AIRLINENEWS

United Airlines Introduced New Acting CEO Hart

United Airlines Boeing 787

United Airlines have been going through a lot of changes as of late. While Oscar Munoz was taking steps to rebuild relationships with unions, passengers and staff, he suffered a heart attack and is recovering (News – October 16, 2015).

United Airlines

The airline announced that its Board of Directors has chosen Brett J. Hart to step in as acting CEO. He is currently United Airlines’ Executive Vice President and General Counsel and the appointment is effective immediately.

Hart joined United Airlines in 2010 and had responsibilities in areas of government and regulatory affairs, corporate real estate, customer experience, corporate security, community affairs, contact centers and food services.

Hart will work closely with Henry L. Meyer III, non-executive Chairman of the Board, and United Airlines’ experienced executive team to run the company in Munoz’s absence.

“Brett has taken on increasing responsibility beyond general counsel over the last few years in the operations and customer facing areas of the company. I am confident in his ability to continue to implement the company’s strategy and Oscar’s mission of bringing United’s people together around the shared purpose of becoming the best airline for our customers and employees,” said Meyer.

Analysis

While Munoz continues to recover, Hart can continue with the making progress on new plans that were drawn to win back trust from customers, unions and staff. While improvements will take some time to trigger through the system and shown in feedback metrics. There were already signs that the airline’s hard work in 2015 have resulted in better on time percentage and completion factor.

Operations

While the airline has an upward trend towards complaints (August 2015 numbers higher than those recorded in 2014), its ranking has gone up from 11th out of 12th to 10th out of 13th places. It’s complaints per 100,000 enplanements figure of 3.18 is only 40% higher than monthly industry average of 2.27 instead of more than doubled the average in 2014 (Spirit Airlines were added into the metric in 2015). Look for the airline to improve these metrics further as weather across its major hubs is forecasted to be present at least until early Winter (source).

Stock Performance

Since the acting CEO’s announcement, United Airlines stock has been trading between $US52 to $US60.94. While the stock is off approximately 20% from its high of $74.52 recorded earlier in 2015, many analysts are bullish on this company. The stock has been trading up 15% since Munoz was announced as the new CEO.

United Airlines Stock Performance
United Airlines Stock Performance
Source: Google Finance

Its future performance would be tied to how labor relations, employee morale and customer satisfaction can improve under the path set by Munoz and implemented by Hart and the rest of United Airlines’ team. Revenue expansion and cost management would always play a role. However, with oil prices continue to be at a lower level, the airline will likely focus more on how to generate more revenue through new routes / auxiliary options and higher yields in different markets.

Contracts Negotiation

United Airlines was battered with labor problems from its merger with Continental Airlines. As at October 2015, most contracts with major unions have been agreed or ratified. This is an important step in ensuring that the airline can focus its efforts working with all groups to win passengers.

United Airlines Contracts Update
United Airlines Contracts Update
Source: United Airlines

 

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