How IT Helped An Airline Recover

Continental Airlines CIO and senior VP Janet Wejman was navigating through heavy Chicago traffic recently en route to a noon lunch meeting. When she realized the time, she called her lunch partner to apologize for the delay and report her new ETA. "I'll be seven minutes late," she said, with the respect for accuracy of a former flight instructor who also holds a degree in computer science.

When she arrived at the restaurant, close to seven minutes later, Wejman sat down to discuss life at the fifth-largest U.S. airline during the most tumultuous time in commercial-aviation history. It had been five long weeks since terrorists hijacked and crashed four airplanes-and five years since Wejman arrived at Continental to apply her precision focus to the monumental task of revamping the airline's stagnant IT infrastructure to support key business objectives.

Wejman was hired to help the company increase efficiency and improve service, but the IT projects she's spearheaded proved crucial to keeping the airline alive in the aftermath of Sept. 11. Those efforts have been well worth the $180 million annual investment Continental has made in IT in each of the last five years, top executives say. "There's no question that we wouldn't be where we are today without IT support," says Larry Kellner, president of Continental Airlines Inc. "In fact, I question whether we'd even be here after 9-11."

Continental would've reported a third-quarter net loss of $97 million last month, amid a 14.9% downturn in passenger revenue, a 1.6% drop in flight capacity, and a 6.5% reduction in revenue passenger miles, if not for its $154 million share of the federal government's Stabilization Act grant. With that funding, it posted net income of just $3 million, down from $135 million a year earlier, on revenue of $2.22 billion, down from $2.62 billion. Given the airline's falling sales, IT systems that let the company review financials daily, quickly adjust flight and crew schedules, and assist customers are playing a key role in recovery efforts.

On Sept. 11, Wejman was tucked away in a Tucson, Ariz., resort, scheduled to speak that afternoon at InformationWeek's Fall Conference about a unique pilot training and scheduling application. But with the sunrise came the devastating news that shocked the world. "I spent the entire day on conference calls, offering help wherever we could," she recalls. The following day, she rented a car with Lance Tucker, a Continental MD-80 pilot who doubles as a senior manager for flight-crew technology, and drove for 19 hours across Arizona and New Mexico straight to Continental's headquarters in Houston (for more on Tucker and his dual role, see story at informationweek.com/864/tucker.htm).

The day of the attacks, the airline's Systems Operational Control Center staff focused on accounting for Continental's aircraft, grounding planes, and logging their locations. Executives offered condolences to friends at United Airlines and American Airlines, each of which lost two planes in the attacks. Continental chairman and CEO Gordon Bethune issued his first of about 30 bulletins to employees, providing updates over the Web and via E-mail and voice mail.

Once the initial chaos diminished, Wejman, senior VP of flight operations Deborah McCoy, and other executives confronted the task of getting the airline back in service-without knowing when the airports would reopen. In the past, they'd had to deal with individual airports' closures, but never had they faced the job of getting an entire fleet airborne again.

Beneath the empty skies, experienced operations staff sat down with pens and paper to come up with a plan to get the planes and crews back on some sort of schedule. At first, they shied away from using three new applications that Continental's IT staff had built earlier in the year to reschedule flights when a single airport closes-they had used them only once before and were more comfortable with manual rescheduling. "People always go with what they know best during a crisis," Wejman says. But the complexity of the crisis soon overwhelmed the staff's capacity. Everything was in disarray: Some planes had reached their destinations while others had been diverted to their departure cities or airports en route. Scheduled flights were canceled, and passengers on the grounded flights still needed to get to their destinations. No one knew what to tell the stranded passengers or those who had flights scheduled for coming days.

That's when the operations staff asked Wejman if the IT staff could tinker with Operations Solver, which reschedules aircraft, Manpower Solver, which reschedules pilots, and Crew Solver, which reschedules flight crews, so that they could run calculations never before expected of them. "None of these apps was built to run the whole system, but we made some modifications quickly so that they would," Wejman says.

Continental had used the applications last spring when George Bush Intercontinental Airport in Houston was closed for a day after a devastating flood. They'd performed well then-normally, it would have taken Continental 72 hours to get flights delayed by one airport closing back on schedule, but with the Solver trio, it took only eight. In September, the apps didn't disappoint either: They rescheduled the airline fleet in just 20 hours, a task the operations staff calculates would've taken 250 people-hours manually. Not only that, they sent updated information about the flights via pagers and E-mail to employees.

"We didn't have to say, 'Let's build this.' We had the tools already in place that we could modify or build on," Wejman says. "For technology people to be able to contribute this much was important. It reconfirmed the past five years." Since the tragedy, Continental has had to reduce its operations by 20% because of the drop in travel demand, and it's relied on the Solver applications to create an entirely new schedule to accommodate the cuts in flights and personnel. The airline saved several million dollars by moving quickly, Kellner says. Reshuffling the flight schedule used to be a six-month project; each department gave input and the schedule went through several iterations, each taking a few days. With the new apps, each new iteration takes only a few hours, reducing the entire project to two weeks, Wejman says.

New financial forecasting applications also played a part in helping Continental officials decide before any other airline the extent of the reductions it would have to make in flights and staff to stay in business and to take action on that information quickly. Earlier this year, it rolled out those applications, which measure profitability on 90 items, from fuel to food to advertising, on a single flight on a particular day.

Before Sept. 11, Continental used the financial-forecasting tools to assess profitability on certain routes to decide whether to use a different-size aircraft or to change the frequency of flights to increase profitability. Executives used those same tools to assess load factors for Friday and Saturday, the first two days that flights resumed after the attacks, and quickly calculated the layoff and flight-reduction figures. Several days later, most other major airlines came to the same conclusions Continental had already reached.

The airline continues to use the financial-forecasting apps to make daily decisions about flight schedules and aircrafts, and Wejman expects that to continue. "There's a new level of efficiency required to do business," she says. "Those IT systems help you understand the effect of your decisions right away." The only change Wejman foresees is that as business stabilizes, Continental will more selectively drill down through the daily data instead of using it to analyze the entire schedule.

"We're using our systems to the max and changing a pretty big company in a short time to adjust our schedules and operations," Kellner says. "The proof's in the pudding, though. We'll see how we do compared to competitors in the fourth quarter."

IT systems also were crucial to communicating with employees and customers in the days and weeks after the attacks. Wejman and her staff decided earlier this year to bring Continental's Web servers in-house rather than have travel site Expedia Inc. continue to run them. That gave IT more immediate control over the customer-facing Web site and corporate intranet. The change also saves the airline $20 per ticket (the cost Expedia imposed for each ticket it processed)-nothing to scoff at in such strained circumstances. The move also should pay off in goodwill, because Continental was able to quickly provide information to stranded passengers.

The IT staff pored over Web-analysis reports to see how customers were using the site; they weren't surprised to learn that most people were trying to check flight status. Then they realized that it took the users four clicks to get to the data they needed and knew that must be frustrating to people desperate to get back home. Within two hours of making the discovery, Continental moved flight status data to the site's front page.

After the airports reopened, Continental also put a posting on its Web site advising fliers that it had placed its 500 self-service ticket kiosks in front of security checkpoints at airports, and that customers should get their boarding passes at those kiosks to save time. Previously, the kiosks had been behind the security checkpoints, but new rules forbid passengers to go through security without boarding passes.

When Continental said Sept. 15 that it would be forced to lay off 20% of its workforce, the IT staff quickly built an intranet site where affected employees could retrieve benefits information and sign up for job-search seminars. XML programming links the site to employee records, so workers can view their 401(k) plans and other personal information. "We didn't furlough people because they did something wrong. The whole thing was so shocking for everyone," Wejman says. "So we wanted to give employees a place to go for answers."

The company's intranet, Coair.com, also proved invaluable for flight crews unexpectedly rerouted to different cities after the attacks, as well as for those now dealing with new routes in light of the airline's altered schedules and reduced workforce. The site lets crew members search for "crash pads," apartments in various cities that can each accommodate eight or nine flight attendants. Managers also use the site to view an organizational chart, which shows who reports to whom-adjusted to reflect the recent layoffs.

But Continental's work in the days after Sept. 11 was far from done. Like other airlines, it was also meeting regularly with the Federal Aviation Administration and the FBI to discuss new security measures. Among them: making sure that each new watch-list that the FBI issued was updated immediately in Continental's database and reservations systems. Like other airlines, Continental programmed new flags into the system to identify potential terrorists such as customers who pay cash for one-way tickets. "The data warehouse is incredibly powerful to look at security patterns," Wejman says.

It's hard to believe that just five years ago, at the beginning of the Internet explosion and the start of grand IT initiatives at many U.S. companies, Continental was a dinosaur. The airline didn't have a LAN, E-mail, or companywide voice mail, and its call center relied on equipment built in the early 1970s. "We wanted to build the company around service, but in every case, we came back to the fact that our technology was woefully inadequate," Kellner recalls. Today, the No. 2 company on this year's InformationWeek 500 ranking has one of the most advanced IT systems of any airline. "Among the conventional U.S. carriers, there aren't a lot that stand out with the exception of Continental, which has done many innovative things," says Timothy O'Neil Dunne, managing partner who specializes in airline technology for consulting firm T2 Impact.

Employees cite Wejman as the brains behind the airline's IT innovation; Wejman, though, credits her 1,300-person IT staff and their partners in each of Continental's business units. She arrived at the airline in 1996, following a four-month consulting stint to raise money for the Wheeling, Ill., flight school she had bought a year earlier. In her second week on the job, Wejman told Kellner she needed $5 million for a LAN. "He asked me about three tough questions," she recalls, "and gave me his approval. He said later that if I had screwed up, that would've been it." Her approach to getting the LAN budget set the tone for future IT initiatives: She identified the need for the LAN on day one, spent the next two weeks educating peers about its benefits, and was able to leverage their support when she asked Kellner for the funding.

From that point on, Wejman and her staff began building the LAN and WAN infrastructure to support the unique applications the airline develops. The IT staff spent the first two months Wejman was on the job designing, configuring, and building the headquarters' network and installing E-mail. The next two years, the group extended the network to hubs, ticket offices, and airports.

Simultaneously, the staff rolled out an NCR Corp. Teradata data warehouse (now in its fifth generation) and adopted a strategy whereby a single data warehouse, along with subject-specific data marts, provides decision support for revenue management, customer service, security, flight profitability, and human resources applications. "All the data that every application uses goes to the data warehouse," Wejman says.

With each new initiative, Wejman and her staff had to prove return on investment. Kellner demands proof that IT spending will lead to a more efficient airline. So from the start, Wejman teamed each business unit with a dedicated IT person or group-a key to the IT department's success. "My colleagues have been supportive and innovative," she says. "They've helped to educate me on their business objective."

For instance, Wejman took on the development of the financial-forecasting applications at the request of the finance department, which wanted a way to view the airline's profitability in granular detail and perform what-if scenarios. Before these applications, airport managers had to review stacks of tickets, fill out paperwork, wrap everything in rubber bands, and mail it all to Houston each month for auditing. That meant the airline, like its competitors, was always 30 days behind in calculating financial performance.

Originally, Continental executives planned to use the Web-based system to move from getting monthly to weekly updates. Because air traffic is normally very predictable, Continental executives before Sept. 11 didn't see the value in getting daily updates from every airport and making changes to flights in response. Sharp slowdowns or unexpected spikes at a particular airport on a certain day wouldn't normally indicate a trend as much as it would explain how a local event had affected flights. But that all changed after the terrorist attacks. "You inject an event like Sept. 11 and the paybacks are there to fine-tune things," Kellner says. In a typical October, Continental would take in about $750 million in revenue; this October, it will be lucky to see $500 million, he says. The airlines can't count on well-established, predictable patterns anymore, and daily data today often points to new flying trends.

So these days, daily financial data from each airport is transmitted to headquarters via the Web. "We know what we made yesterday," controller Chris Kenny says. "We know how much money we made on each route, on each flight, on a certain date." That's vital now that there's no wiggle room when it comes to profits. "People with no data in a crisis are in big trouble," Kellner says. "Smart people with data are very valuable."

As the airline reassesses flight schedules and staffing, a middleware application called Airframe that Wejman launched in 1998 is playing a critical role. Airframe sits between the Web applications and the mainframes that store day-to-day operational data, and it links to the data warehouse that's used as a decision-support tool. Among the Web applications connected to Airframe are the Solver scheduling apps; the Crew Communications System, a Web-based interface for Continental's 4,560 pilots and 8,775 flight attendants that helps them trade flights; and Employee Training Record, the new pilot training and scheduling app that Wejman was to speak about Sept. 11. ETR taps more than 200 data points for all pilots, ranging from medical records to what aircraft they're qualified to fly.

"As we rebuild the airline based on furlough, the app is critical to make sure we get the right pilots in the right seats," Wejman says. The application lets schedulers enter criteria into any browser to search for a list of pilots qualified to fly a certain route. In the past, they culled spreadsheet printouts from a Unix-based system. The application "improves scheduling tenfold," says senior VP of flight operations McCoy. "And that's huge for an airline."

The Web-based program tracks pilot training, particularly critical now that an as-yet-undetermined number of pilots must be retrained because of the layoffs. And DC-10 pilots who weren't laid off must be trained to fly another aircraft because Continental grounded its fuel-inefficient DC-10 fleet. Training for new aircraft or positions can involve up to two months of courses. ETR creates the most efficient schedule for pilots to achieve a particular certification, reducing the amount of time spent in training for about half of those employees. That helps the airline financially because it reduces pilots' downtime. For example, as soon as a pilot passes simulator training on a Boeing 757, a wireless device updates ETR so that the pilot is immediately certified to fly that aircraft. The result is that a pilot can start generating revenue based on his or her new certification right away.

As great a benefit as IT initiatives have been to the airline, the events of Sept. 11 have taken their toll on upcoming projects. For the short term, Continental is conserving capital, so most new IT plans are on hold. But in the long term, Wejman says that IT will continue to be called upon to help make the business more efficient and profitable.

Kellner concurs with her assessment: "If anything," he says, "I see more things we can do today than I saw five years ago."

Photos by Blair Jensen