Southwest’s incoming CEO faces challenges
Jordan identifies areas that could be improved
DALLAS – Robert Jordan will inherit a long list of challenges when he becomes the sixth CEO of Southwest Airlines, which is struggling to recover from a pandemic that battered its finances and left it a much smaller company.
Southwest had never lost money over an entire year in its half-century history until 2020, when it lost $3 billion. The Dallas-based carrier is likely to have finished 2021 in the black – it will report results later this month – thanks to more than $1.1 billion in federal pandemic relief.
After thousands of employees left in 2020, staffing shortages contributed to high numbers of canceled and delayed flights on Southwest last summer and again in October. The airline is now on a hiring spree to catch up.
Jordan joined Southwest in 1988 and rose through a series of finance and strategy jobs, including overseeing the $1.4 billion acquisition of AirTran Airways in 2011. In June, Southwest announced that Jordan would succeed Gary Kelly, who is retiring as CEO on Feb. 1 after 17 years leading the airline.
Jordan talked to The Associated Press shortly before Christmas about those flight disruptions, whether Southwest will charge for checking bags, and what kind of legacy he wants to leave. The comments have been edited for length.
Question: You’ve got your work cut out for you. What are you going to focus on first?
Answer: The company is not broken, but … I think there are some things that we can do to – I’ve used the word modernize. I don’t know if that’s a good word or not because it’s not like we’re behind, but I do think we need to work on, for example, our operational tools. I don’t know that (employees) have all the tools to manage the complex company that we are.
Q: Do you mean the way that you reschedule passengers and crews?
A: It could be a whole variety of things. When you’re in irregular operations (such as cancellations and delays caused by weather or other factors), I’ve got aircraft out of place and customers out of place, and this aircraft needs to end up in that maintenance base. There are probably tools that we can use to more quickly notice problems and provide solutions.
Q: What else?
A: I think we have a terrific customer experience. But (I) think about things like, is our Wi-Fi as reliable as it needs to be? I’m not sure that it is. Do we need to think about things like whether power (outlets for passengers) on the aircraft are important? Can you do everything that you need to do as a customer to self-serve for yourself on your phone? Am I going to drastically change the airline? I don’t think so, but I do think that there are areas that we can improve.
Q: What about bag fees, change fees and your open-seating system? Any changes coming?
A: No. We’re known for doing things that make sense for our customers. No bag fees, no change fees make perfect sense. It’s very hard for me to imagine that we would go to assigned seating. There is absolutely no work on rethinking any of those things. But I do put (assigned seating) sort of in the never-saynever bucket.
Q: You are hiring. How long until you’re fully staffed?
A: We were hiring about 5,000 this fall, and if you remember, we had about 5,000 that took early retirement (in 2020 and 2021), so we’re making really good progress. It is harder than normal. We get plenty of applications, we just don’t get as many applications for open jobs as we used to. We’re hiring even more in 2022, which is why I suspect it takes into the summer to get caught up here.
Q: What’s happening to wages?
A: The market for wages is moved and it feels like it’s continuing to move. I don’t know if there is a such thing as a minimum wage anymore because there is a market wage. It feels like $15 (an hour) has become $18 and $18 may (become) $20. It’s hard to know is when you equalize and when that stops. I think you’re going to continue to see wage pressure for a while.
Q: What will 2022 be like for the airline industry?
A: I think we all wished that ’21 was the transition year and ’22 was back to normal, and it’s just clear that ’22 is going to continue to be a year of continued transition. You’ve got staffing questions, just the whole hiring market that everybody’s dealing with. You’ve got continued supply-chain issues. You have the pandemic, which we all hope moves to endemic here at some point. It’s going to make predicting the business and the schedule a little choppy.
Q: What does that mean for the company?
A: The (last) 21 months have been tough on people, so I want 2022 to be a year where we really invest in our employees, love on our employees, and then get back to being consistently profitable. I’m not arguing (Southwest will be profitable) at the levels that we need long term – I think it’s going to take a little while to get there – but we’ve got to get back to sustained profitability versus off-and-on profitability.
Q: How will you be different or similar to Gary Kelly?
A: I think we’re similar when it comes to how we think through problems and process things. We’re both analytical, we’re both data-driven. I’ve got a high bias for action. That’s good and it’s bad – it can be both. I probably am faster to want to get to an answer and need to probably focus on collaboration, where Gary is highly collaborative. Gary is a people person, I’m probably even more of a people person. I’d spend the whole day wandering the halls, talking to people or being in the stations.
Q: What kind of mark, what legacy do you want to leave as CEO?
A: I’ve never been a career-aspiration type person or especially a title-aspiration person. I’ve just had a lot of opportunity and just moved along and loved every job that I’ve had. I never dreamed that this would be an opportunity. Whenever I leave, there would be no better than two things: One would be that our employees can look back and say that they feel fulfilled, that they love Southwest Airlines. They love that they’ve been able to have a career here that has been good for them and good for their families. And then second … being known as somebody that just did a good job developing others, building good teams. So it isn’t anything about profits or customer experience or any of those things. I think they come along.