But let’s take a step back and look at the bigger picture.
Improved Operational Performance
The biggest issue that plagued post-merger United was operational performance. It was terrible. Remember the “summers from hell” in 2012, 2014, and 2015? In June 2015, for example, only 42.5% of United flights left on time. Forget everything else: United could not even get passengers from Point A to Point B on-time with any reasonable certainty.
Since taking the helms of United in September 2015, United has dramatically changed course. Not only have I personally avoided a substantial delay for more than two years, but the stats are impressive: United’s operational performance is now (arguably) best in the U.S. industry. That’s a testament to the leadership of Oscar Munoz and the oft-maligned Scott Kirby.
This is the most important issue upon which I judge an airline. And on this issue, Munoz can point to unequivocal success.
Surging Stock Price
Since taking over, United’s stock price has risen and analysts predict it will continue to rise. Ultimately, Munoz’s most important contribution is adding to shareholder value. Without that, the airline ceases to exist. For better or for worse, that is the way business works in the United States.
True, most stocks have risen over the last couple years. But don’t assume that United’s leadership had nothing to do with United’s stock rise. Alaska’s stock has fallen by 5% in the same period and is way off its high of nearly $100/share last February.
This metric matters greatly and Munoz will be judged positively for UA’s share price growth under his tenure.
In the post-merger Smisek years, employees lost much of their ability to exercise discretion. Instead, they were kept on a very short leash. The result: paltry, often insulting compensation or lack thereof for service mishaps and other customer service failures.
This was a common occurrence:
That has changed in a big way. Each FA now has an iPhone and can compensate consumers on the spot for service mishaps. Gate agents and reservation agents have been given more discretion in handling irregular operations. For example, voluntary denied boarding credit may now reach as high as $10,000.
This translates into happier employees and happier customers. Munoz should be credited for recognizing that trusting employees is smart business. This was a promise he kept.
United is also trying to reform the customer mindset of its workers through its core4 training. Some employees are no doubt incorrigible, but this is a worthy effort.
The lottery scandal aside, employee morale is incredibly better under Munoz than Smisek.
More Competitive Product + Fares
On the product side, I find myself in the same boat as many: I’m buying more premium fares. That’s not because I’m suddenly flush with cash, but because United has wisely lowered the price of domestic first class tickets. Often dramatically. This has uprooted the traditional upgrade paradigm, but helped me to sit in the premium cabin on flights that matter most without breaking the bank.
And all things considered, the product is getting better. I’ve recently flown transcons between Newark and Seattle, Los Angeles and Newark, and Washington and Los Angeles. All featured lie-flat beds in business class. And prices were cheap enough that I just paid for the seat outright. The seat is the most important part of the experience and United is delivering.
Internationally, the Polaris rollout has been slow, but United still offers lie-flat beds across the fleet and the best bedding in business class in the world (as far as I am concerned). And as much as I hate cutbacks, I guess I cannot blame United: it doesn’t change the purchasing decision of most travelers, including me. United can get away with it. It’s just the reality of a profit-driven business.
Meanwhile, United’s international route map has expanded and Munoz + Kirby are aggressively fighting for domestic dominance…something Smisek all but abandoned.
I often post Munoz’s letters to employees. Actions do speak louder than words, but a well-developed moral character is a foundational to strong and effective leadership.
Munoz’s notes often touch me. For example, this letter on sexual harassment is powerful and inspires a common goal for the betterment of all.
A year after the Dao incident, he told a group in Chicago last week,
We had a truly horrific event last year that everyone in the world frankly heard about. It was flight 3411, with the doctor that was dragged off the plane. And people say, ‘Aren’t you glad that’s over? Can’t you wait for that thing to go away?’
That is the furthest thing from my mind and our mind. We want it front and center. We constantly want to be reminded of how things can go wrong so quickly.”
That’s encouraging to hear. Munoz is not sugar-coating United’s sins.
And he overcame a heart transplant and came back to work instead of retiring. This wasn’t for money: it was to make a difference at an airline desperate for effective leadership. I salute him for that.
> Read More: My Conversation with United CEO Oscar Munoz
Has Munoz exaggerated some of his promises? Of course. And he should be held accountable for that. But despite dead dogs and dragged doctors, the situation at United is not bad. I’d argue it is quite good. As a frequent United flyer, I recognize that the status quo represents a marked improvement from the Smisek era. I get to my destination on time and still find MileagePlus fare more valuable than AAdvantage or SkyMiles.
United still has great potential and has missed many opportunities, but it simply would be dishonest to tell you I’m not a happy camper flying United. I maintain that overall, Munoz’s tenure has been encouraging.
What do you think?
Munoz has delegated his tasks to Scott Kirby, who has destroyed much of Munoz’s vision. Have you seen Musk, Legere or Bezos do that? Those are what real CEO’s do.
UAL has underperformed LUV, DAL, AAL, S&P over the last year SIGNIFICANTLY.
The product is well behind DL/AA, rollout has been slow, despite them already being well behind.
I’d agree on moral character, but he is not in charge, Scott Kirby is. Ask UA employees how they feel about Kirby? I would never fly United until Scott Kirby is gone.
Chesterwilson has made an important point. I am a retired CO employee with friends still at UA. Please bear with me.
We live in an off line international city so my recent experiences on UA are limited. In the summer of 2017 I flew a couple of domestic legs as a pass rider and found the staff I encountered friendly and helpful.
This year our trip to the US starts on Memorial Day weekend so I purchased confirmed tickets using an employee discount for the first time. These are mileage eligible tickets, and are subject to denied boarding compensation, permit seat assignments based on the class of service as all revenue tickets are.
One ticket was a trip to Latin America in Business Class with a domestic connecting sector at EWR. My original flights provided a 2:30 connection at EWR because the other connecting flight gave me 44 minutes connecting time. Experience makes me very skeptical about the time allowed. Then I received a schedule change from UA moving me to the 44 minute connection.
I reached out to a former colleague in a Director level position to see if this connection is valid, and try to change my flight to much earlier (0600) departure.
I will quote his reply:
“Spoke to several colleagues in Res leadership. The infinite wisdom of the lot is to simply remind “the pax” that all UA20’s are refundable at this point and you should cancel, get a refund and rebook what you need on that night before flight. May surprise you (or not) that we are run a bit like Fort Knox and/or the Gastapo nowadays…..
I’m lucky they even returned my call…lol”
So my vote is for the Scott Kirby effect.
I concur with ChesterWilson’s assessment of the situation at UA. Munoz has either relegated himself or, via the board, been relegated to a figurehead. The rubber on the road is that of Kirby and his associates. It’s a brutal world, the business world that is, and while Matthew seems to have a personal like of Munoz, nice guys finish last. Quite frankly, Munoz is no longer up to the task of righting the UA ship. The backsliding on the Polaris project is probably one of the big signs that Munoz has lost control. Rolling him out like a wax figure to the cameras from time to time to address dead dogs, botched police raids on passengers doesn’t validate his 8 figure salary, bonuses and perks. Time to fly off to the sunset.
Munoz is a very weak CEO. Agree with others that he just do the talk and let Scott Kirby do the walk. United has become a joke airline since he came on board. People refer to it as the Greyhound of the skies. UA is far behind other US airlines in almost everything. Unless you are completely stuck in one of their hubs nobody flies UA because they want to.
Oscar Munoz was able to achieve labor peace within his first year even with a massive heart attack and subsequent transplant sidelineing him for several months. Thats something that hadn’t happened in the previous 5 years of the merger or even before that at UA. The front line employees love him and he attains rock star status everywhere he goes. Hell, even the photo that Matthew posted shows an employee taking a picture of him on his cell phone. This is why he won’t be going anywhere any time soon.
The Polaris rollout has been painful though new clubs are opening up in SFO and EWR in April and May so thats something. But they definitely over promised and under delivered on that one.
Santastico, you have no idea what you’re talking about. Every US carrier is essentially the greyhound of the skies domestically, transcon flights notwithstanding. Considering that UA has to compete with another major carrier directly at each of their hubs unlike DL owning ATL, MSP, DTW, SLC, etc, I’d say plenty of customers choose United over the competition even if you personally don’t fancy them.
Fly with DL, UA and AA and then let me know which one offers the best overall service. I agree the 3 US airlines are terrible when compared to other international airlines BUT among the 3 US airlines United is by far the worst.
Again, I could not disagree more. Over the past 3-5 years I’ve flown over 100k miles on UA and 50k each on DL and AA both domestic and international. Overall I’ve had a much better experience on UA than AA though much of my DL experience has been of the domestic variety. UA flies newer aircraft, their lounge experience is better in their hubs than AA and DL though AA’s Flagship experience is solid, and UA’s mobile app blows everyone else out of the water. I’ve received far more ‘sass’ from FA’s on DL than on AA or UA, but I’m not looking a private maid, just someone generally friendly that cares about service which I get 9 times out of 10 if not more.
And thats per year, 200k+ each year, so I’m not just some once a quarter flier, in case that wasn’t clear
I couldn’t be happier you like United. Enjoy the ride.
Apparently Bob does not fly through SFO, IAD, or especially EWR with their vaunted lounge situations
While I’m not in love with Munoz, I do think that he’s the best choice for now. The huge problem with United is Kirby.
heading in the right direction. they must push every single day to better.
Its easy to look like a champ when the economy is growing at 2.9% a year, planes are full, fares are OK and fuel is cheap. Lets see how UAL does when the economy slows and planes are not full. They will be forced to to cut prices to fill planes because they have lost many of their (previously) loyal customers. (Former 1K and One Million Miler) Given their massively higher fixed cost base (thanks to their unsuccessful strategy of paying employees a lot more and hoping they don’t suck as much) United will be the victim of what kills every company with a massive fixed costs base – operating leverage will turn negative and the company will get crushed as it turns to lower fares to fill planes. When people have a choice, they DON’T choose United. . You reap what you sow.
….and then they hired Scott Kirby……since then, UAL is already starting to go downhill like a rocket sled.