Transcripts For KQED Charlie Rose 20130810

United airlines, jeff smisek. Airlines are very complex businesses, first of all,. And they have very different fleets. They have different facilities. Rose different routes. Different technologies, different routes, different cultures that you bring together as well. And in many cases, underinvestment that you have to do catchup investment on just to bring to the state where you need it to be. There are also theyre also heavily unionized, so youre dealing with labor unions and individual contracts and joint contracts. And change is hard. Even when change is good, people resist change because its difficult to go through change. Rose kutcher and smiesec next. Captioning sponsored by Rose Communications from our studios in new york city, this is charlie rose. Rose Ashton Kutcher is here. He is, as you know, an actor, but you might not know that he is an investor. In 2011 he created a Venture Capital fund called a grade investments. A grade has invested in spottify, uber, and four square. Now he combines his passion for acting with his love of technology by playing an icon of innovation, steve jobs. Here is the trailer for jobs. Steve. It takes guts to drop out like did you. Higher education comes at the expense of experience. What are you working on . A computer terminal that hooks up to the tv for the display. Uh, steve . Whoa. These are stateoftheart. Nobody is making anything like this. All right, okay welcome to Apple Computer. Is this everything . Its a startup. I think we should start with around 90 grand. Could you repeat that . If youll have me aboard. Apple went public this morning. Since i was 14. Cant stop me we gotta make the small things unforgettable. Typeface isnt the pressing issue. Get out. Hes trying to start a were with i. B. M. Steves been doing the impossible ever since he was in the garage. Im trying to build apple, and theyre taking it away from me . If you keep heading down this path, i will not protect you. Its a blatant ripoff. Im going to sue you for every cent. Are you your own worst enemy. The board is unanimous. Steve will no longer be involved in this company. 10 years after steve jobs departure, the future of Apple Computer is in jeopardy. In life you only get to do so many things. Were going to make apple cool again. Heres to the crazy ones, the misfits, the rebels. Because the people who are crazy enough to think they can change the world are the ones who do. If were going to do this thing, we need to come up with a name. Apple. That is so much better than laser beam computers. Rose im pleased to have Ashton Kutcher at this table for the first time. Welcome. Great to have you here. Thanks for having me. Rose we share a passion for film and technol at very different levels. Steve jobs, just a sense of who the the essence of this man who has been on this show as well, but youve said there are few people when they walk into the room, the room is different than the way it was when steve jobs walked into the room. I never had the good fortune of meeting him. But i think theres theres this this iconic understanding of who steve jobs was, and which is really who he became. This you know, the guy with the black turtleneck and the pant and the shoes and shaved head and round glasses. And it was always this sort of mirror image that never changed, and there was this constant consistency and a standard with which he brought when i was studying the character, i found a lot of specific patterns, or things that he said again and again and again, and even interviews where he talked about that his real job was to to constantly reinforce the vision of his company. And, you know, its interesting, there arent very many people in the world that you see that you go, that guy is consistently and constantly iconically that. And i think one of the things he was doing with his whole appearance was allowing the products that he created to be the feature of any presentation that he gave, so you knew steve was going to look like and be steve. But the products would change, and to keep the focus on the product, he created a consistency in and of himself, but, wow, i mean, talk about somebody who understood engineering and understood art at the same time. You know, i i ive said it out loud. Id say it again eye really think hes like the Leonardo Da Vinci of our day, somebody really had an appreciation for aesthetic design and beaut and art but also understood how to make things work and made things that made peoples lives better. Rose he also seemed, therefore, to have some sense of what life was about. Yeah, i think you know, you see a guy like that and for a lot of people eye mean, i admire him as a hero, really, and people like that in our minds they start to become larger than life. People that experience that great level of success,un you know, the Michael Jordans of the world, the steve jobs of the world, the people who go to this rs of other stratosphere of brilliance. And i think that steve had a humanity to him that was really complicated but really interesting. And i think it was grounded in his scars. As a kid he was given up for adoption, and i think there was a sense of rejection that he felt when he realized that. And history repeated itself and he was again rejected by the very company he created. And i think that there was a little bit of a mistrust of people that came from that. And so i think the way that he received love and received trust was by creating products that people loved, by which people he felt that people loved him. If they loved his products, it meant that they loved him, and it was this way to create relationships with people almost at a fingertips distance. Rose there was also this demanding perfectionism that he had. Yeah. Rose even to the point sometimes of being rude and difficult. Yeah. Well you know, i i think it was his flaw, but it was also his gift. Which is oftentimes the case. Un, if you if you imagine this this creation and the demand and the care for the consumer that they have to love this thing. Because if they love this thing, it means they love me. And if you if you imagine that, the demand for perfection becomes really personal, and i think that people that didnt care as much as steve which was most people sometimes got the gauntlet of that, and they caught they caught brunt end of a brutally honest guy that was brutally honest because he actually cared so much for the end creation. And if you were a person that was able to not take it personally, he made you better. Its kind of like one of these football coaches that you see thats really tough on their players but they make them better. Rose this is a clip from jobs. This is where steve is stalked to steve wozniak, played by josh gad. No more decks, no more mainframes. That changes everything. Thats pretty cool, i guess. Hi, charlene. Its profound. How come you didnt tell me about this before. I was working on it for my own exactly, exactly. For your own. For you. Its what you wanted, its what your gut, your instinct wanted. Burr brain wanted something that didnt exist and you just willed it into existence. What do you call the system . The operating system. The operating system. Thats what i call it. Its a realtime display of current operations. You can see what youre working on while youre working on it. This is freedom. This is freedom, to create and to do and to build and and as artists, as individuals. Look youre overreacting. Even if you were developing this for freaks like us and i doubt you are nobody wants wants toa computer, nobody. How does somebody know what they want if theyve never even seen it. Rose how are you going to handle in the film the last years of the life. So the film actually goes through the launch of the ipod. Rose right. And, you know, when you do a movie you have to decide what you put in and what you leave out. Rose exactly. Most people once the ipod hit, there was a vertical integration of hardware and software that apple had that just started this whole new growth cycle for the company. And i think that thats the part that people it is pretty fresh in peoples minds and people kind of remember it. But the story we thought was interesting was this tale of a guy who had a friend, an idea, and a garage. And took that and built what is what was the most profitable country in the history of mankind. And the struggle along the way in an effort to do that. Rose and for a while, the largest market cap of any company in the world. Unbelievable. Rose 600 billion. Its stunning. Well and he didnt get to see that. The one well, i think he knew it. Rose he que it was coming . I think he had an awareness of it but i think the thing that made apple magic was an ethic that i think steve had which was this ultimate compassion for the consumer, and he focused the energy of the company on innovating the consumer experience, innovating the product, and in a way, he wasnt beholden to the shareholders. He wasnt trying to create margins. He wasnt reenergying his company to make it look better on the books. Im sure there was some of that going on, but his focus was actually creating extraordinary consumer experiences, extraordinary products that in turn created values for the shareholders, and i think a lot of people lose sight of that in a world where margins and revenue and profit becomes a driving force of wall street. Rose quarterly earn, rather than longterm strategies. Yes. Rose take a look at this. This is steve jobs on this show not talking about apple,ile brought it up but talking about his film which he had just gone into that business after leaving apple. Here it is. How do you think of yourself . Um after apple, how do you think of yourself . The things that ive done in my life, i think the things we do at pixar, these are team sports. Theyre not something one person does. You have to have an Extraordinary Team because these are these are youre trying to climb a mountain way whole party of people, a lot of stuff to bring up the mountain. One person cant do it. Rose john lasush was sitting at the table, and he told me about it later. I talked a lot about apple but he wanted to talk about pixar and the movies. He he walked out the door and john lassure told the story which i had forgotten because he remembered it so vividly. Steve came back and and he looked at me and i was standing up and saying gb he said, i know what to do about apple. I can fix it. And he did. Yeah. Well, at the same time he was running pixar, he was runed next. , and next had built this machine that wasnt really performing in the marketplace, but he had he had a a key component of software in open step, which actually, you know, is this Software Layer that allows other Software Developers to build on top of it and you can build these stacks which actually enables moores law. And he also when he came back into apple he had the great advantage of the internet, and ting you know, when he went into park and went into exreer ox, and gownd the gui, and the graphic interface and the mouse, and the one thing he had at the same time and didnt see it was networked computers. When he started to build next, he started to recognize that and realize that any knew thats where things were going. I think the combination of open step and that the internet was starting to have a surge enabled him to turn it on. A lot of it is skill. A lot of it is diligence. A lot of it is brilliance and hard work and a lot of it is timing. Rose absolutely. Life is timing often, as you know in your own life. Where did this interest in Technology Come from . I was a biochemical engineering major in college. And in 1997, i went to the University Iowa school of engineering, and learned how to program in fortran, which is a very antiquated code at the time. And i sort of i appreciated it, and id sort of understand the mechanics of engineering, but i had one particular teacher and i dont recall his name he said, scientists discover problems and engineers solve them. And i didnt really become fascinated with technology so much as i became fascinated with solving problems, and the process of that. And sort of a little bit of the ego that goes with it. And as i you know, as the internet started to really have robust capacity, i had a Production Company at the time, and started focusing a lot of energy towards producing content for the digital platform, and started to see how software was just disintermediating and disrupting businesses everywhere, and at the time, it was really disrupting businesses that traded virtual goods, whether it was video or music or payments. And now were watching that Software Actually move into businesses that are actually disrupting hard goods and the transaction of hard goods. And i think its just watching it happen got more and more exciting. I made an investment in skype when they exitd ebay. And then it subsequently sold to microsoft and started making small ainge will investments in companies and i got swept up in the spirit of entrepreneuring. Rose exactly. Youre not just an investor. You really have gotten involved. You know the players, and youve gotten involved in a significant way. I love sitting with entrepreneurs who have a vision of the world that is greater than the one that were living in. And i love this the spirit of it, and the fact that they dont just look at the way things are and go, well, theyre going to be like that so we need to work around it. They actually go right into it and they punch regulation in the mouth sometimes, and they punch bloated Business Models in the mouth, and they explook go, wait, wait, we have this new tool that can actually make this process more efficient. And i think its exciting, and in the same way that there was an industrial revolution, i think theres a technology and Software Revolution happening right now, and i also think its going to be a very profitable endeavor. Rose does your celebrity and your media career serve your entrepreneurial ideas . Yeah, i think it does. I have a platform to help some of these Small Companies promote their platform. I think it helped me get in the door and have a conversation with people. Otherwise, theyd say, wait a second, werent you that dumb guy on the 70s show. But at least theyll pick up the phone when i call. And i think the biggest thing i think acting really serves it. As an actor you look at the characters that you play and you try to break them down and you try to understand what motivates them and what they want and why they want what they want and what their tactics are to execute on what they want. We mostly focus on Computer Software products. And when you look at a Consumer Software product, the user interface and the User Experience is really similar of breaking that down, similar to breaking down a character you play because youre trying to understand what the consumer wants and youre trying to intuitively serve them into a process that actually executes your vision. And so i end up working a lot with entrepreneurs helping develop their user interface and the way that people are relating to their products and how the product is actually serving the interest of the consumer. Rose and how do you go about it, through angel investing or through what . Yeah, so i have a fund called a grade with my partner, and with some great limited partners that are a little bit more tech savvy than we are, that help us out along the way. But we go in, we find a company that we think is interesting. We find an entrepreneur that we think has moxie and the perseverance to actually solve their problem and the capacity to do so. And then we try to find problems that have great density. So we look for companies a lot of times really what appear to be really Boring Companies that have been working the same way for a long time, and try to find inefficiencies and find ways that people are Hacking Solutions to problems. And then we invest in those companies and we really try trinot to invest in any company that we dont feel that by lending our services and our time and our thoughts and our contacts that we cant actually benefit if you dont add value. If we dont add material value we dont do it. A lot of times these companies are growing so fast and are in great demand if youre not an investor who adds to the company they dont want your money. Rose you obviously enjoy doing both things, do you not . You enjoy acting on one hand and the entrepreneurial on the other. They serve each other well. Rose and i got to play steve jobs. I got to study one of the great entrepreneurs of all time which taught me a lot and i think i can utilize things they learned to help the entrepreneurs. Rose what is it you learned about twitter than most people did . I understood the value of media transparency. And theres as a person that has gained enough success and i found fame to be somewhat challenging, and i saw a lot of Media Outlets that would report on what i was doing and nation inaccurately. Rose so you thought youd tell your own story. At first i thought that was the interesting thing. Ill tell people what im doing and then theyll know the truth and that way its a pretty good defense mechanism and then i started to see the capacity to promote things through the platform. And i said, wait, this is a true broadcast device but its better than a broadcast device because most broadcasting devices are oneway systems with no feedback loop. But because twitter had an instant feedback loop i could iterate my process and my broadcast really, really quickly, and then i started to see the bigger vision. I met jack dorsey the chairman of twitter. We talked about what he was trying to build and what his vision was, and i took a trip to russia with the state Department Russia had an interest in building a Silicon Valley of that, and they wanted to figure out how to build an ecosystem around it, and i had an opportunity jack was on the trip, and we started to use it we were talking some college kids, and they all had their phones out in the beginning. It was a governmentsponsored thing. And the people were like, you need to shut your phones off, telling the kids they needed to shut their phones off. And i realized all the questions they were asking were staged questions by government officials and i stood up in the panel and said turn your phones back on. I want you to record everything that we say and tweet out everything that we say. At that moment i went, wait a second, any organization, government body, or regulatory system that is refusing to that is creating oppression through refusing transparency of their organization can be disrupted by this thing. And subsequently i think weve seen that in the arab spring. I think weve seen that around the world. Rose and what about politics . Um, what about politics . Rose yeah, what about politics . I have an opinion on it, but i dont you know, i think its unfortunate that, you know, lobbyists and special Interest Groups and getting elected has become half of the half of the card. I think its really hard for people to actually do the right thing when theyre worried about servicing a massive base the better way to explain it is this ive noticed that innovation is not always immediately accepted by the masses in so much as if you want to do something creative and innovative, generally, you have to take something that is and turn it on its ear and you have to do Something Different with it. And people its nature of people is to seek comfort at all times. And if you ask somebody creativity, if you ask the massing creatively what they want, generally theyll Say Something that looks like something that already exists. Innovation isnt something that already exists. Rose youre exactly right. It goes right back to steve jobs, doesnt it . Yeah. I think politics saifers lot because actually creating productive change requires discomfort, and, you know, i think that you know, i look at senators that can run again and again and forever and forever and i go what are the measurables of success to being a senator . What what are the productive measures of success . In business, you look at i look at these entrepreneuri work with, and i go whats your measurement of success . What does success look like . And what is a metric . I want a data metric that actually says thats success. And i dont think a lot of the folks 32 are in that space have a measure of success, and i think that they finish their four years, and they say the things and do the things that make the people that have the money that can help support their campaign happy. They do. And money talks, and you sit inside apt kuwaited systems that really dont change very rapidly. Rose two and a half men continues . Yeah. It is the best job in all of show business. Its truly one of the greatest gifts ive ever received in my life was getting that job. I work with the best people in the business. Chuck lorre and the writing staff are the best people in that business. And its just fun to go to work every day. Rose its great to have you here. Thanks for having me. Rose the movie is called jobs starring Ashton Kutcher. It oppose on august 16. Well be right back. Stay with us. In 2010 united airlineses joined forces with continental, createth Largest Airline in the world. It was also one of the most technically complex mergers in history. The combined carrier operates over 5,000 flights across six continent nents. It is just one of several significant changes that have been reshaping air travel in recent years. Here to talk about his company and how it is handling these challenges ises can my. He is the chairman and c. E. O. Of united and he is here to talk about not only his airline but air travel in general. Welcome. Thank you. Rose let me just talk about whether what kind of policy does this country need in terms of travel and especially air travel . Well, i dont think our government really has much of a policy about air travel at all, which is which is actually fairly sad because we compete globally, and i would compare the policies of the united arab emirates. They have done a terrific job recognizing the value of transportation, recognizing the value of travel, trade, exchange of people, exchange of ideas. And they have a rational tax structure, a rational regulatory structure, and theyre quite supportive and by support i dont mean subsidies or things like, that but understanding the value and jobs this industry drives and the value to the country. And we unfortunately in the United States, were a heavily were the most heavily regulated deregulated business. Having been deregulated were regulated. I dont mean safety which is important. Excessive burdens on us. Were extremely heavily taxed as you know. 20 of your ticket in the u. S. Is taxes. Were not even permitted by our government to disclose the taxes because the government is ashamed of the level of tax and under the regulation we have to hide the tax from the consumer. We basically have a government thats very unsupportive of a very vital industry to the United States. Rose if in fact they said to you we want to make sure this country is first in air travel and in transportation policy, tell me what you think is needed. I think a more rational approach to the regulation of this business is needed. I think a whats irrational about it . Ill give you an example. Youve got youve got youve got huge amounts of just data reporting regulation where nobody even resident the data that im aware of and no other industry similar no other industry has that kind of huge amounts of required file that is nobody ever ends up reading. Weve got regulations like the reg lake prohibiting us from advertising our fares without the 17 different taxes and fees the government imposes on us for example, hotels, car rental companies, dont have that level of regulation, where the taxes are effectively covered up and buried inside of the price. Its just toughous in terms of the level of taxation is very high. And, you know, its just they make our our government makes life difficult for us. Rose some will argue, too, distances of 400 miles is better to have fast Train Service, and we have no transportation policy, which has done nothing to improve Train Service as has happened in other countries. Sure, yeah. I think thats right. I think that look, travel and transportation are incredibly important, whether its whether its rail service, whether its air service. It fosters the economy. It brings people affect. It creates jobs. And we we really dont have a very good policy in the United States towards transportation. Rose i mean, whats interesting about you you, success at continental, success at united, becoming the c. E. O. Of a merged company, and trying to put it together in all of its manifestations. You at the same time without being a critic say we have not run these as very good businesses. And you want your company and your employees to think of united not as an Airline Company but a business. Thats right. Historically, the people who have run the airlines have not run them well. We have been expert at destroying other peoples money, destroying capital. Were now in a position as an industry through consolidation, capacity discipline, and focus on running the airlines like a business to provide more stable years. If you think from our coworkerss perspective, we had serial bankruptcies, we had furloughs. People didnt know if they would have a job today or tomorrow. Thats no business you would want to work for. And we have the opportunity to run the airlines as a business to provide not only secure jobs and theyre highpaying jobs theyre very good jobs but to make the money we need to invest. Our customers want improved products, they want more information, they want Better Technology and we can provide that through being consistently profitable. Rose you think consolidation is good for the Airline Industry . Consolidation has been very good for the Airline Industry because we have gotten ourselves in a position where we have the returns to provide the investments that we didnt invest in for so many years. We underinvested in this business. We have 100 brand new wide bodies. We placed an order for narrow bodies. Were putting satellitebased global wifi on our entire fleet. That costaise lot of money, and to do that you have to make money to be able to make those sorts of investments. Rose merging Big Companies is a tricky business. It is, indeed. Rose youre the first to testify to that, arent you . Yes, yes, poster child for that. Rose yes, you are, exhibit a for that. What makes it a tricky business to put affect two companies . Airlines are very complex businesses, first of all,. And they have very different fleets. They have different facilities. Rose different routeses. Different technologies, different routes, different cultures that you bring together as well. And in many cases, underinvestment that you have to do catchup investment on just to bring to the state where we needed to be. Theyre also heavily unionized, so youre dealing with labor unions and individual contracts and then joint contracts. And change is hard even when change is good, people resist change because its difficult to go through change. And it takes it takes a lot of time to get done. Were well along in the process. The process we have some more things to do, but most of the heavy lifting is behind us. Rose whats the difference in the heavy lifting and what remains to be done . Weve got a couple of systems to go that our customers wont see. For example, our h. R. System, we have to get our h. R. System and weve gotten collective bargaining agreements many collective bargain agreements but we have to do joint collective bargaining between the one agreement graement with continental and one with united and you figure out how to have one agreement. And we have that today. We have the joint contract today. And you need to work through the process, and that takes time and were not necessarily in control of that process was that the toughest nut to crack . No, there are many tough nuts to crack. Rose what about the reservation system. Is that an easy part . No, thats a very difficult part. The reservation systems of these two airlines we brought together, united and continentable, were very different. We chose a reservation systems called shares because it provides much more ability for use greater ability for us to price different products and services in a more sophisticated manner than the system that the old united had. But thats a difficult thing. That requires a lot of learning. Theres also technological risk in bringing that system together, and thats one of the more difficult systems to integrate. Rose its always difficult to integrate companies that have different curlts. Yes, theres no doubt about it. Rose so continental had a culture, united had a culture. What was the difference and what did you do to bring them together . Each company has its own history, and everybody looks at the world through their own knot hole and everybody looks at the world through their own experience and each company had a proud and long history and a different approach. What were trying to do at the new company, the combined company and were making really Good Progress is to develop a cullure we call it working together where people basically come together and enjoy working. They they trust each,. They trust management. Theyre proud of where they work. They want to deliver a good service because they want to, not because theyre told to. And that takes time to gain the trust of people who dont know each other and who have different backgrounds, and the other thing you need to do to bring the culture together is actually do the sorts of things that you told people you were going to do and actually deliver for them. For example, were renovating break rooms across the system. Customers will never see an employee break room but its very respectful of our coworkers to have a good place to take a break when theyre coming off of the ramp, clean, tv, computers, a place to sit and rest. Rose a place to nap. A good place to eat. All of those things are really important. Rose and they, in my judgment, they are key to productivity. Absolutely. Rose you dont want people sleeping. And the key is respect. For example, a brand new airplane, its a better Work Environment for our coworkers. Rose right. Its a far better environment for our customers. And of course with the modern Technology Today its a much under efficient aircraft to operate for the operators. We put in a new Health Clinic at ohare where any of our coworkers can go to the clinic and i get health care for free, not a penny, not a dime. They can do that conveniently there. We have one in houston, we have one in newark, we have one in cleveland, and well continue to roll that out across the system. Those are the things when you say youre going to do them, the employees often go, yeah, right, but when you actually deliver people begin to understand this is actually a different type of management and this is a future thats exciting request where i can have a career. Rose are unions partners in this . By that i mean cooperative, collaborative, and there to help . On some things yes, on some things no. Thats the nature of is it mainly finance or is it having to do theres always going to be some tension around getting to a contract. Once the contract is behind you, though, look, our our our coworkers, most all of whom are unionized, they want us to suckied succeed. They want united to be the worlds leading airlines. You go through the process of getting a contract. Theres a concern kaboke around that. I dont think unions get in the way of being a successful business, no. Rose when you were c. E. O. Of continental, you had in terms of Employee Satisfaction a very high number. Thats correct. Rose so whats your speech to your new united employees . Well, i encourage them to talk to the former continental coworkers, for them to understand the cult that you are were trying to build. And youve got you know, youve got to deliver. You cant just talk about it. You actually have to deliver. You have to make peoples lives measurably better. Theyve got to see and believe in the future. Youve got to deliver today. Youve got to give them visibility for tomorrow. A lot of it is communications. I go out and i do what i call c. E. O. Exchanges. I go across the system and all over the world and i meet with our coworkers. I talk for a few minutes and open it up to questions. Anybody can ask me any question they want. I will always give an honest and direct answer. They may not like the answer i give them, but it will always be honest and direct and you build credibility. Rose do you get a sense of the problems from them . Yes, you cant manage an airline from a corner office. You have to manage by walking around. This is a dirt under your fingernails business. This is an operation. We have 5500 flights a day and its a ballet and it all has to go off well and its very visible when it doesnt go well so you have to get out and well. Rose let me talk to you about what you know about the u. S. Economy today. Its an appropriate question. I would talk to the c. E. O. Of walmart and say what do you know about the Economy Today because youre on the front lines of people buying things. How does it look . I think it depends how you define economy. I think economy globally, we have a Large Business in asia, a Large Business in latin america, and a Large Business in europe and china at sevenplus percent. But were at the same time talking about one to two. I would say the u. S. Economy my view is the u. S. Economy is sort of skating sideways. Rose skating sideways. We dont see any significant improvement. We dont see any significant deceleration but i dont see signs of significant improvements. Rose sliding along at 2 g. D. P. And you see no signs. No. Rose in your judgment youre a harvard law guy and all that. I dont know what that made you, but. I dont know how much economics you studied at harvard law but youve been on the front lines. Whats necessary to change that dynamic, not only in terms of raising the level of g. D. P. Growth but in terms of employment that unemployment that has been at 8 and 7 . I dont have the cure for the economy. If i did, id have a very different job, im sure. Rose you mean youd be at 1600 pennsylvania avenue . No chance, no chance of that. Rose if you had a cure to the economy, you probably could get to 1600 pennsylvania avenue. But i think there are there are some things that could be done. Providing some more stability and more ashirns of the future to businesses, providing a more rational tax structure to both people and businesses. Un, the tax structure is so complex, as an individual or for a corporation. I think that that would be beneficial. I think that continuing to invest in the nations infrastructure would be very beneficial. Rose you say that, isnt that what the president wants to do, invest in the infrastructure, and at the same time you have people saying we dont have any money to invest. We spent all the money we have and we cant raise taxes and all the money coming in we need to spend on reducing the deficit. And, therefore, investment simply has to suffer. Thats part of the debate. It is part of the debate. I would come down on i would come down on the go side. Rose this is from the wall street journal, june 16, a little bit more, six weeks ago, five weeks ago, it says after a year of operational and technical melt down as United Continental holdings, chief executive jeff smisek asserts that the worlds Largest Airline is finally on the end. He called 2012 awful for united, the company lost money, was hit by a wave of canceled and delayed flights and infuriated many customers by mishandling change to the passenger reservation system and dramatically modifying its frequent flyer rules. Two reservation outages last august inconvenienced flyers and fueled questions about uniteds ability to manage itself. Now more than two and a half years after that, customer complaint are down, flights are more punctual, and employees are growing accustomed to the changes required but you acknowledge you still have work to do. Whats the work to do. You say were not where we want to be. We have a ways to go. We are operation reliable. In fact, were now very competitive in our ontime performance. Our Customer Service has improved terrifically. Weve trained 80 of our coworkers to date in Customer Service this year, and well finish it off by the end of the year, and our Customer Satisfaction met mete ricks are much better. In terms of work to do, we need additional systems work to provide the information to customers that you and i were talking about earlier. Rose right, right. And we need to ultimately bring our workers together, the joint collective bargains agreements which well polish those off i think in reasonably short order. Theres been a lot of change, and getting people accustomed to that change has been tough. Theres no question about it. But they are accustomed to it, and our frequent Flyer Program is the worlds largest. Its very attractive. And, you know, its very potent for us and very potent fur our business travelers. When you make any kind of change even to someones frequent flyer number to bring systems together, they dont like it, and i understand that. But all of the toughest part is behind us, and i feel pretty good about where we are operationally. I feel pretty good with about where we are in Customer Service in the direction of where were going. I feel very good about the product investments for our customers. Rose at the same time, when you look at cost, what you want to do is reduce your cost. Thats your biggest economic thats your biggest sort of earnings performance. We need to operate more officially, without question. A lot of people think cost cutting means taking things away. Cost cutting is efficiency. Its productivity. Its doing things more productively than have been done before, and sometimes not doing things that you were doing that really arent adding value to the enterprise at all. So were looking were looking to and i believe we will improve the efficiency, how we operate the airline. But it isnt in you know, it isnt hack and whack type cost cutting. This is thoughtful and mcdonaldical improvement in productive and processes. Rose you were quoted saying, in retrospect the Company Changed too much too quickly. He said united subsequently has invested in making its i. T. System more stable, reducing the number and duration of small outages that customers dont see. Thats correct. I think if i were to dissect 2012, we made too much change too quickly, and theres only so much change that people can absorb, either the bandwidth of the organization or even customer change. But were in a position now where thats all behind us. But it was no doubt a tough year. Rose when you look at your own. Of purchase of dreamliners. How many are on order, and how confident are you about the dreamliner. We have 65 on order. We took the seventh dreamliner this week. We have seven on the property. Rose on the property, but not flying. We have six flying. Were very confident in the airplane. Its had issues without any question. Rose is your explaipgz of that is because there were too many cooks on the plane buying, subcontractingcontracting from d world, and it wasnt all under some big umbrella. I think you should talk to boeing about that. Were just a customer. Rose theyre not at the table but you are. Im sure jim mcinerny would love to be on your show. Rose im sure he would, too. I will tell you the airplane itself is a terrific airplane. Its very comfortable for customers. Its pressurized at 6,000 feet. Its a great airplane. More oxygen, more humid air, big windows its a terrific airplane. Rose do you say to people its safe . It is safe. It is safe. Rose its a good plane and its safe and we passed the problems. If we thought this airplane were not safe look, you put your family, you put your coworkers, you put cufort mers on it, of course its safe. If we thought it werent safe we wouldnt fly it. As soon as there was an issue with the batter, we did what was responsible which was appropriate which the f. A. A. Wanted us to do, you put all the airplanes on the ground until you can ensure its safe. That makes sense. Of course youll do that. Rose tell us because you know planes what is so exciting about this plane . Obviously its lighter, obviously is can go further, obviously it uses lets fuel. Those are pret good things there. Yes. Rose what else did is have. Our Customer Satisfaction when people fly the 787 are higher than any other equipment type that we fly. From the operative perspective, its 20 fuel efficient than the aircraft it replaces. Jet fuel is our single highest cost, higher than our people, equipment worldwide. Its very expensive. Rose and beyond your control. And beyond our control. And the way you can control it is buy the most fuelefficient airplane and operate them efficiently and thats what were doing. Rose or you can buy your own refinery. Its happened. It has and well see how that works out. I have a free front so seat with popcorn so i can watch how this movie ends. If it ends well, its reproducible, and if not, its not my problem. Rose theyre out there experimenting for you. Yes, thank you very much. Rose youre what, 65. Im 63. Im 64, Something Like that. Nothing is more important to me than leg room and i have to pay for it. Do you have a new program where for 500 a year subscription, you get extra does that resonate with you at all . We have economyplus seats. Rose i wanted to make sure i understood it. You can purchase that product first of all, if youre an elite you can get that product for me as part of being an elite member. Rose how do you become an elite member . If you fly with us enough you become an elite member. If youre not, you can purchase an economyplus seat, and the price varies depending where you are its like a subscription. Or you can buy a subscription, an annual fee, and you can get an economyplus seat during the annual period when you apply for a seat you can get the economyplus seat. Rose dreamliners and the future is most of your growth going to come from longdistance flights from the United States overseas . That has historically been the source of this business has very rarely made money. On the occasion it has made Money Airline business. Airline business, and thats why were changing into a real business as opposed to an airline. The profits have come from international operations. I think that we can have an airline thats profitable domestically and internationally. We have a very we have a huge network at united today, but we have opportunities to grow that network and we will. We need to be thoughtful in the capacity, though, so that we may add we may add destinations but wed like to do it in a way where were not growing the number of airplanes. Rose heres what i hear you saying at managing cost and increasing revenue, fixing systems and making them more efficient. Thats correct. Rose is there a Silver Bullet out there . No, there is no one Silver Bullet. We would have found it and fired it long ago if there were. Rose its not because you havent searched. Its not because we havent search gld when you say were not in the airline business. Were in a business. What does that mean . Its several things. One, it is a mindset because people in the airlines got used to this boomandbust cycle and this vast sicklicallity, and living in fear from one day to the next and the serial bankruptcies and laying people off that was an awful, awful way to go through life. What were trying to do is crete a structure so that we can earn a sufficient and sustainable profits so that we can provide longterm years with civility. That we can invest in product. That we can buy new airplanes. We can invest in cutting edge systems, good information from our customers, good Customer Service training, all the thing we should do to make a successful business. Were a service business. Anybody can get you from point a to point b but the Service Makes all the difference between being satisfied and dissatisfied. Many people have different products, but service is really important and were really focused on delivering good service, but service has many, many dimensions, all of which we need to provide as efficiently as we can be so that we can create the profits so we can put it back into the business. Rose s so that you did not believe, as you may, that united offered the best Airline Service in the world. Suppose you that was not true. Whose service would you like to emulate . Who does this business of service to customer best . For example, all of us who fly around the world look at Certain Airlines and say, boy, that was great. You know, it could be emirates, it could be singapore, it could be you know. Well, its hard to answer that because there are different tieppedz of service qualities that different sorts of customers want. There are airlines that provide essentially little to no service, nearby carries and there are statesponsored, state subsidized that ask supply extraordinary levels will of goldplated everything because if they run out of money they can open a valve and oil squirts out which they can use to provide service. I think Everyone Wants to provide as good a Service Level as they can, but i dont think you have to have excess. Whing of i think what you have to have is excellence and dependability and reliability. Rose so youre not going to give me the name of an airline that does it i dont think theres one airline i can think of, no. Rose do you fly on other airlines . I do, sure, i do all the time. I spy on them. Rose do you . You bet. I love to. Rose do you ask questions from the attendants, or the pilots . Usually i cant get on the flight deck. Rose i know that but you can see them come in. I visit with the flight attendants and i like to see what kind of service and my folks i work who knows when im doing that because a chain of emails arrives when i land. Rose Peter Greenberg is always asking this so im asking you his question its consolidation. Anything about the americanu. S. Airconsolidation that you have questions about . No, not really. I think consolidation is really good. We had way too many Business Plans chasing way too few passengers and that has been a problem. And consolidation has brought some stability and some profitability to this business which is sorely needed. Rose peter also argues this it eliminates fare competition. This is a this is a brutally competitive. Business this is a very tough business. Rose if i shop around at four airlines going to the same destination, same class, ill find remarkably different prices . You can depending on the day of week, and all sort of because Airline Pricing is very complex. This is a tough and competitive business, and airfares today as you know are still on a real base, not inflation adjusted, are still less expensive than they were 10, 15, 20 years ago. Air travel today remains a bargain and you can go from point a to point b in complete safety. Its a very impressive business. Mary thank you for coming. Thank you for having me. Rose c. E. O. Of united, the new united. Thank you for joining us. See you next time captioning sponsored by Rose Communications captioned by Media Access Group at wgbh access. Wgbh. Org this is ni report with Tyler Mathisen and susie gharib brought to you by. Sailing through the heart of historic cities and landscapes on a river, you get close to iconic landmarks, to local life, to cultural treasures, viking river cruises, exploring the world in comfort. President ial news conference, president obama spent the afternoon addressing a number of issues important to both business and the american people. 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