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United CEO Oscar Munoz, who suffered a heart attack in October, a month after his appointment, and received a heart transplant a couple of weeks ago, is back — although not yet on a full-time basis.
Munoz, who said today that he will be working full-time before the end of March, if not sooner, has been engaged in meetings and repeatedly put his stamp on United’s fourth quarter and full-year earnings call with analysts.
New Fares, Including a Delta-Like Basic Economy Fare
Consider, for example, the subject of competition with low-cost carriers. United officials have rolled out branded fares this month and announced that the airline will introduce an entry-level fare for price-conscious flyers — likely something akin to Delta’s Basic Economy fare — in the second half of 2016.
United chief revenue officer Jim Compton said the branded fares, including the upcoming entry-level fare, will help the airline better segment customers and that would minimize price dilution.
That would help United compete with ultra low cost carriers — like Spirit, Frontier and Allegiant — as the entry-level fare would be geared toward passengers looking for a low price point, Compton said.
But, as he did throughout the one-hour earnings call, when analysts directed their questions to other members of the United management team, Munoz jumped in with his own views.
On a question directed to Compton about competition with ultra low-cost carriers, Munoz said: “It’s a competitive industry. I’m a competitive guy.” Munoz added that the airline is actively monitoring competitors that are out-performing United on certain fronts.
“The energy and excitement of our frontline employees” is where it all begins, Munoz said, referring to United’s attempts to regain some momentum, and officials believe they have done so.
Balancing Different Interests
One analyst asked Munoz how expensive it would be to win back the allegiances of frontline employees and whether it is just a matter of wage hikes or whether additional investments for things like various tools or infrastructure would be required?
“The needs aren’t as great as you think expense-wise,” Munoz said, adding that he is committed to prioritizing investments and balancing the requirements of employees and other airline stakeholders, such as investors.
The issue of balancing competing interests was a recurring theme.
Munoz interjected his views on another issue when an analyst asked Compton about whether United has plans to raise pricing in first class.
Munoz said he’s spent a lot of time flying and speaking with upper-tier MileagePlus members. He said fare increases in first class versus handing out upgrades is “a very sore subject” among United’s high-value customers.
That balance between first class fare hikes and upgrades “is a very important one that we have to strike,” Munoz said.
When another management team member was asked about United’s plans for share buybacks in 2016, Munoz interjected his views again, saying he’s “very excited” to dig into the issue since his “history,” at companies such as CSX Corp., shows a willingness to allocate capital to shareholders.
Munoz’s influence on United since his appointment in September, despite his absence through much of the fourth quarter because of his heart attack, seems to be making itself felt in subtle ways.
One of the first things Munoz did — and many employees hailed him for this — was he got very busy in visiting frontline employees of all types across the sometimes-troubled airline to better understand their jobs and concerns.
Was it mere coincidence then that Acting CEO Brett Hart mentioned during the earnings call January 21 that he visited every United hub during the fourth quarter?
Perhaps it was.
But the activist permanent CEO, Munoz, is clearly itching to get back full-time and to get things rolling.