Commentary

Kirby Will Captain United Airlines When Munoz Departs In May

Oscar Munoz, a former railroad executive who piloted United Airlines through several turbulent incidences over the past five years, is stepping down as CEO in May. Scott Kirby, who joined United as president at Munoz’ bidding in 2016, will succeed him.

“As CEO, Munoz has transformed United’s culture and set new standards of operational and financial performance,” the company states  in the news release announcing the transition. 

“Munoz is best known  for being the face of the airline during the public relations debacle, when a passenger was dragged off an overbooked flight in April of 2017. In the face of outrage he testified before Congress that ‘we had a horrible failure.’ The incident sparked changes in the way United and other airlines deal with the overbooking of flights,” Chris Isidore writes for CNN Business.

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But “Munoz’s handling of the crisis prompted the United board to drop plans to elevate him to chairman. The CEO vowed to improve customer service and its image of treating passengers with indifference. That reputation was reinforced in early 2018 when a United flight attendant had a passenger put a pet dog in an overhead bin, where it died during a flight from New York to Houston. Once again, news reports portrayed United as a heartless airline. Within hours, Munoz issued a public apology and once again said his airline would do better,” CNBC’s Phil LeBeau reminds us.

The 60-year-old former president and COO of CSX Corporation was a United board member when he took the CEO reins from Jeff Smisek, who resigned  under fire in September, 2015. Munoz, who has also held senior financial and strategic capacities at consumer brands including AT&T, Coca-Cola and Pepsico, will remain as United’s executive chairman for a year succeeding Jane Garvey, who is retiring from the board.

Kirby, 52, helped CEO Doug Parker put American Airlines back together after bankruptcy and its merger with US Airways but was “abruptly let go as American’s president as part of succession planning at the company,” as The Wall Street Journal’s Alison Sider and Doug Cameron report.

“Parker and Kirby were longtime colleagues who led America West Airlines through mergers with US Airways and American Airlines. Together, they convinced labor unions and creditors to support a merger between US Airways and bankrupt American. After the merger, the duo focused the airline on efficiency over market share while trying to leverage the advantages of being the world’s largest airline,” writes  Kyle Arnold for The Dallas Morning News.

“Now the two will face off as leaders of two of the country’s biggest airlines on different trajectories,” he adds.

“Analysts said they were unsurprised by the leadership change, which had been predicted since Mr. Kirby was hired in 2016, shortly after Mr. Munoz underwent a heart transplant,” Niraj Chokshi writes for The New York TImes.

“‘While the timing of this transition was always a key topic, this has been largely expected by investors ever since Oscar Munoz hired Scott Kirby in 2016,’ Andrew Didora, an airline analyst with Bank of America Merrill Lynch, wrote in a research note. Mr. Didora added that he did not anticipate a change to the airline’s strategy,” Chokshi adds, pointing out that United’s stock has jumped more than 50% during his tenure.

“Executives who have worked with Mr. Kirby said he can be bold but brash, and some executives and board members at American saw him as unprepared to take the top job at the carrier, some of these people said. Mr. Kirby has received executive coaching at United, people familiar with the matter said,” the WSJ’s Sider and Cameron report.

“Mr. Kirby left American with $13 million in severance and was free to take a comparable position at a competitor. He was paid $5.5 million by United last year, while Mr. Munoz received $10.5 million,” they add.

“Given diverging performance at the two airlines since Kirby’s departure -- with United’s shares doubling and American’s losing about 25% -- industry insiders and analysts have questioned the leadership of American chief executive Doug Parker and heir apparent Robert Isom, and had speculated about Kirby’s possible return,” writes  Reuters’ Tracy Rucinski.

“When American ousted Kirby, it mentioned the ‘marketability’ of its executives and elevated Isom, then chief operating officer, to the role of president,” Rucinski continues.

Seems like marketability should be included as a marketable item for resume writers, no? 

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