Tilton's Speech To Wings Club

tumbleweed

Member
Sep 5, 2002
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This is a reprint from another site that might be worth the read...


Here is the text of Tilton's speech to the Wings Club of New York

Text of Tilton's Speech:

Good afternoon.

It is a pleasure to be here, and I very much appreciate the kind introduction

I have to acknowledge that my introduction to this industry, some twenty months ago, was not as encouraging. Leaving that aside, I believed then, and I know today, that there is tremendous potential to be unlocked at United.

United has superb assets, superb assets that were not being managed effectively;
United is a great brand, a great brand that had been neglected;
United has loyal customers, customers who were not being offered a compelling or consistent value proposition;
And, just as importantly, United has dedicated employees, employees who were struggling without clear direction.
But United had been directly and greatly harmed by the attacks of September 11, and had significant business issues to address before we could begin to realize our potential.

Our issues included:

A cost structure that was highly uncompetitive;
A balance sheet that was severely over-leveraged;
Lack of alignment between management, supervisors and frontline employees;
Limited scope, productivity and portfolio authority;
Excess capacity;
An impossible corporate governance structure; and
Leadership that lacked credibility… 4 CEOs in 3 years; 7 CEOs in 15 years.
All of this combined to make United a hugely challenged company.

Today, I want to share with you what the people of United have done to restructure our company to meet these challenges.

United’s Restructuring
We knew, twenty months ago, that United was peering into the abyss. We had to immediately bring a new discipline to our thinking and to our work... good, fact based, analytical work would be required if we were to pull back from the specter of failure and the risk of liquidation.

We segmented the work on two distinct tracks:

The first track….all the work associated with restructuring in bankruptcy; and,
The second track, running our operations and our business at a higher level of employee engagement and performance.

The cardinal rules in our restructuring are straightforward:

Do it well. Take the time. Take full advantage of every tool of bankruptcy – that is what Chapter 11 is designed for.
We want to do this once. We want to do it right – and never come back.
As everyone in this rooms knows, and as Bob Crandall recently said, the challenge of this industry is costs, costs, costs. We have brought our costs down from among the highest in our peer group to among the most competitive.

Labor costs will continue to dominate concerns about viability across the industry… Our new, consensual six-year labor agreements deliver $2.5 billion in annual savings, with wage growth average just over one percent with no snap-back or wage re-openers.

At United, on another front, through work rule and scope changes in our employee agreements, we now have the flexibility we need to be responsive to market challenges or opportunities.

To be responsive in this rapidly changing marketplace, we now have unlimited code share authority. And we can deploy regional jets wherever it makes sense for our business and our customers.

It is the full participation of our employees and our union leadership that is driving the pace and scale of these changes.

Because we preserved the options made possible by our unparalleled network, we have been able to make smart decisions about which markets to exit – and which ones to add, such as recently announced expanded service to China, Vietnam and other fast-growing destinations.

Our unit revenue performance has improved. We have used a combination of route and capacity changes; aggressive marketing and sales initiatives; restructured business fares; and better inventory management. The result: our year-over-year unit revenue improvement leads the industry.

The significance of this challenge is often overlooked. United has now been rechartered and has a conventional and transparent governance structure. Board committees have gone from ten to four and they are independent. Oversight is focused on financial return and the interests of all the company’s stakeholders.

As we work through our restructuring, as I said earlier, the second track - running a good airline for our customers - is critical.

Our customers do not want, nor should they be, part of our restructuring. They expect that in today’s competitive environment we should be doing more to earn and retain their loyalty… not less.

We will continue to work on providing consistent, high-quality customer service. We have more to do, but we are seeing good solid results.

Last month, United's load factors were the highest for any April in the company's history. High load factors often lead to delays and frustrated customers. But, in fact, we achieved our best-ever customer satisfaction ratings.

Last year was the best on-time performance in United’s history, and last month was our best ever. In 2002-2003, we led network carriers in on-time arrival :14. Productivity at United is the best ever.

We launched Ted, our new low-fare carrier, in February and customer response has been excellent. Our research shows that 82 percent of Ted customers would choose Ted for a future trip, and 76 percent would recommend Ted to a friend. Load factors for Ted were a remarkable 89% in March.

We do not want to be all things to all people – but we will invest in what our customers say they value most and where we see the business potential for the future.

Employee Commitment/Culture Change

We are aligned in moving this company forward, but it did not happen over night. We have gone through wrenching change, and we know change is continuous. We know that we are going to have to compete in a much different way in a difficult and dynamic marketplace.

What I know is that we are a vastly different company than we were two years ago. A year ago, we were burning through millions of dollars of cash every day.

Today, we are executing against a solid business plan that is delivering results, and we’ve created a strong foundation to build upon.

Our unit revenue was up 14% in the first quarter, while our unit cost, excluding fuel, was down 14%... both improvements far outpacing the industry. We dramatically reduced our loss in the first quarter and expect to record an operating profit in one of the next two quarters.

Were it not for record high fuel prices, I would be able to stand here and say with some certainty that we would be profitable this quarter.

Validation of the Work
Moving forward on these two tracks as I have described them has been challenging. We know first hand why companies try at almost any cost to avoid Chapter 11. It is complex, it drains resources, and people from outside the company get intimately involved in your business.

All of our constituent groups, including our banks, JP Morgan and Citigroup, know every aspect of our plan and performance. It subjects the work to an intense level of scrutiny that only comes in bankruptcy – and has not been entirely a bad thing for United.

Industry issues and competitive environment

In the face of our industry’s complexities, there is a predisposition to oversimplify. Such as, the widely held assumption that low-cost carriers will inherit the skies, and that the network model is obsolete.

Point-to-point carriers have a different cost structure. And they do deliver a specific service and value to their customers.

But they can’t fly you from Charlottesville to Beijing. They do not have the connectivity or serve the range of communities United reaches, through our mainline, United Express, Ted, and our Star Alliance partners.

It is clear to me that the future will include both network carriers and low cost operators. But we think the network model is the right model for United.

We also believe it is all about execution against that model. And that’s what we have been about at United – restructuring our business to tap into the inherent strengths of our global network.

Although some are better positioned than others, no single network carrier or LCC is guaranteed survival. The company that does the best work wins.

Conclusion – United’s Future
We will be a company with a relentless focus on costs, critical in this continuing environment of uncertainty when we are confronted with challenges such as “a terror premium in the price of fuelâ€

Through this work, we are unlocking the potential of United.

We are beginning to rebuild our brand.
We are managing our assets and reengaging with our loyal customers in a way that will differentiate us in the market place.
And our motivated employees are fully aligned with the direction in which we are headed.

But United is stronger for this experience.

It’s time for United to fly.

Thank you very much.
 
Welcome to our high paid Cheerleader. Does anyone really think he would say anything bad about us. He gets paid to sugarcoat everything so it looks good. There's probably a lot of behind the scene things that would scare the hell out of us all.
 
Borescope,

I have to disagree with your comments. When is the last time we had a leader at UAL that was out touting our company as a viable entity? Just about every CEO we have had lately comes in, fills his pockets and leaves. Even if it is eyewash, what Tilton is doing, is more than any of the previous guys. Can you see Goodwin making that speech? I can with his tie stained from dribbling his lunch down it and maybe some spinach stuck in his teeth.

Tilton appears to be the real deal and that is all we have right now. He has my support 110%.
 
magsau said:
I can with his tie stained from dribbling his lunch down it
In the airline business this is what the pilots call there survival tie. If the airplane goes down in some remote area, all they need to do is boil the tie and they have soup. See there is a strategy behind it, and you thought Goodwin was just a slob. :D
 
Wasting your time Borescope. These nimrods would buy anything. Tilton was brought on to steer the company through BK...perhaps even doing a good job doing it. BUT, he is not here for the long haul. He is not an airline guy. The underlings, you know, Pete and the gang are running the airline...and will posture to succeed Glenn after he vacates. The pursuit of retiree benefits also is obvious, where can you draw money from with the least amount of operational impact. Yes, we may bicker and complain, but in the end, if it's not coming out of YOUR pocket we will all acquiesce, with tantrums, but not much more. It's all quite sickening isn't it, but afterall, aren't we all...just...well...UNITED :D
 
Not a matter of satisfaction, just reality. As stated, Glenn maybe doing a great job at just what he was hired to do...steer United through BK. But he WILL leave not long after (or if) we imerge from BK...with his money and possibly a feather in his cap. But what then....CEO number 17?! And who will pick him and from where? Then the same 'ol merry-go-round....and you honestly though we had changed...tsk, tsk. Or am I just too negative :D
 
The Ronin said:
These nimrods would buy anything. ... The pursuit of retiree benefits also is obvious, where can you draw money from with the least amount of operational impact. Yes, we may bicker and complain, but in the end, if it's not coming out of YOUR pocket we will all acquiesce, with tantrums, but not much more.
Umm, Ronin?
I don't know you, but who's the nimrod buying things? I hate to break it to you, bro, but retiree cuts DO come out of your pocket, and mine, in the phase of our work lives when we're least able to do anthing (active or passive) about it. Now, I'm a F/A, so maybe you wouldn't understand my perspective, but retiree cuts are very real and brutal cuts to very real income and quality of life, just that it's tomorrow's life and not today's.
Put down the Kool-Aid and step away from the cup...
 
Two comments...

1. Glenn Tilton is one of the good guys. I worked for Texaco for many years. Texaco, like a lot of companies, had more than it's share of incompetent to mediocre managers who succeeded on their ability osculate the derrieres of their bosses. Tilton was not one of those people.
2. As far as I know, United is only his second job in many, many years (He was with Texaco for the bulk of his career. Hell, for all I know it was his only job.) What makes you think that he will cut for the door the minute UAL exits BK? Steering companies through BK is not his forte. Good management is.
 
Um, Ronin and borescope, did you guys expect Tilton to go in front of the Wings Club and tell them how much we suck? Is that good leadership to you? I, for one, am quite happy that we have got a leader out there trying to sell the airline (that speech, BTW, was for the ATSB). Even if we all know that there are still things that need to be fixed, the primary face of our company should be out there extolling our virtues. Sometimes a CEO is a high priced cheeleader, and Tilton is a well spoken one who inspires confidence. That is a good thing. Just thinking that doesn't make me a kool-aid swilling management minion. It just makes me a guy who wants his job at UAL to continue.