Airline infrastructure is 'a double issue' ahead of summer travel demand: Former United Airlines CEO

Former United Airlines CEO and Author of "Turnaround Time" Oscar Munoz joins Yahoo Finance Live to discuss air traffic control, how the debt ceiling impacts the airline industry, challenges for leaders in the current economy, and how AI may impact the workforce.

Video Transcript


JULIE HYMAN: Airlines have been facing some turbulence over the last few months as they grapple with cancellation backlash and impending strikes. Our next guest says airlines still have one big challenge to overcome. It has to do with air traffic control. Oscar Munoz, former United Airlines CEO and author of "Turnaround Time," a new memoir, he's joining us now alongside Yahoo Finance executive editor Brian Sozzi. Oscar, it's such a pleasure, first of all, to have you in the studio with us. We've talked to you recently about some of your newer ventures remotely. So thank you for coming in.

OSCAR MUNOZ: Thanks for having me.

JULIE HYMAN: I want to get to your memoir, but I want to talk about air traffic control first. Because we have talked a lot about the summer travel season and some of the challenges that airlines have faced. Talk to us about the role that air traffic control has played in what's been going on.

OSCAR MUNOZ: Well, it becomes an increasingly part of your air travel experience. Because, for safety reasons, it's important we're still safe. We have to slow everything down with the air traffic control systems. The way they communicate from ground to the Earth is outdated. And there are much more modern systems out there that are deployed in many, many countries around the world. And we just haven't made that investment in this country. It's part of the broader infrastructure issue for sure. But it's something that has to get on the radar screen.

And it's complex. And it's going to take a long time and a lot of money. Probably has to be a private venture versus a federally funded one just because of the cycles of funding that happens in the US government. And you have to attract the best and brightest.

So it is complex. But that would go a long way towards a lot of the ills and ails. And, again, I know the government wants to regulate a lot of those things and punish the airlines. And, again, when we need it, we're happy to take the brunt of it. But a lot of it is not necessarily, you know, mostly out of our control with regards to air traffic control.

BRIAN SOZZI: Well, now we have potential spending cuts as part of any debt ceiling debate here. How debilitating would that be to the air traffic control?

OSCAR MUNOZ: That's exactly my point. Let's say we had a really involved process and everybody was engaged and then you have a situation like this. And the first place people are going to cut-- well, many projects, but this would be one.

And so I think that's one of the reasons why it's been so complicated to do that. And privatization may not necessarily be the case, but I think it's the most realistic and practical way to do this. Because it's going to take years to get this done.

BRAD SMITH: Airlines right now have been trying to chart their own turnaround from the lows or the lulls of the pandemic and--


BRAD SMITH: --how it shut down operations, essentially. And so now, with what we've seen over the past two years and even, furthermore, how some of the very issues that we were discussing on the kind of infrastructural side need to be amended or at least solved for in order for companies like Southwest Airlines, who are continuing this broader airline comeback, to get past some of their own operational issues, what does that turnaround look like for companies on top of the turnaround that had already been taking place post-pandemic?

OSCAR MUNOZ: Well, unfortunately, part of leadership and involving large companies, especially with service to the consumer, you have to think ahead. And I think one of the things that United did well over the course of that lull-- right-- we lost 93% of our revenue, is to think ahead and invest. So we kept investing in our aircraft to keep them maintained. And we were able to use a lot of money to train our folks to be ready.

But, nevertheless, it is a double issue. And with demand coming as-- people want to travel. It's amazing how people are, as you've seen. And so it is going to be a tricky posture. And some airlines will fare better than others. And deferred investments that obviously are going to come back. And I think the airline you mentioned was clearly one of those situations.

BRIAN SOZZI: Oscar, you're definitely not retired. You sit on a number of boards. Recently, Salesforce as well. What's the biggest challenge leaders are up against at this moment?

OSCAR MUNOZ: I think the economic climate, right? I mean, everything here is about economic uncertainty. The debt ceiling is the current issue. You've got the work from home. You have a shortage of-- I mean, it's just always tumultuous. But it's particularly tumultuous.

And it's hard to see ahead of the corner. So I think the most important thing, at least in the boards that I follow and the senior managers and CEOs that I work with, is from board perspective, we just try to keep looking ahead. What is it that you do best?

Let's keep doing that well. Let's discuss it. And let's get the organization lined up behind it and then tell investors in a very transparent way what's ahead.

And cycles are cycles. We've all lived through [INAUDIBLE]. This cycle will end. And you have to be ready for the top end of it. So the but the tough is-- tough thing is staying focused when you have all this noise around you.

JULIE HYMAN: Speaking of cycles, you've experienced some cycles of your own, so to speak, as well. You write in your book about your heart attack, followed by a heart transplant. And that's a situation where your body is telling you, you have to slow down, you do not have a choice. How is that fed through to leadership? And I think about it because especially right now when leaders are managing millennials, for example, and now Gen Z coming up who have a different approach to work, how has that kind of informed how you think about all of that?

OSCAR MUNOZ: You know, resilience is a wonderful term, meaning turbulence, all of those things we talk about in a trite way. When you face a life-altering, potentially life-ending situation, you really do get to appreciate what's wonderful in this world. And for me, going back to work was an easy conversation because of the outpouring of support I had from my United family. But, yeah, work is work. And you talk to anybody that's accomplished anything in life, when they go back to those early days, I'm sure all of you in this room, there's a portion of your life and career where you just have to work hard and do work that maybe isn't what you want to do eventually, but you'll get there if you put in the effort.

BRIAN SOZZI: Does this next generation, just building on what Julie asked, do they have it?

OSCAR MUNOZ: You know what? I have children of this age and I know many people have stayed very close to this and there's a lot of apps out there that give you a lot of insight, yes, they have. You just have to find the right mechanism of communication, listen, and learn from them before you lead them. Because we all read these headlines.

Well, Gen Zs are this and millennials are that. And it's like, they're not all that. It's you have a conversation with your people in your environment, create your own culture. And I think you'll learn a lot about how to apply it for you and your company, not what everybody is. You can't label people.

I think if you ask many of them, I think they hate being labeled. We don't like being labeled. And so why is it OK if we do that? So, yeah, they have the stuff. They just need to learn. And if you look over history, the original Gen X, right, where are they now? Well, they have mortgages and children and family, right? We're all working for a living. So it'll all evolve.

BRAD SMITH: Even within that, we talk so much about hustle culture or grind culture all the time or, which is essentially just a nice way to say workaholic in some cases, but do you think that's pivoting now with new technologies such as generative AI even or the different tools that we can leverage as a resource to drive a more efficient culture, if you will, among employees, among the workforce more broadly?

OSCAR MUNOZ: So a lot of questions in there. So I always say, people-- everyone wants to work for a good living. Increasingly, we also want to live a good life. And the definition of good life has changed given COVID. Because we got to experience things. People stay home with their kids and all of that. So a good life has been defined. So you have to understand what that regard. New technology is wonderful as long as it doesn't make you lazy, right? I mean to say you just can't dial it in and say, hey Chad, put this presentation together. And, again, we worry about that aspect of that.

I was just at an event that somebody said something I think wonderful. There's fake gold because there's the real gold. While there is artificial intelligence because there's real human intelligence. And I think that's a really important part for us to remember.

We are not going anywhere. And our brain capacity shouldn't go. And we shouldn't allow it to go easily into that good night of using other people to do our stuff for us. So it'll be a combination.

BRIAN SOZZI: Oscar, you write in the book about your upbringing. I believe you and your mom came over from Mexico, immigrated here to the United States. Just curious on where you're at, where your emotions, your head is at as we gear up for potentially another contentious election in this country.

BRIAN SOZZI: You know, this will sound like I'm running for office or something, but I can say this from experience and the thing we were able to solve at United, you have to have two sides of a conversation that want to move forward and do the right thing. Increasingly, in a lot of our social issues, it's like yes and no or red and blue. And it's such-- they're such polar opposites. There's no one yearning for a solution that brings us not only together, but forward.

And I think with regards to immigration, it's heated on both sides, you know? And I think if somebody were just really-- somebody or a group of people-- I know it's complex. But if you just started with a concept, let's solve this for the practical reality that it's required.

We need workers in America. How do we manage that process? And if we start it there, I think we would make progress.

But now, all immigrants are bad and you should let everybody in the world in, they're just two polar opposites. So I've always been able to bridge gaps between two chasms, in some cases. And I just don't think we have that civil discourse anymore.

We just go to our respective sides and really, really push hard. And nothing gets done. And we sit here trying to resolve this issue time and time again.

JULIE HYMAN: Are you running for office, Oscar?


BRIAN SOZZI: Let us know if you do.

JULIE HYMAN: I just asked.

BRAD SMITH: Oscar Munoz, who is the former United Airlines CEO, alongside Yahoo Finance's executive editor Brian Sozzi, thanks so much for taking the time.

OSCAR MUNOZ: Thank you all for having me. I appreciate it.