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United Airlines’ Collateral Damage
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If I were a United Shareholder …

Still trying to recover its corporate composure after a stinging slap in the face last week from Continental, United Airlines is now turning its focus on US Airways as a potential partner to reach the holy grail of corporate success … increased shareholder value.

Continental would have been a good fit, at least for United. Luckily for Continental, their managers were smart enough to run while they still had the chance however, because I think they smelled the blood in the water.ILL_UnitedAirplane1_344x162

Rumors floating around the industry about this new US Airways merger run the gamut … that a desperate United, on the verge of another bankruptcy filing, is seeking a leadership bailout from a more stable carrier or that United’s employee groups will do everything under their power to oppose this joint venture because they already see another train wreck ahead … and they should know.

Employee relations have been terrible at United for almost as long as I can remember, certainly back before the 1985 pilot strike when the airline hired a few hundred new pilots in the face of those on the picket line, a decidedly poor decision when you have a collective bargaining agreement in place.

Employee chaos isn’t limited to pilots, although they often seem to garner most of the publicity. Mechanics watching many of their jobs being outsourced are angry and flight attendants still remember they were excluded from the Employee Stock Option Plan a few decades ago.

Left Holding the Bag

But if I were a United shareholder I’d be asking why those folks at Continental left us standing at the altar.

Here’s are a few thoughts.

Let’s place the responsibility for the state of the airline where it rightly belongs, with United’s management team, the same group that managed to push another few bits of bamboo under employee finger nails this week when the airline set aside another $130 million worth of stock for executive pay incentives management believes it needs in order to attract good management talent.

“Hello … Earth to United, Earth to Glenn. You’ve had oodles of bonus money for years and you still don’t seem to be able to hire executives that can get everyone working together smoothly.” That is supposed to be the point of all this cash, isn’t it? And shareholders seem to stand idly by while Glenn Tilton keeps talking about what he’s going to do to solve employee relations problems. It’s time for a little beef.

A good airline … a good company … is a balance of truly talented, dedicated people willing to give as good as they take. Employees at United want to help run a good airline. I think even they have given up on the words “great” and “United” being used together in the same sentence.

Bad Attitudes

Most of us on the outside think customers are the only group paying a price for poor management at United, but employees do as well. And miserable employees repeatedly passed over for any share of the pie often unknowingly avenge their angst on passengers which ultimately hurts United’s reputation in the marketplace. That drives down share prices.

Is there any guarantee that United would be profitable right now if it had better labor relations like say, Southwest Airlines? Of course not. But we’ll never know for sure will we.

If I were a United shareholder, I’m sure I’d be demanding top-notch value for my investment too.

But after 20 years of watching the swinging doors at the top, I’d have to be asking myself why United is either unable or unwilling to understand that workers who feel as if they are fairly treated will deliver more than a fair day’s work.

I’d also have to admit that as a shareholder, maybe I’d been complicit in the current state of my own company. And maybe, just maybe I’d start demanding a management team capable of delivering more than just talk about changing this beleaguered company.

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Posted Tue, May 6 2008 5:25 PM by Jetwhine | Report Abuse