"The Rock Show" by Blink-182 pounded through speakers the size of refrigerators, all shrieking guitars and thundering drums. "Hanging out behind the club on the weekends, acting stupid, getting drunk with my best friends."
Kerry B. Skeen, 51, chief executive of Dulles-based Atlantic Coast Airlines Holdings Inc., soon to be Independence Air, ran up the aisle of the National Conference Center in Leesburg on Monday morning, high-fiving employees. He hit the stage, basking in the clapping of 400 people. "Welcome," he shouted, "to the 'Fly I' experience!"
Not your average employee get-together, but then this isn't the average company. Skeen is making a huge bet that Atlantic Coast can change from a prosaic contractor feeding short flights into United Airlines to a risk-taking, buccaneering cheap-seat airline, a move no airline like his has made before. Now he has to sell these 400 people -- and 3,600 more employees just like them -- on the notion that he is right to leave the comfortable business the airline is in now and that to accompany him on this risky flight they need to change the way they have always worked.
Changing a corporate culture this way isn't easy, but Skeen has a powerful motivator: If the company doesn't make this change successfully, it could die.
In a month, Atlantic becomes Independence Air, going head-to-head with Jet Blue and United Airlines' new low-fare unit, Ted, at Dulles International Airport over who can sell the cheapest seats. It's high-risk, high-stakes stuff, far riskier than Atlantic's old business -- for a straight fee, contracting its small jets to feed small-town passengers onto United's bigger jets on longer flights.
But the airline industry wobbled after the Sept. 11, 2001, terrorist attacks, and United went into Chapter 11 bankruptcy protection a year later and tried to cut what it pays Atlantic. Atlantic balked. Released from its United contract, Atlantic will begin to pull out of its United Express business June 5 and launch its new flights June 16.
The small airline Mesa Air Group Inc. last year took a run at Atlantic in a hostile deal that Atlantic fought off in December. It has been a rough year for employees. And now this.
"We're petrified," said Tom Kissel, a technical writer who has worked for Atlantic for two years. "But people are really jazzed up. We're excited to get away from United."
The airline's president, Thomas J. Moore, took the stage. More rock roared through the speakers. A middle-aged woman on a folding chair in the back nodded. "Um-hmmm,'' she said, like she was in church. She elbowed a friend.
"We're not taking the easy way out and signing up for United Express," Moore said. "We're going for the gold!" Now she was rocking, stomping and clapping, ready to explode from her seat.
Companies, after all, do change. Consider Staples Inc., the office supply company, which in 1995 moved from a membership-only warehouse retailer to a more conventional store. It had been on the warehouse model since its founding in 1986. The switch worked, the company says: It has 1,600 stores worldwide, compared with fewer than a third of that number in 1995.
"A lot of companies are looking to do culture changes just in general because their current culture is not adapting and responsive enough to the marketplace," said Myrna Marofsky, president of consultants ProGroup Inc.
At Continental Airlines Inc., when Gordon M. Bethune became chief executive a decade ago, the company was at the bottom of the list for customer service and on-time flights. Bethune transformed the airline. He focused on measuring the things Continental did worst, showed the results quarterly and gave bonuses to employees who met his goals. Bethune got rid of a motley fleet of different planes and focused on just one model to lower maintenance costs.
Sometimes, though, trying to change a culture just doesn't work. When Dulles-based America Online Inc. merged with Time Warner Inc. in 2001, AOL said it wanted to inject its "Internet DNA" into its old-media partner. But when AOL stumbled and Time Warner's stodgier magazines and movies prospered, AOL instead had to adapt its own culture.
These days, the mantra is to make changes before circumstances force them.
When Skeen formulated his gamble last year, executives knew they had to change the airline's culture. The company was highly profitable; earnings nearly doubled to $83 million, with sales of almost $900 million, in its latest annual report. But Skeen argued that tying your future mostly to a single customer in bankruptcy was risky, too.
"For the board, it was the matter of weighing both alternatives, and there were substantial risks to both," Skeen said through a spokesman. "It will have an upside in the long haul. The risk of being associated with United has a much higher risk."
The airline hired BrandInside, a consulting company, to help with things like getting Atlantic employees into shape for handling ticket counters. As United Express, most Atlantic employees rarely dealt with the public: They simply got customers from one place to another while United sold the tickets and handled baggage.
The airline's public face will now be extremely important. Atlantic wants to set itself apart by trying to position itself as a low-fare airline, but also as convenient and friendly. In training sessions, employees learn that when they make announcements at the gate they must make eye contact with customers and speak slowly and deliberately. If an employee is taking a break and sees a line, she must stop and ask customers how she can help.
"They want a personality to it versus a mechanized experience you get with other airlines," said Bill Fitzgerald, vice president and general manager of BrandInside, a division of the Martin Agency in Richmond. The airline has connected "with people on a very personal level and helped them see that by being more themselves, being genuine, helpful, proactive, that it would not only be more fun and enjoyable, they'd make a huge difference in the marketplace."
Employees are encouraged to break from what the company says were United's rigid rules and to "freelance" ideas, said Angie Shermer, vice president of Employee Services, the department rolling out the changes. "We realize we're going to have to get used to this new skin."
If there is one idea the company wants to get across, that is it. "It's really breaking away from the customs," Skeen said in an interview after Monday's rally. "We spent a lot of time defining who we are. Now we will make sure what we do day-to-day represents that."
Atlantic Coast will have a leg up in making these changes -- or perhaps, more accurately, it has no choice. It's easier to get employees to go along with a dramatic new plan if there's not much alternative. If Atlantic employees want to keep their jobs, they have to make Skeen's plan work. And even if they don't buy into his vision for the company, the airline industry is in such a mess, they can't walk out the door to another airline.
The employees "don't have 10 other job options right now," said Reena Aggarwal, professor of finance at the McDonough School of Business at Georgetown University. "So it's in employee interest to make sure it works."
Still, a lot of the campaign is as much about selling nervous employees on the new company as selling the public. Many analysts and experts, in fact, don't believe the company can make it as a low-fare airline. There's too much competition; the airline has the wrong-sized jets; it's hard for companies to change.
Competition will be ferocious, said Robert J. Gordon, a professor of economics at Northwestern University. Atlantic should expect its former partner United and another local competitor, US Airways, to match its low fares. Already United has launched an incentive campaign to hang on to Washington area fliers.
In April, Atlantic said it would lose significantly more money this year than it had expected: $8 million to $10 million in the second quarter, $25 million to $30 million in the third and $15 million in the fourth. It has $350 million in cash.
Those were scary numbers for the people at last Monday's pep rally, and even as executives tried to reassure them, they also pushed penny-pinching when employees broke into smaller groups for special sessions.
"The cash we have in our bank account is all we have to defend ourselves from competitors," said Steven Westberg, an Atlantic vice president, to employee groups who got a chance to win a trip to the Bahamas if they attended his session. He begged them to help save money in ways as simple as reusing three-ring binders and staying at less-expensive hotels. "If you wouldn't spend it yourself, don't have Independence spend it."
As the skits flashed by onstage, people roared and laughed. There were nervous jokes about "drinking the Kool-Aid," but also a sense of optimism. Near the end there was a fashion show with flight attendants in the new Independence Air uniforms strutting down a ramp from the stage and going through the seat-belt and oxygen-mask routine they will do on every flight.
Gene Reynolds, a long-time ramp employee, with wheel chocks around his neck, won the most cheers and applause -- until the tall, imposing Skeen walked down the runway in his jeans and a dark blue Independence Air shirt. The crowd went crazy. And then even crazier when he looked into the lights and pumped his fist into the air, his pinky sticking up to make the "I" for Independence.
"Go, I," he shouted.
As the music pounded and people shouted, the 400 pumped their pinkies in the air, too.