Good Airline CEO

[bobbysamd]

It's probably easier to begin by citing examples of bad airline CEOs.

How 'bout the following for a real cast of characters? E.L. Cord. Ted Baker. A few recent ones: Carl Icahn. Bob Crandall (some people might disagree, but his institution of the "B" scale was appalling). Dick Ferris. Of course, I save the best for last: Frank Lorenzo.

Some people might add Frank Borman to this list. Perhaps. I kind of think that he was a victim of circumstances. I have a feeling that many people might be less than thrilled with Stephen Wolf.

I'd say an obvious example of a great airline CEO is Herb Kelleher. From what I understand, he treats his people the way he'd want to be treated. I recall reading that while he makes plenty as Southwest's boss he earns far, far less than what the Wolfs of the world make. Based on my experiences from being employed in several jobs since I've been 14, I've learned that the quality of an organization and fair treatment of employees always starts at the top. Southwest's work environment is legendary.

Maybe other examples would be Juan Trippe of Pan Am, who was a great visionary, and Bob Six at Continental.

More specific to your question, I'd say a good airline CEO should be an aviation person. Not necessarily a pilot; I've learned in my experiences that pilots make horrendous company managers. It should be someone who understands the business, pilots, flight attendants, mechanics, CSAs, everyone. I realize that Herb Kelleher is a lawyer and not a career aviation person, but he learned aviation and is fun-loving and fair.

A good airline CEO should understand fair treatment of employees, including pay, hours and working conditions. He should be honest and above reproach, something like Caesar's wife. He should embody CRM, meaning that he listens to everyone and uses all his resources before making a decision. I'd also say in light of recent current events that a good airline CEO should understand accounting! By the way, I use "he" for ease in writing; no reason why an airline CEO can't be a "she."

Just a few of my .02 opinions.

 

[enigma]

Leadership.

Air transportation is a labor (read PEOPLE) intensive business. A CEO who has both "people" skills, and enough sense to trust his subordinates is well on the way to becoming the next Herb Kelleher. I'm sure that others may have other opinions about Herbs success, but my two cents is this: Herb led the troops, choose good subordinates and trusted them, he was loyal to his people. In return, he received loyalty, efficiency, and hard work.

regards,
8N

 

[ilinipilot]

As with any good leader it comes down to respect. Do you respect them. A lot of people disliked Crandall but I think some respected him. I am sure you have heard the famous quote regarding him. "I know he is an A&#% Hole but at least he is ours"

that sums up Crandall.

D

 

[bigD]

Herb spoke at my college last semester, and I had a chance to meet him. He was hilarious, and seemed like a guy that would just be fun to hang around. He certainly didn't have a stuffy, intimidating aura that many CEO's have.

During the Q&A session at the end of his talk, one student asked him what he does to relax and get away from the stresses of being a CEO. He answered, "Lots and lots of drugs and alcohol!"

When people were filing out after it was over, many of the students (most of them from the business school) made comments about wanting to work for someone like him someday. Obviously making sound business decisions is important, but as someone already mentioned, just being a guy that people want to work for does wonders as well.

 

[vja217]

The best CEOs (airline, or otherwise) are those that are willing to admit that they don't know everything and don't have all the answers. They are willing to find the best people to work with them, from management down to line-level, and give them all the support, trust, and resources needed to succeed. In this respect, a CEO like Herb Kelleher didn't really need to have any aviation background to be successful, just strong leadership and communication skills. On the other hand, such successful CEOs like Gordon Bethune have had a fairly strong background in aviation, or in his case, aircraft development and sales - which has certainly been a strong asset. Some would say (correctly I think) that Bethune is a tad on the egocentric side - but afterall, if you don't think you're the best, then why won't anybody else think that? Not everyone needs to write a book about it though

David Neeleman at JetBlue and Don Burr of People Express are examples of charismatic, entrepreneurial CEOs that had a vision and were able "to make it happen". Hopefully JetBlue won't end up like PEX.

Now, are we rating the CEOs on their ability to run the business to its maximum potential, or whether they were nice guys that you would want to have at your summer BBQ? If you look at contributions to the industry overall, you have to recognize Bob Crandall for inventing yield management and the whole idea of integrating commuterized reservation systems. But I guess if you are one of his B-scalers, then you might not enjoy having a beer with him during Labor Day...

 

[Saluki Dawg]

Bethune's next book is about to be released. The Title is "From First To Worst!" The remarkable destruction of Continental Airlines. Bethune's new approach to running this airline seems to be centered around RJ's doing as much domestic flying as possible. This shrinking to profitability will lead to Continental's eventual demise!

 

[CaptBuzzard]

I would say that Leo Mullin is a top notch CEO. He is an aviation leader, especially being that his corporate background was not in aviation. He is definitely a take charge person. He and his upper management personel are keeping Delta on top. Delta will survive through the uncertain times ahead mostly because of Mr. Mullin. Delta's shareholders trust him.

 

[enigma]

I would say that Leo Mullin is a top notch CEO. He is an aviation leader, especially being that his corporate background was not in aviation. He is definitely a take charge person. He and his upper management personel are keeping Delta on top. Delta will survive through the uncertain times ahead mostly because of Mr. Mullin. Delta's shareholders trust him.

Yea, but do his employees trust him? Serious question, I don't know that much about DAL nor, it's culture.
8N

 

[ifly4food]

Yea, but do his employees trust him? Serious question, I don't know that much about DAL nor, it's culture.
8N

I have never EVER heard a positive comment about Leo Mullin from a Delta family employee.

His reputation inside the company is that of a typical corporate raider who is out to make as much money and options for himself as possible than exercize his "golden parachute".
He is tremendously anti-union and vehemently opposes the unionized groups in this company. He spends more time lobbying on Capitol Hill for airline management rights (he's current president of the IATA) than he does in ATL running the company. He doesn't even have his primary residence in Atlanta. He lives in a 1/2 million dollar crash pad downtown (paid for by Delta) but commutes from Chicago. The story is that his wife is a member of "high society" in Chicago and wouldn't move down south with all those "hicks". His solution was to commute to work on a private jet owned by Comair (on Delta's dime).

He a typical bean counter who couldn't give a hoot for his employees as long as he makes a buck. He only has the respect of management and a few employees drinking the KoolAid.

 

[Humblepilot]

Further Back in History

Each company's culture requires a different kind of CEO. Herb was Southwest.

United had a great CEO once. William Allan Patterson. Elected to the presidency in 1934, he oversaw the merger with Capital Airlines and led the airline into the modern era.

Difference between Mr. Patt and our modern CEOs. He was a man of his word and was well respected by all.

Humble

 

[~~~^~~~]

I would say that Leo Mullin is a top notch CEO. He is an aviation leader, especially being that his corporate background was not in aviation. He is definitely a take charge person. He and his upper management personel are keeping Delta on top. Delta will survive through the uncertain times ahead mostly because of Mr. Mullin. Delta's shareholders trust him.

I'm not so certain. ALPA absolutely rolled him on the last contract (refer to the Wall Street Journal article contrasting Mullin and Giambusso). Leo Mullin has signed off on the "portfolio of carriers" concept to take advantage of ALPA's discriminatory and arbitrary treatment of "regional" pilots. Obviously, some of what Mullins has signed off on is not a long term solution.
Before contract 2000 was signed, I wrote on this board's predecessor, a quote from a recent Delta Chief Pilot. He said that Delta would never see a profit under this contract and that he doubted the Delta pilots would ever see their fourth year pay figure.
Delta has to eventually make a profit from their core business. The fact that Delta Technical Operations, ASA and sometimes Comair contribute to the Company's bottom line is not enough. Mullins and the board do not reveal the operating numbers for the Connection business units in an effort to obsfucate the painful truth that the core business is in serious trouble.
Delta's leadership has made bad calls on the labor issues, which are the airlines most controllable expense. Mullins feared the Delta pilots might strike, so he rolled. He thought the Comair pilots were not wealthy enough to take a strike and he held his ground. Both calls were incorrect. The Comair strike cost over $350,000.00 per pilot - obviously not a pragmatic business decision when the average Comair pilot only makes around $50K a year.
There is also the issue of loyalty. Delta never misses the opportunity to remind ASA and Comair that we are not Delta (only our profits are Delta). Now some one tell me why ASA and Comair employees would want to sacrifice anything to support a company that we are not a part of?
It is a lot like the slaves on the Plantation. Our profits keep it going, but we are not to be invited into the house. It is not a long term business model - all of this in my humble opinion.

 

[FL000]

IFF,

I don't know how much of your post is truth and how much is crew lounge BS, but I'll just ask this: who of the big 3 is in the best cash position in these down times? Who has the best balance sheet?

CEOs have but one goal, to maximize the company's profits. They couldn't care less about coddling us or any other unionized group. Accepting that given, I'll take Leo over these other Bethu...uhhh...buffoons any day of the week.

The proletariat/Marxist drumbeating in the industry is sometimes scary.

 

[publisher]

ceo

Often the times and the direction along with the stage that a company is in are key elements in what type CEO will be effective.

Herb at SWA became the airline. He had personality and so did the airline. He was irreverent to the traditional carriers and that was what was required to move the start up to its current position.

In the case of Leo Mullin, you have an established huge carrier. It may take more like a good administrator than the type of Herb personality.

There are so many factors that many times it is just the right person at the right moment who may not be great at some other time or point.

 

[~~~^~~~]

FL000:

The answer to your question is none. Look up the numbers for LUV and AAI. They are profitable. I look at current trends, not historical performance. Delta benefited from Ron Allen's draconian measures, that were applied during an expansive market bubble. However, what Ron Allen achieved carried a price in employee moral and loyalty. Now Mullins is faced with paying that price, plus paying the money he spent to buy labor peace in 2000.

By the way, do you see any reason Leo should be paying his former employer (McKinsey & Co) millions to ride around on LUV and AAI to see what they are doing right? Is there any re-organization that McKinsey and Co has participated in that has worked? Those snot eating, bed wetting, Harvard pukes sure killed State Farm Insurance Co. Remember them, they used to be the most profitable and largest personal insurer in the history of mankind.

So do you like the portfolio of carriers concept and the plan to minimize Delta's core bsuiness? Pan Am survived as long as it did by diversification, maybe that is all that can be done when mainline arrogance makes it impossible to run the core business unit profitably.

BTW, I'm a practicing libertarian anarchist. Pretty far "from the each according to his ability, to each according to his need" speech. You will not find many of us econ folks touting socialism. In fact McKinsey & Co. requested that I interview with them, an opportunity that I turned down because I felt the quality of their product was garbage.

 

[WileE]

Another example of the worst.

Jonathan Orenstein would be another example of the worst type of CEO to have running your company. The man is pure corporate raider with no management skills whatsoever. He is good at taking a failing company and turning it around, but cannot maintain it in any way shape or fashion. His total style of managment is that the employees are the enemy and he will go out of the way to screw them out of their last dollar.

It is like this man is willing to let the entire company go down the tubes rather than make one concession or admit that he might be wrong. As long as his own personally net worth goes up by a dollar, he would sell out his own mother in a heartbeat.

The employees of his companies have been screwed so many times, there is a prevailing attitude of not doing one iota extra to help the company, because you are only going to get bent over in return the next day.

 

[surplus1]

The proletariat/Marxist drumbeating in the industry is sometimes scary.

For those of us that are more intellectually challenged (like me) would you care to be more specific and translate what exactly you mean by that sentence?

 

[FL000]

Prof,

I'm aware of Southwest's and AirTran's profitability, which is why I shaved my point down to the "big 3". I know nothing about McKinsey and Co. or their relationship with State Farm. However, I don't see anything wrong with assessing the competitors' products for potential improvements using an objective outside source. Do you know exactly how much is being spent on McKinsey or what the ROI will be? Maybe Leo's past affiliation with them got us some perks we would not have gotten from another consultant. Who knows? I don't. Do you? I have contacted past employers about current business opportunities myself. If you know and trust those people, it's probably a good way to go. Not everything is a conspiracy.

Interesting that you would choose LUV and AAI as models of profitability. What's one thing those two have in common? Both pilot groups are self-represented.

Surplus,

I am just making reference to the "rise up" attitude of Marxists (a slight exaggeration of the haves vs. have nots cliché) who feel like their careers are so unfair and miserable. With all its imperfections, this lifestyle is the best I've been able to find. I won't be searching for another as long as the choice is mine.

 

[bobbysamd]

Mesa CEOs

I should have mentioned Ornstein and Larry Risley in my first post. I did work for Mesa briefly. It wasn't brief enough.

In all fairness, I never worked for Ornstein. Everything I've seen and read about him makes him sound to be Frank, Jr. I did work for Risley, before ALPA was certified. To say the least, lousy working conditions and bad-faith employee treatment. His lieutenants weren't any better.

 

[kilomike]

CEO

Herb Kelleher sums it all up as the perfect example of an excellent airline CEO. He is a leader who is funny, true, but he also EARNED the workers' respect.

Eventually I will have my own company, and I will be looking to Herb Kelleher as a role model for leadership.