kirby

Fortune Staff

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Kirby | 2022 Fortune 500

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Kirby

Kirby | 2022 Fortune 500 | Fortune

Scott Kirby talks about United turning a profit and the airline's biggest jet order.

United Airlines CEO Says Leisure Travel is "100% Recovered"

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scott. Thank you so much for joining us to talk about United Airlines. Let's begin talking about people flying again. How would you describe travel demand these days, especially coming after the long holiday weekend. Well, thanks for having me Susie. And we're really encouraged by what we see from travel demand. Leisure demand here domestically in the United States is more than 100% recover. It indicates the huge pent up demand, but also the desire to just reconnect with family, with friends to get back to experience. Now business demand is still down about 60%, but we expect that to start picking up in September after schools are back in uh and offices are starting to reopen and then international. Every time one of the borders open, we have a huge surge in demand. But of course, with a lot of international borders essentially closed. International long haul demand is still down. But all of this indicates that as we get the economy more open and borders open demand comes roaring back. How does all this Compared to pre pandemic levels? Leisure demand is above pre pandemic and another two are well below pre pandemic still. But that's because they haven't come back. Our view has been throughout. Were really confident now that business demand is ultimately going to come back. 100%. We don't think it's immediately think that's 2023 long haul international demand, we're pretty confident will come back at 100% Once the borders are open and once all the quarantine restrictions are down on the business demand part as you talk to ceos and business people, what are they telling you about their interests when it comes to business trips? As you know, we hear over and over in this new era of zoom that business travel isn't as crucial as it used to be. What do you say to that business travel is about human relationships, It's about connection and you can't replace that with zoom. I've kept track of some of the conversations I've had with various clients. It's going to permanently down fifth percent. Some of them are now was not gonna be down 10% as their brains are evolving to realize how much they miss The connection with humans. Uh and and that's why we actually really confident that business travel, some of it will be different, but that is going to recover to 100% ultimately, because business travel is about human connectivity and nothing about human nature changes resulting. Well, that's a really interesting observation. But you know, it's just not easy traveling these days. There are long lines for check in, There's a long wait times to get through security. Uh Their flight delays and airports are just so short staffed. How is all of the chaos, so to speak. Impacting your business and your booking? Well, United, it's been a little different than some of the what you've read in the media for for some of our competitors recently, particularly with staffing shortages. And United was unique were the only U. S. Airlines that negotiated a deal with our pilots union to keep them all in place, all employed throughout the pandemic. And as a result we are not having the staffing training issues that have happened at small. That said, you know, there are challenges around the system, you know, at all kinds of points. You know, with vendors with T. S. A. And T. S. A by the way is doing a great job, you know, but everyone kind of getting back normal even F. A. You know, just shaking the rust off a little bit. You know, you've been operating such a lower level and come back so quickly, even though it's lower than it was pre pandemic. Um It's coming back quickly and my guess is that we'll get the rush shaken off kind of around the whole industry pretty quickly and get back to having the travel experience that we all hope. What are you hiring plans during the height of the pandemic? United has so many layoffs and furloughs, tens of thousands of workers. Are you bringing them back? Well, we all of our workers are here now. Really what we had during the pandemic because we had some early retirements were about 13,000 people are the retired, but there's nobody on furlough, nobody laid off as we went through the pandemic and actually given our announcement last week for 270 new airplanes that were ordering. We expect to hire 25,000 incremental employees are, these are really great job. These are not jobs actually their careers scott. You've had a lot of time to think about and to prepare for this new post pandemic world. What are you doing differently at United? Whether it's about uh, customer experiences or other different things than prevent him? Well, you used the right word, customer experience. And really what we've done Going through the pandemic is we took this as an opportunity, I think to make a decades or the progress in a single year and the experience flying united today is completely different than it was before. We had over 30 point increase in our net promoter scores as we went through the pandemic, the announcement where we announced a week ago that we're going to order 270 new airplanes. The bigger thing for our customers is 100% of the United Mainline fleet flying domestically is now going to have a seat back entertainment on every airplane and we're going to have one for one bend. So new bends on our airplane that every single person can bring a roller board on board so that whole chaos of Russia to get on the airplane, you have room for your bag should be a thing of the past. Flying United Airlines, just everything we're doing is about using this opportunity to completely change The customer experience. I want to pick up on something. You mentioned a couple of times in our conversation about that new jet, order 270 new planes from Boeing and from Airbus. This is the biggest airplane order in United History. It's obviously a huge bet on the future of travel. But you know, there's still so much uncertainty about the covid threat and there's still uncertainty about the outlook for the economy. So I want to ask you, why did you do this now? Well, we have incredible confidence in the ultimate recovery of travel demand. And so I don't think this is as much about on the recovery and travel demand because I'm really confident that's going to happen. What we really made is a bet that customers care about the product. And then if we create a product, you know, with seat back entertainment with large bends with good customer service, we're getting rid of small regional jet to replace them with big airplanes. The customers are going to choose to fly United Airlines that they're not always just looking for the lowest price. We do offer a lot of really good bears, but they're not always just looking for the lowest price and that customers care about a quality product and that's really the best we made with this aircraft. Well based on what you're saying. Do you think the pandemic is over? Well, I don't think it's over nor do I think it will ever be over. I think this is now endemic to our society, much like the flu will probably have to get a shot every year. Um, but I think our ability to deal with it is so much better today. And you know, all the evidence for vaccines, even with the delta variance is that the vaccines are very effective at preventing severe illness. And so I don't think it's ever going to be over. But I think we have figured out how as a society to live with Covid and manage Covid and return to our normal behavior that we had before. How would you describe United financial health right now? You know, all through the pandemic, you were talking about losses and lay off and cash burn and now you're saying that United will actually post a profit when it releases second quarter results in a few weeks. So how was United doing financially? My, what a difference a year makes, uh, you know, we went from revenue down 99% at the beginning of the crisis burning $100 million a day of cat to now we expect to actually be back to break even in july. So it's really been encouraging and we're back to break even with, in a world where business demand, an international are still down, you know, 60 plus percent. That's really amazing. That's half our revenue. Um, but we took on a lot of depth. We raised over 30 billion of liquidity as we went through the crisis. So we're going to spend the next few years hanging down debt restoring the balance sheet. But it's pretty amazing what we're able to do from, you know, everything we did to manage through the crisis, but also what our finance team did to go raise capital to make sure that we could survive the crisis. Um, And we feel really good about where we're headed now. Um and it's really encouraging to see that we, you know, we finally got back to, to break you now in normal years, july is probably the most probable month of the year. It's a whole lot better than break even, but it's a very important milestone that we're going to reach. In july scott. You became Ceo, of United Airlines right at the beginning of the covid pandemic. Just as the whole world went into lockdown and air travel screeched to a halt. You became the new boss and your new job required a special kind of leadership. What would you say are the leadership skills that you tapped into the most? Yeah, well it was quite a time to become ceo of an airline, but in a lot of ways it was the best of times because it allowed us to drive decisive change. And some of the most important things early on in the world of uncertainty was to be decisive about taking action and confident. While we had a lot of uncertainty, have confidence about what the ultimate future was going to look like. While the near term looked uncertain to be able to paint a vision for our leadership team, but also for all the front, an employee of what our North Star was and where we were headed. And that vision helped keep us steady even when things got much worse. you know, in March and april and May, knowing that we had a North Star and a vision of what we wanted to look like at the end helped us immensely navigate through the crisis. Did you turn to anyone for some leadership advice before you started the job? And what did they tell you? I think actually probably the best mentor I had was was Oscar munoz, who I succeeded as a Ceo and you know, I learned a lot from him particularly about listening and how important it is to listen and as we went through the crisis, you know, I always used to be been used to being a my career kind of one that felt like I knew the answer and impatient to get to the answer, but forcing myself to listen to everyone else to get input, especially in a world of uncertainty, but Oscar really kind of was really the first part that I ever had that took time and mentored me and it was great to also be able to call him and talk through things even at the beginning of the pandemic, even though he was gone, you know, he was a wonderful, not just mentor and partner, but friends as well. You talked a moment ago about the importance of being confident for the sake of your team, What did you do? What did you say to motivate all of the united workers who continued working for the airline under the most difficult circumstances. A lot of it was about communicating and early in the crisis, you know, as optimistic as we are about the future today, we were much more negative about what the near term outlook was going to look like and it turned out to be right and I took some heat from employees for saying like this is not over and Mark in april and May last year, a lot of people are saying this is almost over. I took a lot of heat, but when it turned out the second wave came and the plant wanted lasting a lot longer that built immense credibility with employees and what I hear from them all the time now is you're such a straight shooter, you're so transparent, you're so honest. I do the straight from scott videos, you know frequently and I did it more frequently, beginning the crisis to just tell them what's going on. But always as much as I thought it was going to be bad in the short term confidence on what the long term. So you can, if you're honest with people, that's what people wanted, honestly don't vote smoke at them. If you tell them the truth and you shoot straight, it goes so far in the crisis and even further when the crisis is over because they know they can trust you. You know, and I'm sure you've heard this many times got that people say that the ultimate test of leadership comes during the period of crisis. As you look back on the covid 19 crisis, what would you say is the single most important leadership lessons that you learned through all of that? If I had to just pick one thing, I would probably say, communicate honestly and transparently Because that does more to build confidence with the 100,100,000 people at United Airlines or any organization and they're the ones that can make a difference. One person cannot do it on their own. But if you're communicating transparently and honestly, even when the news is bad, those people will help get you through the crisis. And so if I had to just pick one, I was honest and transparent communication

One of the many roles of CEOs and an important one is how you develop the leadership around you. And importantly how over time you work the succession planning process. And what we're announcing today is that I will transition to Executive Chairman of the Board in May of 2020, following our annual meeting. And I'm so happy and glad to announce that Scott Kirby, could become your new CEO, our new CEO. [ MUSIC ] [ MUSIC ] [ MUSIC ] You know, one of the early tenets that we had in our company was regaining the trust of you, our employees, and as I think of this transition and the period ahead of us, and there is no one I trust more than Scott to continue that legay. Personally I'm excited To spend even more time out with all of you listening to you, sharing your enthusiasm for the future and together building the best airline in the history of aviation. [ MUSIC ]

United CEO Oscar Munoz Will Step Down

Travel

Company President Scott Kirby will succeed him.

Company President Scott Kirby will succeed him beginning May 2020.

Year	Revenues ($M)	Profits ($M)	Assets ($M)	Total Stockholder Equity ($M)
2021	$2,171-23.5%	$-273-291.5%	$5,924	$3,084
2020	$2,838-4.5%	$14281.4%	$6,079	$3,369
2019	$2,97134.2%	$79-75.0%	$5,872	$3,213
2018	$2,21425.1%	$313121.5%	$5,127	$3,111
2016	$2,148-16.3%	$227-19.6%	$4,156	$2,269

Kirby

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