The role of airline leadership has never been easy, but has it become near impossible?Over the past five years, just about half of the industry's top 50 airlines have seen their chief executive resign and among the US majors none now remain
The airline industry has always been something of sporty game - that is a large part of its appeal. The glamour may have faded somewhat, along with the famous names that created it such as PanAm and TWA, but the industry still attracts huge public and political attention. But such visibility comes at a high premium, not least the pressures that it places on those industry leaders charged with seeing through a radical reshaping of their businesses in the full public glare. And that ever-thankless task now looks as though it has become almost impossible. The sheer numbers of chief executive resignations tells the tale.
Casting an eye across the top 50 passenger airline groups, only a third still have the same leader today as they did back in 2002 in the wake of 9/11. Go back a little further and only a quarter of carriers still have the same leader as they did five years ago. A degree of churn would be expected in any dynamic business, especially one going through the sort of radical change facing air transport. What is worrying is the number of leaders who have been forced to fall on their swords rather than survive to pass on the baton. Half of the airlines faced an unplanned succession in the last five years and half a dozen have seen mass resignations.
The pressure around the job is beginning to resemble that of a sports team coach, where a couple of bad results or a dispute with the owner can spell a short sharp end to a contract. The situation among US majors is now at the point where even the most hardboiled of baseball coaches must be starting to feel some pity.
It easy to sympathise with Bruce Lakefield of US Airways, a veteran submariner and former Wall Street executive, who remarked as angry retirees screamed abuse at him after a court hearing on cutting their pensions, "at times like this, I wonder why I took this job". His predecessor, David Siegel, had no doubt wondered the same as he attempted to save the airline.
In fact, all of the US majors have seen their leaders replaced since 2001, with the exception of Doug Parker at America West. Still in his early 40s and after less than four years in the job, Parker finds himself as the longest-serving chief executive. In a small irony, United Airlines chief executive Glenn Tilton, a newcomer from the oil-and-gas industry in September 2002, has become the next longest serving.
The last veteran airline chief in place was Continental's Gordon Bethune, who retired at the end of last year, earlier than expected and earlier than he wanted, in a personal sacrifice to conclude a long-running battle with a major investor who demanded Bethune's departure in return for his own exit. In September, Richard Anderson stepped down from the top spot at Northwest Airlines in a surprise move, leaving to join a firm in healthcare, a sector that ranks along with airlines near the bottom of the US league in terms of public respect. A friend reports that Anderson mused about why he should have to take symbolic pay cuts simply to stay in a job where unions and much of the public would inevitably revile him? That is a telling remark, coming from a man who grew up in a working household and who had achieved considerable respect from his airline's unions.
Even profitable airline darlings are not immune: witness the surprise departure of Jim Parker - Herb Kelleher's designated heir - from Southwest Airlines in July 2004 after he failed to break months of stalemate in flight attendant labour contract negotiations. That adds to a growing tally of US leaders who have stood aside under union pressure.
By comparison, the rest of the world looks positively stable. The Asia-Pacific carriers have seen a lot of change, but appear to have managed it more or less calmly with a planned series of successions. Europe too looks a little more settled than it did, with few boardroom upheavals over the last three years. Even so, over half of the leading European carriers have had a change of leadership and mostly unplanned.
But the spectre of political interference still stalks some European boardrooms. Alitalia managed three chief executives in a matter of months last year as the government stepped in to sooth the unions. Willie Walsh and his management team at Aer Lingus are gone despite remoulding the Irish carrier, against all odds, into one of Europe's most profitable airlines. The state owners, it seems, saw the success as a chance to go easy rather than press ahead.
As sports teams demonstrate only too clearly, change at the top is seldom a guarantee of success in the field.
Source: Airline Business
