Southwest Airlines will mark the 50th anniversary of its first flight in June, transforming from a scrappy intrastate airline into the largest domestic carrier in the country.
CEO Gary Kelly, who has been CEO since 2004, talked with The Dallas Morning News about how the COVID-19 pandemic was the greatest challenge in the company’s history, the future of aviation and what makes Southwest’s reputation so strong when other airlines are constantly ridiculed.
This interview has been edited for length and clarity.
As Southwest approaches 50 years since its first flight in 1971, what are your first memories of the airline?
I grew up as a lifelong Texan. My first flight in my life was on Southwest in the fall of 1972. I flew as a college recruit from San Antonio to Houston. I had never flown on a plane before. So my first trip was about a year after Southwest started. There was me and two other kids going to Rice (University in Houston) for a college visit.
I remember there were two flight attendants in hot pants, and back then we all probably thought it was a lot of fun and had a lot of personality, but honestly, I didn’t know if this airline would survive.
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You mentioned that quirky attitude and Southwest, despite being the largest domestic airline, still has that underdog mentality. How has that been maintained?
In those days, the experience just felt so different from other airlines. In the late ’70s, I traveled a lot in my job and traveled on other airlines besides Southwest. With the open seating and a very informal ticketing process, the employees just had personality; they were very friendly. They seemed very happy and loved to hear jokes. You could tell they were investing effort to make the flying experience a pleasant one.
And Southwest had a very unique route system. I thought of it as an intra-Texas airline in the late ‘70s, which of course it was at that point. And so I think it’s that maverick spirit and the personality and the desire to make a human connection with, with each other as employees and with customers. It’s very much in part of the DNA and the soul of the company.
And the fact that we still fly one aircraft type. It was just kind of an underdog mentality in those days, and I think that that serves as well even in contemporary times. Even though we’ve become the largest airline in the country. There’s brutal competition and I think our people understand it. There’s always somebody trying to knock us off. So resilience meeting challenges definitely run through the DNA of the company.
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How much of that DNA comes from the leaders like Herb Kelleher and Colleen Barrett, who led the company for so long?
They deserve the lion’s share of the credit for that. When you ask about reflecting on the 50th, you think about our ancestors and the people who started the airline, the original employees and what they had to do. There’s a real appreciation for the history of the company and the people who built it.
Herb wasn’t the first CEO and Colleen wasn’t an employee until the late ’70s. So they weren’t here, in that sense, in the very beginning, but they were very involved from the very beginning. Herb was a co-founder, he was the general counsel and he was in legal battles to get the airline launched back in 1971. But he was CEO for 20 years and then chairman for 30 years. Even after he retired in 2008, he continued to be a very significant and visible presence around Southwest. Lamar Muse (Southwest’s first president) deserves a lot of credit for getting the airline started, but I think Herb and Colleen very much deserved credit for establishing the culture in the way that we know it today, continuing to build on what was started in 1971.
We’re very indebted to both of them.
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You came in the mid-’80s. What were your first memories of Herb?
I started in ’86 and the company was 15 years old. Southwest was a client of mine with the firm that I worked at, Arthur, Young & Co. And so I knew from my friends within Arthur Young what a great company Southwest was. I was hired as comptroller in 1986. I was young and it was an officer position for a Fortune 500 company and I was just delighted at the opportunity.
He (Kelleher) was larger than life, even then. He was already very well established and Southwest was a raging success in the 1980s. The opportunity to work for somebody really so talented, like Herb, and very different from normal business executives, was just a real thrill. He kept us laughing. And he had a huge passion for Southwest Airlines and a very deep understanding of the business.
The early days for me it was just like drinking out of a firehose because I was brand-new to the airline industry and brand-new to his and Colleen’s leadership style. I just tried to soak it up like a sponge. I was a convert early on.
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What was that leadership style like? You came from an accounting firm, which was probably very orthodox.
They call it work for a reason. I think we all expect that people will work hard, but you can enjoy yourself. You can still have a sense of humor. Every company says these things, but Southwest was a company that truly treated people with dignity and respect.
And there was an informality to it that wasn’t just focused on titles.
Anybody in the company was welcome to share their opinion and views and suggestions. The involvement of front-line employees was key.
Some companies can have a seriousness about them, a stuffiness, a formality. It just didn’t feel that way at all at Southwest. There were a lot of opportunities to grow, and all of that made the environment really, really exciting as well. And then you couple that with the fact that we were good at what we were doing. We made money. We didn’t have a layoff. We had great customer service. The airline operations was superb.
There was just a belief in what we do. And that was very captivating then, and it still is today.
Other airlines have had a lot of time to copy and figure out what Southwest does. What do you think still sets Southwest apart?
People like to simplify perhaps a bit too much and they’ll seize on one thing. “Oh, well. The special thing about Southwest is one airplane type or the special thing about Southwest is open seating” or whatever it might be.
And it’s real. The power is in the sum of all of those attributes. Over the years, the wisdom has been what string do you pull so that the whole doesn’t unravel. No one is like Southwest. We love to say we’re in a category of one, and that’s really true.
Again, this goes back to Herb and Colleen with putting people first, putting our employees first and taking care of them first. If you do all of those things, you empower your people to identify the right problems and solve them in the right way.
And those things can be challenged from time to time, like it’s like open seating versus assigned seating. We’re probably the only large airline left in the world that doesn’t assign seats. Maybe someday we will, but it certainly won’t be while I’m CEO.
But there’s more to Southwest than open seating, and I think a lot of people miss that. And the fact that over 50 years we’ve never had a furlough, we’ve never had a layoff, we’ve never had a pay cut in an industry that is notorious for failure, I think says it all.
It’s pretty remarkable that we’ve made it 50 years. I don’t know that there’s a 50-year-old company, other than Southwest, that can make that claim.
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How do employees manage to stay positive?
They are resilient. People that work in the airlines are pretty special because there are a lot of challenges. There are a lot of risks to manage.
And every flight is not perfectly on time. Some flights get canceled. I do think a lot of our employees are energized by the opportunity to help customers solve their problems. Rather than considering that to be a burden, they really look at it as an opportunity or a privilege to take care of people. And they just go the extra mile.
During the early months of the pandemic, what was going through your mind in terms of what might have to happen for Southwest to survive?
The first thing is, I just have to admit is that they were very dark days. And I distinctly remember when the traffic started plunging, there was a despair and it was disbelief. How can this be happening? Certainly no fault of ours, no fault of any company in the United States for that matter, around the world. But it happened. So you quickly come to grips with the fact that we’ve got stuff to do. And you make your to-do list and you believe that we’re going to get through this.
We had so much momentum coming into 2020 that there was just very strong and widely held belief that our world will defeat this pandemic and ‘this too shall pass.’
It’s just not going to be instant gratification, and I think that was the main thing that I had to come to grips with and I had to convince the rest of the company was that we are in uncharted waters, we’re going to take one step at a time and we’re going to do everything we can to preserve people’s jobs.
And you fast forward now 14 months later and we accomplished that. Not one job was lost. It was messy. It’ll be messy coming out of this pandemic as well.
How would you compare how tough this recession or this downturn was financially for the company to other downturns?
There was nothing like it. We haven’t lost money since that first year that I flew on Southwest, 1972.
And we had a profit string beginning in 1973 that went all the way through 2019 and then 2020 was a whopper.
We lost $3.5 billion last year if you exclude the government support that we got. And I should add quickly that we would be in a very different place, as a country and certainly as an industry, if it were not for the federal government stepping in with the CARES Act and the successive stimulus bill. It’s akin to fighting World War II and you just have to pull out all the stops to win the war and that’s what our country had to do with this pandemic.
Some days you had literally empty airplanes flying around in April of 2020 because the demand is so weak. We’d lost 98% of our business and we weren’t close to cutting 98% of our costs. So the losses were staggering and unsustainable. It’s by far the biggest challenge the company’s ever faced.
What are the biggest challenges that Southwest and the airline industry will face over the next 50 years?
The big challenge is to address climate, and our industry has a goal of net-zero carbon emissions by 2050, which is very ambitious, but it is an achievable goal.
It’s going to have to be a partnership between the airline industry, the aerospace industry and governments around the world. We’ll need technological breakthroughs.
I think it’s achievable. It will be just like putting a man on the moon 52 years ago — it will require government investment and focus. And I think the world is up to the task here.
As you’ve faced this crisis over the last year and a half, have you had much time to think about your role as a steward over this brand and what you’ve been able to accomplish?
I’m proud to be a part of Southwest Airlines. The older I get, the more I appreciate that. Next year it’ll be 36 years for me and half of my life at Southwest as of next year will be as CEO, which is kind of hard to believe. I’m glad that I was here to work shoulder to shoulder with our employees to fight our way through with them. We did it. We were prepared for this. It was unexpected, but we were prepared for it. We figured out what we needed to do to fight our way through it. And we feel like we’re on the other side of this.
I think the thing I’m most proud of is that when Herb retired, we made this promise to him that we were going to take care of Southwest Airlines, and I feel like our people did that.
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May 28, 2021 at 06:02PM
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Southwest Airlines CEO Gary Kelly on Herb Kelleher, hot pants and how the carrier emerges from the COVID-19 - The Dallas Morning News
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