Gordon Bethune? What About Jim Whitehurst on Board With United Airlines?

O f all the turmoil going on at the world headquarters of United Airlines regarding leadership of the company, the big news has been the health of Oscar Munoz, who returned to work earlier this week as the president and chief executive officer of the airline after recovering from a heart transplant procedure — which he underwent slightly greater than two months ago as a result of suffering from a heart attack on Thursday, October 15, 2015…

…and there is also the brewing controversial proxy contest involving Gordon Bethune — lauded as the former chief executive officer of Continental Airlines but who brought Jeff Smisek to the troubled airline in 1995 — in an attempt to control the direction of leadership of United Airlines. United Continental Holdings, Incorporated confirmed in this press release ten days ago that it had been informed by hedge funds PAR Capital Management, Incorporated and Altimeter Capital Management, Limited Partnership of “their intention to nominate six director candidates for election to the Board of Directors at the Company’s 2016 Annual Meeting of Shareholders. The nominees include Gordon BethuneBrad GerstnerBarney HarfordRodney O’NealTina Sharkey and Brenda Yester Baty. PAR and Altimeter have previously disclosed that they are acting as a group that collectively owns approximately 7.1% of the Company’s outstanding shares of common stock”…

…but also of interest is one of the three new independent individuals who were immediately appointed to the board of directors of United Airlines — according to this official press release from United Airlines — with a fourth person expected to be named later: in addition to the names of James A.C. Kennedy and Robert A. Milton — who is the former president and chief executive officer of Air Canada — is the name James M. Whitehurst.

Jim Whitehurst? The former chief operating officer of Delta Air Lines?

Yep.

Re-entry Into Commercial Aviation?

“Don’t think for one second that he couldn’t be coaxed out of Red Hat to run United”, according to a source close to Whitehurst while he was an executive at Delta Air Lines. “He’s been there and done that with Red Hat and he’s very competitive; so I’m sure he’d like to poke Bastian in the eye and run an airline even bigger than Delta. Now that would be poetic justice.”

Perhaps — but Delta Air Lines has surpassed United Airlines as the second largest airline in the world in terms of revenue, according to this latest ranking by Forbes.

Edward Bastian will become the new chief executive officer of Delta Air Lines, Incorporated once Richard Anderson — the current chief executive officer — retires effective as of Monday, May 2, 2016. Sources close to Jim Whitehurst claimed that he sought to become the next chief executive officer of Delta Air Lines — succeeding Gerald Grinstein once he retired as chief executive officer — but Anderson was appointed instead; and that claim is corroborated by this article written back on Tuesday, August 21, 2007 by Matthew Boyle of Fortune: “When Delta Air Lines named board member Richard Anderson as its new CEO Tuesday, speculation mounted that it would soon lose a major architect of its ongoing turnaround.” The article — an interesting one to read with its speculation of the possibility of Northwest Airlines merging with Delta Air Lines as a result of the appointment of Richard Anderson as chief executive officer — then continued with this statement: “Industry experts say that Jim Whitehurst, Delta’s COO and an internal candidate for the CEO job, is expected to leave the company now that he’s been passed over for the top post.”

“It’s good to see Jim Whitehurst re-enter the airline world. He was much loved at Delta, but a bit too nice for Anderson and Bastion’s taste”, opined FlyerTalk member fly18725. “Robert Milton is an interesting choice. He saved Air Canada but was not loved by the unions.”

Other FlyerTalk members generally concur regarding the appointment of Jim Whitehurst to the board of directors of United Airlines. FlyerTalk member NH_Clark responded that “Whitehurst is a great addition! Good moves.” FlyerTalk member sinoflyer posted that “Seeing Jim Whitehurst’s name put a smile on my face…Some of us were impressed with what Whitehurst did at PMDL, and believed that he would have made an excellent CEO for PMUA. I see today’s news as positive indeed.” FlyerTalk member worldwide dreamer agreed: “Mine, too. I work in technology where he (and RedHat) have a glowing reputation. What a great call!” FlyerTalk member snowed added, “Thrilled to see Whitehurst coming in. It will be nice to have someone who knows how important and valuable technology is.” FlyerTalk member SJC ORD LDR joined in with this sentiment: “Good for Jim. He’ll be an asset to UA.” FlyerTalk member DiverDave simply roots for Whitehurst: “Jim – keep climbing.”

Regarding the aforementioned proxy contest currently occurring at United Airlines, FlyerTalk member EWR764 commented that “…the lack of airline experience on the board is a concern, and the move to add Whitehurst and Milton, in particular, is aimed to address that.”

Would Frequent Fliers Have Been Better Off With Jim Whitehurst?

FlyerTalk member readywhenyouare believes that “Delta’s loss is United’s gain. The DL BOD were fools for not making Whitehurst the CEO. You needn’t look any further than the impressive job he has done at Redhat.”

Admittedly, that argument is difficult to substantiate when Delta Air Lines has been earning billions of dollars in record profits financial quarter after financial quarter in recent years — although frequent fliers might have arguably been better off with Delta Air Lines under the leadership of Jim Whitehurst.

Almost ten years ago — in an old building in Atlanta which once housed Macy’s — the refreshingly candid words of “We screwed up” by Whitehurst launched a presentation as part of an event by Delta Air Lines called The Velvet Rope Tour; and I can tell you that the ears of every attendee in that room perked up when they heard those three simple yet unexpected words on the evening of Thursday, May 18, 2006. He continued the presentation by frankly stating that the reason Delta Air Lines was currently in bankruptcy was because “we have been failing you” and that Delta Air Lines had “not listened carefully enough to you”. He went on to say that 100 percent of the turnaround effort of Delta Air Lines will be on focusing on service and product, not on cost, as had been done in recent years; and that the goal is to be the number one carrier in the industry in terms of customer satisfaction.

We will never know whether or not frequent fliers would have been better off had Jim Whitehurst been the chief executive officer of Delta Air Lines.

The Career Path of Jim Whitehurst

Jim Whitehurst has had an interesting career path. At 48 years of age, he has already accomplished a number of lofty goals and significant achievements. He is currently the president and chief executive officer of Red Hat, Incorporated in Raleigh, which is a leading provider of open source enterprise information technology products and services. “Since joining Red Hat in January 2008, he has more than tripled the company’s revenue from $523 million to $1.8 billion, while more than tripling the company’s stock price”, according to the aforementioned press release. “Under his leadership, Red Hat was named to Forbes’ list of ‘The World’s Most Innovative Companies’ in 2015, 2014, and 2012; added to Standard and Poor’s 500 stock index in 2009; and named one of the best places to work by Glassdoor in 2014.”

Prior to Red Hat, Whitehurst spent six years at Delta Air Lines — first as acting treasurer who was appointed on Tuesday, September 11, 2001; then as a senior vice president before becoming chief operating officer — where he managed airline operations and drove significant international expansion.  Whitehurst was one of the architects — some say the chief architect — who positioned Delta Air Lines back on track as it emerged from bankruptcy protection on Monday, April 30, 2007.

Whitehurst held several corporate development leadership roles at Boston Consulting Group — with clients across a wide range of industries — prior to his stint at Delta Air Lines, who was his biggest client. He currently serves on the board of directors of DigitalGlobe, Incorporated. In June of 2015 — according to the aforementioned press release — “Whitehurst published a book with Harvard Business Review Press entitled The Open Organization: Igniting Passion and Performance, showing how open principles of management, based on transparency, participation, and community, can help organizations navigate and succeed in a fast-paced connected era.”

He is a graduate of Rice University with a Bachelor of Arts degree in computer science in 1989; and also earned a Master of Business Administration degree from Harvard Business School in 1994.

Summary

According to the aforementioned press release, Oscar Munoz noted, “I am excited that three world-class, independent directors are joining the Board and believe they will help achieve our goal of generating superior value for shareholders. I look forward to working together with the Board and the management team to accelerate the positive momentum of our operational turnaround while continuing to innovate and elevate our employee and customer experience.”

Henry L. Meyer III — who is the non-executive chairman of the board of directors for United Airlines — added, “We believe these accomplished executives, who have deep airline or other relevant experience, will provide invaluable perspective as we build on our strong momentum by continuously working to improve operations. We remain focused on investing in our products and services to earn the trust of our customers and employees and to create long-term value for our shareholders.”

If his years at Delta Air Lines are any indication, the addition of Jim Whitehurst to the board of directors of United Airlines might prove to be quite interesting for the future of the airline.

In this article pertaining to leadership, I wrote that I have always believed that one of the most important aspects — if not the most important aspect — of leadership is earning trust. If you are not trusted, you cannot be a true leader. It is as simple as that.

I remember when I learned about the news that Jim Whitehurst was no longer with Delta Air Lines back in 2007, not long after I attended the events celebrating the emergence of Delta Air Lines from bankruptcy protection. I called his mobile telephone number and wished him the best, suggesting that he will land on his feet in no time and embark on an even better opportunity. I know that he did not need to hear that from me; but he seemed appreciative just the same. I told him that because I truly believed it — not because he needed to hear that from me or anyone else. I do not waste my time telling people things which I do not believe myself — and I hope that shows in the articles I post here at The Gate.

To conclude this article, here is a statement I wrote in this article on Monday, May 18, 2015 regarding Jim Whitehurst, who is someone I can trust:

“Management and executive personnel of companies may not feel they owe it to their suppliers, stakeholders and customers to grant every single request by them regardless of the consequences; but they do at least owe their customers truthfulness, transparency, honesty and clarity pertaining to the changes and implementation of policies which affect them; and they should learn from what Jim Whitehurst did on that spring night in Atlanta” — in my opinion, anyway.

Photograph ©2007 by Brian Cohen.

3 thoughts on “Gordon Bethune? What About Jim Whitehurst on Board With United Airlines?”

  1. Whole heartedly agree – the addition of Jim Whitehurst is potentially much more telling than Bethune, James Kennedy or Robert Milton (although I am partial to Milton being he is a Tech grad – THWG!).

    One of the interesting stories about Jim that doesn’t get recounted often is how he and Vince Caminiti (then SVP ecommerce @ Delta Air Lines) turned a $19M investment in Priceline into a $1.3B profit (more had Michele Burns not restructured the deal for short term purposes). You can literally rack up all of Delta’s profits over 99-01 to a technology deal an not moving pax.

    The technology side of aviation has always been more profitable than the pax / cargo side of the business (AA Sabre, UA Galileo / Cendant, DL/NW PARS / Worldspan, … and on the other side of the runway Sceptre, Merlin, Memis, …). Of course saying something is more profitable than air transport of pax isn’t really saying much over the history of airline profitability since deregulation.

    To other initiatives Whitehurst observed (as a BCG consultant at DL and then championed during his tenure at DL) were the Delta Nervous System (DNS) and NextGen MRO.

    There are a good number of reasons DL got to Single Operating Certificate (SOC) after the NW merger faster than UA/CO, WN/FL or AA/US will – but one significant element was DNS – the first Enterprise Service Bus (before ESB was even a TLA three letter acronym) that enabled fast and accurate parallel integration and then consolidation of res, flight ops, airport ops, ground ops and maintenance ops.

    So it should be a surprise that when Whitehurst got to Red Hat, he executed a series of acquisitions and investments to build an open source ESB to compete against TIBCO, Websphere, Weblogic, etc… which is now RedHat’s JBoss/Fuse. And not stopping there – RedHat is expanded / transformed Enterprise ESB to Ecosystem ESB – at least in the rail industry – as it is the backbone of FRA regulatory mandated Automatic and Positive Tran Control (ATC / PTC).

    Unfortunately the NextGen MRO initiative didn’t fare so well. While being supported by Mac Armstrong (my old boss), Ray Valieka (SVP TechOps) and Jim, it wasn’t supported by Ed Bastian (then Controller) or Michele Burns (CFO). NextGen MRO started in 2000 but got killed after 9/11 and SARS when DL was bleeding a million dollars a day. There are a lot of reasons to not make your accountant your CFO – and Burn’s shortsightedness on Mac’s fuel hedging deal and NextGen MRO are among good examples.

    A few years back I asked Jim to give a presentation at AvWeek’s MRO Americas conference, about a year or two after departing DL. Jet-A runs through Jim’s blood, so he jumped at the opportunity. His presentation was the precursor to his book Open Organization, and if you ask Ed Hazelwood or Helen Kang from AvWeek Evetns – it is to this day one of the best / most liked presentations ever given – Steve Jobs-esk.

    It will be interesting to see the impact Jim will have on UA – not only on the IT side but the organization, leadership, PaxEx and operations.

    Might this be a stepping stone for Jim to transition back into aviation – maybe.

    Has UA brought on board one of the best thought leaders / operators in the industry – definitely.

    Can and will UA right the ship – only time will tell.

  2. edits

    I whole heartedly agree – the addition of Jim Whitehurst is potentially much more telling than Bethune, James Kennedy or Robert Milton (although I am partial to Milton being he is a Tech grad – THWG!).

    One of the interesting stories about Jim that doesn’t get recounted often is how he and Vince Caminiti (then SVP eCommerce @ Delta Air Lines) turned a $19M investment in Priceline into a $1.3B profit (more had Michele Burns not restructured the deal for short term purposes). You can literally rack up all of Delta’s profits over 99-01 to a technology deal and not the business of pax air transport.

    The technology side of aviation has always been more profitable than the pax / cargo side of the business (AA Sabre, UA Galileo / Cendant, DL/NW PARS / Worldspan, … and on the other side of the runway Sceptre, Merlin, Memis, …). Of course saying something is more profitable than air transport of pax really isn’t saying much given the history of airline profitability since deregulation.

    Two other initiatives Whitehurst observed (as a BCG consultant at DL) and then championed during his tenure at DL were the Delta Nervous System (DNS) and NextGen MRO.

    There are a good number of reasons DL got to Single Operating Certificate (SOC) after the NW merger faster than UA/CO, WN/FL or AA/US will – but one significant element was DNS – the first Enterprise Service Bus (before ESB was even a TLA three letter acronym) that enabled fast and accurate parallel integration and then consolidation of res, flight ops, airport ops, ground ops and maintenance ops.

    So it should be no surprise that when Whitehurst got to Red Hat, he executed a series of acquisitions and investments to build an open source ESB to compete against TIBCO, Websphere, Weblogic, etc… which is now RedHat’s JBoss/Fuse. And not stopping there – RedHat is expanded / transformed Enterprise ESB to Ecosystem ESB – at least in the rail industry – as it is the backbone of FRA regulatory mandated Automatic and Positive Tran Control (ATC / PTC).

    Unfortunately the NextGen MRO initiative didn’t fare so well. While being supported by Mac Armstrong (my old boss), Ray Valieka (SVP TechOps) and Jim, it wasn’t supported by Ed Bastian (then Controller) or Michele Burns (CFO). NextGen MRO started in 2000 but got killed after 9/11 and SARS when DL was bleeding a million dollars a day. What we then called NextGen MRO or what the military called Sense & Respond Logistics at the time – is what GE now calls the Industrial Internet or simply IoT (the Internet of Things).

    There are a lot of reasons to not make your accountant your CFO – and Burn’s shortsightedness on Mac’s fuel hedging deal and NextGen MRO are among good examples.

    A few years back I asked Jim to give a presentation at AvWeek’s MRO Americas conference, about a year or two after departing DL. Jet-A runs through Jim’s blood, so he jumped at the opportunity. His presentation was the precursor to his book Open Organization, and if you ask Ed Hazelwood or Helen Kang from AvWeek Evetns – it is to this day one of the best / most liked presentations ever given – very Steve Jobs-esk.

    It will be interesting to see the impact Jim will have on UA – not only on in IT but on the organization, leadership, PaxEx and operations.

    Might this be a stepping stone for Jim to transition back into aviation – maybe.

    Has UA brought on board one of the best thought leaders / operators in the industry – definitely.

    Can and will UA right the ship – only time will tell.

  3. NotAFan says:

    It was no secret with the higher ups that Ed played very dirty pool and Jim would not sink to that level. Ed promised promotions to people if they were loyal to him…Jacobson comes to mind…despite there being an implied agreement that it should not have been done. Folks like Hauenstein took to the Ed camp as did many others as Jim was not seen as aggressive enough. It just wasn’t Jim’s shtick but Ed had no problem with it. Did Ed win? Pyrrhic victory some would say. Yeah, he won the spoils of the position but also soiled whatever reputation he had at the time…and people don’t forget that type of activity. And his acolytes could certainly be seen as opportunists. They got rich as Delta got richer. But Jim’s reputation served and continues to serve him well. As it should. Yeah, whomever you quoted was spot on. Jim’s ultra-competitive and to move to United, should he choose, would give him the opportunity to exact a bit of revenge…and there’s not shortage of very talented people from all over who would follow him. I don’t think this is a story that’s finished by any stretch of the imagination.

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