United Airlines is politically savvy, guided by President Obama’s former press secretary as Executive Vice President. The airline donated $1 million to President Trump’s inauguration. And CEO Scott Kirby immediately congratulated the President on his “historic” victory back in November and lauded his goals in announcing the most significant tariffs in the history of the United States.
Kirby can’t stop the tariffs, but by offering the President political cover in the business community he might get something in exchange later on? Now Kirby says that Trump’s trade turmoil will make the U.S. stronger. Has he gone insane? (HT: One Mile at a Time)
“We’ve been through periods where people are unhappy before,” Kirby told Liz Hoffman at the Semafor World Economy Summit in Washington, DC, describing US President Donald Trump’s recent tariff increases as opening moves in a game of chess.
“The president has a genuine desire to make things better for middle-class Americans,” Kirby argued, stressing that tariffs are aimed at middle-class job creation, “whether you think it’s the right tactic or not.”
Success, however, will take time, Kirby said, and the US needs to be patient. “We should all take a breath,” he said.
The problem is that Kirby harms his own credibility here. Either:
- He believes that this is 3D chess, or that tariffs are good, in which case you have to discount his intellect
- Or he doesn’t believe what he’s saying, and you have to discount his credibility.
Can employees trust his word in negotiations? Can investors trust his analysis of the business? It seems pretty clear that Kirby is not a stupid man. He’s demonstrated his acumen as CEO. But now he’s demonstrating a side that we weren’t sure we’d seen before, and it requires re-evaluating some of his past pronouncements as well.
Scott Kirby was all-in on President Biden’s agenda. He got out in front of vaccine mandates within days of President Biden’s inauguration when that was a priority of the Biden administration, and long before they attempted to make those mandatory. He was supportive of environmental causes and affirmative action. I’d described United as the most ‘woke’ of U.S. airlines, assuming that Kirby’s statements and United’s actions reflected a consistent manifestation of a worldview, rather than simply blowing with the wind.
United Airlines has an interest in slots at New York JFK. JetBlue’s market cap is down to just $1.4 billion. Kirby describes them as the only airline in play as an M&A target. And legal decisions around things like antitrust, pardons, and economic policy are no longer made on the basis costs and benefits (whether calculations are done correctly or not). Supporting the President’s agenda could be enough for antitrust signoff?
By the way, even temporary (‘strategic’ negotiating ‘3D’) tariffs are highly damaging to the economy. We’re creating tremendous uncertainty. And that’s not just bad for business, it’s also bad negotiating. Note not only that the tariffs themselves lack credibility because they keep changing, U.S. commitments broadly lack credibility because they’re inconsistent with treaties and with other promises, even ones made by this administration.
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