Events News
"Work together, win together" Larry Kellner tells students
"The companies that are successful are
the companies that get people to work together, to go in the same direction," Continental Airlines
Chairman and CEO
Larry Kellner told 150 students and faculty who attended the annual Wachovia Bank
Executive Lecture Series at the Moore School of Business Oct. 23.
Kellner, who earned his bachelor's degree magna cum laude from the Moore School in 1981 and was named one of the business school's Distinguished Alumni in 2003, joined the Houston-based carrier in 1995 as senior vice president and chief financial officer. He is credited with engineering the remarkable turnaround of Continental, now the world's fourth-largest airline. The carrier had just emerged from bankruptcy 11 years ago when Kellner, then 36 years old, took the job.
"We were a lousy company then," Kellner told his audience on the Columbia campus. "We treated our customers badly. We were in financial trouble." In 1994, in fact, Continental ranked as the nation's worst airline in terms of customer complaints, lost baggage, and on-time arrival.
Since Kellner's arrival, the carrier has won more awards for customer satisfaction than any other airline. In 2006, Fortune magazine ranked Continental the No. 1 "Most Admired Global Airline" for the third consecutive year. Continental was also named the most admired airline on Fortune's "America's Most Admired" airline industry list.
How did he do it? Soon after he joined Continental, Kellner said he made it the company's number one priority to improve its on-time arrival ranking. "If we did that, I figured the other two problems [customer complaints and lost baggage] would lessen," he said.
By paying all employees below top-management level an extra $65 every month the airline ranked in the Top 5 for on-time arrivals, Continental moved up to fourth place within 30 days. Within two months, the carrier was Number 1. Continental has kept that top ranking ever since.
"We did that because we got everyone working together," Kellner said. "You're successful because
your people want you to be. You've got to believe in a quality product."
The extra $65 per month for Continental's employees was part of Kellner's belief that to make money, you have to spend money. "If you make yourself the cheapest product, you'll make it so bad no one will want to buy it." With that in mind, Kellner began replacing Continental's aging fleet in 1998 with more fuel-efficient aircraft. He also began increasing the number of international destinations that Continental would service. Today, it serves more international destinations than any other carrier.
The strategy has paid off. In just-announced results for the third quarter of 2006, the airline posted net income of $237 million - one of the highest in the industry. Its passenger revenue also increased 17.1 percent compared to the third quarter of 2005. And, Continental is one of only three major American carriers to escape having to declare bankruptcy after the terrorist attacks of Sept. 11, 2001. (Two days after the attack, Continental moved to cut 20 percent of its flights and lay off 12,000 employees. "We didn't go bankrupt," Kellner said, "because we were honest and the difficult decisions were made.")
After joining Continental in 1995, Kellner was named executive vice president and chief financial officer in November 1996. In May 2001, he was elected president of the airline and to the Board of Directors, and in March 2003, he also was named chief operating officer. He became chairman of the board and chief executive officer in December 2004.
Prior to joining Continental, Kellner was executive vice president and chief financial officer of American Savings Bank, with approximately $20 billion in assets, where he was responsible for all financial operations and strategic planning.
Kellner, who grew up in Sumter, South Carolina, served as Student Body President while attending USC. In addition to his Distinguished Alumnus Award from the Moore School of Business in 2003, USC presented him with a Distinguished Alumnus Award in 1998.
Jan Collins
October 2006