In the airline business, occupancy of the corner office remains a somewhat precarious business. Just recently, the chief executives of Alitalia and Sabena have been forced to walk the corporate plank because of lack of success in restructuring their companies. At Olympic Airways, the chairman and chief executive has achieved notable success in turning the company around. His reward? The bullet.
Sometimes, a change of personnel at the top is needed. However, the change needs to be made for the right reasons, and the right change must be made. By itself, putting a new face at the helm of a company will achieve little unless it forms part of a strategy.
Consider the three current examples.
Two years ago, the decision by Alitalia's state-owned parent IRI to bring in two executives from the computer industry looked like a masterstroke. Renato Riverso and Roberto Schisano would brush away the old flag carrier mentality and usher in new private-sector thinking. That was the theory. However, the airline was not ready for this revolution. Instead, employees revolted against the drastic recovery plan, and effectively scuppered it.
But the recent appointment of new managers from within IRI sends out all the wrong signals. The unions think they have won, and the new team have been forced to come up with a less controversial plan. Consensus like this works well in politics, but in business it is a potential disaster. The result of a watered down recovery plan is almost certain to be a weaker company.
Similar considerations forced the resignation of Sabena's chairman, Pierre Godfroid. He had become the scourge of labour groups, who demanded his head. They got it. But the commercial realities facing Sabena are no different now there is a new chief executive. Indeed, the unions are likely to find Paul Reutlinger at least as tough a nut to crack as Godfroid.
There is a potential strategic benefit here, however. By dispatching a seasoned executive of its own to run Sabena, Swissair is making its mark as a 49 per cent shareholder, and is showing that it is serious about making the best out of its acquisition.
Of these three examples, the removal of Olympic Airways' chairman and chief executive, Professor Rigas Doganis, is the most absurd. Last year, Olympic made its first net profit for 17 years. The state capital injection cut the carrier's debt burden dramatically, but Doganis had made progress in improving the airline's operation.
By Olympic standards, Doganis was a long-standing chairman, having survived for a few days short of 13 months - before him, the average was nine months. But a year is nowhere near enough time for any airline chief to decide on strategy like routes policy, fleet or alliances, especially when just holding on to the job takes up a high proportion of his time. Olympic desperately needs a capable management team which is there for the long term.
We wish the new leaders of these airlines well. If they are to improve the performance of their companies, they need the support of shareholders, employees and politicians, even though they will have to take tough decisions.
Source: Airline Business
