Stephen Wolf Leaves Flying Tiger to Head Parent of United Airlines
Stephen M. Wolf, an airline executive known for his ability to rescue failing carriers, was named Wednesday to head Allegis Corp., parent company of United Airlines.
The move ends months of uncertainty at Chicago-based Allegis that began last June when Chairman Richard J. Ferris was fired over unhappiness by unions and investors with his plans to turn the corporation into an “integrated” travel empire consisting, to begin with, of hotel chains and a rental car company, as well as the airline.
Wolf, 46, resigned Wednesday as head of Los Angeles-based Tiger International and its major subsidiary, the Flying Tiger air cargo line, to take the new job, which he begins on Saturday. Wolf, known as a workaholic who expects the same from his colleagues, has also worked at Republic Airlines (now merged into Northwest Airlines), Continental Airlines, Pan American World Airways and American Airlines.
Wolf’s appointment will allow Frank Olson, Allegis’ current chairman, to move back to the Hertz rental car company, which he and a group of others are in the process of purchasing from Allegis for $1.3 billion. Olson joined UAL Inc.--as the corporation was known until it changed its name to Allegis last February--when it acquired Hertz in 1985 and has been serving until a successor was found.
‘Impeccable Record’
With its other major subsidiaries--Hertz and the Hilton International and Westin hotel chains--either sold or in the process of being disposed of, the corporation plans early next year to bury the Allegis name and to call itself United Airlines Inc. The company is still trying to sell up to 49% of its computerized reservation system, named Covina/Apollo.
Allegis seemed delighted with its hiring of Wolf, who will be chairman and chief executive of the parent firm and president and chief executive of the airline. Former astronaut Neil Armstrong, an Allegis director and chairman of the company’s executive search committee, said, “Stephen Wolf has an impeccable record of performance, covering strategic initiatives, innovative marketing, financial acumen and the positive leadership of people, all of which are critical to United’s future.”
Wolf was not available Wednesday for comment on his plans for his new company. A United spokesman, Dan Sheehy, said Wolf returned to Los Angeles immediately after the Allegis board meeting. Allegis declined to say how much Wolf will be paid in his new job.
At 6 feet, 6 inches tall, Wolf is an imposing figure. He is energetic, often behind his desk at 7 a.m. and working late into the evening, and is a stickler for detail. He often gets into the nitty-gritty of the carriers he heads, monitoring ticket lines and telephone traffic to make sure that customers do not have to wait too long.
While chief executive at Republic, he earned a reputation as an executive who could deal effectively with labor.
“He can be disarming to some adversaries,” said a close associate, Jeffrey Kriendler, who is a senior vice president at Pan American. “Even in labor negotiations, he will maintain a good sense of humor and endear himself to those adversaries. No matter how critical a situation may become, he has that sense of humor, and he uses that levity very efficiently.”
But his reputation as a favorite of the unions faded a bit at Tiger, where he won massive wage concessions from its 6,500 employees after threatening to sell the troubled cargo carrier.
In a dispute over an attendance policy last spring, Louis R. Schroeder, president of Flying Tiger’s machinists union, likened Wolf to Iran’s Ayatollah Ruhollah Khomeini. Paul Phillips, an official of Flying Tiger’s pilots union, said Wednesday, “I don’t think many will miss him.”
But Flying Tiger is expected to earn a profit this year, its first yearly profit since 1982. When Wolf joined the airline in August, 1986, it was losing $74,600 a day.
Search for Chairman
In the wake of Wolf’s resignation from Tiger International, James A. Cronin was elected president of the company, and it was announced that he will continue as president and chief operating officer of Flying Tiger. He became president of Flying Tiger in September after serving as senior vice president for marketing.
The 33-year-old Cronin, a former First Interstate banker, joined Flying Tiger in 1980 and is credited with trimming losses in its troubled domestic operations by dropping unprofitable routes and establishing hubs in key cities. He is liked by labor.
He apparently is not in contention for Wolf’s job as chairman and chief executive of the airline, or its holding company. A spokesman for New York investor Saul P. Steinberg, Tiger International’s biggest shareholder and a director, said the board plans to “go to the outside” for a new chairman.
The company has created a temporary three-member “office of the chairman” that will oversee the company’s business in addition to searching for a new chairman. Besides Steinberg, members of the office of the chairman are directors Kelly H. Burke, a Virginia aerospace consultant, and Beverly Hills investor William E. McKenna.
After Allegis announced that it had hired Wolf, the Tiger board of directors issued a statement lauding his “remarkable achievement” in Los Angeles. “Although we are sorry to see him leave Tigers, he has completed and surpassed what he set out to do, by establishing strong financial, management and marketing capabilities in the organization,” the board said in its news release.
The new Allegis chairman has gained something of a carpetbagger’s reputation, especially with the unions of the airlines he has headed, for what they call his pattern of staying a while, taking his stock and leaving. He has been with Tiger long enough to take advantage of only 25% of his stock options.
Tiger International’s stock was the 12th-most-active issue Wednesday on the New York Stock Exchange, with 1,474,800 shares changing hands. One trade alone reportedly involved about a million shares.
Sheehy said the trade did not involve any shares owned by Wolf and it could not be learned who sold or who bought the stock. Steinberg, who controls more than 18% of Tiger International shares, was also said not to be involved in the transaction.
Tiger International closed at $11.25 a share, down 87.5 cents. Allegis closed at $69, up $1.50.
Marketing Changes
At United, Wolf will confront a different challenge from those he faced at Republic and Tiger, both of which were near financial collapse when he arrived. In each of those cases, he told the unions that unless they agreed to wage and other concessions, the airlines would be sold or go bankrupt. The unions agreed and there were dramatic turnarounds.
At Republic, he also made major marketing changes. Before it was taken over by Northwest last year, he completely restructured the airline’s route system and redeployed its planes. He pulled Republic out of Phoenix and Atlanta and established new hubs in Minneapolis-St. Paul, Detroit and Memphis.
United, on the other hand, is profitable and analysts predict that it will report net earnings topping $100 million for 1987. Although it is expected to seek concessions in wage negotiations with its highly paid pilots union, it has recently negotiated new contracts with its other unions.
But there are some problems.
“United has lost its leadership to American Airlines in the last four of five years. American has stolen the show,” said Paul Karos, airline analyst with L. F. Rothschild, Unterberg, Towbin, a New York brokerage.
“These guys have to get that back,” Karos said in a telephone interview Wednesday. “They will have to look at every market, every hub and really ascertain where the opportunities exist, to see what is needed and what United can do to take advantage of a mass market as the largest airline in the free world.”
Adding to the problems is the fact that the unhappy pilots remain intent on leading an employees’ effort to buy United Airlines from Allegis.
“We are still committed to the purchase of UAL by the employees,” a spokesman for the pilots union said Wednesday. “It is too early to see if we will sit down and talk with Wolf” about the proposed purchase.
Times staff writer Denise Gellene, in Los Angeles, contributed to this story.
