Story ID: BCUnitedAirlines10222015
United's Interim Leadership Stays Course on Improvements
By: Bill Carey
Caption: The carrier's management team is 'fully capable,' acting CEO Brett Hart told analysts and reporters in a conference call.
Word Count: 571
Beleaguered United Airlines pledged to continue efforts to improve its customer and employee relations under the second new chief executive it has appointed in the last seven weeks. “At its core, this is a [management] team that has been here” through three financial quarters of record results, said acting CEO Brett Hart. “I will [say] that the team that we have here now is fully capable and will in fact execute the plan for the rest of this year.”

Hart spoke during the airline’s third-quarter 2015 earnings call on October 22, three days after United named him to fill in for ailing CEO Oscar Munoz. United reported revenue of $10.3 billion for the quarter, down 2.4 percent from the previous-year period. The airline’s pretax earnings were $1.7 billion, making this its sixth consecutive quarter of “margin expansion.”

On September 8, United announced that it had appointed Munoz as president and CEO “effective immediately” to replace Jeff Smisek, who had led the carrier since its 2010 merger with Continental Airlines. Smisek and two other executives stepped down amid a federal investigation into United’s dealings with the former chairman of the Port Authority of New York and New Jersey. Munoz, a board member who was previously president and chief operating officer of CSX railroad, embarked on a tour of United hubs to meet with employees, among them flight attendants and mechanics whose unions are negotiating labor contracts with the carrier. But Munoz suffered a heart attack on October 15 and is now on indefinite medical leave.

United then named the 46-year-old Hart, its general counsel, to replace Munoz in an acting capacity on October 19. “The last several weeks have been very eventful for United, with news of Oscar’s heart attack hitting many of us hard,” Hart said during the earnings call from Chicago. “However, I want to assure you that the United team has never been more unified and committed to the goal of making United great again.”

A reporter asked Hart if his vision for the airline differs from that of Munoz. “Oscar’s focus and what he brought to us during the time that he was here was a renewed focus on our customers, on getting our employees the tools they need to succeed and to provide excellent customer service,” Hart said. “We are using what he provided in terms of a vision as a lens for executing our plan for the rest of this fiscal year. Those perspectives are entirely aligned and there will be no dramatic changes.”

Among performance results, United said that its on-time arrivals and mishandled baggage rate have improved over the previous year. It has also cancelled 30,000 fewer flights. The carrier counted a fuel-hedging loss of $250 million for the third quarter, which is offset by $600 million in non-fuel cost savings through the first nine months of the year.

During the third quarter, United took delivery of six Boeing 737-900ERs, four 787-9s and one used 737-700. It added to the fleet 16 new 76-seat Embraer E175s, and it now operates 75 of the regional jets. “We know that our business customers prefer two-cabin aircraft over single-cabin, 50-seat aircraft,” said Jim Compton, United vice chairman and chief revenue officer. “We have responded by significantly increasing the number of two-cabin regional jets, or mainline aircraft and routes where we previously flew small regional jets, without materially affecting capacity.”