Is This Any Way To Run an Airline?

Last December, when Edward Carlson took over United Air Lines, company wits spread the gag that he would ground U.A.L.'s superjets and run them as hotels. The point of the barb: Carlson had risen from bellhop to president of the Seattle-based Western International Hotel chain, but his airline background was limited to less than five months of sitting on United's board after Western was merged into U.A.L. If anything, lack of experience in the deficit-ridden industry has proved an advantage. In 1970 United lost almost $41 million, but last week it reported a third-quarter profit of $24 million, trimming its loss for the first nine months of 1971 to $8 million.

As president and chief executive, Carlson has indeed taken a different approach than a veteran airline executive might have. At the start of this year, he pioneered in cutting back schedules to eliminate flights that were taking off with many empty seats. Airline men had long felt that move to be necessary, but the Civil Aeronautics Board would not let them get together to discuss which flights to drop. Carlson gambled on a unilateral 18% cut in United's schedules, with CAB approval. "It was a little gamesy," he concedes, "but it worked." Majoi competitors followed.

Carlson also has taken a lead in cost cutting, largely by reducing his orders for superjets. He trimmed United's orders for DC-10 jets from 30 to 22, and postponed delivery of some 747s. Savings: $160 million. "I'd rather be a lit tle behind in the equipment race than too soon," he says. He also pared payrolls 10%, eliminating 6,000 employees through attrition or layoff.

Now Carlson is campaigning against "NETMA"--his acronym for the frequent executive complaint that "nobody ever tells me anything." By the end of the year, he will complete a reorganization of United into three operating centers, each with its own profit-and-loss statement. He hopes that this first decentralization in airline history will bring headquarters executives into closer and quicker touch with what is happening in the field. He cites a trip that he made to Florida, during which he found that United's ticketing and check-in facilities were grossly inadequate, and ordered them to be improved. "That kind of decision should not be left to the president of the company," he says. "To the headquarters in Chicago, the problem of a check-in counter in Fort Lauderdale is not so important. But it will be important to the new East Coast division."

Volunteer Baby-Sitter. To get that kind of information, Carlson, 60, a short and trim man, has been in constant motion. He prides himself on putting in only one day a week in Chicago, spending the rest of his time roaming the U.A.L. network from Honolulu to New York. He often turns up at United hangars and airport kitchens, shakes hands with startled baggagemen and quizzes stewardesses about flight service and their complaints. Riding coach recently on a U.A.L. flight, he voluntarily handed over $1.50 to a stewardess who had been worrying whether to charge him for a drink. "Why not?" he said. "The company needs the money."

This personal interest by the boss has lifted U.A.L.'s morale despite the layoffs. Since Carlson took over, an employee-organized sales effort has brought in some $5,000,000 of revenue. In Chicago, a United janitor organized a charter flight to Los Angeles for his bowling group. A San Jose mechanic babysat for a neighbor flying on United to Hawaii.

For all this effort, the skies will not really be friendly for United until there is a general pickup in the economy. So far, passenger traffic is down 4% from 1970, and United may be reaching the limit of the benefits it can get from cost cutting. "You can't save yourself to prosperity," Carlson admits. But he has put the slimmed-down airline in position to earn a solid profit whenever traffic does climb again.

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