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 When Munoz, 56, arrived at CSX Corp in 2003, the Jacksonville,
Florida-based railroad was struggling. CSX and Norfolk Southern had
carved up Conrail, a large rail network in the U.S. Northeast, but
CSX failed to consolidate Conrail's operations and was essentially
running two networks, with the worst safety record among the major
railroads and the worst operating ratio.
"We were the biggest excuse machine east of the Mississippi," said
one current CSX manager who declined to be quoted by name. The
company seemed ready to be "broken up, gobbled up or go bust," he
said.
Munoz had held finance jobs at consumer products companies including
Coca-Cola Enterprises, AT&T Corp [TATTC.UL] and Pepsico Inc before
joining CSX. But people familiar with his time there said he moved
to reduce back office employees and shed some 2,200 miles of poorly
performing tracks, port assets and other things the railroad did not
need. He is largely credited for changes that made CSX an industry
leader in safety and steadily improving financial performance,
people familiar with his tenure said.
In 2004, Munoz took a seat on the board of Continental Airlines Inc,
and stayed on when Continental merged with United Air Lines to
become United Continental. Like CSX, United Continental has
struggled to effectively integrate its operations. It suffered from
data system crashes that disrupted service, and wrestled with
disgruntled unions.
Munoz is succeeding Jeff Smisek, who abruptly departed after running
United Continental since 2010.
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"In the cut-throat airline business if you do the wrong thing
customers go away and the wrong thing can be as simple as having a
ticket price that is $10 higher," said Morningstar analyst Keith
Schoonmaker. "So it will be interesting to see how Munoz adapts to
that market." At CSX, he said, customers often only have two choices
among railroads.
Munoz said Tuesday during a call with analysts he sees close
parallels between the challenges of big railroads and big airlines.
Both industries must manage complex technology, attend to customer
service, contain costs, generate cash and return cash to
shareholders. Safety is critical for both industries, he said.
"The airline industry has been closely watching, monitoring, exactly
what the rail industry has done,” Munoz said.
(Reporting By Joe White, editing by Joe White and John Pickering)
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