lowecur
Well-known member
- Joined
- Sep 14, 2003
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This article is being presumptive, but the usual cast of characters again point to a significant change taking place since Gary Kelly took the reigns. Gary obviously feels the "nice guy" philosophy has run it's course and it's time to crank it up a notch on all fronts. Of particular interest will be company/employee relations as contracts expire. Kelly has sharpened the expense pencil on mgts end, and he will have to clearly point out that payroll will have to fall in line with the rest of the industry in order to maintain viability into the future. Caveats will be the failure of a legacy in the next 24 months as NWA and DL pilots harden their stance on striking. I think it is a smart move on the pilots part for both groups. They are keenly aware of the pressure faced by mgt from Investment Banks to keep the ball rolling until the big fees can be realized from mergers.
imp:
Posted on Thu, Feb. 09, 2006
Southwest loses several top executives
By TREBOR BANSTETTER
Star-Telegram Staff Writer
Several high-level executives have left Southwest Airlines in recent months, even as the carrier faces the unprecedented challenge of remaining profitable amid punishing fuel costs and rapid growth.
The executives’ exodus comes amid what some analysts call a slow shift in Southwest’s culture and strategy under Gary Kelly, who took the top job in mid-2004.
The new Southwest is more aggressive, takes greater competitive risks, and is no longer quite the folksy underdog that built a reputation for charming partners and rivals alike.
"There is a slow cultural change going on over there," said airline consultant Stuart Klaskin of KKC Aviation Consulting in Coral Gables, Fla. "There may be a realization that the company is entering a new era," he said, which may be spurring some executives to consider leaving "while they’re at the top of their game."
The departures include:
Carmichael was also listed among the airline’s 29 top officers in the annual report.
The three leave as the airline defends its position as the nation’s most successful carrier and may have to re-evaluate some longtime business practices, said consultant Mike Boyd of the Boyd Group of Evergreen, Colo.
"If they don’t, they won’t survive," he said.
Coincidence?
Kelly said the the timing of the departures was coincidental.
"Almost every year, we have an officer leave," he said. "There’s nothing extraordinary about it." But he acknowledged that 2006 will be a challenging year. Southwest is struggling to increase profits by 15 percent even as it becomes more vulnerable to the high fuel costs that have devastated the rest of the industry.
"We’re a bigger company with more competition and more intense challenges," Kelly said. "That demands better teamwork and more communications between our executives." Kelly also said he has revamped the management structure since he took over, striving for more efficiency. "It’s very different today in terms of the structure and the assignments," he said. "Things need to change and circumstances change."
And Kelly is taking on more responsibilities as Herb Kelleher, the airline’s co-founder and chairman, focuses on high-profile initiatives like lobbying for the repeal of the Wright Amendment.
"Herb is uninvolved in the day-to-day operations," Kelly said. This year, Kelly will represent Southwest on the board of the Air Transport Association, an industry trade group, a seat that Kelleher had previously held. Kelleher remains "significantly involved" in high-level strategy decisions, such as new cities and routes, Kelly said.
Not the same company
Kelly, who came from the airline’s finance department, has taken the airline into uncertain territory with expansions into major cities such as Denver, Philadelphia and Pittsburgh. He also changed the airline’s longstanding neutrality on the Wright Amendment.
One Southwest executive who asked not to be named for this story said life under Kelly is more numbers-oriented and less freewheeling. "The culture here has changed significantly," the executive said. "It’s not the same company it was a year ago, and that’s why you see a lot of these people leaving."
Wimberly, Ridley and Carmichael did not respond to phone messages and e-mails requesting comments for this story.
Regardless of why the executives departed, its clear that Southwest is in a time of transition. The airline posted its 33rd annual profit earlier this month with earnings of $548 million for 2005. But Kelly warns that significant challenges await in 2006. The airline faces a substantial increase in fuel costs as hedging contracts expire, which could cost as much as $600 million in additional spending this year.
And Kelly is still sticking to his goal of 15 percent earnings growth, admitting that "we’ll need double-digit revenue growth to achieve it."
Southwest today faces many of the same challenges as traditional hub airlines, consultant Klaskin said. That includes higher labor costs with an older workforce and a less-flexible structure that has been built over decades.
"Southwest isn’t JetBlue," he said. "They have a lot of the same issues American has."
Boyd said Southwest’s management team is keenly aware that the next several years will be difficult. "You hear all of this glowing press about how great Southwest is doing," he said. "Make no mistake about it, Kelly and his folks don’t believe a word of it." In coming years, Boyd predicted, Southwest will be forced to re-evaluate longstanding practices like a lack of assigned seats and using a single airplane type in its fleet.
Evolving focus
Linda Rutherford, the airline’s vice president of public relations, acknowledged that the airline’s management style has slowly evolved since 2001, when Kelleher stepped down as president and chief executive.
"For the longest time, we had just one man running everything, and now it’s a little more inclusive," she said. "And that was an adjustment." Under Kelly, Southwest’s longtime drive to contain costs has gotten even stronger, she said.
"Everyone knew that coming from his position as CFO, there was going to be a lot of cost discipline and operations discipline there," she said. "But I think he’s done great adjusting to the other parts of his role as CEO." Kelly said that he works hard to make the airline an attractive place for top executives, and he’s aware that rivals would love to snare his top officers. "We have a hard-work culture, but it’s still a place where we like to have fun, where it’s very informal," he said, noting that he was wearing blue jeans and boots that day, as he often does.
He also added that the airline has no shortage of experienced executives to replace anyone who leaves. Southwest has hired just one outside executive in recent years — Joe Harris, a labor attorney with a long history of representing Southwest. He will replace Carmichael.
Wimberly’s job is being taken by Mike Van de Ven, a 12-year veteran who was most recently the airline’s senior vice president of planning. Ridley’s job will be taken by Jeff Lamb, who formerly reported to him as a senior director in Southwest’s learning and development group.
Given the challenges that are in store, a change in some management positions could be a positive, Boyd said. "This is why if you’re an airline, the most dangerous competitor in the country is Southwest," he said.
Consultant Klaskin adds that Southwest is well positioned to ride out the storm. "The thing you have to remember about Southwest is they have tremendous bench strength," he said. Rutherford agreed. "Things here are a lot like a family, where you’re not going to just pick up and move onto something else unless there is someone ready to move into your leadership position," Rutherford said. "And that’s the case now."
imp: Posted on Thu, Feb. 09, 2006
Southwest loses several top executives
By TREBOR BANSTETTER
Star-Telegram Staff Writer
Several high-level executives have left Southwest Airlines in recent months, even as the carrier faces the unprecedented challenge of remaining profitable amid punishing fuel costs and rapid growth.
The executives’ exodus comes amid what some analysts call a slow shift in Southwest’s culture and strategy under Gary Kelly, who took the top job in mid-2004.
The new Southwest is more aggressive, takes greater competitive risks, and is no longer quite the folksy underdog that built a reputation for charming partners and rivals alike.
"There is a slow cultural change going on over there," said airline consultant Stuart Klaskin of KKC Aviation Consulting in Coral Gables, Fla. "There may be a realization that the company is entering a new era," he said, which may be spurring some executives to consider leaving "while they’re at the top of their game."
The departures include:
- Jim Wimberly, Southwest’s executive vice president of aircraft operations, who retired at the end of 2005 at age 53 after 20 years at Dallas-based Southwest. He remains on contract as a consultant.
- Dave Ridley, senior vice president for people and leadership development, who left the airline last week at age 53 after 18 years to focus on missionary work. Ridley also has the option of continuing to work as a consultant.
- Beverly Carmichael, vice president of labor and employee relations, began a new job this month at Rockwell Collins in Cedar Rapids, Iowa, after 10 years with Southwest. Carmichael was the airline’s lead labor negotiator.
Carmichael was also listed among the airline’s 29 top officers in the annual report.
The three leave as the airline defends its position as the nation’s most successful carrier and may have to re-evaluate some longtime business practices, said consultant Mike Boyd of the Boyd Group of Evergreen, Colo.
"If they don’t, they won’t survive," he said.
Coincidence?
Kelly said the the timing of the departures was coincidental.
"Almost every year, we have an officer leave," he said. "There’s nothing extraordinary about it." But he acknowledged that 2006 will be a challenging year. Southwest is struggling to increase profits by 15 percent even as it becomes more vulnerable to the high fuel costs that have devastated the rest of the industry.
"We’re a bigger company with more competition and more intense challenges," Kelly said. "That demands better teamwork and more communications between our executives." Kelly also said he has revamped the management structure since he took over, striving for more efficiency. "It’s very different today in terms of the structure and the assignments," he said. "Things need to change and circumstances change."
And Kelly is taking on more responsibilities as Herb Kelleher, the airline’s co-founder and chairman, focuses on high-profile initiatives like lobbying for the repeal of the Wright Amendment.
"Herb is uninvolved in the day-to-day operations," Kelly said. This year, Kelly will represent Southwest on the board of the Air Transport Association, an industry trade group, a seat that Kelleher had previously held. Kelleher remains "significantly involved" in high-level strategy decisions, such as new cities and routes, Kelly said.
Not the same company
Kelly, who came from the airline’s finance department, has taken the airline into uncertain territory with expansions into major cities such as Denver, Philadelphia and Pittsburgh. He also changed the airline’s longstanding neutrality on the Wright Amendment.
One Southwest executive who asked not to be named for this story said life under Kelly is more numbers-oriented and less freewheeling. "The culture here has changed significantly," the executive said. "It’s not the same company it was a year ago, and that’s why you see a lot of these people leaving."
Wimberly, Ridley and Carmichael did not respond to phone messages and e-mails requesting comments for this story.
Regardless of why the executives departed, its clear that Southwest is in a time of transition. The airline posted its 33rd annual profit earlier this month with earnings of $548 million for 2005. But Kelly warns that significant challenges await in 2006. The airline faces a substantial increase in fuel costs as hedging contracts expire, which could cost as much as $600 million in additional spending this year.
And Kelly is still sticking to his goal of 15 percent earnings growth, admitting that "we’ll need double-digit revenue growth to achieve it."
Southwest today faces many of the same challenges as traditional hub airlines, consultant Klaskin said. That includes higher labor costs with an older workforce and a less-flexible structure that has been built over decades.
"Southwest isn’t JetBlue," he said. "They have a lot of the same issues American has."
Boyd said Southwest’s management team is keenly aware that the next several years will be difficult. "You hear all of this glowing press about how great Southwest is doing," he said. "Make no mistake about it, Kelly and his folks don’t believe a word of it." In coming years, Boyd predicted, Southwest will be forced to re-evaluate longstanding practices like a lack of assigned seats and using a single airplane type in its fleet.
Evolving focus
Linda Rutherford, the airline’s vice president of public relations, acknowledged that the airline’s management style has slowly evolved since 2001, when Kelleher stepped down as president and chief executive.
"For the longest time, we had just one man running everything, and now it’s a little more inclusive," she said. "And that was an adjustment." Under Kelly, Southwest’s longtime drive to contain costs has gotten even stronger, she said.
"Everyone knew that coming from his position as CFO, there was going to be a lot of cost discipline and operations discipline there," she said. "But I think he’s done great adjusting to the other parts of his role as CEO." Kelly said that he works hard to make the airline an attractive place for top executives, and he’s aware that rivals would love to snare his top officers. "We have a hard-work culture, but it’s still a place where we like to have fun, where it’s very informal," he said, noting that he was wearing blue jeans and boots that day, as he often does.
He also added that the airline has no shortage of experienced executives to replace anyone who leaves. Southwest has hired just one outside executive in recent years — Joe Harris, a labor attorney with a long history of representing Southwest. He will replace Carmichael.
Wimberly’s job is being taken by Mike Van de Ven, a 12-year veteran who was most recently the airline’s senior vice president of planning. Ridley’s job will be taken by Jeff Lamb, who formerly reported to him as a senior director in Southwest’s learning and development group.
Given the challenges that are in store, a change in some management positions could be a positive, Boyd said. "This is why if you’re an airline, the most dangerous competitor in the country is Southwest," he said.
Consultant Klaskin adds that Southwest is well positioned to ride out the storm. "The thing you have to remember about Southwest is they have tremendous bench strength," he said. Rutherford agreed. "Things here are a lot like a family, where you’re not going to just pick up and move onto something else unless there is someone ready to move into your leadership position," Rutherford said. "And that’s the case now."
