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How significant a momentum loss will United Airlines suffer with the sidelining of CEO Oscar Munoz, who reportedly suffered a heart attack and is on medical leave?
In response to an analyst question during United’s third quarter earnings call October 22, Acting CEO Brett Hart seemed to downplay the schism between United’s management and its employees.
The analyst, Jamie Baker of JP Morgan, made some news himself during the question and answer session when he said: “We met with Oscar recently and he indicated, and these are his words, that ‘United had lost its frontline [employees].’ And I, for one, appreciated the bluntness of that statement. He also indicated that he expected to have the final managerial bench in place by year-end.”
Baker asked Hart whether his views were consistent with Munoz’s on the issues of an employee rift and changes in the management team.
In a fascinating answer that related to Munoz’s activities during his seven weeks as CEO before his medical crisis and Hart’s views on employee relations, Hart said:
“First you have to put it in context. What Oscar was doing was, in his seven weeks with the company, his commitment first and foremost was to get out into the operations. To get down into the break rooms, to get out onto the ramp, to talk to the employees and the focus very specifically was on what they would like to see changed. And he heard it at every location that he went to. It is very healthy for us to receive that feedback. Oscar had a level of urgency with respect to addressing and getting our employees the tools they need to provide specific customer service, which at the end of the day is clearly our objective.”
“So what you made have read from that perspective into Oscar’s comments was a real sense of urgency which we all need to have about ensuring that our frontline employees are able to have the level of service that they would like to provide,” Hart added. “In some respects we acknowledge that we can do better and we are working very hard on that. But I wouldn’t misinterpret Oscar’s desire to create urgency in that area, which is appropriate, with an out-blown [sic] perspective on a disconnect between our frontline employees and management. So we are very focused on it and we expect to continue to move forward with the momentum that Oscar brought in that area.”
In other words, Hart downplays the fact, as many view it, that employee-management relations and the corporate culture at United Airlines are broken.
Earlier, in prepared remarks, Hart, who became United’s acting CEO October 19, said it has been “a challenging few weeks for us and we are proud how the United families have come together.”
In the few weeks since Munoz was appointed United CEO on September 8 and began visiting with ramp workers, customer service reps and ticket agents to hear their views, in the wake of the resignation of Jeff Smisek, United has heard from “thousands of employees” on suggestions for improvements and plans to soon announce changes directly growing out of that feedback, Hart said.
If Hart sought to downplay the schism between United management and employees, he also seemed to push back on any expectation of widespread changes in management in 2015.
Hart said every new CEO needs to reevaluate the changes he needs in his management lineup so it was “not out of the ordinary” that Munoz might have been contemplating new appointments.
But Hart said he believes United’s current management team is “fully capable” and will executive the plan for the rest of 2015.
Given the tumultuous events in the C-suite at United over the last two months, Hart, who had been the airline’s general counsel since 2010, is emphasizing stability. That could mean that the sense of momentum that Munoz hoped to generate could be a casualty of the executive changes.