CFOs Must Know Numbers and Think Strategically

Four key concepts got Jack Brace, ’82, to the job of executive vice president and CFO of United Airlines, Brace said during a keynote address at the Road to CFO Conference sponsored by the student-led Financial Analysis and Treasury Group, at Hyatt Regency Chicago October 19.

“First, the job is about a whole lot more than just numbers,” he said. “Second is more about a philosophy I have, that problems are actually opportunities. Third is to be flexible and keep your options open. And last but definitely not least, you’ve got to keep your sense of humor.”

A good CFO must be grounded in numbers, Brace said. “But what a CEO is really looking for is a business partner, somebody who may start with numbers or may have a numerical background but is really more of a strategic thinker,” he said. “In my career, I’ve been very fortunate to have been exposed to very strategic thinkers and visionaries. They taught me you have to know the numbers, but the numbers are really just a starting point.”

Brace has encountered no shortage of opportunities in the form of complex business problems at United, he said. “I have a very firm belief that every problem is solvable, if you use the right resources, keep your options open, and approach it creatively,” Brace said. “I have taken the attitude that you have to make fact-based decisions. You have to generate analysis and look at the data, but then let’s decide and move on.”

If United had not remained flexible, the company would not have been able to accomplish what it did in recent years, including completing two rounds of concessionary bargaining with five labor unions and terminating and replacing the company’s pension plans, he said. “We always had to keep our options open,” Brace said.

A good example of that flexibility is the grueling process that United went through to terminate pension funds in order to save the company, he said. The five unions initially rejected the proposal, but eventually the pilots union accepted it in return for stock, Brace said. Pension Benefit Guaranty Corporation initially said the maneuver was impossible but eventually agreed to discuss the possibility, he said.

“Over the course of a couple of months, we actually worked it out with them where they were going to terminate the plans and in return we were going to give them certain securities and other contractual guarantees,” Brace said. “It turned out to be a much better alternative for all of us involved. That was the key to our getting out of bankruptcy.”

With so much publicity surrounding United’s controversial decisions, company officials learned not to take themselves too seriously, he said. “We try to find humor in everything we do,” Brace said. “We keep our relationships upbeat and positive. I have excellent relations with senior union leaders, even though we had to do very difficult things to them. Somebody who may be your foe today may be on your side of the table tomorrow. Don’t let personal relationships get in the way of business.”

Martina Dimova, a second-year student who co-chairs the Financial Analysis and Treasury Group, chose to invite Brace because United is interested in recruiting Chicago students, the airlines is an interesting industry, and United is based in Chicago.

“People tend to think company finance is the boring side of finance,” Dimova said. “But it’s actually very much not. It’s very interesting and it gives you many opportunities. Having experienced that, Jack Brace is proof.”

- Phil Rockrohr