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Everyone loves Southwest
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By Dan Reed, USA TODAY
A month ago, Gary Kelly was a mild-mannered 49-year-old accountant. Now, he's CEO of the USA's most successful large airline.
He's also positioned to be the guy at Southwest Airlines for a long time once Herb Kelleher, the airline's iconic 73-year-old co-founder and chairman, leaves the scene.
Kelly might have the best job in the industry. But even at Southwest, Kelly faces tough challenges and withering pressure.
The 18-year Southwest veteran was promoted from CFO last month when colleague and friend Jim Parker, 57, retired unexpectedly after three years. Only the timing of the promotion caught Kelly by surprise.
He's known for three years that he was Parker's likely successor, and he's been involved in decisions about the direction of the airline.
"I know the kinds of challenges we face and the things we need to do," he said in an interview with USA TODAY.
By decade's end, Dallas-based Southwest, which expects 10% annual growth, should be the nation's largest airline as measured by passengers. It's already No. 3, with 75 million passengers in 2003.
Kelly's challenge is to get there without ending the carrier's string of 53 consecutive profitable quarters. To do that, he'll have to find a way to perpetuate Southwest's one-of-a-kind culture and low-cost operations. And he'll have to do it while fending off competitors and dealing with skyrocketing fuel and labor costs.
"It's a good thing that Gary is both a financial guy and someone who knows the Southwest culture," says Ray Neidl, an analyst at Blaylock & Partners. As such, he says, Kelly understands the link between the airline's profitability and its unique corporate culture.
Southwest expects employees to work harder than at any other airline. In return, management celebrates their work and gives assurances of a bright future.
Kelly says Southwest can adapt without abandoning the core principles that have made it a favorite of investors, travelers and workers over three decades.
"My top priority is, as it always has been at Southwest, our people," Kelly says. "If our employees love working at Southwest Airlines, everything else will fall into place."
But keeping most of the airline's 32,000 employees satisfied and feeling connected promises to get tougher.
Since the Sept. 11 terrorist attacks, all 10 of Southwest's unions — 85% of all employees — have signed expensive new labor agreements. Some workers have begun to say that industry-leading profits should lead to industry-leading pay.
But Kelly urges employees to focus on profits rather than rivals' pay scales. In return, he promises them a future in the business — something, he says, "people at many of the big airlines today don't have."
Says Kelly: "It's ridiculous to think that your objective is to be the highest-paying airline. We might end up at times among the highest-paying carriers, but only because we can afford it, not because that was a goal."
Southwest has fewer employees and spends less per passenger-mile than any major airline. To offset fast-rising fuel and labor costs, he says, the airline will have to get even more efficient.
It can't shave $1 billion off its annual operating costs like some high-cost carriers, Kelly says. "But we can save hundreds of millions of dollars."
A month ago, Gary Kelly was a mild-mannered 49-year-old accountant. Now, he's CEO of the USA's most successful large airline.
He's also positioned to be the guy at Southwest Airlines for a long time once Herb Kelleher, the airline's iconic 73-year-old co-founder and chairman, leaves the scene.
Kelly might have the best job in the industry. But even at Southwest, Kelly faces tough challenges and withering pressure.
The 18-year Southwest veteran was promoted from CFO last month when colleague and friend Jim Parker, 57, retired unexpectedly after three years. Only the timing of the promotion caught Kelly by surprise.
He's known for three years that he was Parker's likely successor, and he's been involved in decisions about the direction of the airline.
"I know the kinds of challenges we face and the things we need to do," he said in an interview with USA TODAY.
By decade's end, Dallas-based Southwest, which expects 10% annual growth, should be the nation's largest airline as measured by passengers. It's already No. 3, with 75 million passengers in 2003.
Kelly's challenge is to get there without ending the carrier's string of 53 consecutive profitable quarters. To do that, he'll have to find a way to perpetuate Southwest's one-of-a-kind culture and low-cost operations. And he'll have to do it while fending off competitors and dealing with skyrocketing fuel and labor costs.
"It's a good thing that Gary is both a financial guy and someone who knows the Southwest culture," says Ray Neidl, an analyst at Blaylock & Partners. As such, he says, Kelly understands the link between the airline's profitability and its unique corporate culture.
Southwest expects employees to work harder than at any other airline. In return, management celebrates their work and gives assurances of a bright future.
Kelly says Southwest can adapt without abandoning the core principles that have made it a favorite of investors, travelers and workers over three decades.
"My top priority is, as it always has been at Southwest, our people," Kelly says. "If our employees love working at Southwest Airlines, everything else will fall into place."
But keeping most of the airline's 32,000 employees satisfied and feeling connected promises to get tougher.
Since the Sept. 11 terrorist attacks, all 10 of Southwest's unions — 85% of all employees — have signed expensive new labor agreements. Some workers have begun to say that industry-leading profits should lead to industry-leading pay.
But Kelly urges employees to focus on profits rather than rivals' pay scales. In return, he promises them a future in the business — something, he says, "people at many of the big airlines today don't have."
Says Kelly: "It's ridiculous to think that your objective is to be the highest-paying airline. We might end up at times among the highest-paying carriers, but only because we can afford it, not because that was a goal."
Southwest has fewer employees and spends less per passenger-mile than any major airline. To offset fast-rising fuel and labor costs, he says, the airline will have to get even more efficient.
It can't shave $1 billion off its annual operating costs like some high-cost carriers, Kelly says. "But we can save hundreds of millions of dollars."
