Bumpy Ride

No one would have predicted seven years ago the devastating effect one day would have on the airline industry. But since Sept. 11, 2001, airlines have struggled, and now are scrambling to hold their place in a faltering American economy. Rising fuel prices are challenging them to search for ways to stay profitable, and some airlines have not yet recovered from the bankruptcies they were forced into after the terrorist attacks. Consolidation is expected to help relieve pressure, but the most recent merger rumors haven't yet come to fruition.

These challenges make life interesting for Jennifer Vogel. After a one-year stint as GC of Enron Global,
Vogel had the foresight to get out of the company before it imploded, joining Houston-based Continental Airlines Inc. as vice president of legal in 1995.

When she landed the role of senior vice president, general counsel, secretary and chief compliance officer in 2001, Vogel immediately faced tough post-Sept. 11 regulations on security and the resulting civil liberties issues. She also oversaw the post reorganization work after the airline emerged from bankruptcy in 1993.

Yet Vogel has taken it all in stride. She currently spends her days tackling regulatory, security, labor and environmental issues. Her 33-person team, which she considers lean for the fifth largest airline in the industry, handles a lot of sophisticated work such as real estate, international, regulatory and
antitrust issues.

When not at the office, Vogel is vice chair of the Texas General Counsel Forum, an organization that facilitates the sharing of best practices among legal departments of Texas companies. At the end of the day, Vogel's focus is on the airline industry. If merger plans between Northwest and Delta come to life, Continental would likely have to pursue a merger to stay competitive. But for Vogel, it's all in a day's work.

Q:How did you go from Enron Global to Continental?
A:One day on a flight, I bumped into the then-GC of Continental Airlines and we talked. I had realized that Enron was not going to be a good fit for me. I got a job offer from Continental to run the legal department, and I took it.


Q:What types of legal issues do you face as GC of an airline?
A:We deal with many international and regulatory issues. There are always antitrust issues. For instance, due to the highly competitive nature of the airline industry, pricing decisions by one carrier are often followed by other carriers. Although each airline is making its own independent decision, the optics of "parallel" behavior lead to claims of conspiracies and violations of the antitrust laws. One example is the lowering of travel agent commissions, which resulted in a class action suit claiming antitrust violations that we won on summary judgment.

We have a lot of litigation: customer-based, employee-based, standard commercial litigation, regulatory challenges, patent infringement. We have more than 45,000 employees, so we get the typical labor and employment issues like wrongful termination and harassment. There's also a big focus on environmental issues, the biggest being emissions from aircraft. We have 55 million-plus passengers a year. Think about the number of sodas we serve. So we have a very big focus on recycling.

Q:Do you use a lot of outside counsel?
A:We probably use more than 100 law firms. Because we fly to so many different places, we need local counsel in every country and state we fly to. But my team has the latitude to handle whatever they want in house, and that is an aspect of this legal department that people enjoy. Complex work doesn't
necessarily get farmed out.

Q:There have been many changes in the airline industry since Sept. 11. How has this affected Continental and how have you dealt with any challenges?
A:The biggest challenge was dealing with the aftermath of Sept. 11. We faced a flood of unique legal issues on top of the painful and emotional realities of what that event would mean for our company and our industry. Not only was there a lot of regulation from a security aspect, there were certain civil liberty issues we've faced, and economic issues that were new. In particular the economic hit to the industry was bad. We faced financial restructuring of our company. But as an industry we've moved past the immediate aftermath of Sept. 11 and now worry more about things like fuel prices.

Q:How are you dealing with the rising costs of fuel?
A:That's certainly one of the biggest challenges we have right now. If oil stays above $100, it is going to dramatically change how the industry does business. Airlines are going to have to find a way to have a healthy industry with the fuel prices that high, which is why Continental has one of the most fuel-efficient fleets in the industry. Our biggest hedge against high fuel prices is to use less energy.

Q:What's the most interesting issue you've encountered at Continental?
A:Trying to determine if we could transport a sumo wrestler. We ultimately decided we could not because even though we could take out a row of seats, the weight was not going to necessarily be supported. We also had safety concerns for the gentleman and other passengers regarding an emergency evacuation. We would not have been able to properly evacuate the aircraft.

Sometimes we come across an issue here none of us has ever dealt with, and we just roll up our sleeves and sit down and try to figure it out. And that's what makes this job so interesting. When you're in an industry that's on the front page of the paper on almost a daily basis, it's both exciting and frustrating.

Q:During Hurricane Katrina, Continental stepped in to help?
A:We brought in cargo such as generators and emergency supplies. Once we unloaded, we had room to take passengers. Continental volunteered to help fly people out of New Orleans, but we faced problems because there were no TSA agents to clear people through security. Our legal department had to work with regulators to find ways to screen people. We got waivers for certain requirements because of the emergency situation. We also set up special flights to transport abandoned animals and pets to shelters around the country.

Q:What is the Texas General Counsel Forum and what role do you play in it?
A:As the president of the Texas General Counsel Forum next year I would provide leadership for the organization's strategy, membership recruitment, events and operations. The organization is made up of general counsel and managing attorneys across Texas. They come together to discuss legal department best practices. We hold quarterly events with speakers and have lunches for general counsel. We take a topic of interest--for example, how you interact with your board or board communications--and we discuss the problems we face and share our solutions.

Q:What's your favorite place to fly?
A:Two years ago I took the family to Egypt, and we absolutely loved it. It was awe-inspiring to be on the Nile and in the Valley of the Kings and standing in King Tut's tomb.

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Yesenia Salcedo

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