CHICAGO — Five years after the merger that created United Continental Holdings Inc., newly installed CEO Oscar Muñoz has come to a stark conclusion: The marriage is in trouble.
In his first interview since taking the helm three weeks ago after the abrupt ouster of Jeff Smisek, Muñoz acknowledged that the 2010 merger had been poorly managed. He declined to discuss the federal probe into United’s dealings with the Port Authority of New York and New Jersey that led to Smisek’s departure.
“This integration has been rocky. Period,” he said. “We just have to do that public mea culpa. … The experience of our customers has not been what we want it to be,” said Muñoz, 56, a former Qwest Communications consumer division chief who left the troubled Denver company in 2001. He comes to United from CSX Corp.
He said his initial focus as CEO has been meeting with United workers for candid — sometimes confrontational — discussions, seeking to win back the trust of United’s 85,000 employees, whose morale has suffered and who have become increasingly vocal with complaints about management.
Denver International Airport is a hub for the airline.
United employees had been “allowed … to be disengaged, disenchanted, disenfranchised — the three nasty D’s,” Muñoz said. “I’ve got to win all (of them) back.”
Muñoz, who has been a director of the new United from its inception, said the airline’s board “could have been more aware” of the morale problem. The 12-member board includes two labor leaders representing thousands of United’s unionized workers.
“Should we have known more? Of course,” he said.
Muñoz said he has called a summit with labor leaders for Oct. 15 and that one of his priorities is to reach new labor deals with the airline’s flight attendants and mechanics, who are still working under separate agreements struck by the airline’s two predecessors.
He said his other major priority is luring back United customers by improving the carrier’s reliability.
He provided no details, but he said his sense of urgency “should be at hyperspeed” because United faces intense competition. He said he needs to study what rivals do and “what’s overcome-able and what’s not.”
Muñoz said United has made some progress improving its financial performance and will stick to its plan to return $3 billion to shareholders through buybacks.
He wouldn’t discuss the reason for Smisek’s exit. The company has said it was prompted by an internal investigation related to the federal probe of the Port Authority, which manages Newark Liberty International Airport, a big United hub.
United’s integration hasn’t gone as smoothly or swiftly as that of rival Delta Air Lines Inc., which undertook a major merger two years earlier. Integration at American Airlines Group Inc., whose December 2013 merger formed the world’s largest carrier, also appears to be proceeding at an even pace, though in two weeks it will face the tricky task of shifting the former US Airways onto American Airlines’ reservations system.
United’s effort to integrate its own reservations systems in 2012 led to months of problems and customer outrage. And the systems have continued to crash repeatedly, prompting Muñoz to say that technology “is not our shining light.”
On Thursday, the fifth anniversary of its merger’s closing, United planned to unveil a new website, UnitedAirtime.com, where passengers and employees can offer ideas, give feedback and hear what Muñoz is up to on his learning tour.
United took ads in eight newspapers, including The Denver Post, in which Muñoz apologizes for not meeting expectations and vows to improve.