On this 4th of July, long-struggling United Airlines should declare its own declaration of independence - from Glenn F. Tilton, the chief executive officer, chairman and president of parent UAL Corp.. Tilton has had nearly seven years to get United to straighten up and fly right, and hasn't done it. It's time for a change.
Last weeks' computer meltdown at the start of the July Fourth holiday weekend at United's biggest hub, Chicago O'Hare International Airport, is just the latest of a long string of errors.
Tilton, airline-industry watchers will recall, became boss at United in September 2002, coming to the airline from Chevron Texaco after a long career in the oil business. In December 2002, Tilton led United - which bled some $5 billion in losses since mid-2000 - into Chapter 11 banruptcy protection. There it languished for more than three years, finally emerging from the Chapter 11 cocoon in February 2006, having off-loaded employee pensions to the Pension Benefit Guarantee Corp. and squeezed remaining employees for salary and benefits cuts.
The result? A smaller, angrier workforce, one prone to taking out their bitterness on their customers. I well remember the sarcastic "mahalos'' (thank you) from a flight attendant on a trip to Hawaii and the general air of disgruntlement that United workers have shown the traveling public over the past few years. Their attitude - rooted in helpless anger at Tilton and other top managers - has turned the once-friendly skies downright hostile.
Since emerging from bankruptcy, United has lurched from one crisis to another under Tilton's stewardship. It launched and folded a discount carrier within a carrier, called Ted. It tried and failed to merge with US Airways. Now, it is trying to launch a marketing and revenue-sharing agreement with Continental Airlines, a plan that may help United but must first pass the scrutiny of anti-trust regulators in the Obama Administration.
United needs all the help it can get, especially if it can't work closely with other carriers or merge outright, which Tilton, rightly, has long wanted to do. "Consolidation is the answer'' to United's problems, Tilton told me when I interviewed him at Beijing Capital Airport, during a Star Alliance meeting in 2007. He may well be right, but if the political and business skills to close a deal aren't there, the point will be moot.
Even though the entire airline industry has been flying through turbulence this decade, United's financials are much worse than average. The carrier eked out a rare profit of $403 million in 2007, but lost a thumping $5.34 billion last year. The first quarter of this year has been more of the same: a loss of $579 million.
Late last month, UAL issued $175 million in fresh debt, on which it is paying sky-high 17 percent interest; the industry average is just a bit more than 8 percent interest, according to Bloomburg. Reports the New York Post: "UAL was planning to sell the debt at 12.75 percent interest, but was forced to sweeten things due to both a lack of investor interest and management desperation, said analyst Roger King, of CreditSights.''
I have met Tilton several times. He is affable in person, gives you a firm handsake, looks you in the eye. He is a bright man and was successful in business before going to United, but his policies have failed United's workers, its shareholders and its retirees. Indeed, retirees have simply been devastated. I saw this first-hand: I interviewed pensioners who took major hits when United shed its pensions while reorganizing in Chapter 11. One husband and wife I interviewed for the San Francisco Chronicle had both worked at United; their past and their future were tightly tied to the struggling airline. To say they were worried is to understate the facts.
It's time for Tilton to go. United's employees deserve a fresh start, its shareholders deserve to see some black ink and the millions of travelers who fly on United deserve a better airline.