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tv   The David Rubenstein Show Peer to Peer Conversations  Bloomberg  August 25, 2018 9:00am-9:30am EDT

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ng... simple. easy. awesome. stay connected while you move with the best wifi experience and two-hour appointment windows. click, call or visit a store today. david: one month after you take this job, you get a heart attack, and they say you need a heart transplant. oscar: they said get the surgery. that is the only way you will live. david: i assume you are not flying on private planes. oscar: you have to eat what you cook. david: a lot of people have emotional support animals? oscar: we just had an incident where one of the animals recently required another emotional support animal. [laughter] >> would you fix your tie, please? david: well, people wouldn't recognize me if my tie was fixed, but ok. just leave it this way. alright.
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♪ david: i don't consider myself a journalist. and nobody else would consider myself a journalist. i began to take on the life of being an interviewer even though i have a day job of running a private equity firm. how do you define leadership? what is it that makes somebody tick? first, i want to talk about an incredible story that many here may not be familiar with. let's talk about your background initially to get to this story. you grew up in california. you had eight siblings? oscar: i do. david: what is that like? i am an only child. is that easy to do? oscar: if you are an only child, it is hard to reference. it was hectic, crazy. we shared everything. we had first and second lunch because we could not fit everybody at the first table.
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when i first brought my wife home for thanksgiving, i said, honey, just get ready. this is not normal. david: when you are growing up, you got into harvard and chose not to go. why? oscar: it was an awkward moment. i am the first to go to college. i came from a blue-collar family. we were invited to an event, black-tie optional event. i don't know what that means at that time, and my dad certainly didn't. first of all, we got stopped at the door because they said, you must be lost because of the way you are dressed. i was in high school. my hair was down to here. i was a surfer kid. i thought i looked good. ratty.r was [laughter] oscar: walking across a room of this size with all eyes upon you and sitting at a table where everybody is asking questions,
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like what is your major? i knew that wasn't the right fit and southern california was closer to home. david: have you ever thought what you could have accomplished with your life if you had gone to harvard? oscar: god knows, i could have been in that seat. [applause] david: well, you went to usc. university of southern california. you obviously did well. you worked your way up, and you find yourself at csx. a railroad company. you were president and ceo of, is that correct? you are probably about to be made ceo, and you are on the board of a company called united airlines, so one day there is a need to have a new ceo, and they ask you. why did you want to leave florida or chicago, and why did you want to give up running a railroad, which is not as complicated as running an airline?
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oscar: one of the more complicated questions in my life. to add to that, my first daughter was getting married around that time frame. and we had the wedding planned. my wife's entire interest over the course of that momentous decision was you better get your father of the bride speech done. [laughter] oscar: listen, there are some friends from csx here today. it is a wonderful place. i thought i had another turnaround in me. when you meet the people of united, and what we needed was someone that could relate to the everyday folks we work with. i thought i could do that better. david: one month after you take this job, you get a heart attack. oscar: i never go through any conversation without this one. 38 days to be exact. david: did you think maybe you had taken the wrong job and it was too much pressure? you were a vegan and an exerciser? you run marathons? what went wrong?
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oscar: a different public service announcement to all in the room. heart disease is the biggest killer in america. most of us don't know we have it. my family background did not allow me to understand a lot of my history. being relatively fit, and eating crazy like a vegan, you think nothing will happen. something did. when you talk to specialists, unfortunately your plumbing is what affects you. david: you have your heart attack and then they tell you you need a heart transplant. were you surprised? oscar: i was surprised and hesitant. they talk about the fact that heart transplant surgeries are 93% successful, the actual surgery. us being who we are, it is like, what happens to the 7%? [laughter] oscar: not a good answer. david: when they told you you needed a heart transplant, did
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you ask for a second opinion? oscar: we did travel around and i am fortunate enough to know people all over the country. we were trying to figure out if there is something else. most of us, guys in particular, we think we can fix these things. that is not true, you cannot fix these things. what the doctors around the world told me is, sit-down and get the surgery. that is the only way you will live. david: it is one thing to say you need a heart transplant but you have to get a heart. so don't you have to wait on line for a long time? how did you get a heart? oscar: it is one of the most byzantine processes, how you apply. it is well regulated and modulated so people don't take advantage of it. i was very fortunate. i was on a list. on my birthday, the morning of, my doctor said "have we got a
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[expletive] heart for you." [laughter] oscar: we happen to be a meeting at united. i came back and stood up after lunch. we were determining the strategic future of the company, where all the things we are doing in the past couple of years and what we had been doing, but i knew that morning i had to go into the hospital that afternoon. so i went to the meeting, and we were excited. i didn't say anything other than my general counsel. i did stand up and say, i have got to go to the hospital. i have a thing i have got to do. it is a classic line. i did not mean to say the way i said it, but i said, i will see you on the other side. again, that can have a lot of meanings. i meant the most positive. meaning, hey, i will be back. [laughter] the surgery was great. i was in and out.
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a 21-year-old beat me in history at the hospital, but i was out in about seven days. david: seven days. oscar: i was back in the office on monday. we did not tell the world of analysts and investors that he could they would freak out but i was back in the office. david: today you are in good shape. you have a heart transplant. you are feeling as good as you can possibly feel? oscar: i mean, i am always running around. i just came back from australia. there are no restrictions. david: do you still exercise a lot? oscar: not a lot. because of the job, unfortunately. i ride bikes. david: have you got that may be exercising and being a vegan is not a good thing, and maybe don't exercise and eat all the meat would be better? have you thought of that? [laughter] oscar: my doctor, who is a larger gentleman -- he advised me to go from vegan to eating what you want, but eat lots of it as you need to gain weight. [laughter]
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david: let's talk about the airline industry that you are now part of. [laughter] [applause] david: can you be on your airline and not have people come up to tell you what you should do better? oscar: i reached for the earbuds. this guy reached in and grabbed this thing. it was a little intrusive. listen, all of us in this business do this a lot, and it is important to hear from your customers. ♪
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david: why is it that people love to fly around the world at relatively low prices? why doesn't the public seem to like airlines? oscar: a couple of things, you are right, prices. next year will be the 40th anniversary of deregulation. to your point on pricing, the
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ofber is 45% on inflation adjustment in prices. prices are lower. schedules are increased. we have farther reach. the customer has evolved. we have 150 million people we serve every year. you all have opinions on various aspects. not everyone dislikes things, but people that fly infrequently -- for instance, luggage and the feet around luggage. if you now have to pay for luggage, you get angry. some things have evolved. the airline industry is generally profitable. we have to balance that industry in providing everything you want all the time at a low price to still having a relatively low economic price, but also adding .he product, value and schedule david: in the old days 30 years ago, a lot of airlines were going out of business.
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oscar: i have read about the old days. david: braniff, twa, they are not around anymore. i don't know what happened. oscar: i am not going there. [laughter] david: did they ever find the trump shuttle? i don't know. why are there so many airlines that went out of business, but today, the airlines seem profitable? is that because of the know, havethat you not left too many empty seats? oscar: i mentioned my railroad experience. if you look at their history, i think the airline has followed the same evolution of less folks vying for the same amount of customers. it is certainly part of it. i think how much product we offer, the price, and how we are efficient, but i can never get -- forget the fact this product is supported by the human beings that run the airline every single day. david: what is the best way to get the lowest price? do people go online and book it themselves, a travel agent? oscar: probably the further out you book, the better options you have.
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people use an interesting array -- travel agents are still good customers of hours and are part of it. our direct channel is a growing channel. david: is it possible somebody could be sitting next to somebody else on an airline and he or she paid a lower price than the person sitting right next to him? oscar: nobody talks about that, but that has been an issue forever. you have a corporate customer or someone who has booked far ahead. so usually, i don't usually ask the person sitting next to me how much did you pay for the ticket? it is an issue, but not a significant one. david: let's talk about your flying. i assume you are not flying private planes anymore? oscar: you have to eat what you cook. i am very comfortable. david: when you need a reservation, do you have any problems getting a seat or anything? [laughter] oscar: we booked through the normal channels. it is positive space. meaning, i will book a flight, and if it is booked, i will find another flight.
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like everyone else. david: can you be on your airline and have people not come and tell you what to do better? how does that work? oscar: that is not an easy task anymore. the further back you go, the less you are recognized. in the front of the cabin, it is almost impossible. people do want to chat and provide important feedback on many things. obtrusive, yes. i have had people -- i will put my headphones on and to pretend to do something so i can sleep. they will reach over and take it out. [laughter] oscar: it gets worse. being the smart person i am, i went to the earbud. the hearing, they cannot reach and get those. this guy reached in and grabbed this thing. which is a little obtrusive. [laughter] oscar: listen, all of us in this business do this a lot. it is important to hear from your customers. increasingly in our business, it is more positive. david: do you have a lot of people in first class who don't
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like something and they say, do you know who i am? oscar: they are wonderful customers with a high degree of self-importance. [laughter] david: what percentage of luggage is lost? [laughter] david: by the industry generally. i'm sure yours are better. oscar: by complaints, i think per 1000, 3 per 1000. david: the best way to avoid having your luggage lost is do what? carry it on? oscar: your predicate i am not in agreement with. we don't lose that much luggage. if we do, we get it right to you. our policy used to be onerous, where if something got lost and we could not find it, we needed receipts for everything in your bag, including things for underwear and your toothbrush. we instituted a thing that said , you trusted me with your bag, we lost it, here is $1200. it is important for us to build trust. we don't lose it that often.
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we need you to trust us. when we do, we have to act quickly. david: in the old, old days, people were worried about the safety of flying. do people today care about safety that much? you don't have a lot of accidents in the industry now. oscar: safety is by far a high priority. safety and security has been an increasing focus. there will be things as a customer you don't enjoy. unfortunately, with safety and security, it has to be a top priority. sometimes that gets in the way of customer service you would like or wish, but i think we will agree safety and security are paramount. david: do you notice people have emotional support animals or something like that? oscar: we had an experience where one of the emotional support animals required another emotional support animal. [laughter] it was a dog and a monkey, and
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somebody asked me earlier today, which one was at the party? i don't know that answer. ♪
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david: let's talk about some specific issues that have risen recently. you are probably familiar with them. [laughter] oscar: no, but i am sure you will remind me. [laughter] david: there was a flight where there were some united employees that needed to go somewhere and you were trying to get people off the airline. you offered them money, which is fairly standard, and one person said i can't get off and i have to operate in the morning. and not united, but local police dragged him off. oscar: one of the dark moments. usually the question is, are you glad that is getting behind you? i always say, i happy to be
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am reminded of it every day. it is important to know how quickly things can go sideways. the circumstances that led up to that, the policies and procedures, in a nutshell because safety, security, and operational efficiency become so focused, and it is important we do that, the rigor around safety, security and operations does not necessarily apply to the comfort, quality, and emotional connections. so, our rules and procedures, you can not always put rules and procedures on how you treat a human being, which is why we started our core form. it is four principles in order. if you as an employee have a concern or question about how to act, safety first, and number two is caring. just a simple word caring. what does that mean? it means a lot to a lot of
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people, but it does not mean shutting the door, yanking someone off the plane. it doesn't mean any of those things. then you get the dependable ,fficient, but there are four simple, and caring. david: let's talk about another problem, dogs. you're not the only one with dogs dying in overhead compartments. oscar: a little bit of defensiveness on my part, we as a company, because we understand how important pets are to folks, which you may not agree with given the circumstances, but we flew three times as many animals all over the world because no other airline was doing that, so we were doing that as a customer aspect. when you open up that many animals, you introduce risk into it. what we have done is de-risked the situation and brought that back down to what kind of dogs we carry. it is aligned with the rest of the airline world. david: a lot of people have emotional support animals where
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they get a certificate from a doctor saying i cannot travel without this animal. are people abusing that? you are getting a lot of big animals on your planes as a result? oscar: everyone has heard the peacock story. i will not go into that we had one. an experience where one of the emotional support animals required another emotional support animal. [laughter] [applause] oscar: it was a dog and a monkey, and somebody asked me earlier today which one was supporting her? i don't know the answer. on a serious note, people that need things, the problem is that it is abused because it is not regulated in any way, shape or form and anybody can get it, so we don't know. if you have a need, service animals for disabled veterans, for people that are blind, we bend over twice over backwards to take care of people, but when you get to the ridiculous stage, where peacock or two different
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animals -- i mean, if you have allergies, all of that has to be modulated, and there are no real rules of around it. taken a harder stance. we need to have some proof. you need to register the animal. it has to be of a general size. we have small ponies, snakes. again, it sounds funny, but our flight attendants have to deal with this. back to putting humans and getting them comfortable and on their seats, and all of a sudden you have to deal with that. that and many other issues. david: how do you deal with sexual harassment on the planes? oscar: i don't understand how people can do things that we hear people doing. that is just a personal opinion. in addition, people don't want to sit next to someone because of their race, sex, and color. frankly, i do not have a lot of time for that. this is where customer service,
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for me personally, goes out the window. you want to fly elsewhere, because we don't want to deal with that. the real issues of safety, sexual harassment are important for us. we have partnered with people, an american flight attendant organization, that we listen to because they have to take the brunt of this. it can be awful. it has been quiet for a long time. it has been going a long time. we had a deaf ear. the other thing is human trafficking. that is another angle and aspect. how do you recognize it? how do you resolve it? and inevitably, you have false positives? when you see something going on and we pull somebody off the aircraft and it turns out to be something different, and we get sued. that has been an argument for why we should not do some of these things. i say we will take the heat for the minority of things because we need to fix the broader issue. david: there is a rumor that
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members of congress can get airlines held for them. is there any truth to that? oscar: we generally as an operation don't want to hold anything. we have a schedule. if one of my agents sees a young woman with three kids running down, but our schedule says we close in 30 seconds and she is 10 minutes away, we have tended to shut the door to get it out on time. again, we will allow our gate agents to make that call and hold the aircraft. the morning flight, you can let it go because you have other options. if it's the last flight, you can hold it for someone. we do not told aircraft for anyone. david: a member of congress, nobody? oscar: we don't hold aircraft for anybody. [laughter] david: you have wi-fi on your planes? oscar: that is another loaded question. again, we do. wi-fi is a huge focus for us.
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some of the technology is better than others. we have a mishmash. you are not in your living room streaming netflix. you are 35,000 feet in the air, flying at 600 miles an hour, and we forget that sometimes. it is inconsistent, which is the worst thing we can do. we are working on that. we will take the time. david: let's suppose i have three airlines to pick from, american, delta, united to fly across the country, why should i pick united over your peers? oscar: this is a great company with our greatest asset are the humans and people who work with us. the level of spirit and service and caring that they will be increasingly giving to you will make the difference. i think the human aspect, we forget we are a first person-to-person, human-to-human business, and all the other things don't matter as much. david: no regrets about taking the job? you don't think if you'd stayed at csx you would not have had your heart transplant? right?
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it would have happened anyway? wonderfulret is a academic and theoretical term but it is not practical. i love what i do. i loved my company before. and i really love my united family today. ♪
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jonathan: from new york city, 30 minutes dedicated to fixed income. this is "bloomberg real yield." ♪ jonathan: fed chair jay powell forging ahead with interest rate hikes. president trump telling italy that america is willing to buy italian debt. one of the best-performing - pockets of fixed income this year. fed speak in jackson hole. >> we ought to be moving towards neutral, which means three or four increases over the next nine to 12 months.


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