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The significance of United’s CFO selection

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Oscar Munoz is not afraid of bringing ULCC attributes into United’s business.

United Airlines’ selection of former Allegiant Air president Andrew Levy as its permanent CFO brought to mind a conversation I had with Brett Hart, United’s general counsel, last December in Chicago. At the time, Hart was serving as interim CEO during CEO Oscar Munoz’s medical leave. Two things he said stand out in light of the Levy selection.

First, while Hart emphasized that United was moving forward while Munoz was on leave (Munoz returned in March), he made a point of saying that one initiative would remain on hold: selecting a CFO. Longtime United executive Gerry Laderman has been handling the CFO duties on an acting basis since August 2015. It was important, Hart said, that Munoz choose the CFO himself and not be rushed in doing so. CFO is a particularly significant job at an airline, and it should be held by someone who is in lock-step with the CEO’s philosophy and with whom the CEO is completely comfortable, he explained.

The other thing of note Hart said that day that seems significant in light of Levy’s selection was that United was unwilling to cede any customers to the US ultra low-cost carrier segment. While serving global business passengers is critically important to United, the airline is determined to develop a product offering that appeals to the passengers flocking to the likes of Spirit Airlines, Frontier Airlines and Allegiant, Hart said.

Munoz clearly believes Levy is the best person for the job, but he’s also making a statement with this selection. Far from scoffing at the ULCC sector, he is bringing in a key figure in that sector’s rise in the US to serve as perhaps United’s second most important senior executive (Levy was president and COO of Las Vegas-based Allegiant for five years and prior to that was the ULCC’s CFO for seven years). That is not to say United will suddenly become a ULCC. But Munoz is not afraid of bringing attributes from that sector into United’s business. He probably also believes Levy will keep a very close watch on United’s costs.

In his relatively short time as CEO (less than a year interrupted by a four-month absence following a heart attack), Munoz has been unhesitant in saying that United needs to do things differently. The selection of Levy is another indication that Munoz will be taking a non-conventional approach to revamping United.

Compton’s retirement

I would be remiss if I didn’t mention Jim Compton’s retirement, which was also announced today. Compton, United’s vice chairman and chief revenue officer, has been a top Continental Airlines or United executive since 1995. In recent years, he’s been one of the most outspoken figures in the US airline industry about the need for airlines to act and operate like real businesses that cover their cost of capital.

Compton appeared to genuinely love the airline business, and delighted in the fact that his career had taken him full circle back to his hometown of Chicago. During that same visit to Chicago last December, Compton hosted a luncheon for journalists at the top of the Willis Tower, the towering skyscraper where United’s headquarters are located. If you looked out the right window, he noted, you could see the street where he grew up.

Compton has certainly been a steadying presence at United during a tumultuous year that started when Jeff Smisek abruptly resigned as CEO last September.

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