Southwest Airways will mark the fiftieth anniversary of its first flight in June, remodeling from a scrappy intrastate airline into the most important home provider within the nation.
CEO Gary Kelly, who has been CEO since 2006, talked with The Dallas Morning Information about how the COVID-19 pandemic was the best problem within the firm’s historical past, the way forward for aviation and what makes Southwest’s popularity so sturdy when different airways are continually ridiculed.
This interview has been edited for size and readability.
As Southwest approaches 50 years since its first flight in 1971, what are your first reminiscences of the airline?
I grew up as a lifelong Texan. My first flight in my life was on Southwest within the fall of 1972. I flew as a university recruit from San Antonio to Houston. I had by no means flown on a airplane earlier than. So my first journey was a couple of yr after Southwest began. There was me and two different children going to Rice (College in Houston) for a university go to.
I keep in mind there have been two flight attendants in scorching pants, and again then all of us most likely thought it was numerous enjoyable and had numerous character, however truthfully, I didn’t know if this airline would survive.
You talked about that quirky perspective and Southwest, regardless of being the most important home airline, nonetheless has that underdog mentality. How has that been maintained?
In these days, the expertise simply felt so totally different from different airways. Within the late ’70s, I traveled lots in my job and traveled on different airways moreover Southwest. With the open seating and a really casual ticketing course of, the staff simply had character; they had been very pleasant. They appeared very completely satisfied and cherished to listen to jokes. You might inform they had been investing effort to make the flying expertise a pleasing one.
And Southwest had a really distinctive route system. I considered it as an intra-Texas airline within the late ‘70s, which in fact it was at that time. And so I feel it’s that maverick spirit and the character and the will to make a human reference to, with one another as staff and with prospects. It’s very a lot in a part of the DNA and the soul of the corporate.
And the truth that we nonetheless fly one plane sort. It was simply type of an underdog mentality in these days, and I feel that that serves as effectively even in modern instances. Though we’ve turn into the most important airline within the nation. There’s brutal competitors and I feel our individuals perceive it. There’s all the time anyone making an attempt to knock us off. So resilience assembly challenges positively run by means of the DNA of the corporate.
How a lot of that DNA comes from the leaders like Herb Kelleher and Colleen Barrett, who led the corporate for thus lengthy?
They deserve the lion’s share of the credit score for that. If you ask about reflecting on the fiftieth, you consider our ancestors and the individuals who began the airline, the unique staff and what they needed to do. There’s an actual appreciation for the historical past of the corporate and the individuals who constructed it.
Herb wasn’t the primary CEO and Colleen wasn’t an worker till the late ’70s. So that they weren’t right here, in that sense, within the very starting, however they had been very concerned from the very starting. Herb was a co-founder, he was the overall counsel and he was in authorized battles to get the airline launched again in 1971. However he was CEO for 20 years after which chairman for 30 years. Even after he retired in 2008, he continued to be a really important and visual presence round Southwest. Lamar Muse (Southwest’s first president) deserves numerous credit score for getting the airline began, however I feel Herb and Colleen very a lot deserved credit score for establishing the tradition in the best way that we all know it as we speak, persevering with to construct on what was began in 1971.
We’re very indebted to each of them.
You got here within the mid-’80s. What had been your first reminiscences of Herb?
I began in ’86 and the corporate was 15 years outdated. Southwest was a consumer of mine with the agency that I labored at, Arthur, Younger & Co. And so I knew from my associates inside Arthur Younger what an amazing firm Southwest was. I used to be employed as comptroller in 1986. I used to be younger and it was an officer place for a Fortune 500 firm and I used to be simply delighted on the alternative.
He (Kelleher) was bigger than life, even then. He was already very effectively established and Southwest was a raging success within the Eighties. The chance to work for anyone actually so proficient, like Herb, and really totally different from regular enterprise executives, was only a actual thrill. He stored us laughing. And he had an enormous ardour for Southwest Airways and a really deep understanding of the enterprise.
The early days for me it was identical to ingesting out of a firehose as a result of I used to be brand-new to the airline trade and brand-new to his and Colleen’s management fashion. I simply tried to soak it up like a sponge. I used to be a convert early on.
What was that management fashion like? You got here from an accounting agency, which was most likely very orthodox.
They name it work for a cause. I feel all of us anticipate that folks will work laborious, however you may take pleasure in your self. You possibly can nonetheless have a humorousness. Each firm says these items, however Southwest was an organization that really handled individuals with dignity and respect.
And there was an informality to it that wasn’t simply targeted on titles.
Anyone within the firm was welcome to share their opinion and views and recommendations. The involvement of front-line staff was key.
Some corporations can have a seriousness about them, a stuffiness, a formality. It simply didn’t really feel that approach in any respect at Southwest. There have been numerous alternatives to develop, and all of that made the setting actually, actually thrilling as effectively. And then you definately couple that with the truth that we had been good at what we had been doing. We made cash. We didn’t have a layoff. We had nice customer support. The airline operations was excellent.
There was only a perception in what we do. And that was very charming then, and it nonetheless is as we speak.
Different airways have had numerous time to repeat and determine what Southwest does. What do you assume nonetheless units Southwest aside?
Folks prefer to simplify maybe a bit an excessive amount of and so they’ll seize on one factor. “Oh, effectively. The particular factor about Southwest is one airplane sort or the particular factor about Southwest is open seating” or no matter it is likely to be.
And it’s actual. The facility is within the sum of all of these attributes. Through the years, the knowledge has been what string do you pull in order that the entire doesn’t unravel. Nobody is like Southwest. We like to say we’re in a class of 1, and that’s actually true.
Once more, this goes again to Herb and Colleen with placing individuals first, placing our staff first and caring for them first. In case you do all of these issues, you empower your individuals to establish the correct issues and remedy them in the correct approach.
And people issues could be challenged now and again, prefer it’s like open seating versus assigned seating. We’re most likely the one massive airline left on the earth that doesn’t assign seats. Perhaps sometime we are going to, however it actually gained’t be whereas I’m CEO.
However there’s extra to Southwest than open seating, and I feel lots of people miss that. And the truth that over 50 years we’ve by no means had a furlough, we’ve by no means had a layoff, we’ve by no means had a pay minimize in an trade that’s infamous for failure, I feel says all of it.
It’s fairly exceptional that we’ve made it 50 years. I don’t know that there’s a 50-year-old firm, apart from Southwest, that may make that declare.
How do staff handle to remain optimistic?
They’re resilient. Those who work within the airways are fairly particular as a result of there are numerous challenges. There are numerous dangers to handle.
And each flight is just not completely on time. Some flights get canceled. I do assume numerous our staff are energized by the chance to assist prospects remedy their issues. Fairly than contemplating that to be a burden, they actually take a look at it as a chance or a privilege to maintain individuals. And so they simply go the additional mile.
In the course of the early months of the pandemic, what was going by means of your thoughts by way of what might need to occur for Southwest to outlive?
The very first thing is, I simply need to admit is that they had been very darkish days. And I distinctly keep in mind when the site visitors began plunging, there was a despair and it was disbelief. How can this be taking place? Definitely no fault of ours, no fault of any firm in the USA for that matter, all over the world. However it occurred. So that you rapidly come to grips with the truth that we’ve received stuff to do. And also you make your to-do record and also you imagine that we’re going to get by means of this.
We had a lot momentum coming into 2020 that there was simply very sturdy and extensively held perception that our world will defeat this pandemic and ‘this too shall cross.’
It’s simply not going to be immediate gratification, and I feel that was the primary factor that I needed to come to grips with and I needed to persuade the remainder of the corporate was that we’re in uncharted waters, we’re going to take one step at a time and we’re going to do all the things we are able to to protect individuals’s jobs.
And also you quick ahead now 14 months later and we completed that. Not one job was misplaced. It was messy. It’ll be messy popping out of this pandemic as effectively.
How would you examine how robust this recession or this downturn was financially for the corporate to different downturns?
There was nothing prefer it. We haven’t misplaced cash since that first yr that I flew on Southwest, 1972.
And we had a revenue string starting in 1973 that went right through 2019 after which 2020 was a whopper.
We misplaced $3.5 billion final yr for those who exclude the federal government assist that we received. And I ought to add rapidly that we might be in a really totally different place, as a rustic and positively as an trade, if it weren’t for the federal authorities stepping in with the CARES Act and the successive stimulus invoice. It’s akin to combating World Struggle II and also you simply have to drag out all of the stops to win the battle and that’s what our nation needed to do with this pandemic.
Some days you had actually empty airplanes flying round in April of 2020 as a result of the demand is so weak. We’d misplaced 98% of our enterprise and we weren’t near chopping 98% of our prices. So the losses had been staggering and unsustainable. It’s by far the most important problem the corporate’s ever confronted.
What are the most important challenges that Southwest and the airline trade will face over the following 50 years?
The large problem is to handle local weather, and our trade has a aim of net-zero carbon emissions by 2050, which could be very formidable, however it’s an achievable aim.
It’s going to need to be a partnership between the airline trade, the aerospace trade and governments all over the world. We’ll want technological breakthroughs.
I feel it’s achievable. Will probably be identical to placing a person on the moon 52 years in the past — it’s going to require authorities funding and focus. And I feel the world is as much as the duty right here.
As you’ve confronted this disaster during the last yr and a half, have you ever had a lot time to consider your position as a steward over this model and what you’ve been in a position to accomplish?
I’m proud to be part of Southwest Airways. The older I get, the extra I respect that. Subsequent yr it’ll be 36 years for me and half of my life at Southwest as of subsequent yr will likely be as CEO, which is type of laborious to imagine. I’m glad that I used to be right here to work shoulder to shoulder with our staff to combat our approach by means of with them. We did it. We had been ready for this. It was sudden, however we had been ready for it. We found out what we would have liked to do to combat our approach by means of it. And we really feel like we’re on the opposite facet of this.
I feel the factor I’m most pleased with is that when Herb retired, we made this promise to him that we had been going to maintain Southwest Airways, and I really feel like our individuals did that.