FWAAA

I would have thought that switching from whole cashews to cashew halves (which will actually result in bits and pieces more often than not) would save more than $200k annually. Why downgrade a premium cabin amenity in search of a paltry savings of just $0.54 per mainline flight, on average?

Assumptions: UA flies nearly 740,000 mainline flights each year and about half of those feature the warmed nuts (at AA, nuts aren't served on breakfast flights).

Apparently Smisek wanted to leave a lasting legacy for cost discipline, like Crandall's $40k olives (eliminated one olive from each F salad and thus saved $40k annually). Smisek will be known for his 54 cent cashews.

FlyingNut724

I would think it would increase the weight of nuts UA purchases, because more nuts would now be packed into the same volume.

BearX220

Actually, I saw nothing to show the isolation bubble has burst. The closest he came to truth-telling was acknowledging that he was lying to investors and Street analysts through 2012 when he kept claiming things were going fine.

Everything else was more of the same stuff that's brought them massive losses and shrunk their customer base.

Smisek still sees high operating costs as his main problem. In a scenario where revenue and passenger traffic are both falling, you can either raise the ceiling or lower the floor. He's talking about lowering the floor further, which is pretty depressing when you look at how lame service and operational levels are already. I didn't see any reference to "raising the ceiling," e.g. getting HVFs back with appealing service or incentives.

That's why UA account managers take corporate travel managers to dinner and beg to get their business back, as discussed often in this forum, but offer literally no reasons to jump. That's why 80 percent OT is good enough. That's why UA ground and cabin staff are free to make up their own rules, provide service or not, be merciful to customers or abuse them, etc. Nobody at the top is talking about consistency or excellence or delighting customers. They're talking about cheapness.

The cashews, to mix a metaphor, are just the tip of the iceberg.

I think they understand exactly where their current product stands. I don't think they understand the dynamism of the marketplace or the law of unintended consequences.

I also think UA corporate culture regards high-touch service factors -- the little things that delight customers and blunt dissatisfaction with crap operations, and even stem defections -- as superfluous, and kind of woo-woo and stupid, and certainly too costly.

When Smisek says he admires DL he's not talking about the superior service culture. He's talking about hub pricing and stingy SkyMiles redemptions and PQDs.

FlyingNone

I particularly like this -
...he is working to fundamentally change employees' thinking about the company...."far too long we've operated this company as an airline. Airlines don't make money"....he wants employees to view United as a business....

and this -
He is also saying that a single "corporate culture" can progress even without joint (union) contracts. New contracts likely will only increase United's expenses".

Are we back to the negatives ?...."NO", "can't", "we don't..", "you can't". I'm head scratching.....the eight hour customer service class I went to this past Winter emphasized saying "yes, we can help you" and making negative problems into a a "win-win" situation. So if you look at something strictly as a business, in my opinion it reduces a lot of flexibility and freedom. Now I'm not saying flexibility and freedom to make changes, waivers, exceptions, give away the store, etc. should be unlimited but....?

Also, without our union contract being ratified (between United and the IAM) and settled in customer service, we are hanging in limbo with wage increases, back retro-pay, future benefits, etc. Just having a "corporate culture" doesn't move this along and is keeping a lot of employees concerned/frustrated as to what will happen.

bseller

So true, so very very true.

This perspective was what PMCO did when it ran AirHouston, but sadly doesn't translate outside of a mid size regional.

Dave

BearX220

Do you not remember Delta's "no waivers, no favors" period? And how well that worked for service levels and customer retention? I believe it ultimately led to the departure of their CEO. Smisek might read up on DL history before he doubles down on Operation Cheapout.

FlyWorld

OK, so we cut the nuts (literally), we cut the employee shuttle service, we cut everything in sight, because we've got to save money - and yet, his $14 million bonus? Somehow that's off the table?

Truly sickening.

I've never seen a spectacle like this.

dw

I'm curious whether he thinks WN has been run like an airline these past 40+ years (of profitability).

BearX220

Yeah, you have. Home Depot / Nardelli:

http://www.nbcnews.com/id/16469224/n.../#.Ub8ocvmTiSo

Nardelli nearly sank the company with blind oblivious cost-cutting. In the end, the BOD came to its senses, but it cost them a lot of money and corporate wreckage.

FWAAA

I would bet serious money that UA purchases nuts by the pound, not by volume.

Or are you saying that FAs will serve more pounds of cashews to fill up the ramekins? If so, there's an answer to that: Smisek can buy smaller ramekins.

fly18725

No one said the employee shuttle was cut...

There's a difference between cutting and re-thinking operations in an effort to be more efficient and effective. I think some of the decisions have been weighted towards the former, but I think the latter is very much in play.

If you've never seen anything like this before, you should go read the thread in the Delta forum about changes to the Sky Club alcohol brands.

remedy

I agree. While whole vs split nuts sounds trivial, it is a reflection of diluting the brand at at time when others are elevating theirs; particularly for premium customers. Sends the wrong message to the customers they should bed courting.

FlyingNut724

I agree about how they purchase. But, they fill the cups by volume right? So it takes more cut nuts (thus more weight) to make the cup look as full as compared to the time when they were using the non-cut nuts?

FlyWorld

I knew someone was going to call me out on that comment. ;-)

It's true. I have never seen anything like this. But, it's also true that, relatively speaking, there are very few corporations that I am as deeply invested in and therefore follow as closely as this one. I'm sure that if I followed all corporations with this degree of interest, there would be other similar stories. That's why CEO pay and corporate governance are such hot topics generally.

This sickening arrogance and greed is indeed widespread - it's just hitting much closer to home for me, here.

aacharya

I don't see the greed as much as you do. I don't care a hoot about CEO pay or bonuses. Because it all bothers me and almost all American companies have this issue. So why bring it up at all?