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Former chief financial officer of United Air Lines Kathryn Mikells, '94, thought she would have no problem when her boss assigned her what seemed like an easy task: prep company executives on strategies for an upcoming collective bargaining negotiation session. Mikells immediately prepped a technically savvy presentation outlining the company's financial position and including one overarching conclusion: "Basically, that United can't afford to pay people much more."
"I approached that presentation with all hard skills. I'm going to have the best analysis. I'm going to have good numbers," Mikells said March 5 at Gleacher Center.
As it turned out, the executives already knew the airline's position. Instead, they were looking for more of a strategy talk. "From a softer skills perspective, I did not read the situation very well," Mikells said. "This wasn't a presentation to a union group. This was a presentation to an executive management group who well understood our competitive position from a cost perspective and also pragmatically understood what the situation was with the unions at this point in time."
Mikells walked away from the experience with one key insight: you can't rely solely on the technical skills you learn in the classroom. "You can't be so laser focused on the numbers and your analysis. You need to think more holistically."
"I could have sought to meet with some of those executives one-on-one before the presentation. Listening skills are a very important soft skill, and I didn't get a whole lot of input before I decided I was going to go and put it out there."
Mikells' speech was hosted by the Chicago Booth Finance Club, a club led by students in the Evening MBA and Weekend MBA programs.
Mikells now serves as the executive vice president and chief financial officer for Nalco Company, a sustainability services company in the middle of a growth surge. Mikells said it's a welcome change from her time at United. With the airline in survival mode, Mikells helped oversee its Chapter 11 bankruptcy restructuring from 2002 to 2006 as well as its October 2010 merger with Continental Airlines. In 2008, the company was hammered by the global recession and rising oil prices, which yielded $50 million in extra costs for every $1 rise in per-barrel oil prices. In the first quarter of 2008—two years before a deal would finally get completed—United tried merging with Continental, but Continental walked away just before a planned announcement, Mikells said.
"United found itself with no merger partner (and) $147-a-barrel oil," Mikells said. "I ended up stepping into the CFO position shortly after that. We were in significant financial distress very quickly."
The company shored up its fuel hedge fund portfolios and raised $4 billion in liquidity in 18 months, Mikells said.
"We sold assets that we didn't need. We sold airplanes we didn't need. We sold routes we didn't need. We conserved cash and ended 2008 with about $2 billion in cash," she said. "It was a real critical measure at that time for people to believe we were going to survive that crisis."
The company also worked toward improving its customer service, moving from last place in on-time performance in 2008 to first place in 2010.
Those moves ultimately allowed the company to complete the merger with Continental Airlines, which ensures the survival of the company into the future, Mikells said.
"What Continental really brought to United and what United really brought to Continental was a network that fit like a glove," Mikells said. United, for instance, was strong in the Midwest and West, while Continental was stronger in the South and the East. Globally, Continental was stronger in Latin American while United had better service to the Pacific and other regions. Continental offered smaller aircrafts to more efficiently serve smaller international markets, while United brought larger aircrafts that were a better fit for bigger markets.
"All of a sudden, you have more opportunities to send the right-size plane to the right-size market," Mikells said. "That enhances your opportunity for revenue. When you put (the companies) together, it was a very strong and powerful match."
—Patrick Ferrell