This was in yesterday''s Rocky Mountain News.
A leaner, meaner UAL
By Heather Draper, Rocky Mountain News
May 31, 2003
United Airlines'' newest high- profile executive certainly has hit the ground running.
Colleagues have seen Executive Vice President John Tague - who is in charge of marketing, advertising, frequent-flier programs, reservations and sales (among other things) - as he rushed past in the hallways, but he hasn''t exactly had time for a sit-down talk with them.
It''s no wonder he''s busy. Helping the world''s second-largest airline emerge from bankruptcy is daunting enough, but Tague is faced with performing CPR on the United brand and pushing the leaner, meaner carrier past its competitors.
So busy was Tague this week, United spokesman Jeff Green said, that he wasn''t available for an interview with the Rocky Mountain News.
Industry insiders say Tague, who was hired in early May, has already helped put together a national media and advertising campaign that will be released next week, although the company declined to comment on those reports.
"His job is obviously going to be challenging," said Jon Ash, managing director of Global Aviation Associates Ltd. "He''s got a pretty broad scope in terms of his areas of responsibility - he''s got not only the product, but the network."
Tague, 41, came to United after several years of running competitor American Trans Air Inc. He began his United job just after the Chicago-based airline -cleared what was probably its biggest hurdle in bankruptcy - obtaining massive wage and work-rule concessions from all its labor groups.
It was a time when United executives first began saying publicly they were well on their way to a successful reorganization, and that they might emerge from bankruptcy sooner than mid- 2004, as they had first predicted.
"He comes at a time when United''s business plan is gathering momentum," said Joseph Schwieterman, director of the Chaddick Institute for Metro Development at DePaul University.
"This summer is showtime for United," said Schwieterman, a former strategic planner for United. "It must show strong financial results to pull itself out of bankruptcy."
Despite reporting a $375 million loss in April as fewer travelers took to the skies because of SARS and the war with Iraq, United''s prospects for returning to financial health rose substantially after it won sweeping wage cuts from employees. The cutbacks, which took effect May 1, are expected to save the carrier $2.56 billion a year.
"Presumably they have something close to a 30 percent improvement in unit labor costs as a result of the new agreements," Global''s Ash said. "If they have that, they should be very competitive across the board."
Building brand loyalty
But lower costs are only part of the solution, Ash said, and no amount of "spectacular advertising" Tague may come up will help United boost its sales if the carrier can''t deliver quality service to customers.
"You need to have an image out there to build brand identity and loyalty," he said. "My only caveat is that you need to create advertising that reflects the product they are delivering."
Tague will have to work hard to lure business travelers back to United because they are the carrier''s bread and butter, Ash said. "And the business traveler has been rebelling for the last three years."
When introducing Tague to employees on May 16, UAL Corp. Chief Executive Glenn Tilton said the former head of ATA planned to make customer service part and parcel of his marketing efforts.
"Having the customer-contact part of the business closely aligned and associated with the customer-messaging part of the business - even if we pay for it through advertising - that''s what I want to see United do," Tilton told employees. "I want to see United deliver one marketing message all the time, and I want us all to know that we''re all responsible for delivering it."
Tilton said the fact that Tague ran a competitor airline meant he came to United with a valuable outsider''s perspective.
"John understands this business, he understands the customers in this business, he understands our competitors in the business, and, as he likes to say, he has competed against United, and that gives him a unique perspective on our company, a little different from our own," Tilton said.
After the introduction, Tague said he had spent his entire 20- year career "having a brand and product envy for what United brought to the marketplace.
"We produce a very high-quality brand," Tague said. "I don''t think we should be bashful about establishing that with the consumer.
"The past is the past and the future is ours to change and that''s the approach we are going to take," he said.
Still, some analysts question whether the former chief executive of a midsize, low-fare carrier has what it takes to run a behemoth like United.
"It''s hard to say how transferrable some of his skills will be," Schwieterman said. "But he does understand how to sell tickets."
At Indianapolis-based ATA, Tague crafted a business strategy that enabled the company to increase sales from $300 million in 1997 to $1.4 billion in 2002.
He also negotiated transactions to help ATA move from one of the oldest fleets in the industry to the youngest and aggressively managed the company''s post- Sept. 11, 2001, response.
During Tague''s tenure as CEO, ATA was named best-managed medium-size airline worldwide by Aviation Week and Space Technology magazine.
But analyst Henry Harteveldt at Forrester Research noted that two former airlines Tague was associated with - Air South and Vanguard - weren''t exactly industry stalwarts, and eventually failed.
"The concern I have about him is that while the airlines he may have run have been good operationally, none have been successes in terms of their financial performance," Harteveldt said.
Return to superpower
Another challenge facing Tague, analysts said, is figuring out the form United''s highly contentious low-cost carrier plan will take.
United said for months that it planned to launch a low-cost carrier - code-named Starfish - to compete with JetBlue, Southwest, Frontier and even ATA.
This week, however, company executives said they were backing off the plan to make the low- fare carrier the key to their reorganization plan.
"He may need to first come to terms with the future of Starfish, which (is) falling in stature in United''s turnaround plan," De-Paul''s Schwieterman said.
Tague himself hinted that his low-fare background shouldn''t be seen as a sign of where United is heading.
"Clearly I''ve had substantial involvement with low-fare, low-cost operators," Tague told employees earlier this month. "I would not draw any conclusions by that experience that that is directional in nature, in terms of what United needs to do in the future."
Launching a low-cost product flies in the face of Tague''s push to use customer service to build on United''s global brand, analyst Harteveldt said. "United wants to transform itself into a more efficient operation, but a lot of that comes out of the hide of the customer," Harteveldt said.
Tague should focus on getting the mainline carrier back to the superpower it used to be, he said.
"United is the beloved but kind of dopey football jock," Harte-veldt said. "They''re big and certainly strong - and have often come through in the crunch - but everybody looks at them and says, ''It''s amazing they can walk.'' "
JOE WAGNER/
ROCKY MOUNTAIN NEWS
About John Tague
Career highlights of UAL Corp.''s new executive vice president, John Tague, who is in charge of marketing, advertising, frequent-flier programs, reservations and sales:
• Tague began his aviation career at Midway Airlines in 1984. In 1987, he was named vice president of planning.
• He joined American Trans Air in 1991 as vice president of marketing. Within a year, he was promoted to senior vice president of marketing and sales. He was named president and chief operating officer by the end of 1993.
• In 1995, he left ATA to form an aviation consulting company, where he served as co-chairman and CEO until his return to ATA in 1997.
• He served as president and CEO of ATA until 2002.
[email protected] or (303) 892-5456. Staff writer David Kesmodel contributed to this report.
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