Aviation Daily: United CEO Creates Task Force To Focus On Non-Labor Costs

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Aviation Daily: United CEO Creates Task Force To Focus On Non-Labor
Costs

By Steve Lott/Aviation Daily

24-Sep-2002 10:51 AM U.S. EDT




United, desperately looking for any new ideas to quickly cut costs and
improve revenues, yesterday became the latest U.S. major airline to
formalize reviewing employee suggestions and carrying through on
objectives in its current recovery plan.

In his weekly message to employees, CEO Glenn Tilton said the airline
can't waste any more time in making sure it is prepared to compete in
the changing marketplace. As a result, Tilton has created a task force,
which "will be structured to represent all aspects of our total
business." The group will focus on non-labor costs and productivity
savings "that we have embedded in the current strategic plan."

Tilton said the task force will consist of a combination of "internal
and external resources" and will begin its work this week. The charge of
the group is to "examine and to insure United's competitiveness across
the full spectrum of our profit margin." The task force will report to a
"decision review board" that will meet regularly to provide guidance and
monitor project milestones and timetables.

This task force also will "gather, review and support the thousands of
productivity and cost reduction ideas that we are receiving from you
every day," he said. Tilton said he reviews many of the suggestions
personally, but the task force will make it easier to track the employee
ideas. American, Delta and Northwest have previously created similar
committees to review employee suggestions.

It's unclear how the new task force is different from previous internal
groups United has created. Former President Rono Dutta earlier this year
organized an internal group of executives to conduct a four-month,
top-to-bottom self-study of the entire airline looking at both
structural and technical areas. The review was conducted in-house with
no outside consultants and concluded United's one true weakness is that
it is a high-cost carrier (DAILY, July 23).

Tilton noted in his message the airline business is changing rapidly,
and a variety of different business models are being offered to the
customer. While JetBlue and Southwest are examples of new low-cost
models, "our major competition" also is changing at the same time, he
said. Tilton encouraged employees to "focus on every single thing, no
matter how seemingly small, that we can do to differentiate ourselves
from the pack in the minds of our customers."

He added employees should be aligned as a united team regardless of
whether they are members of union or not. "The customer, rightfully,
should not be burdened with our current financial challenges." He wants
employees to work together to create the "global airline of choice" and
leave competitors "trying to catch us."


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