- Feb 14, 2004
- Total Time
I suggest you run very far away. He's 0 for 4 now.
Posted: 01 Dec 2009 20:14 Post subject: Try not to read this on a full stomach...
United Airlines: Regular Guy as President
CHICAGO (TheStreet) -- John Tague's appointment to be president of United shattered precedent because Tague is an itinerant airline guy.
Before he joined United in 2003, after two decades in the airline business, Tague, 47, worked for four little known airlines Midway, Air South, Vanguard and ATA. None existed before deregulation, and none survive today. (Anybody see a pattern here?)
While the airline industry is filled with similar career stories, few itinerants make it to the top at the five remaining, pre-deregulation carriers that collectively dominate the industry. United, in particular, has historically looked outside the industry for leadership: of the four CEOs it has employed since 1994, three came from the auto, timber and oil industries. The fourth was a career United employee. The president's job had been filled by CEO Glenn Tilton since 2002.
Tague provides a marked contrast. His father started out handling baggage for Pan Am in Alaska, advanced to run Hughes Air West, and later founded Midway. "I was weaned on airlines,'' Tague has said. He joined United in 2003 and held a variety of executive jobs before being named president in July.
"I sort of grew up on the other side of the tracks of the industry," said Tague, in an interview. "I looked wantingly at the kind of brand and the kind of company United was throughout the years. I suppose I always hoped and thought I might end up here. (But) I was actually ready to leave the industry when Glenn and I had our first conversation."
Tague is focused on the nuts and bolts at United, including operations, interacting with employees and assembling a top-flight management team, all areas that seem to have been long overlooked. Tague began to attack the problems in 2008, when he was named chief operating officer.
Now, operations are improving after a dismal 2008. Internal passenger surveys show improvement in workability of onboard equipment, cabin cleanliness and employee courtesy. Moreover, during the first three quarters of 2009, United was second among the five legacy carriers in on-time performance, and eighth among the top 20, a big improvement over 2008, when it ranked 17th among 19 carriers. On-time performance "gets to the competency of the airline, whether you're covering it in (the media) or our employees have mandatory overtime and can't pick up their kid at child care," Tague said. "It doesn't allow your leadership team to focus on making the company better when you're reacting to a schedule that's not industry leading."
As for the 36% year-to-date decline in United's stock price, Tague says: "We have to produce results and then we'll get Wall Street's respect. We are producing results, but where we are on that curve is something I don't know, (although) I think the commentary over the last few quarters has been very favorable in terms of our ability to control costs." In the third quarter, United cost per available seat mile excluding fuel fell by 1.6%, despite an 8.2% capacity reduction that would have been expected to lead to higher costs.
As a leader, Tague is a face-to-face guy, proud that he communicates constantly with employees. Recently, for instance, he brought senior leadership to Washington's Dulles Airport for meetings with local staff. "Whatever bubble we might exist in, we break by being out there," he said.
Most airline executives express similar intentions, but Tague's obvious love for airlines and broad experience enhance his credibility. Whether it also enables him to overcome the barriers that have long separated management and labor at United, who is to say? "Tague is not the worst of the worst," said Christopher Clarke, spokesman for the United chapter of the Association of Flight Attendants. "There are certainly people in the corporation worse than he is. But he is not our advocate. All of our current management is stuck in a concessionary mindset."
The principal trouble with United labor relations, Clarke says, is that flight attendants' pay scales today are about the same as they were in 1993. Although the union negotiated wage increases in 1995, bankruptcy cuts returned salaries to earlier levels. "Flight attendants are angry," he said.
The president of United's largest union takes a different tack. "From our point of view, Tague is a straight-up guy, personable, not aloof at all," says Rich Delaney, president of District 141 of the International Association of Machinists, which represents 17,500 United employees. "We meet regularly with him and the officers of the company after every board meeting, and he has been honest with us."
United is in contract talks with all of its unions: Pilot talks are producing the most heated rhetoric. Still, Tague said he talks to pilots frequently. "I go out and fly the line all the time," he said. "I have a very good rapport with the pilots in the company. I have very constructive conversations about the business and about what we need to do. That's where I find reality. It isn't in a blaze of union leaders' statements." A pilot spokesman declined to comment.
As for his management team, Tague says United has brought in executives like Joe Kolshak as senior vice president of operations; Jim Keenan, as senior vice president of United Services and Howard Attarian as vice president of flight operations. "We've also promoted a lot of people from inside the company," he said. "We're dealing with the issues around leadership and organization and focus in a way that would put the company on a path to realize its opportunity, which historically had not been the case." Consultant Robert Mann says Tague has reached out to employees during a troubled decade for airlines: It has included serial bankruptcies, sky-high fuel costs and a near-depression. Through it all, "these people day-to-day have to deliver excellent service to customers," Mann said. "If they are respected, they feel better and they do a better job."
Moreover, Tague seems to have succeeded not only in managing down, but also in managing up, as his career path at United indicates. "He has certainly played the game well in the executive suite," Mann said. "But I don't think he's forgotten where he came from."
-- Written by Ted Reed in Charlotte, N.C.