Continental Airlines

Summary

Continental Airlines has been transformed from a company facing bankruptcy to one that is consistently profitable. This has been achieved through a new corporate strategy, the Go Forward Plan, which has helped build a new, and winning, corporate culture.

Introduction

Headquartered in Houston, Texas, USA, global carrier Continental Airlines has about 48,000 employees and in 1998 reported a pre-tax profit of $770 million. This financial success is, in itself, a measure of the extraordinary turnaround in fortunes of this once perennially failing airline. As Mike Campbell, the organization's senior vice president, human resources and labour relations, says:

"Within four years we have changed from one of the worst to one of the best performing airlines. We have turned the organization around from one that was failing to one that is very successful and indeed was, in 1998, voted by Fortune magazine as one of the best 100 US companies to work for.

"Right now within Continental Airlines employee morale could not be higher. We have a culture in which we are winning together. To use a sporting analogy we see ourselves as being a team that could win the superbowl."

Corporate Culture – Pre-change

Such a confident assertion, to put it bluntly, would have been laughed out of sight by anybody involved in the organization in the early 1990s – by managers, staff, investors and customers alike. The company was, quite simply, awful. For example, in 1994, when its change programme was launched, Continental Airlines was facing bankruptcy for an unprecedented third time. President and chief operating officer (COO) Greg Brenneman, who first experienced the company while with the management consultancy Bain and Company, neatly expressed Continental Airlines problems pre-change in a 1998 article in the Harvard Business Review:¹⁵

"In my six-odd years of working on turnarounds at Bain, I had never seen a company as dysfunctional as Continental. There was next to no strategy in place. Managers were paralysed with anxiety. The company had gone through ten presidents in ten years, so the standard operating procedure was to do nothing while awaiting new management. The product, in a word, was terrible. And the company results showed it. Continental ranked tenth out of the ten largest US airlines in all key customer-service areas as measured by the Department of Transportation – on-time arrivals, baggage handling, customer complaints and involuntary denied boardings. And the company hadn't posted a profit outside of bankruptcy since 1978."

About employee morale he provided this example:¹⁶

"When I arrived at Continental, it was a mean and lousy place to work.... A couple of weeks after I arrived, I was walking the ramp at Houston saying hello to our mechanics and baggage handlers, and helping to throw a bag or two, when I noticed that almost all the employees had torn the Continental logos from their shirts. When I asked one mechanic why he had done this, he explained, 'when I go to Wal-Mart tonight, I don't want anyone to know that I work for Continental'. His response still sends chills down my spine."

So how did the company address such massive and deeply ingrained financial and cultural problems? Campbell suggests that the fact that the company was so awful proved a somewhat perverse benefit. He says:

"One of the advantages of being so bad is that you can only get better. It's much easier to change the culture when things are terrible than to change a negative culture when you are financially successful."

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