- Former Southwest Airlines exec Bob Jordan took the helm as new CEO this week, replacing Gary Kelly.
- Aviation analysts and consultants shared what Jordan should focus on in his first 100 days.
- Experts said rising costs, labor supply issues, and workplace culture are key areas for Jordan.
After a turbulent two years for the airline industry, Southwest Airlines’ new CEO, Bob Jordan, is hoping to pilot the company into smoother skis. On Tuesday, Jordan, who’s been with the company for over 33 years and was most recently the vice president of corporate services, replaced outgoing CEO Gary Kelly. Kelly is now the executive chairman, ending his more than 17-year tenure as the company’s leader.
Like its competitors, Southwest Airlines is left to recoup after a difficult pandemic season. Its stock is down approximately 17% compared to five years ago. Insider asked airline industry veterans and analysts where Jordan should invest the most energy in his first 100 days.
“Bob shouldn’t do anything dramatic nor will he, because Southwest is a good, fine, operating machine. It runs effectively very well,” David Banmiller, a veteran airline executive with over 50 years of crisis management in the industry, told Insider .
Hiring and retaining workers
The pandemic hit the airline industry hard. Many flight attendants, pilots, and staff were concerned about contracting COVID-19 or were exhausted from dealing with unruly passengers who refused to wear face masks, per reports.
Jordan will have to address this need for workers head-on, analysts said. The CEO has said the airline plans to hire 8,000 people this year, and to attract talent, the company is raising minimum wages to $17 from $15 per hour, which is higher than other airline minimum wages, according to Payscale data.
Nawal Taneja, an airline industry consultant who’s written over 13 books on the industry, said that raising wages for workers is a good start, but increased salaries alone “just isn’t going to do it.”
“There has to be a focus on engagement, not with just customers, but also employees,” Taneja told Insider. “Leaders need to figure out what do employees want from their employer?”
Taneja shared examples of problems airlines face that impact productivity, like a flight attendant saying they can’t come into work because their child has COVID-19, or a pilot being delayed due to traffic to the airport. He suggested Jordan and other airline CEOs consult their employees more and consider questions like “Do they need backup child care benefits or flexibility with their work schedules?” and “Do they need better transportation to the airport?”
Offsetting rising costs of fuel and technology
Inflated prices of fuel, maintenance, and airport fees mean that Southwest must figure out how to offset those costs “without alienating customers who rely on their low fares,” said Helane Becker, a managing director and senior research analyst at financial-services firm Cowen . Indeed, Southwest’s December 2021 Investor Day presentation listed low fares among the company’s most important principles.
There are also increased costs associated with expanding into international markets. For one thing, Jones said, “they’re going to have to buy bigger airplanes.” Historically, Southwest has operated only Boeing 737s, which was a way to save money because the company could tailor both training and maintenance to one type of aircraft. Not to mention, Southwest will have to start training its pilots and mechanics differently to fly larger aircraft.
Airline veteran consultant Banmiller agreed, saying “cost control” would be high on his list if he were advising Jordan. He said Jordan should take a close look at the impact of inflation on costs, and re-negotiate “non-fuel” expenses like airplane leases and airport fees with contractors.
Maintaining an employee-first culture
Southwest is known for its unique culture, one that Lewis University dean and associate professor of aviation and transportation studies Robert “R.” Eric Jones called “employee-centric.” (Jones spent 15 years as a maintenance technician at Southwest.) “Fun” and “family” were always at the core of how Southwest operated, Jones said.
Jordan’s biggest challenge will be maintaining that culture even as the company tries to compete with large legacy airlines like Delta and United. It’s similar to the problem many startups face when they start to scale and there are simply more people and processes to manage. “The bigger that you get, the harder it is to control that culture,” Jones said.
Another challenge to Southwest’s workplace culture is executives’ recent decision to lift its two-year ban on alcohol sales aboard planes. Lyn Montgomery, president of TWU Local 556 which represents Southwest’s flight attendants, told Insider that the union is “outraged” at the resumption of alcohol sales on board, saying it was “unsafe and irresponsible.”