UAL Corp. Taps Top Oil Exec.
UAL Corp., parent company of United Airlines, last week named industry newcomer Glenn F. Tilton, 54, its new chairman, CEO and president, replacing John W. Creighton. Tilton, most recently vice chairman of ChevronTexaco Corp. and interim chairman of Dynegy Inc., assumed command on Labor Day.
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Tilton has many high-priority tasks in front of him, notably the formation of a new executive team. Both Rono Dutta, UAL president, and Andrew E. Studdert, UAL COO, resigned from their posts after months of criticism from United employees. The company said other executives will assume those duties in the interim.
More importantly, Tilton must bring the company back from the brink of bankruptcy or restructure within it. In either case, he will have to reach concession-laden labor agreements with employee unions, try to convince the Air Transportation Stabilization Board to grant the airline $1.8 billion in federally backed loan guarantees and fix the company's broken revenue model.
"Despite the significant challenges we face, United is a company with tremendous strengths on which we can build," Tilton said. "Our highest priorities must be to restore employee trust and revive investor and customer confidence. That means working cooperatively with all of United's stakeholders on a plan to address near-term financial issues and develop a much-needed, long-term strategy for the company's renewed growth."
"Glenn is a forceful, positive executive who is exactly the right person to lead United at this critical time," said James J. O'Connor, a UAL director who led the search for a new CEO. "He knows how to guide major global companies through difficult transitions with a sharp focus on financial responsibility."
At first blush, the company's labor unions expressed optimism and a willingness to work cooperatively with Tilton. United's employees own 55 percent of the company and hold two seats on the board of directors. But Tilton must work quickly. He faces a Sept. 16 deadline by which he must forge new agreements with steadfast labor groups in order to resubmit the company's loan application to ATSB. An earlier recovery plan called for $1.5 billion in annual labor cost reductions, a proposal largely rejected by union leadership.
With or without the federal loan guarantees, UAL desperately needs to improve revenues—particularly impacted by the two-year drop-off in business demand—and cut costs. The company has lost well over $800 million this year and dropped a record $2.1 billion in 2001. It also faces nearly $900 million in debt payments that will be due in the months ahead.
Tilton, who rose through the ranks at Texaco Inc. in a 32-year career, became vice chairman of the board of directors of ChevronTexaco following the merger of Chevron Corp. and Texaco in October 2001. This past May, he took on added responsibilities as chairman of Dynegy Inc., partially owned by ChevronTexaco.
Creighton—a UAL board member who was asked last October to take the top spot on an interim basis after his predecessor James Goodwin resigned under fire from United's powerful labor unions—is retiring.