Southwest Air founder, Kelleher, yielding reins

He remains chairman

Parker named CEO

Barrett to president Colorful innovator yields Southwest reins

March 20, 2001|By Paul Adams | Paul Adams,SUN STAFF

Southwest Airlines' bourbon-drinking, chain-smoking, Elvis-impersonating chief executive is stepping down after a nearly 30-year career as one of the industry's most colorful and successful innovators.

The no-frills, Dallas-based airline announced yesterday that James Parker, vice president and general counsel, will succeed company founder Herb Kelleher, whose unconventional ways have inspired cult-like loyalty among longtime employees and earned him a reputation as a corporate prankster.

Kelleher, who turned 70 March 12, is to remain as chairman of the board and its executive committee through at least 2003. The management changes are to take effect June 19.

Southwest's board also named Colleen Barrett, currently executive vice president-customers, as president and chief operating officer, making her one of the highest-ranking female executives in the airline industry. Both Barrett, 56, and Parker, 54, have been part of Kelleher's inner circle since they all worked for a San Antonio law firm. Barrett once served as Kelleher's legal secretary before rising through the ranks at Southwest and is credited -- almost as much as Kelleher -- with helping to create a unique corporate culture that emphasizes fun as well as profit.

"We've been walking in Herb's shoes all those many years and it's just going to be a continuation of the same thing," Barrett said.

Industry analysts praised the new management team, but some expressed sadness that Kelleher will be taking a less prominent role within the industry.

"It just won't be the same," said Darryl Jenkins, executive director of George Washington University's Aviation Institute and author of a study on Southwest's business practices. "He has a very unique style of high productivity and low cost that I've seen duplicated only once in the industry, and that was with JetBlue. Other than that, he is pretty singular in the industry."

Since its founding nearly 30 years ago, Southwest has grown from a small regional carrier with three planes to the nation's No. 7 airline, boasting a market capitalization that dwarfs that of its largest rivals. In few places has that growth been felt more than at Baltimore-Washington International Airport, where passenger totals have climbed from 8.8 million when Southwest arrived on the scene in 1993 to nearly 20 million last year. It is the airport's largest and fastest-growing carrier.

Yesterday's announcement ends nearly two years of speculation about a succession plan, which has been widely anticipated since Kelleher was diagnosed with prostate cancer in 1999. Kelleher insisted that his decision was part of an agreement with the board of directors last year and not a result of failing health.

"I feel like a young mustang in the spring," he joked during a conference call with reporters.

"We may not get as many jokes now," said Robert Milmore, an airline analyst with Arnhold & S. Bleichroeder, referring to Kelleher's legendary sense of humor. "Other than that, it's good to get rid of some of the uncertainty" about a successor.

Kelleher brushed aside concerns that his diminished role might result in any change in Southwest's commitment to low fares or its often-copied corporate culture, which is characterized by a casual work environment and generous profit-sharing for employees. Southwest's employees are famous for joking with passengers, and Kelleher has been known to give up his seat on flights and pass out peanuts on occasion.

"I think a lot of people looking in from the outside have seriously underestimated the strength of Southwest Airlines' officer group and the capabilities they have," he said. "I think it's perfectly obvious that I have not been solely responsible for changing the tires on the airplanes or for the corporate culture of the airline."

Employees contacted yesterday expressed relief that the board picked successors from within the company.

"Even though he's kind of our leader, our culture is so intact and our employees are so dedicated to it that we won't skip a beat," said Steve Sisneros, district marketing manager for Southwest in the Baltimore area. The airline employs more than 1,200 at BWI.

Sisneros came face-to-face with Kelleher's legendary memory for names and people early in his six-year career with Southwest. He recalls meeting the chief executive while working in the airline's Dallas headquarters. During their brief conversation, Sisneros mentioned that he had moved to Dallas from St. Louis. Six months later, the two bumped into each other again in the bathroom.

"First thing he said to me was, `Steve, you been back to St. Louis lately?' I was just floored that that myth was reality," he said. "That gift just helps solidify the adoration of his people anywhere in the country. When he comes to an employee function, he is swarmed like a celebrity."

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