Commentary

Munoz Retaking The Yoke At United

Oscar Munoz, who suffered a heart attack six weeks after he was named president and CEO of United Airlines in September and then had a heart transplant operation in January, will return to work full time next Monday morning. He’ll start off by meeting with disgruntled labor leaders that day but there are myriad other issues facing the airline that is still facing integration issues after a 2010 merger with Continental.

As a Bloomberg Businessweek cover story blasted in January: “UNITED’S QUEST TO BE LESS AWFUL. A bungled merger. A corruption scandal. Three CEOs in a year. But hey, at least the snacks are free again.” Not to mention “unhappy employees, tech meltdowns and delayed flights.” All that added up to “the worst customer satisfaction of any North American airline, with the exception of the low-cost carrier Frontier, according to J.D. Power’s 2015 ranking,” Reuters’ Olivia Oran reports.

advertisement

advertisement

“I am thrilled to return full-time to a job and the employees I love. Since September when I became CEO, our team has been focused on our employees, improving the operation and the customer experience, and the results are starting to show,” Munoz says in a statement announcing his return. 

He points to improvements in “on-time arrivals and completion factor” and the news release adds that the airline has been “upgrading its customer experience with free snacks and premium coffee, providing improved WiFi onboard, and modernizing its United Clubs and airport lounges.”

Brett Hart, United’s EVP and general counsel, has been filling in as acting CEO but Munoz has been participating in all major corporate decisions and meeting with employees, shareholders, and other stakeholders during his recovery, according to United. 

He “has plenty of challenges ahead of him,” writesForbes contributor Grant Martin. “Prior to his tenure, United suffered from the worst on-time percentage across the three legacy carriers while tension between employees and the management was at an all-time high. Disruption among frequent flyers was also on the upswing, as MileagePlus, the airline’s loyalty program shifted to a revenue-based model that roiled many of United’s most loyal customers.”

Labor issues loom large. United’s 9,000 mechanics last month authorized a strike in a vote rejecting a contract by a huge margin — 93% to 7% — the Chicago Tribunereports. “Separately, the airline remains in federal mediation with its flight attendants union to negotiate a contract for some 24,000 flight attendants at United and Continental, which merged in 2010.”

On the positive side, pilots approved a two-year contract extension in January and its 420 dispatchers have agreed to a tentative deal through 2021 pending ratification.

“During his brief stint at the helm, Mr. Munoz outlined a new strategy for the nation’s second-largest airline by traffic, one designed to improve employee morale, customer service and punctuality,” writes the Wall Street Journal’s Lauren Pollock.

Indeed, “Munoz has created an improved atmosphere since taking over, Sara Nelson, international president of the Association of Flight Attendants, told Bloomberg last week,” reports Bloomberg’s Michael Sasso. “She met with Munoz on Feb. 4, and even while on sick leave he appeared to be running the airline.”

“He’s back and in full control of the airline,” Nelson said. “He’s a medical marvel.”

The airline “has faced questions about how and when [it] disclosed information about [Munoz’] health status. The company waited four days to disclose the heart attack and surprised the market again with news of the surgery in January,” reports the WSJ’s Pollock. But  thanks to Munoz’s speedy recuperation and lower fuel costs, that may all be forgiven by investors as the airline posted improved profits in the fourth quarter.

Meanwhile, United this morning announced three new independent directors have been appointed to its board: James A.C. Kennedy, former president and CEO of T. Rowe Price Group; Robert A. Milton, former chairman and CEO of ACE Aviation Holdings, and James M. Whitehurst, president and CEO of Red Hat, an IT company,  and formerly an executive at Delta.

"We believe these accomplished executives, who have deep airline or other relevant experience, will provide invaluable perspective …,” says Henry L. Meyer III, United’s non-executive chairman. 

“In connection with the appointment of the new directors, certain current directors will step down from the board at or in advance of the 2016 annual meeting,” according to the release, which also says that a fourth appointment will be made “in the short term.”

Next story loading loading..