What’s ahead for Southwest Airlines’ new CEO Bob Jordan
Southwest Airlines’ new CEO, Bob Jordan, has taken on the task of guiding the carrier out of the Covid pandemic after two bruising years.
Jordan, 61, who took the reins Feb. 1, has 34 years of experience working at Southwest, overseeing a host of initiatives including Southwest’s network expansion and the airline’s acquisition of AirTran. His career has spanned paper tickets to mobile boarding passes.
He replaces Gary Kelly, becoming the Dallas airline’s sixth CEO in its five-decade history. Kelly, 66, is staying on as executive chairman after more than 17 years as CEO, completing a succession plan unveiled last June.
Costs and labor pressure
Jordan faces a host of challenges: a profit-crimping surge in expenses from fuel to salaries, strained relationships with labor, hiring struggles, the slow return of business travel, and ensuring the airline doesn’t repeat costly operational meltdowns of 2021.
“Just do the basics right,” said Brett Snyder, a former airline manager who runs the Cranky Flier travel service and website. “Run a good operation. For me, that’s all that matters.”
Southwest has already dialed back its growth plans.
“If we need to, and I’m not predicting we will, we’ll continue to moderate our capacity because we are going to have a reliable operation for customers,” Jordan said in an interview with CNBC on Tuesday.
He estimated that Southwest can’t fly between 35 and 40 of its roughly 730 Boeing 737 planes because it lacks sufficient staffing. The airline is planning to eventually ramp up to a fleet of around 1,000 jets.
Southwest is already trying to address some of its problems, raising minimum wages to $17 from $15 an hour to try to staff up. Jordan has said the airline plans to hire 8,000 people this year, after 5,000 last year, partially the result of losing thousands of workers in the pandemic at the company’s urging, in a bid to cut its labor bill.
Management faces contract talks with unions that represent its pilots and flight attendants. Both groups have complained about fatigue from grueling schedules and being steamrolled by pandemic policy changes.
“I’ve always had a lot of respect for Bob,” said Casey Murray, president of the Southwest Airlines Pilots Association, which represents the company’s more than 9,000 aviators. “We are cautiously optimistic that we’ll see a change in the operation.”
Lyn Montgomery, president of TWU Local 556, the flight attendants’ union, described Jordan as “approachable”
“I hope he’s going to be more of a people person than a number cruncher,” she said.
Southwest posted its first profit of the pandemic without government help in the last quarter. It forecast a first-quarter loss as the omicron variant drove down bookings and sidelined crews, but profits for the rest of the year. Its shares are up 0.9% over the last 12 months, less than some of its closest competitors and far shy of the S&P 500′s more than 20% gain.
Better tech
Jordan said the airline would keep key policies like not charging ticket change fees or for checked baggage.
“There are a lot of things that just aren’t going to change,” he said.
But there are some things Jordan does want to improve. He said the airline will be investing in better technology for both customers and employees.
“We’re going to hire thousands of thousands. Their expectation of how they engage is going to change,” he said. “A lot of that is going to come through an app … so we need to work on our employee experience.”
Travelers are also demanding better technology from reliable onboard Wi-Fi to self-service through smartphone apps.
“We’ll be investing in all of that,” he said.
Promoting from within
Typical of the airline industry, Jordan, who has a bachelor’s degree in computer science and an MBA from Texas A&M University, was a longtime executive promoted to succeed Kelly from within the airline’s executive ranks, as boards typically value industry and company knowledge.
Just a few miles away from Southwest’s Dallas headquarters, in Fort Worth, Texas, longtime American Airlines CEO Doug Parker, who first took the helm of an airline less than two weeks before 9/11, is stepping down at the end of next month, handing the keys over to Robert Isom, the company’s president.
Last year, Southwest’s outgoing CEO, Gary Kelly, recorded a tribute to his DFW-area rival for his retirement called “Friends in High Places,” a parody of “Friends in Low Places” for a lifetime achievement award an industry group gave Parker.
“Gary is an intense competitor and we’ve battled against each other for decades, but he is also a really good person who is hard not to like,” Parker posted on Instagram on Monday.
Leslie Josephs www.cnbc.com