Thursday, July 29, 2021

business

Longtime Southwest Airlines CEO Gary Kelly to step down


Longtime Southwest Airlines chief executive Gary Kelly, who has steered the company through the coronavirus pandemic and other crises, is stepping down and will be succeeded by the carriers executive vice president, Southwest announced Wednesday.

Kelly, 66, one of the longest-serving U.S. airline chiefs and Southwest's top executive since 2004, will leave his post in early 2022. He will serve as the airline's executive chairman through at least 2026, the airline said.

Kelly was at the helm through the global financial meltdown in 2008 and the 2019 grounding of Boeing's 737 Max jets after two fatal overseas crashes less than five months apart. Southwest was particularly hard hit by the nearly two-year grounding because it operates a fleet of only Boeing jets.

Bob Jordan, Southwest's executive vice president of corporate services, will become CEO of the nation's fourth-largest air carrier on Feb. 1.

"He is a gifted and experienced executive and well-prepared to take on this important role," Kelly said in a statement, noting the two have worked together for 30 years.

In separate statements, Casey Murray, president of Southwest's pilots association, and Lyn Montgomery, president of Transport Workers Union Local 556, which represents Southwest's flight attendants, congratulated both men.

"We look forward to working together in collaboration to enhance the people-centric culture of our company so that our customers and the flight attendants who are proud to serve them can enjoy the unparalleled Southwest Airlines experience for many years to come," Montgomery said.

Henry Harteveldt, president of Atmosphere Research Group, an aviation consulting group, said Jordan will face several pressing issues when he takes over as the company celebrates its 50th year. He said the airline has built a reputation for customer service with a work culture that is the envy of many in the industry, but the pandemic has transformed the market.

Not only must Southwest compete with the big three air carriers - American, Delta and United, which offer a premium experience and multiple classes of service - it also must reckon with a new and expanding crop of ultra-low-cost carriers that offer cheap fares but few amenities, Harteveldt said. He said Southwest also must keep an eye on niche carriers such as Alaska Airlines, JetBlue and Hawaiian Airlines.

"Southwest is now the man in the middle, if you will," Harteveldt said. ". . . They're really boxed in."

Southwest also has resisted changing a model that has worked so well for the company - a single class of service with no fees for checked bags.

Kelly began his tenure at Southwest 35 years ago when he was hired at the airline's controller. He then became the carrier's chief financial officer, while carrying the title of vice president for finance and later executive vice president. He was appointed chief executive and vice chairman in July 2004, then became chairman and president in 2008.

In January 2017, Kelly gave up the title of president and named former Southwest board member and executive Tom Nealon as president.

Before joining Southwest in 1986, Kelly was a certified public accountant with Arthur Young & Co. in Dallas and controller for Systems Center.

During his tenure, Kelly also oversaw Southwest's acquisition of AirTran Airways and launched service to the airline's first international destinations. In March 2019, the carrier began offering flights to Hawaii. Still, Kelly has said his biggest source of pride is that the airline never laid off or furloughed workers.

"Gary has been an outstanding CEO for Southwest for nearly two decades and has developed an excellent group of senior leaders to shepherd the airline into its next 50 years," said William Cunningham, lead director on Southwest's board.

In tapping Jordan, the board is turning to an executive who, like Kelly, has deep roots at the airline.

Jordan, 60, joined Southwest in 1988 and has served in several roles, including director of revenue accounting, corporate controller, executive vice president and chief commercial officer. During the pandemic, Jordan led Southwest's efforts to reduce labor costs through voluntary leave and early separation programs, which have been credited with enabling the carrier to avoid layoffs and furloughs as passenger counts tumbled amid the pandemic.

Before Southwest, Jordan worked for Hewlett-Packard as a programmer and financial analyst. He holds bachelor's and master's degrees from Texas A&M University.

Published : June 24, 2021

By : The Washington Post · Lori Aratani