Gordon Bethune
The compulsively candid, famously profane 63-year-old CEO of Continental Airlines on stepping down, managing up, life after 9/11, and why employees are like selfish fish.
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I’ve always said that managing up ought to be predicated on what’s good for the shareholders. And in my ten-year history with this company, I’ve never had one disagreement with my board on a business issue. Most of the time, the things I wanted to do were good for shareholders and good for employees. Quite frankly, the success story’s pretty hard to replicate.
When didn’t they leave you alone? A couple of times, not every board member had the best interests of the shareholders in mind. Their judgment was colored by some of their investments in companies outside our arena, and it’s hard not to understand the conflict. If you have investments here and investments there and what I’m doing here is hurting you over there and you’d like me to modify my behavior—I refuse to recognize that. There’s only one way out of that kind of conflict, and that’s what’s best for our employees and our shareholders.
Is this a good time or a bad time to run an airline? Well, you wouldn’t choose to run an airline today.
Why? Because you’re only as good as your dumbest competitor. And there’s this huge contest to see who’s going to win that award. Right now, there’s a big fight between Atlanta and Minneapolis, but it looks like Minneapolis might win.
Just to be clear: Atlanta is Delta and Minneapolis is Northwest? I didn’t want to say it.
Why else wouldn’t you run an airline? Because of the government. Did you know that after 9/11, we didn’t fly an airplane in this country for three or four days? Nothing happened. M. D. Anderson? No one came. Honolulu might as well have not existed. Amazon.com? You double-clicked; it never showed up. Who gets the aspirin on the shelves of the Walgreens in Anchorage if we don’t show up? The whole world stopped. And the government’s response was to let us self-destruct. Why put taxes that were appropriate ten years ago on an industry in intensive care? They like to talk about government bailouts after 9/11 because they sent $5 billion back to all of us after they stopped our business for four days. But this year alone, we’ll send those turkeys $14 billion in federal non-income taxes and fees. The reason they sent the $5 billion was because they didn’t want to let go of the $14 billion bloodsucking. Our government needs to wake up. This is a fragile part of the infrastructure of our country that is absolutely vital to its existence. When it doesn’t work, the economy slows.
Does your beef with the government extend to the state? I think the state is blessed and smart. They’re blessed in that they have three airlines: American, Southwest, and Continental. No other state has anywhere close to that. They’re smart, because it’s a good place to work. The tax structure allows us to come. They don’t do foolish things to run us off. Now, there’s always some dumb-shit legislator who wants to tax something that would just run us off, but most of the legislators and the governor understand. We’ve got a lot of economic power coming into this state, and we should keep it as a good place to do business.
A lot of industries want government to do something. You want government not to do something. When I was testifying before Congress earlier this year, I said the only request I would have of government is to take the word “airline” out of its lexicon. Never use the word again, never put it in legislation—forget about it. Because every time you bring us up, you push us deeper under the water. And the best thing that government could do to us is get the hell out of our business.
Let’s talk about your competitors. Anyone or anything you admire? Well, I’ve always admired [former Southwest Airlines CEO] Herb Kelleher, because he’s got the discipline. He knows his market, and he’s identified what he wants out of it. He’s not trying to be us. He’s going to be him, and he’s very good at it. And he admires people who actually know what they’re doing and know how to do it well.
Who else? [Federal Express CEO] Fred Smith—one of the most brilliant, professional, disciplined guys in aviation today. [Former American Airlines CEO] Bob Crandall. Bob and I, I bet you, see eye to eye on 99 out of 100 things. We don’t see eye to eye on how to achieve them, but we see what needs to be done. Look what he did for American. He moved the company from New York to Dallas in ’79 and built one of the biggest franchises there ever was. It’s the number one airline in the world today. Bob Crandall did that, right? And he did it his way, but you’ve got to give him credit for doing it.
Smith is still the CEO of Fed Ex, but Crandall and Kelleher both peeled off in the past decade and—what do you know?—their successors didn’t last very long. Does that have to do with the cultures of their companies? That’s a good question. Let me tell you a story about [Crandall’s successor] Don Carty. Bob Crandall has a dog that he keeps in his backyard on a chain, and every day he comes out and kicks the shit out of the dog. The dog hates his guts, but he can’t get him because of the chain. And Don goes out there with Bob sometimes, but he never kicks the dog, because it’s Bob’s dog. One day Bob says, “You know what? I’m going to retire. And Don, I’m going to give you the dog.” So Don reaches out to the dog: “Hi, puppy. How are you?” What do you think the f—ing dog does? Bites the shit out of Don. You changed the owner, but you didn’t change the dog. It’s very predictable. If you kick the shit out of a group of people and then you give the people to someone else, they don’t change because the boss does.
Do you ever look at a competitor and think, “You know something? We should do what they’re doing.” No, actually, we’ve said we don’t want to do that for sure.
Give me an example. One airline decided to give out on-time bonuses. You know who they gave them to? The management. The stupid shits! You’re telling me that as a pilot I don’t get an on-time bonus, but this f—ing guy does? Watch out.
Another story. An airline executive was once quoted as saying, “I wouldn’t give my employees extra money just to do their jobs.” Look at his compensation! He had incentive compensation for every f—ing thing he did. Did he think the mechanics were less human and wouldn’t work a little harder for extra money? Well, then, why not pay them extra to do a better job?
I was making this point recently to a group of intellectual dudes who are considered my peers, and I said, “Do you ever wonder why fishermen put bait on the hook? Well, let me tell you why. Because the fish doesn’t give a f— about you. The fish has his own agenda, which does not include getting in your boat and feeding your ass or getting you some money. It’s not on his list of things to do. You, on the other hand, need the fish. So it’s incumbent on you to motivate the fish, and it’s incumbent on you to know what that fish likes. And they don’t all like the same thing, which is your f—ing problem too. If you are smart enough to know something about the f—ing fish and where he resides and you put the right bait on, he might get off his ass and help you.” Now, is that pretty f—ing simple?
Last question: What are you going to do after you step down? Run another airline, maybe? I’ve always had people call and say, “Could you help us?” Looking out the window, I know that a lot of money’s going to get lost in this business the next few years. The people who have that money don’t want to lose it. Then there’s a whole other group of people who will look from the outside and think that there are a lot of opportunities to make money in this changing environment. Both of those camps will call, people who know something about how we get this done, and I’m going to have to think what I want to do.
So staying in the airline industry, if a job came along, is not a given? I’m going to pick up the phone and say, “Hello,” and then say, “Explain to me why I would want to get in your boat and help you feed your family. Why in the shit would I want to do that?”
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