Picture this: In the early 2000s, the dot-com bubble had burst and the aftermath of the 9/11 attacks left the airline industry reeling. United Airlines faced record operating losses in 2001, resulting in more than 20,000 layoffs.
Shortly after, in December 2002, United Airlines found itself facing another massive storm—the airline industry's largest bankruptcy and the sixth largest corporate bankruptcy of all time. Headlines screamed, "United Airlines’ bankruptcy: A case study in how not to run an airline" and "United Airlines’ bankruptcy is a wake-up call for the industry." The situation was dire and the stakes were high.
As part of court-ordered actions, United needed to aggressively cut costs by $150 million by 2004, with repercussions that reached far beyond the airline's balance sheet. United faced tense relationships with the labor unions that represented many of the company’s 83,000 employees. Also, as the nation’s second-largest carrier, disrupted operations would impact 1,700 flights per day—20% of all U.S. flights. Failing to meet these cost-cutting measures included the ominous prospect of liquidation.
United Airlines' response to this unprecedented crisis was not just about salvaging the company; it was about reinventing it. United needed a partner to engage employees in achieving these significant cuts, while maintaining operational performance and customer service.
Gagen was brought in, not only to provide strategic communications and change management counsel but also to manage the overall program. Our approach included:
- Create a compelling story: Aligned leaders behind a compelling story to engage the hearts and minds of employees while driving necessary behavior change.
- Explain the why: Linked everyday employee behavior to business objectives through education, storytelling and tailored communications.
- Connect the dots: Created a “line of sight” between divisional goals, strategies and programs, and the company’s overarching transformation objectives.
- Bring people together: Brought together local union leaders and frontline supervisors to define new ways of working to maintain safety, improve customer service and achieve cost savings. In addition, built an implementation advisory team comprised of leaders from across the organization and each union – the first collaborative effort of its kind.
- Instill consistent messaging: Developed a “drumbeat” of communications to ensure employees received consistent messages—as opposed to one program splash—using corporate, division and union communication channels. For managers, we created a communications network to regularly provide airport GMs with visibility into the full scope of the change effort, rather than relying on individual program report-outs.
THE SUCCESS STORY
Despite the ominous headlines, United Airlines emerged from bankruptcy in 2006 after a record 1,150 days. The results?
- $229 million in cost savings—48.8% better than plan.
- 16% increase in productivity, while decreasing costs by more than 20%.
- Improved performance—on-time departure performance broke records and ranked first in the industry.
- Improved customer satisfaction—a 50% decrease in competitive complaint rate.
- Received the Award for Excellence in Operational Improvement for business results achieved through significant behavior change. This was driven by increased employee understanding of the company strategy and brand.
People are at the heart of every company transformation. United’s turnaround required that every employee have a clear understanding of why decisions were made, a seat at the table and a vision for where they were going as an international airline brand.