A farewell nod to Southwest

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Kelleher steps down as chairman of board, but he's not leaving yet

May 22, 2008|By McClatchy-Tribune

DALLAS - This is an obituary for a guy who hasn't died, a retirement story for a person who hasn't retired, a goodbye for someone who isn't going anywhere.

Chairman Herb Kelleher, 77, chaired his 31st and last Southwest Airlines Co. annual meeting yesterday, ending one of the longest and most colorful tenures for a head of a U.S. airline.

As of today, he's just an ordinary employee of Dallas-based Southwest - if Kelleher can ever be considered ordinary. His $400,000-a-year contract keeps him at Southwest into 2013. It does not state his duties.

And Kelleher says he expects to still be coming to work every day in 2013, when he turns 82.

"I would guess so. I enjoy it. I enjoy work. You can refer to me as a drone, a worker bee. I always have enjoyed it," Kelleher said last week, adding, "I hope I can still be useful."

Kelleher was a 35-year-old San Antonio attorney back in 1966 when a client, businessman Rollin King, brought up the idea of starting an air carrier to fly between major Texas cities.

A year later, King and Kelleher incorporated that airline, Air Southwest, to offer the service. After a four-year legal battle, the renamed Southwest Airlines finally took to the air on June 18, 1971.

If one were to ask Kelleher for the most dangerous period in Southwest's history, he would name the two-year stretch right after its 1971 launch, "when survival was a matter of day-to-day, hand-to-mouth activity on our part."

"There were a lot of things that happened during that time. As you know, we had to sell one of our four airplanes to get enough cash to keep going," Kelleher says.

But for the industry as a whole, Kelleher sees the current period as the most dangerous - and this from an airline veteran who was there during the 1974 oil embargo, the 1979 Iranian revolution, the early 1980s recession, the 1990-91 fuel price spike and national recession and the industry's collapse after the Sept. 11, 2001, terrorist attacks.

The difference now is that oil prices in general and jet fuel prices in particular are putting unprecedented strains on airlines' finances, he said.

"This situation with fuel prices as high as they are obviously is a threat to the entire industry and probably worldwide," Kelleher said. "We've got to find some way to get around it."

Airlines are cutting the number of seats and flights so that they can force fares higher, a prospect that bothers Kelleher "from a philosophical point of view."

"When you increase fares, that means that fewer people will be able to fly," he said. "As far as I'm concerned, that's not a good outcome for the people, but it may be absolutely necessary under these circumstances."

A board member since the airline's inception (except for a brief period in 1975-76), Kelleher took over as executive chairman in March 1978 after Lamar Muse, who had run the airline since before it took off in 1971, lost a boardroom showdown with King. The airline brought in United Airlines Inc. executive Howard Putnam as president and chief executive.

In September 1981, Putnam abruptly left to take over Braniff International, and the board named Kelleher to be interim president and CEO as well as chairman. In February 1982, the board removed the "interim" label and Kelleher had the jobs on a permanent basis.

He kept all three titles until 2001, when - to reduce his workload and begin a leadership transition - longtime assistant and executive Colleen Barrett moved into the president's job, and general counsel Jim Parker became chief executive.

In 2004, chief financial officer Gary Kelly replaced Parker as CEO.

Last year, Southwest announced that Kelleher and Barrett would step down from the board after the annual meeting, and that Barrett would leave the president's job in July. The board named Kelly chairman, and he will assume the president's title when Barrett leaves.

At yesterday's annual meeting, Kelly said he expects Southwest to remain profitable, as it has in every quarter since early 1991, but not as profitable as in the second, third and fourth quarters of last year.

"I would love for Southwest to grow modestly next year and in 2010, but at this point we're not making any announcements," he added. And as for Kelleher?

"Well, I'll still be here at Southwest Airlines," Kelleher said. "I'll be working a normal, full-time schedule. Basically for the last 40 years, I have worked seven-day weeks, at least 12 hours a day. Hopefully, when we make this transition ... I'll have a few weekends off."

He says he expects to be deployed on assignments like his most recent battle to change the Wright amendment, a federal law that restricted flights from Dallas Love Field, as well as on matters involving the Federal Aviation Administration.

"I think Gary will continue to include me in special projects like that," he said, adding with his trademark laugh: "And I'm looking forward to maybe being able to go to the drugstore on Saturdays. Hah, hah, hah, HAH, HAH!"

The Associated Press contributed to this article.

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