Skift Take

In almost every room he enters, Scott Kirby is the smartest person. Everyone knows it — including him. As CEO, though, he may need to show a little humility. Can he do it?

Skift Editor-at-Large Brian Sumers writes this column with a critical eye on the important global issues impacting the airline industry, from the middle seat of the last row in economy class to the boardrooms of the world's largest carriers.

Over two decades at four airlines, more than a few junior or midlevel employees have feared briefing Scott Kirby.

The problem has never been that he was uninformed or would need extra explanation. The issue is Kirby often seemed to know more about whatever issue they were presenting than they did. If they had holes in their presentations, he would find them, chiding them on what they missed. It didn’t matter if the talk was about operations, revenue management, network, or even onboard product. Kirby knew it all.

“He was an imposing figure,” said Brett Snyder, an airline analyst who worked for Kirby from 1999–2002 at America West Airlines. “He certainly cast a long shadow, and he was very blunt. He was not going to play games. You would know where you stood pretty clearly when you were interacting with him.”

Blunt or not, by many accounts, Kirby is among the top airline minds in the United States, a modern Robert Crandall or Herb Kelleher, and it’s remarkable he has had to wait this long to lead a carrier. But his wait is over: Kirby, now president of United Airlines, will become CEO in May, 14 years after taking his first airline president job — as the No. 2 executive at US Airways. Current CEO Oscar Munoz will become executive chairman for one year.

Kirby joined United as president in 2016, when he was pushed out of American Airlines, three years after its merger with US Airways. In an interview in October with Holly Hegeman, editor of industry newsletter PlaneBusiness, Kirby said he had essentially been fired, even though CEO Doug Parker once had promised he someday would be American’s CEO. Neither Kirby nor Parker has said exactly what happened, though Kirby said American’s move surprised him.

In industry circles, there’s some talk the experience softened Kirby. He long has been a revenue guru — he loves to talk about maximizing profits — but at United he began to talk about the importance of onboard product, marketing, and employee relations. Munoz, who had been named CEO in August 2015, wanted to soften United’s image after a series of post-merger failures, and Kirby joined the effort. How much he believed in it is up for debate.

“Kirby has adopted a more diplomatic tone in public forums over the last two to three years after a humbling and unexpected exit from American,” Hunter Keay, Wolfe Research airline analyst, said in a note. “But make no mistake — he’s the same guy he’s always has been. He doesn’t suffer fools, empowers people he trusts, has no tolerance for stupidity or laziness, and wants to win by a million.”

A Winner

Corporate America being what it is, Munoz will take much of the kudos for United’s turnaround over the past three years. But make no mistake: Kirby and his top lieutenant, Andrew Nocella, have been the brains of the operation, and they deserve much of the credit.

As Munoz has worked to repair relations with employees and customers, Kirby and Nocella, another US Airways and American alum, remade United’s commercial structure. The duo often tried to reverse what they said were made before Munoz took over.

Kirby said United’s previous regime erred by trying to shrink the airline to improved profitability, and he argued United needed to regain its “natural share” against American and Delta Air Lines. In a move that made some investment analysts nervous, Kirby announced a plan in January 2018 to grow capacity by 4–6 percent per year for three years, arguing the market could absorb it without hurting fares. (So far, he has been right, and most analysts have commended him.)

As they added new flights, Kirby and Nocella worked to revamp where United flew and at what times, building up United’s domestic offerings at three key hubs — Denver, Chicago, and Houston. They sought to build schedules that could both serve local markets and facilitate connections.

Meanwhile, Kirby led a charge to update United’s revenue management system, called Gemini, so the airline could focus more on quality revenue, rather than just filling seats at any price.

“For Scott, revenue management and pricing, these are his babies,” Snyder said. “When you hear him talk about it, he has incredible ability to grasp the situation and understand the right way to go with something. I think it is because his brain is actually a computer.”

Kirby also has pushed United, long a risk-averse company, to take more chances. Earlier this year, United introduced two unusual aircraft configurations that have more premium seats than normal, one for routes to Europe, and one for regional routes in the Eastern United States. Both airplanes have high unit costs, but Kirby is optimistic the airline can offset that with higher revenues. If it doesn’t, he’ll probably drop the idea.

“CEO Munoz will get deserved credit for driving United’s’s culture change, but it’s our view that airline culture changes mainly from winning results, attention to detail, and accountability — not catchphrases,” Keay said. “Kirby was the leading change agent at United due to a growth-first network strategy and a daily focus on operations and a cost-conscious culture.”

What’s Next?

It’s hard to believe much changes are ahead with Kirby as CEO.

Since he arrived, Kirby essentially has been running the company, working to mold the airline into the revenue powerhouse he wanted, and pushing out some senior executives who did not fit his model.

He has been the executive Wall Street analysts sought to speak with, and the interview most knowledgable reporters coveted. (Although he has softened, he still chides journalists for asking what he views as dumb questions.)

Munoz, meanwhile, has rarely spoken on earnings calls and has generally avoided investment conferences, instead preferring interviews about customer experience or culture. He also seems to enjoy traveling the world, speaking to United’s employees and preaching about the airline’s turnaround. A lot of workers treat him like a rock star.

As executive chairman, Munoz may do more of the same, while Kirby does what he has already been doing for three years — making key decisions to maximize profits.

“We expect United to generate new ideas and implement them quickly under Kirby,” Keay said. “Some will work and some will fail (they’ll kill those quickly), but it will be fun to watch.”


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Tags: execs, united airlines

Photo credit: Scott Kirby speaks at Skift Forum Asia in Singapore on May 27, 2019. Skift

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