Widgets Magazine

United CEO talks at GSB

Jeff Smisek, president and CEO of United Continental Holdings Inc., spoke yesterday at the Graduate School of Business (GSB) about the challenges of the airline business and the daunting task of merging two industry giants like United and Continental Airlines.

United Continental Holdings CEO Jeff Smisek speaks to students at the Graduate School of Business yesterday. (Frank Austin Nothaft/The Stanford Daily)

The event was part of the View from the Top Dean’s Speaker Series, which brings top leaders from around the world to share their views on leadership with GSB students.

“If you like the business of business, there is no business like the airline business,” Smisek said. “If you like making money, then it’s not for you.”

“I’m in a business that hasn’t earned an adequate return since the Wright Brothers,” he added, eliciting laughter from the audience.

According to Smisek, much of the problem for the airline business lies with the exorbitant price of fuel; he said United Airlines burns $25,000 worth of jet fuel every minute.

“We could buy a brand new Airbus A380 aircraft and throw it away for the price of what we spend on fuel,” Smisek said.

On top of this, the airline business has had to deal with government regulation that Smisek called “oppressive.” Government taxes on airlines are far greater than those on either alcohol or cigarettes.

For Smisek, these challenges are exactly what attracted him to the airline business. He excitedly compared United Airlines to “the other side of the wardrobe,” alluding to C.S. Lewis’s “The Lion, the Witch and the Wardrobe.” He added that anything could happen at United, including terrorist attacks, volcanoes, brutally high fuel prices and SARS outbreaks.

“We’re constantly in crisis,” said Smisek. “But you have to remain calm and collected. You have to be able to work your way through it.”

In addition to this constant stress, Smisek also had to orchestrate the merger between United and Continental airlines, bringing together more than 87,000 employees to make United Airlines the largest carrier in the world.

“The most important part in bringing two carriers together is really cultural,” Smisek said.

During this process, one of Smisek’s top priorities was to meld the best of both cultures with an emphasis on respect, openness and honesty.

“I’ve always lived my life off what my mother told me: never tell a lie and treat other people like you’d like to be treated,” he said.

In leading his employees—or “troops,” as he calls them—Smisek emphasizes the importance of simple, understandable mission plans. This way, even baggage handlers understand how they fit in and how they contribute to the company’s future. Smisek claims that each of Continental’s plans for the past 16 years could fit on a single piece of paper.

Smisek also mentioned that he looks for the best and brightest in hiring his employees.

“You’ve got to find people who are better than you at your own job and then leave them alone,” he said. “Don’t micromanage.”

At the same time, his job as CEO is to stay informed of all his troops’ movements. Smisek calls his managerial style “management by walking around.” He walks into break rooms and flight decks, talking to employees at all levels and thanking them in person for their hard work. He also devotes an hour each day to answering every email from his employees.

Smisek, 56, grew up in San Antonio, Texas. He graduated from Princeton University with a degree in economics in 1976 and from Harvard Law School in 1982. He joined Continental Airlines in 1995 as a chief corporate lawyer. He rose to become CEO of Continental Airlines and, in 2010, became CEO of the newly merged United and Continental Airlines.

Smisek offered a few last pieces of advice to students in the crowd.

“Don’t go into investment banking because it’s cool and everyone’s doing it,” he said. “Go for your passion. Ignore the herd. Be yourself.”

“Always book at the last minute and buy the highest fare!” he added jokingly.