April 18, 2007

Continental CEO Discusses Airline Business Post 9/11, Going Green

By Chantelle Wallace

For four straight years, Continental Airlines has claimed the title of Fortune magazine’s “Most Admired Global Airline.” But it's not just the continued free services, such as meals and pillows, that helps the Houston-based carrier achieve this title.

“Everything works at Continental because of our people,” said the company’s chairman and CEO Larry Kellner at his April 12 VIP Distinguished Speaker Series talk. “Business strategy isn’t as important as employees.”

Prioritize People and Product Plans

Kellner’s tenure with Continental began in 1995 when he was appointed CFO. Among U.S. carriers, the then-ailing airline had the highest number of customer complaints, delayed departures and baggage loss. To improve these rankings, Kellner addressed four areas of needed improvement—people, financial, product and marketing.

Adhering to his principle that people are paramount, Kellner constructed a corporate plan that could easily be communicated to employees.

“Because I wanted to get everybody in the huddle at Continental, the business plan had to be a few simple bullet points because people aren’t going to read 20 pages,” he said.

Connecting Continental’s baggage loss problems to the frequent departure delays, Kellner prioritized “make reliability a reality” for his product plan.

“Any business product should be clean, safe and reliable,” he said.

Success After September 11

The Sept. 11 attacks devastated America’s airline industry, but Kellner pointed out that Texas’ three carriers—Continental, Southwest and American—all dodged the bankruptcy bullet.

“After 9/11 we threw out our former business plan,” Kellner said. “We issued comments about the economic impact on Continental three days after the event as opposed to many of our competitors who waited six weeks. We decided our market plan had to shrink, our product plan would stay the same and our people plan would involve working them harder.”

Because Continental caters to business travelers, comfort is key. The airline flies at 6,000 pounds of cabin pressurization as opposed to the typical 8,000 pounds that other airlines usually use.

“This makes a dramatic difference in how you feel after a 15 hour flight,” he said.

Going Green

Continental’s concerns extend to the environment as well. Fortune magazine’s special report “Going Green” recently cited the airline as a company willing to go beyond legal environmental requirements and achieve even higher standards.

“We can now fly a passenger plane with 35 percent less fuel today than we could 10 years ago,” Kellner said. “We’ve found that what’s good for the environment is good for business.”

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