Smisek Apologizes For United's Technological, Operational Missteps

United CEO Jeff Smisek on Thursday apologized for the carrier's lackluster operational performance during the second quarter and the bedeviling aftermath of its March transition to a new passenger services system. Despite those issues, United executives during the carrier's quarterly earnings call said they had seen no evidence that frustrated corporate clients have shifted business to competitors.

"I know we caused some customer disservice because of all the changes we made so quickly, and I apologize for that," Smisek said. "We hold ourselves to a higher customer service and reliability standard than we delivered for our customers lately, and we will return to the level of service and reliability our customers expect."

As United this year continued integrating Continental Airlines, Smisek acknowledged that the carrier "added new stress to the system by simultaneously converting to a single passenger system, implementing hundreds of new processes and procedures, rerouting aircraft across our network and harmonizing our maintenance programs. Those changes were in large part responsible for the degradation of our operational performance," which included what he called declining performance "on metrics such as on-time arrival, mishandled bag rates and cancellations."

In recent months, some United corporate customers, frequent flyers airing grievances on Internet forum FlyerTalk and various media reports pointed to a variety of glitches stemming from the March cutover to Hewlett-Packard's Shares reservations system, which Continental had been using before the United merger. Those included a "buggy" website, check-in issues, mileage accrual problems, upgrade difficulties and long hold times to speak with United customer service agents. In the immediate wake of the cutover, problems also included unsynced passenger name records and missing itineraries.

While acknowledging "a number of issues" following the cutover, Smisek Thursday deemed the Shares conversion "successful," adding that glitches have subsided and further improvements are in the works.

"As we identified each conversion-related issue, our top priority was to improve the customer and co-worker experience by determining the cause and quickly deploying teams to fix the problem," Smisek said. "We made significant progress on these issues during the second quarter, and customers calling our reservations line now experience normal wait and handle times; MileagePlus miles for United flights now post within 48 hours of travel; and complimentary upgrades for our premier members now clear in a timely manner."

The transition to Shares also disrupted sales of the carrier's Economy Plus seating product through global distribution channels, which a spokesman said should be restored by the end of September.

Smisek further outlined plans to improve the Shares system for employees, which he expected to result in improved customer service. The carrier in October plans to release to airport and res agents "a new user-friendly design and experience, easier elite recognition, automatic calculation of service charges and better flight amenity details," Smisek said.

United already has begun piloting those enhancements and has found that those new interfaces improve "the speed and ease of handling premium-cabin upsells, same-day upgrades and standby requests," Smisek explained.

Next year the carrier plans to roll out a "comprehensive new front-end for our airport and reservations agents, which enables us to deliver a higher level of service than we've ever been able to offer in the past," he added.

JP Morgan analyst Jamie Baker questioned whether "the operational difficulties as of late might have exposed you to any potential loss of corporate customers." Pointing to the carrier's 16 percent year-over-year growth in corporate revenue in the second quarter, chief revenue officer Jim Compton said, "We don't see loss in share today." Instead, Compton claimed United has "been improving our share."