United places faith in industry newcomer
By Dan Reed
USA Today
Glenn Tilton was not what anyone expected.
The oil-industry lifer — whose career focused on marketing and getting crude oil refined and delivered to the consumer — doesn't come close to having the ideal airline CEO's resume.
But in search of a miracle worker, the directors of UAL have turned to this 54-year-old horse-loving son of a CIA agent to be what more than a dozen top managers at other airlines said they couldn't be: United's savior.
Former colleagues and friends lavishly praise Tilton's managerial and people skills. The vice chairman of ChevronTexaco, is, they say, a genuinely nice guy, a man of high moral and ethical integrity, a perceptive and approachable manager, and a superb communicator who has an uncanny ability to motivate those around him.
But critics of both United and Tilton worry that he lacks specific experience in labor relations, finance and airline operations, United's three most critical areas of need. And they question whether he can unify United's splintered employee groups and persuade them to back a restructuring plan certain to include huge labor concessions and thousands more jobs lost.
Compounding matters, United is running out of time. It has only weeks to negotiate labor concessions of as much as $9 billion and come up with other big cost cuts that will be necessary to win a $1.8 billion federal loan guarantee. The airline needs those cost savings and a $2 billion loan to keep huge debt payments — due before year's end — and continuing losses of $4 million a day from pushing it into insolvency.
"There's nothing in his background that says he can get it done," says aviation consultant Ron Kuhlmann of Unisys R*A of Hayward, Calif.
But even an avowed skeptic such as Kuhlmann says bringing in someone capable of building trusting relationships and rallying the troops could be the right move. "They've already tried competence and experience, several times, and that didn't work," he says.
Tilton, through United representatives, turned down repeated requests for an interview, citing the need to focus on negotiating with the airline's unions and putting together a credible application for the loan guarantee.
But supporters such as James Kinnear, Texaco's CEO from 1986 to 1993 and one of Tilton's mentors, trumpet Tilton's strengths.
"He's one of the best motivators I've ever been around," Kinnear says. "Everyone who's ever been around him has the highest regard for him."
John Palms, former president of the University of South Carolina, frequently sought the advice of Tilton and calls him an "exquisite problem solver."
Elizabeth Smith, a retired Texaco vice president who worked with Tilton for 17 years, recalls how he became CEO of Texaco. The deal to sell Texaco to Chevron was in motion when CEO Peter Bijur left in early 2001. A handful of senior Texaco executives were positioned as possible successors, but Tilton was "the popular choice" even among the other candidates, she says.
"All of the others were pleased that it was Glenn," Smith says. "He just has a personal charisma that makes others like him, and an innate core set of personal principles that make him very trustworthy."
As interim CEO, Tilton received high marks for keeping Texaco operating smoothly and its people motivated during the merger process that brought an end to their proud old company.
Still, Tilton's primary expertise is in marketing. He was behind the fuel-additive campaign that won Texaco big U.S. sales and market share gains in the early 1990s.
But there's little in his background that suggests he can bring peace to a labor-management feud that goes back at least to 1986, when one of the longest pilot strikes in industry history all but shut down the carrier for a month.
Robert Wages, who led Texaco's largest union for nearly a decade in the 1990s, says he "fell out of my chair laughing" when he heard United directors selected Tilton because they believe he can win over the airline's embittered unions.
"I thought that was the funniest damn thing I'd ever heard," Wages says.
Management-labor relations at Texaco were "the worst in the oil industry" because, Wages says, Texaco's management viewed labor relations as "a field of battle where their lawyers duke it out" with the union.
Tilton wasn't Texaco's CEO during Wages' tenure as president of the Oil, Chemical & Atomic Workers union. But as head of U.S. marketing and refining Tilton "was in a position where he could have had considerable impact ... (but) did nothing," Wages says.
Kinnear counters that Tilton did a good job of handling labor relations when he had the opportunity as head of Texaco's British operations in the late 1980s.
"The U.K. is a tough labor market," Kinnear says. "The unions there have a lot of stroke. Especially the Transport and General Workers' Union, which Glenn had to deal with."
Skeptics also question Tilton's lack of finance experience. Even Kinnear acknowledges that Tilton's job as head of U.S. downstream operations at Texaco during Texaco's Chapter 11 period in the late 1980s and early 1990s was to "run the store" while others dealt with the financial and legal issues of bankruptcy.
Earlier this year, Tilton was named chairman of Houston-based Dynegy, which ran into deep financial trouble after it tried to buy most of the assets of rival Enron. But Tilton's role was to act as the eyes and ears of ChevronTexaco, which owns 27 percent of Dynegy, and counsel Dynegy executives, not take hands-on control of the restructuring process.
Franklin Jenifer, Former Texaco and current ChevronTexaco board member, says concerns about perceived holes in Tilton's resume are overblown.
"I'm sure there may be some specialized knowledge of that industry that he doesn't have now," says Jenifer, president of the University of Texas-Dallas.
"But Glenn is so smart, and so quick, if there's anyone who can make that transition, it's him."
