What is takes to be an airline CEO?

[altscap]

To learn what NOT to do, do some research on Carl Ichan, Frank Lorenzo, and Jonathan Orenstein. you might look at Don Cardy as well (former AA before the flight attendents got him fired).

To expand your understanding of what is necessary in the business of aviation, or any inudstry, you really should read "From Worst to First: The Turnaround of Continental Airlines" by Gordan Bethune who is one of the very few CEO's the labor group has any respect for. he knows how to take care of his employees. Also, Lee Iacoca, former head of Ford Motor recently wrote a book titled (I think) "Where Have All the Leaders Gone?", talking about his 9 qualities a CEO should possess.

The problem is, the corporate leadership in this country doesn't have any fresh blood or new ideas. It's the same old farts bouncing around from one company to another. How often have you read an article about some bozo who used to be in the upper escelon at Pepsico being placed in the top spot at J&J (just an example). What does a food/beferage ceo know about the medical industy. NOTHING! But they all know ho wto manipulate the bottom line, and the stock price, and are excellent at Public Relations and telling investors what they want to hear, instead of telling them what's really going on.

Take jonathan orenstein for example. If middle mgmt tells him something he doesn't want to hear, he throws a temper tantrum like a 2 y.o. who isn't getting his way and finds someone else woefully unqualified to do the job, but will tel him jokes and keep a smile on his face. And he has next to no regard for his labor groups, in fact, it's well known throught the industry that he doesn't like pilots. This is why we've lost over 500 (nearly 36%) crew members this year, most of whom are FO's with less than 1 yr. seniority, and it's the same reason our reqruiting dept. is sitting on it's a$$ because everyone inthe nation knows not to come here.

One last thing, read those two books I mentioned, and do some research on Ben&Jerry's. They make money, they're profitable and their employees are happier than my collegues wil ever be.

 

[pilotyip]

ATW did an article on this 5 yrs ago. The title was "Airline Management a dying breed" The article basically said who would want to work in this business. Airlines have razor thin margins; they regulated to the ends of the earth, militant unions, and a fickle public that buys airline travel as a commodity. Who in their right mind would pick this for a career, unless for quick money or a passion for things that fly?

 

[Ty Webb]

Well, it does buy them the opportunity to come to my cockpit and shake my hand.


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[CitationLover]

In many cases I would say they start at the bottom and work there way up. At least that is the case at SWA. They like to keep it internal. That said, many other airlines have hired from the outside for top management. Stephen Wolf would be a good example he has led (for lack of a better word) a few airlines. Although every time he takes a job it has been to steer said airline to a merger. Flying Tiger, USAir. I think he may have been involved at republic as well.

and united gave him a lot of money to leave, $40 million in stock i believe.

 

[Publishers]

Most people underestimate the difficulty of running an airline. Having been an executive in companies in and out of aviation, I can certainly appreciate the differences in management of an airline versus other more traditional ones. First of all, the obvious. Airlines run 24/7 which in itself brings nuances that are not that obvious. Secondly comes the variety of regulatory bodies and governmental bodies one has to deal with. Sure, the FAA is obvious as is the TSA and others, but how about the number of different bodies you work with at every airport. Another major problem is that it is an industry with heavy capital spending and where fleet planning etc are made over long periods but where the market factors and much more short term.
Most CEO types like to go where they can make a few short term moves which have a big impact and consequently the stock changes for the better and they look like winners. That is for the most part not aviation.
For those that think this is easy and they could do better, they will find that there are a tremendous amount of decisions that are made to you not by you. Then there are the other issues like the weather that impact you, dealing with long term union issues in a market that changes weekly, sudden changes in regulations or maintenance problems. It goes on and on 24/7. Other businesses have problems too but nothing I have seen like airlines.

 

[capt. megadeth]

For those that think this is easy and they could do better, they will find that there are a tremendous amount of decisions that are made to you not by you. Then there are the other issues like the weather that impact you, dealing with long term union issues in a market that changes weekly, sudden changes in regulations or maintenance problems. It goes on and on 24/7. Other businesses have problems too but nothing I have seen like airlines.

Maybe so but they sure are not going to EVER be liked when employees take 50% paycuts and they get a $40 million bonus. The guy could be a genious but the bottom line is that IT JUST LOOKS GREEDY! It's the same as people thinking pilots are overpaid. No matter what an executive does (24/7 at the office, blah blah blah), in the end.....all people will see is the HUGE salary and bonus at their expense.

 

[pilotyip]

We are back to the difference between leadership, which it seems we have little of, and management that any Harvard grad can do.

 

[Lear70]

Well, it does buy them the opportunity to come to my cockpit and shake my hand.

And a fine opportunity it is, sir.

 

[airplane wizard]

Just the burning desire to line your pockets with $$$$$. No matter what you have to do, who you have to run over, just think of your wallet and that big fat bonus check. Who cares if you tank the company...after all you're rich F**K the little guy.

 

[CKJET]

It seems everyone agrees on this. Somehow the General and SWA F/O will find a way to mess this up!!

 

[BOHICAgain]

A complete lack of talent, ethics, and morality.

BINGO... ever watch WALL STREET

 

[whymeworry?]

The problem with airline CEOs is most have never worked in labor. Airlines are a very labor-instensive business. If you don't master the art and skill of working with labor, you are never going to make it as a leader long term.

They can't teach labor at Harvard/ Yale/ or any other business school. You have to spend time working on that side of the fence to learn what works and what doesn't. You have to get into the mind of your employee to understand him/ her. As a businessman myself, I always apply this principal when it comes to working with my labor pool. I certainly can't give away the store, that would be fooling business and fiscal practice; however, I can prevent a lot of frustration and distraction in the business if I just take the time to understand them, rather than wielding my "Big Boss" sword.

In the context of pilots as labor. They are the asset managers of the business. The number one asset in an airline is the airplane. Pilots control that plane from pushback to block in. They can taxi fast or slow, take initiative or just "do their job", save fuel or not, and most implortantly fly fast/ direct or not. The larger the plane the higher the by-the-minute cost. The larger the airline the more the potential exists that unmotivated pilots can decimate the bottom line due to economies of scale.

Airline managers, including CEOs, histroically maintain a rather adversarial relationship with their pilots (asset managers) and that ignorance translates to millions of dollars in extra costs at the bottom line. It would be in their best interest to work with the pilots and bring them into the fold as mgrs rather than beat them up because once the door closes and the jet is airborne, the pilot is in control of any extra costs for that flight. Pilot moral is one of the many keys to success at any airline. Don't manage the moral factor and you're staring down the barrel of a gun. Just look at what happened to NW this summer. UAL is struggling as well. Low pilot moral isn't helping UALs present dilemma when it comes to getting back into the black despite their CH11 process shedding billions of dollars of debt.

No airline has ever been successful in the long term by pummeling it's labor. Sure it may cost more to pay a bit more but that increased costs translates into a higher ROI (return on investment) over time.

And it's not all about costs. Sometimes it purely respect. I have seen our management refuse to provide a crew meal to a capt who was flying a 8.5 int'l flight. When they could have simply done the right thing and gave the guy a $6.00 meal, they chose to take it to a level 3 grievance and deny him what he felt was contracturally his. How much do you think that will cost the company over time? At let $20,000 from that one employee I would surmise. why would you want to expose your business to that kind of workplace behavior?

It's kind of like telling the neurologist he's a fkhole on your way into the operating room. Once you treat him with such disrespect, do you really think he's going to do the best job he can on your brain surgery despite the fact that he is suppose to give the utmost care?

I have worked in mgmt. I have run small charter airlines. I learned early on, its costly to fk with your pilots. So why would you? The only explanition I can come up with it simply because you don't understand this dynamic. Airline CEOs have no clue when it comes to pilot, and for that matter, labor mgmt.

 

[NuGuy]

Heyas,

Wow...that should go into FI Hall of Fame, "quality post" category.

WMW, very nice post.

Nu

 

[PhatAJ2008]

Thanks for the info, I will check out those books

 

[whymeworry?]

Heyas,

Wow...that should go into FI Hall of Fame, "quality post" category.

WMW, very nice post.

Nu

Thanks. Sorry about the grammar/ spelling errors. I tried to fix it but the edit button is not available for this post for some reason.

 

[pilotyip]

Management makes it happen

This is repeat but if fits here. This is a pilot board so saying anything in defense of management is like peeing into the wind, that it is going to come back to you. CEO's are not intentionally running airlines into the ground. They would very much like to succeed. For lack of other reason it would make their resume look great, they would be doing something no other CEO had ever done. Top management includes many besides the CEO, the CEO sets direction as requested by the board. The CEO has little control over the airline, the airline is run by regulation and union contracts. They are at the mercy of the purchasing public, who with Internet access has made the airline ticket a perfectly elastic commodity. There is little they can do inside their structure. Other high paid top management personnel, in Operations, Maintenance. Marketing, Legal, Finance, etc. have unique skills in dealing with large organizations. This makes them marketable when shopping for a job, unlike pilots whose skills are nearly universal. An issue of ATW in 2002 had an article about “Airline Management a dying breed”, the article basically said no one wants to do it. The good track record CEO’s are going to other industries. With tremendous, payrolls, overhead burdens, and extremely low margins, there is no tried and true path to success. Most have tried to increase market share, but this has lead to low price and ridiculous breakeven load factors in 95% range. What is management supposed to do? Eliminating management will bring the end quicker for the airplane industry, and their salaries are insignificant to the airlines operating costs. Without management you could not operate the airline, The FAA would shut it down without approved Part 119 key management. Would the pilots step up and become management for free in their spare time? Why is every time, pilot salaries come up, they are immediately compared to top management. I saw an article in ATW in 2001 that stated at DAL there were 17 members of top management made more than the top DAL Captain. The combined top 17 salaries equaled less than 1/6 of 1% of the combined pilot salaries. If management worked for free all pilots in the company would get a 1/10 of 1% raise. (for a $100K per year pilot that would be $3/wk increase in take home) Boy that raise would really make the pilot group happy. Top management possesses skills that allow them to move from job to job and command high salaries. And every one of these managers wants to see his/her airline prosper. They just can not do it.