After formally taking the reins from Larry Kellner on 1 January Smisek sent a note to employees today telling them he has refused to accept a annual salary and bonus until Continental turns a yearly profit.
Filings published today with the US Securities and Exchange commission indicate that Smisek has acknowledged that his ability to particiapte in Continental’s 401k or employee stock purchase programme are “impacted” by his salary waiver.
I can’t peg an exact number of shares Smisek currently holds in Continental, but a quick look on Forbes.com shows the value of his unexercised options is about $1.5 million.
I had the chance to sit down with Smisek and his predecessor Kellner in September for an Airline Business interview, and here are his thoughts on achieving profitability.
“You’ve got to be profitable. We’ve got to get back to profitability and we’re going to have a single minded focus on that while preserving our culture.”
Smisek at the time said clearly the airline business is not known for having adequate returns on invested capital.
“But it is my mission and everyone’s mission in this business to change that…and we’ll be very focused on that.”
In his letter to employees Smisek stresses that he is not asking anyone else to waive their salary or take a pay cut. Rather, his move is a demonstration of his own belief that Continental’s employees can help return the carrier to profitability.
It’s a daunting task as no can predict if the fallout from the failed 25 December terrorist attack will have a measureable effect on the bottom lines of global carriers.
Collectively the world’s airlines are expected to bleed about $5.6 billion this year, based on IATA’s latest figures, which is an improvement from losses of $11 billion in 2009.
But Smisek’s push for profitability occurs as industry losses for 2000-2009 reached $49 billion. He’s not blind to those statistics as he stresses to employees Continental has lost close to $1 billion since 11 September 2001.
Yet he’s strong-willed in attempting to rally Continental’s employees. “It’s our airline and it’s time to take control of our destiny.”