Last month, United Airlines appointed Scott Kirby as its new chief executive officer. The Chicago-based carrier’s former president takes the wheel at a vital time within the aviation industry. However, with a wealth of knowledge and experience under his belt, he will be up for a challenge.
A veteran in the game
Kirby was also the president of American Airlines between 2013 and 2016 before joining his current company. However, since 2006, he was also president of US Airways before it merged with AA. During his tenure at this operation, he demonstrated his ability to take action by looking at facts and figures. This approach helped him handle the consequences that operators faced following the 2008 financial crisis.
After seeing how passengers were opting to fly with other airlines due to US Airways not offering inflight internet, he introduced this feature in 2012. Moreover, according to View From The Wing, the 52-year was part of the team who pushed for American’s AAdvantage program to copy Delta and United in a move to a revenue-based program, instead of taking on its own model.
Furthermore, Kirby also held various other important posts at US and America West, which helped him on his executive journey. However, he traces his experience back to the 1980s, when he studied at the United States Air Force Academy, before training to become a pilot. This knowledge soon assisted him to hold a position as a budget analyst for the United States Secretary of Defense.
A call to action
Therefore, when it came to finding a suitable replacement for the charismatic Oscar Munoz, Kirby’s resume speaks for itself. When Munoz announced that he would be transitioning away from his CEO post at the end of last year, he was setting up his colleague to take the helm while United was in the best position it could be in.
The firm reported revenues of just over $43 billion in 2019. However, no one could predict the significant global health events that 2020 would bring.
This year, along with most the majority of other airlines, United has been forced to suspend most of its flights and ground several of its aircraft. Subsequently, it is expecting to burn up to $45 million a day this quarter due to the lack of activity.
However, the carrier has maintained a firm stance regarding the pandemic’s potential impact. During these uncertain times, it has been planning for the worst.
With the lack of business, layoffs are expected to be made by the time this fall is in full swing. If the climate does not improve when government support for wages ends in September, there will be considerable changes made throughout the company.
In a conference call attended by Simple Flying at the end of last month, Kirby acknowledged that Munoz had already done great work to improve labor relations at United. Now, the company’s management is in a better position to have open and honest talks with its employees and unions.
“I think we’ve also been upfront and realistic with our people. And that transparency goes a long way. People may not like the message. They may not like thinking about how bad it can be and what we’ll have to do. But by and large, they appreciate the openness, honesty and transparency,” Kirby said during the conference call.
“And that sets the groundwork for actually getting deals done. If you’re saying everything is rainbows and sunshine and then you come in one day and say, oh, but now we need to furlough 30% of the people. That’s a really, really hard conversation. But if you’re being open and acknowledged here where things are, it makes it easier to get to that ultimate answer.”
Nonetheless, Kirby has been taking a proactive approach to reducing the impact on the business and its employees. He is adamant that there will not be any bankruptcy filings. Additionally, he has been looking at labor and supplier contracts to find flexibility, so there is a balance for all parties.
Moreover, the airline is also making critical changes to its fleet renewal strategy in a bid to save further cash. Altogether, Kirby emphasizes the importance of risk management.
During a crisis like the one the industry is facing now, risk management becomes a top priority for him. He says almost raising enough capital is not enough as the results for an airline could be catastrophic in terms of jobs, shareholders, creditors, communities, and customers.
However, raising too much capital runs the risk of having too much dilution or having extra interest payments every year. Therefore, he believes it is far better to be too aggressive than to be not aggressive enough.
United will rise again
Ultimately, the businessman admits that his company is going through hell right now, but he is passionate about defeating the virus and getting through to the other side. He wants his team members to take care of each other and their customers to help them get through this tough situation as quickly as possible.
Kirby’s hardline approach has already raised confidence in getting United’s daily cash burn down to $20 million by the fourth quarter of this year. Therefore, once the airline survives the pandemic’s worst effects, the executive will be trusted to return the firm to former glory.
Munoz is still supporting Kirby as executive chairman and Brett J. Hart has moved up from his roles as executive vice president and chief administrative officer to become president. Therefore United is in the right hands to overcome its challenges and continue on its journey.
What are your thoughts on how Scott Kirby will run United during his time as CEO? Will he be able to lead the carrier through the storm? Let us know what you think in the comment section.