Name: How United Airlines’ CEO Plans to Turn Around the Company
Uploaded: 2016-11-17
Duration: 9 min 41 s
Description: Oscar Munoz explains his vision.

Over the last couple of years we've heard a lot about United lagging its major competitors like Delta and American. Over the last couple of months United seems to have come back and the stock is coming back. What would you say the single most important thing that you have done as CEO has been? It's simple. It's Listening and learning from an incredibly wonderful family that we call the United employees. And over the course of the last year, they just remarkably have been astonishing, of how they've rebounded it in not only the work that they do, but sort of the spirit that they bring to you as a customer. Well you set a very ambitious goal of boosting profits by 4. 8 billion dollars by 2020, and as part of that you announced a new fair class basic economy, can you tell us about that, and and about how that idea came about. Well, it's simple. The idea came about the fact that, again, when you listen to your customers, customers want choice, and this new world, we're offered a lot of segmentation in the products that we buy and, so, Traditionally in airplanes, we didn't have much. We now have a business- first product that we call a United Polaris, for those people wanting that level of service. We have Economy Plus and we have Economy, now we have Basic Economy. And it's a simple. A sort of learning from a lot of our customers and a some of our competitors have rolled out the same, but again it's an issue about choice for those folks on a quick day trip or are price sensitive we're gonna offer those low fairs as well to them along with the amenities that an airline like us can bring to them. Right. And so, with no assigned seating and no overhead compartments, personally that sounds actually really great to me, I have waiting for people to sort through overhead compartments. But some of the media haven't had a very positive reaction, BuzzFeed called it an insult to human dignity. Has the media reaction surprised you at all. You know what, anytime we roll a new product, there's initially a little confusion then the following consternation. And then usually the facts, and the product, and all the documents get out and people get settled in unto what it actually is and it is an absolutely new product that's not taken away from current products which has been the biggest concern, I think. But at the end of the day, there's always that little confusion and consternation that I think we've gotten past over the last couple of days and People are selling in and waiting for the fares to roll out early next quarter. Right. And you mention the new super premium option Polaris, I understand that it has sex with a new bedding in the cabin and smell like showers in lounges. Which of those options super premium or economy do you ultimately expect will generate the most returns for the company. I'm sorry I didn't quiet hear that. Which of those products, super premium or economy, do you expect to generate the most returns for United? Well, I think it's a combination of all the products that we offer, right. Depending upon where you're flying. Certainly, on the international world, our upfront service and Polaris will be the biggest generator. I think on the domestic business, I think you'll see more of the economy plus and basic economy products generate more of that revenue domestically. Mm- hm. Fortune's Shawn Tully wrote in his excellent profile of you in this issue of Fortune that you ultimately don't think it's the amenities like Polaris that's gonna really boost United over its competitors, that it's the company culture. What do you mean by that? Well, it's beyond culture. We have historically forever been known as the friendly skies of United, and we kinda lost that nomenclature for a while. We forgot about it. We've re- learned it, and the way you relearn that is by re- engaging your workforce, and that's what we've been able to do and. People ask how you monitor or measure something like that. And I say, you know, it's simple. When you fly us, ask any employee, any United family member that you see and ask them how their feeling about their future, about their company and where they're headed. And you're gonna see a smile and you're gonna see friendly back in the skies again. And that's what you change. Because th products, like I said, and all those things. It's easy to match hard product. You cannot match engagement. You cannot match true hospitality and true friendly skies. So do you have any specific examples of what the new United looks like as compared to the old one? [ LAUGH ] Well, I think the smile factor. I'll just stay with that. Again, it's just been this wonderful engaging aspect of people inside the company treating each other with a lot more collaborative spirit and service, and then of course that obviously carries on to you as a customer. So I'm calling it the new spirit of United. And so it's hard to discern, it's hard to explain. But it's easy to see and feel, and that's what we're about. Right. And you mentioned in the story little things like better coffee and stuff like that. Are there really specific examples about how the new culture is playing out? Well, you know, listen to the product. Back to this concept of listening first. I heard from a lot of employees and customers that they were just tired of always having to say. I'm sorry, I'm sorry we dont have coffee, I'm sorry we dont have snacks, I'm sorry that WiFi is not working, and all those various issues. And so what we've been able to do is invest in those products, and prove not only to our customers but to our employees that we're truly do care about the level of service and how they provide that service And what the tools that we can give them. So it goes beyond technical tools which we provided a lot. But you've also got to do some hard products. So illycaffe has been a huge hit, our snacks, our stroopwafel. There's all sorts of little fun things that we do. But again, all of that has to be served with a smile and that has probably been the most critical thing that we have been able to do over the course of the first year Warren Buffett recently bet big on airlines, including United. Why do you think the investor is bullish on the industry? Well, listen, there's a lot of technical factors from the financial perspective that would warrant the sort of multiples that are gonna be created, that create a level of investment value for folks. And it's great to have someone like Berkshire Hathaway in, because they do give the Sort of good house keeping seal of approval to not only the industry, but to our company. We need an anchor tenant like that to give us credibility. But at the end of the day, there's also, at least from a United perspective, and I think when I talk to investors they're beginning to see it, we built the infrastructure and the platform from which we can grow. We've created a level of engagement in people that's not been seen in a while, certainly at our company. And now we've created a very. A defined strategy, as you mentioned the numbers before. And we put the right structure around it. I always say that structure follows strategy and we've got a whole new team of incredible folks and a strategy that was very well received a couple days ago. At least from the market place reaction. And so the combination of good management, with good leadership, and good strategy and an engaged family of 86, 000 people. I think that's a good combination for an investment and For you as a customer. Our aim is simply to be the best airline, not only for investors, but for customers and also for employees. Mm hm. And you also personally have a kind of incredible story. Just 38 days after taking this job, you had a heart attack and went on to have a heart transplant. I think a lot of people wouldn't come back after that, did you ever consider saying goodbye to United. You know what in my mind I knew I was physically sick but mentally I never thought of anything other than coming back. We were back and working fairly quickly even while in the hospital and while resting at home, but I'll tell you this is back to why I'm so excited about our opportunity, what brought me back and my family supported this whole heartedly. Was the fact that while I was sick, the volume of email, mail, food, flowers, all the different. And they came in from the entire United family. People that I had not met yet. Again like you said, I'd only been there a few weeks. The level of engagement, and support, and prayers, and guidance that they gave me just really resonated with my family. I mean there would be a bag of mail that would arrive almost every morning At the hospital and my children, my children would take the time to read that. And at the point we had the quote unquote morning reading where we would, my kids would read it. The doctors, the nurses, would all stop by and just to listen to the incredible, wonderful things that people from United would tell me about coming back, wishing me well. And that's what brought us back. So it was never a question in my mind or my families mind that I would never come back to the family. And how did that ordeal impact the company and how did it change you as a leader? I don't know that it's changed me. I've kinda always been this way. You do appreciate the miracle that has happened, frankly in my life and our lives with regards to My health event. But it really hasn't changed, I mean it's reinforced that my initial objective in joining the company is that you can build a great company that's good for investors, but also good for customers and employees. And excuse the pun, but it's great thriving business investment and great company But it comes with heart and a friendly smile and that's an initiative. Capitalism, business has gone, people have gotten sour over time over who we are as corporations but I think you can build a great company with heart. And we can't have the CEO of United on the show without asking at least one question about fares. Where do you think they're headed over the next year and do you have any predictions for holiday travel? Holiday travel? Holiday travel is looking fairly stable, nothing out of the ordinary. And then, as far as fares are concerned, obviously most of the airlines have a bias in that regard, with regards to stability and / or some upward yield movement. I think industry's been wonderfully, sort of, disciplined in how they provide capacity, which is a factor in yields. And so I think you'll see a little stability with maybe a little bit of an upward trend over the course of the next year. [ SOUND ] [ BLANK_AUDIO ]