May 22, 2020 - Economy

The pandemic class of CEOs

Illustration of a gloved hand carrying a briefcase

Illustration: Eniola Odetunde/Axios

Investors are getting acquainted with a new class of CEOs, who are making crucial decisions about how to steer the companies that are in some cases taking the worst hit from the coronavirus crisis.

The problem: No one has experience dealing with an economy-shuttering global pandemic.

The backdrop: A record number of CEOs stepped down in prior months amid a thriving economy. Their successors are now taking the helm but under unprecedented circumstances.

  • Wednesday marked Day 1 for United's new chief, Scott Kirby. The transition was long-planned, but "no one knew that our world was going to change so considerably" when he took over, Kirby said in an email to customers this week.
  • Among the other companies debuting CEOs during the pandemic: L Brands, Expedia and IBM.
  • Hertz unexpectedly named a new CEO this week, its fifth leader in just as many years. He'll take the helm of the car rental company that was struggling pre-pandemic but is now fighting to avert bankruptcy as demand collapses and used car prices plummet.

Why it matters: These CEOs will be the face of tough decisions — including about layoffs — as their businesses are forced to change.

  • We’re already seeing it: IBM is reducing its workforce by an unspecified amount, the WSJ reports, the first layoffs under new CEO Arvind Krishna.

Yes, but: In certain cases, while some titles have changed, predecessors are lingering in the background.

  • United's former CEO Oscar Munoz is now the executive chair of the company.
  • Meantime, former Disney CEO Bob Iger, who announced he would step down in February, "has effectively returned to running the company," the New York Times reported last month.

The other side: Retirement plans are being put on ice. Their companies are halting the time-consuming searches for new leaders. But no amount of tenure could have prepared someone to navigate the coronavirus pandemic.

  • One example: The CEO of California State Teachers' Retirement System, one of the largest pension funds in the U.S., is delaying retirement in part to focus on its response to the coronavirus economic downturn.
  • Another: International Airlines Group, the parent company of British Airways, is keeping its chief executive on as it navigates the crisis.

What they're saying: "A company that a year ago was focused on growth and international expansion might now need to shift much more towards cost-cutting," Yo-Jud Cheng, a professor at the University of Virginia's business school, tells Axios.

  • "The types of leadership qualities necessary to deal with that might be very different," she says.

Editor's note: This story has been updated to correct that IBM's layoffs were reported, not verbally confirmed by its new CEO.

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