Rakesh Gangwal, WG’79: Flying High at US Airways
On those few occasions when Rakesh Gangwal actually has some free time, he always chooses to spend it with his wife and nine-year- old daughter. In July, for example, the family flew to France to attend both the World Cup soccer finals and the victory parade on the Champs Elysee.
It’s an appropriate perk for a man who is credited with helping to take an ailing airline — US Airways — and make it one of the highest flyers in the industry.
In his two and one half years at US Airways, Gangwal, who was named CEO in May, has helped increase market capitalization from $800 million to $8 billion. The company’s stock has risen from $14 a share to $77 this summer. And the company now ranks in the top three airlines in terms of on-time performance, baggage handling and the fewest consumer complaints.
A number of new initiatives at US Airways bear Gangwal’s direct imprint. He has, for example, just launched US Airway’s MetroJet service, a no-frills, low-cost operation that concentrates primarily on East Coast leisure destinations like Florida and New England. “The MetroJet service involves quick turnarounds of aircraft that drive up asset utilization. Moreover, there are no meals and you get seat assignments only at the gate,” says Gangwal, who worked on a similar program on the West Coast for former employer United Airlines. “It brings down both costs and fares … MetroJet started in June and has already been spectacularly successful.”
US Airways, based in Arlington, Va., is not only adding more planes but also bigger ones. The company recently ordered a fleet of widebody A330 aircraft that will fly 275 passengers in a three-class cabin compared to the current 203-seat, two-class cabin design. The new planes, Gangwal says, “will be more spacious and will have more cargo carrying capacity, which means greater revenues.”
Primarily an East Coast airline, US Airways recently expanded its routes in Europe, which Gangwal describes as a “fundamental and natural market for the company.” Passengers who previously were limited to Paris and Frankfurt can now fly US Airways direct to Madrid, Munich, Amsterdam, London and Rome.
Gangwal was born in Calcutta and earned a master’s degree in mechanical engineering from the Indian Institute of Technology. He and his family were strong supporters of Mother Teresa before her death last year, and continue to be benefactors of her Calcutta-based Missionaries of Charity.
Gangwal’s swift ascent in the airlines industry started in 1980 when consultant Booz Allen & Hamilton assigned him to work with client United Airlines. In 1984, United hired him as a manager for strategic planning. After 11 years, he left United as senior vice president, planning, to become executive vice president for planning and development at Air France.
Gangwal spent 18 months in Paris reviving the French airline by creating a new route network, frequent flyer program and fleet plan, among other initiatives.
In 1996 US Airways appointed him president and COO. “When I came here, it was a very troubled company,” says Gangwal. “People had given up hope of US Airways ever being a force in the marketplace.” He set to work improving product quality and operating performance, hiring new managers and making them more accountable, establishing a strategic plan, buying airplanes and negotiating new labor contracts. “We were fortunate that we were implementing strategic changes at a time when the economy was booming … It allowed us to stay focused on our plan and to keep funneling money back into operations.”
Gangwal’s management style didn’t hurt. In an industry known for confrontational labor relations and dictatorial executives, he has always preferred a more collaborative approach. “Anytime we do big projects, we have task forces,” says Gangwal. For the MetroJet project, the 25-member group included union leaders, line employees, pilots, mechanics, managers and company officers. “They came up with an operating plan, a marketing plan and a launch schedule, all within a specified framework,” Gangwal notes. “I have found that this kind of cooperation pays off handsomely for everyone involved.”
Michelle Peluso, W’93: Government Service in the White House
Michelle Peluso, W’93, distinctly remembers the first question she was asked during her three days of interviews in June for a White House Fellowship: In light of Judge Rehnquist’s decision on judicial independence, how do you think that should relate to the Indian nation state?
She’s not quite sure how she answered it, but clearly the session — which also included questions on literature, the arts, history and current events — went well. In late June Peluso was chosen as one of 17 White House Fellows, a program that, according to its official description, “provides gifted and highly motivated young Americans first-hand experience in the process of governing the nation and a sense of personal involvement in the leadership of society.”
Peluso, selected out of a field of approximately 1,000 applicants, is working directly with the U.S. Department of Labor, which recently received a billion dollar grant to study the issue of youth unemployment in inner cities.
“I’m interested over the long term in bringing my business skills to the non-profit world,” says Peluso, whose goal is to run a non-profit government organization like UNICEF or the Children’s Defense Fund. “This fellowship will provide the opportunity to see how business, government and the community intersect.”
While at Wharton, Peluso was chosen as a Thouron Scholar, a prestigious fellowship that enabled her to spend two years at Pembroke College, Oxford, where she earned a degree in philosophy, politics and economics. During the intervening summer she worked as a financial analyst for Citibank in Senegal.
In 1995 she joined Boston Consulting Group’s New York office. A senior case leader assigned to health care and consumer goods companies, Peluso spent part of her time looking at recent changes in the healthcare field and then analyzing business opportunities for pharmaceuticals and healthcare companies over the coming decade. She also ran the New York office’s community involvement initiative, coordinating both pro bono work and volunteer activities with community groups.
The Fellowship, she says, “is a great chance to reflect on what I have done and think hard about what I want to do, and how to get there from here.”
Garrett Reisman, W’91: Government Service in Space
A graduate of the Jerome Fisher Program in Management & Technology has a shot at being the first Wharton alumnus in space.
In June, Reisman was chosen by the National Aeronautics and Space Administration to be a member of this year’s astronaut candidate class. The 25-member class is selected from a field of 2,600 applicants after a rigorous screening process that culminates in a weeklong interview process at NASA headquarters in Houston. “We had a series of medical and psychological exams and then we were interviewed by 15 senior astronauts and NASA officials,” Reisman says. “The head of the committee is John Young, who was Neil Armstrong’s crewmate in the Gemini program and walked on the moon as an Apollo astronaut. He asked me what I had done starting from high school, and it went on from there.”
Reisman will complete 18 months of training and evaluation, then undergo a series of ground assignments. “Maybe in about four years I will actually be up in space as a mission specialist,” he says. (Astronauts are divided into two groups: pilot astronauts who fly the shuttle and usually come from a branch of the military; and mission specialists who come from scientific, engineering or medical backgrounds and conduct the actual space walks.) A mission specialist’s assignment can involve such activities as assembling a manned space station, repairing the Hubble space telescope or fixing a malfunctioning satellite.
After Reisman graduated from Wharton he earned a master’s and PhD in mechanical engineering from the California Institute of Technology. Before moving to Houston in August, he worked for two years at TRW in Redondo Beach, Calif., helping to design the control loops for a NASA satellite called EOS (Earth Observing System) PM1. The satellite will be launched in December 2000 to take measurements of energy transfer systems in the earth’s atmosphere. “The idea is to get a better understanding of climactic phenomena like El Nino and global warming,” he says.
“I have been interested in space and astronauts ever since I was a kid putting together model airplanes and rockets,” adds Reisman, who spends his free time flying (he has a pilot’s license), scuba-diving, hiking and mountain-climbing. “By the time I was 11, I had just about worn out a Super 8 film version of the Apollo 11 lunar landing.”
And yes, he understands the hazards of his chosen profession. “They [NASA officials] were pretty up front with us during that weeklong interview as to the risks involved. We know that flying in space and launching in these rockets is not the safest activity. But I have confidence that NASA does everything it can to minimize the danger. For me, the reward of being able to go up there and look out the window and see planet Earth will make it all worthwhile.”
Victoria Formiconi, WG’85: Heavy Lifting in Venezuela
Running a business in Venezuela these days can’t be easy.
“Infrastructures are inefficient or non-existent, the bolivar is overvalued, interest rates are at 70 percent, oil prices are lower than they have been in 20 years and the political outlook is extremely uncertain,” says Victoria Formiconi, president of the Formiconi Group, a $50 million family-owned enterprise made up of seven companies including Formiconi, C.A. (construction) and Acero Fabricantes, C.A. (process equipment manufacturing). Both are based in Caracas and service primarily the oil industry. “Any type of long-range planning is impossible.”
Yet despite an overwhelmingly difficult business environment, the Formiconi Group is thriving. This year it received an ISO 9000 certification award given out to a select number of companies on the basis of superior quality control and management. In addition, the group has been establishing strategic alliances with foreign companies that have sophisticated technologies in such related areas as process equipment design and heavy lifting.
The Formiconi Group was founded 40 years ago by Victoria’s Italian-born father, Aldo, who is still involved in the business, dividing his time between homes in Rome, Caracas and Boston. Victoria was born in Caracas but grew up in Italy and graduated from the University of Rome with a degree in economics before attending Wharton.
After almost two years with Manufacturers and Traders Trust Co. in Buffalo, N.Y., she left for Caracas, planning to spend no more than two years at the family company before returning to the U.S. It didn’t work out that way. When the Formiconi Group’s president left in 1989, her father insisted that she take over the job. “I was concerned because so many people had been working in the company for so many years and they might have rejected my appointment,” she says. “But I have been very much accepted and we have been highly successful as an organization. In the last 10 years the Group’s capacity quadrupled and today it has close to 1,000 permanent employees and between 2,000 and 3,000 full-time workers contracted on a project basis.”
Formiconi is married to a Greek-Romanian industrial engineer who was general manager of the company when she first joined in 1987. Today Anton Apostolatos is executive vice president of the Formiconi Group. The couple has four children, ages 6, 4, 2 and four months.
Despite what must be a lack of women executives in her particular industry, Formiconi is very positive about employment opportunities for women in Venezuela. “Yes, Venezuela has a Latin macho-oriented culture, but women are well respected by men and are, in fact, preferred over men in certain professions,” says Formiconi, who has two brothers, neither of them currently active in the company.
“For example, a great majority of judges here are women, a large number of financial executives are women, and women are hired in highly skilled and technical areas like quality control. And to do all this, women don’t have to be aggressive or act in a manly manner. They can be themselves because there is no discrimination and they share the same opportunities that men have. I don’t think this is necessarily true in more developed countries.”
While the company has always been run conservatively — carrying no debt load, reinvesting its profits and operating with a very hands-on type of management — one of Formiconi’s major responsibilities is to constantly reevaluate current strategy.
“Our goal has always been to be the first in quality, first in compliance with the client’s requirements and first in fulfillment of the delivery schedule. We have achieved it, but it is very hard and costly to maintain this standard in a developing country such as Venezuela where so much is unpredictable,” she says.
With the recent opening of the Venezuelan oil industry to the global markets, a very large number of new players, both customers and competitors, are dramatically changing the rules of the game, Formiconi adds. “Some competitors are quoting prices that have no relationship to cost, just to get into the market … We have to find new ways to adapt to this environment and still be successful.”