United Airlines has a word for Delta Air Lines: “Healthy businesses don’t make excuses.” In a not-so-subtle jab, United argues that it takes a “no excuses” approach to issues that impact operations, even beyond its control.
United Jabs Delta: “Healthy Businesses Don’t Make Excuses About CrowdStrike”
In what was probably the most interesting interaction of this week’s Q3 earnings calls, Deutsche Bank analysist Mike Linenberg asked why United did not even reference the CrowdStrike issue in it guidance. While Delta bore the brunt of the delays and cancellations, United still canceled nearly 2,600 flights.
Mike Leskin, United’s Chief Financial Officer, answered first and offered an interesting concession as well as a dig at Delta:
“But healthy businesses, healthy industrials, healthy businesses, don’t make excuses about CrowdStrike, don’t make excuses about weather. We build into our guidance, the expectation there will be one act of God in a quarter that impacts the business in a negative way. And if that impact ends up not being so large then we can beat — coming at the high end or beat our guidance. If you have a series of events in a quarter or a massive event, then of course, you’re not always going to hit your guidance. But I think it’s just basic setting of targets in a way that expects it not always to be a perfectly sunny day.”
No excuses about CrowdStrike? I think it’s very clear Leskin was referring to a certain Atlanta-based airline. That United plans in for one bad weather even or other “act of God” each quarter may not be unique, but it is an interesting way to hedge bets and hope for higher returns, much like the concept of schedule padding, where a carrier blocks far more time than is typically needed for a flight to ensure on-time arrival.
United CEO Scott Kirby, who historically has avoided such poking of a competitor, piled on:
“And I’ll actually use this to expand on a cultural philosophy that I think is really important here at United. When I was a cadet at the United States Air Force Academy, the best thing I learned was no excuses, may have no excuses ma’am, no excuses sir. It’s easy to point to the things that aren’t your fault, they don’t feel like they’re your fault, but that was one of your basic answers. And we have tried to get that philosophy instilled throughout United.
“What that means is it forces you to constantly get better. It’s easy to have an MBA in a cubicle somewhere come in at 9:00 am on Monday in an air-conditioned office and calculate how much some event outside of your control cost. And it’s right, I mean it’s not that it’s wrong. But that then that’s the end of the story. If you have a no excuses mantra and you don’t allow people to even go calculate those numbers, it forces people to go find innovation, creative ways to get better and better and better, so that you can overcome those things when they happen. And we have said it a few times on this call.
“We are the innovation leader in the airline industry around the globe and second place is far behind. And the no excuses philosophy is a big part of that. It forces us to do things that we wouldn’t otherwise do if we let ourselves just look at the calendar or look at the bad things that happen and write those off. And so I think it’s a really important cultural point that the team has on both the revenue side and the cost side. And I’m proud of the team for taking it to heart, our Chief Operating Officer is in the room, Toby, and he says it in a different way, but great. He says, — we’re talking about things like the weather. And it may not be our fault but it is our responsibility and that’s the attitude we have here at United.”
It’s a powerful contrast between Delta CEO Ed Bastian, who continues to point fingers at CrowdStrike for Delta’s week-long operational meltdown, even though it uniquely impacted Delta (of course, suggesting something more was at play). If you think Kirby was not talking about Delta here, you’re really not paying attention, especially when he boasts that United is the innovation leader and “second place is far behind.”
But there’s a certain swagger here too, which must be always exercised with caution. There’s a verse in the Bible that says, “Therefore let anyone who thinks that he stands take heed lest he fall.” (I Corinthians 10:12). Kirby, you’re on notice!
To its great credit, United is investing in precisely the sort of technology that should minimize future CrowdStrike outages, weather delays, or other events beyond United’s control. But everyone has a meltdown now and then and if I were a betting man, I’d certainly wager that United’s day will come, in some form or in some way.
Yes, continue investing. Continue innovating. But humility goes a long way in building trust and confidence. That’s something Kirby might learn from Bastian’s failure as well.
image: Bill Abbott
This is only one reason UAL is a better airline than Delta. Irrespective of what a certain troll thinks.
Delta is a well run company for at the last 10-15 years. They have some of the best employees in the world of airline employees. Scott and his team should be recognized for a superb near flawless resurection of United. Neither carrier is perfect. It makes me nauseous to read Scotts bilious bloviations. He is better than that and he knows it, or ought to know it.
Okay so if United delays or cancels a flight and they won’t rebook you on another airline or reimburse you for hotels, meals etc because it’s “weather related,” I assume that excuse is acceptable to Mr Kirby?
I agree. UA is without fault. This year alone, I’ve experienced a canceled flight at boarding due to the captain not showing up (UA 201 on 28 September); More than two flight cancellations from NRT to DEN in August and September due to mechanical and weather issues; of course the IT glitch in July 2024 that cancelled my GUM to NRT flight and had me cancel my entire trip; and something weird as of late where UA is substituting the 77W on between GUM and HNL with the domestic 772 for whatever reason. It’s frustrating; it’s inconsistent; it’s unreliable. Try harder, UA.
Remember when UA melted down at EWR and Kirby blamed the FAA as he sped off in his private jet? Pepperidge Farm remembers.
Also cancelations the last 3 days:
UA – 43, 20, 30
DL – 15, 7, 4
Like I always said, DL has had 1 really really bad week, but I’d rather be with the airline that is generally
better on the other 51.
It was pride that changed angels into devils; it’s humility that changes men into angels.
– St. Augustine
Always be grateful that things are going well. I understand the need for a company to acknowledge success but be careful.
Sorry, but Scott Kirby thinks that UAL is the innovation leader. Is he being sarcastic? lol – too funny.
Especially when there is SQ and QR.
UNITED rising
Clever and amusing. I wonder what United’s excuse is for not giving FA’s a fair contract.
He will probably regret those words when UA has a comparable meltdown one day. And they will. The words will come back to haunt him when they are cited in lawsuits.
Scott Kirby is now working for his 4th airline and is a fairly young guy. Anyone w/ a modicum of intelligence can figure out what works and what doesn’t. And since Kirby arrogantly thinks he is the only one that reads every airlines’ financial statements and listens to their earnings call, he should all the more figure out how to copy the best airlines.
And from the first day that Kirby took over at UA, his goal has been to match DL’s earnings… he has done a herculean job of turning UA around by fixing the things that were broken. He has stated over and over that UA has learned from and is copying many of DL’s strategies.
But let’s also be clear that UA, despite 7 years, has not caught up to DL in terms of profitability as well as most other customer service and financial metrics. UA exceeded DL’s profitability on an OPERATING income basis for the 3rd quarter but did not on a net income basis; try not paying your interest expense on your mortgage or car payment and let us know how it goes.
and UA has not completely turned around employee relations. The FAs at AA, WN and DL have all received pay raises and UA didn’t hesitate to give its pilots pay raises but Kirby is happy to drag the process out with the FAs.
as for excuses about CrowdStrike, UA cancelled 2.5% of flights in Jul while DL cxld 4.2% and DL still has fewer cxld flights than UA (and AA) year to date and the best on-time of the big 4.
Kirby and co. love to talk about how they include one major disruption per quarter as part of their forecast but what the data shows is that UA simply runs a less reliable operation than DL (and at least on cancellations than WN) all of the other days of the year.
And UA will not exceed DL’s profits on an annual basis, even if the AFA fails to play hardball as the APFA did with AA. If the AFA really does its job, a settlement wiht the AFA will cost UA hundreds of millions of dollars more in labor costs each year plus a half billion or more in retro.
Kirby has fostered a mindset of arrogance at UA that is a combination of Kirby’s need to prove himself at his fourth airline and the natural arrogance that has been part of UA’s culture long before Kirby showed up.
And, UA also will hugely fail at the fleet expansion plan that Kirby laid out with the massive MAX and 787 orders that UA placed during the past few years. In contrast, DL will get more than 2X more new widebodies from Airbus that the entire rest of the US industry will receive from Boeing. And DL might very well receive more total aircraft than United will in 2024 depending on how quickly Boeing recovers from the strike – which might be in the settlement phase.
Kirby and co. love to tout their own greatness but manage to repeatedly deliver on the goals they set while trashing everyone else
Didn’t you once say on OMAAT that you never post on here?
What do you expect from the bozo?
Copy/Paste from another article. Way to just repeat your own garbage, Tim
No doubt when Ed Bastian heard about Kirby’s bellowing ‘shade’, I’m sure he just laughed with a bit of irony. You see, Bastian gets the job done incredibly well and has year after year – with a great team that he always cites and commends. He’s done that – pretty much so – with humility and charm. Scott Kirby has been – and continues to be – an arrogant horse’s ass.
I’d never call Kirby humble, but Bastian strikes me as incredibly arrogant.
Matthew. I respectfully disagree with you on that one. In his interviews with Phil Le Beau on CNBC, he comes of likeable, fully knowledgeable, and always thanking his team rather than grandstanding and ‘throwing shade’ to other airlines and executives. That’s not the Scott Kirby I see – who seems like more of an opportunist and egotist. But, to each his own opinion on this one.
I thought he was woefully arrogant and tone deaf during CrowdStrike meltdown, but indeed on this we will have to disagree.
Let’s be honest. United is in no position to throw shade at Delta (who are also overrated), especially with how much UA’s service has gone down since the Continental merger. The only reason why UA is better is because of their global network (as you may have seen, they have some unorthodox routes and previously unknown cities they’ve added in recent years). But in terms of the overall product (in Economy at least), they’re roughly on par with other US carriers. Even Lufthansa and KLM are better than UA, generally speaking.