After a meltdown The airline may have to cancel 16,700 flights as a result. more than $800 millionThe blame lies with an outdated crew scheduling system, and an unorthodox point-to-point routing network. Southwest The US was ravaged by severe weather that left the country in chaos.
Behind these specific issues lies an insular management The team is criticized for lacking the technology and imagination to prevent such crises. While bootstrapping is a good idea, culture Herb Kelleher was the co-founder. Southwest into one of the nation’s largest carriers, the size of the company now demands new ways of thinking and investment in innovation.
“It makes you wonder if there isn’t sort of a correlation or cause and effect here, where you’ve got a fairly entrenched, stagnant board, a grow-your-own leadership team since it was a very small, scrappy airline,” Keith MeyerGlobal leader in the board and CEO practice of executive search firm Allegis Partners. “A founder-based culture can only take it so far.”
Southwest It is full of people who are living the dream. Bob Jordan was with the airline for over 34 years. While the communications chief and chief financial officer have had a combined 30 years of experience, chief commercial and chief law officers have had at most 20. This is the closest thing to being a novice among them. Southwest’s top management Andrew Watterson might be the Chief Operating Officer. He joined from Hawaiian a decade earlier. Airlines.
Jordan doesn’t see it Problem.
“We’ve always been proud of the fact we’ve developed leaders here and that we have folks with so much tenure,” In an interview, he stated these words. “They have a very deep airline knowledge, functional knowledge and very deep relationship that serves you well in normal times and when you get into an incident like this.”
Southwest isn’t alone in recruiting from within. American Airlines Group Inc.’s top leadership had been together since the mid-1990s, first at America West AirlinesUS Airways, before it was merged with American. When Scott Kirby, a United Airways employee, moved to United, the group began to split. Airlines Holdings Inc. was founded in 2016, and the CEO later joined.
“The aviation industry more broadly has been a bit of a laggard experimenting with executives from outside, let alone their boards,” Jason Hanold is the CEO and founder of Hanold Associates, an executive search company.
However Southwest It is in a rare position with both the advantages of a large carrier and the mentality of a small airline.
Since 1971 when it began to fly between Texas cities, the airline has become a major player in domestic travel. The airline’s expansion has complicated its operations.itSimple business models and the resulting cost pressures it Often can’t offer the cheapest fares.
The airline’s focus on stretching every dollar has also made it more conservative than other carriers in a highly regulated, safety-focused industry that rewards consistency, said Samuel Engel, senior vice president for innovation at ICF, and former head of the consultant’s aviation group. Because of this, it relies more heavily on the insiders. “the continued belief that Southwest is different.”
Southwest’s 13-member board has an average tenure of nearly 12 years, compared with about six and a half at Delta Air Lines Inc. and American and five and a half at United, which agreed to a board revamp in 2016 at the behest of activist investors. None Southwest’s directors has a background in tech.
Long-standing problems with the carrier’s slow adoption of new technology have meant that it spent decades implementing new reservations systems and maintaining its operations. It’s now spending $2 billion to improve a balky Wi-Fi system, add power ports at seats and install larger overhead bins.
“Southwest is the largest domestic airline in the US and it should start behaving that way,” Helane Becker was an analyst for Cowen Inc. “There are probably a lot of smart technology people who are getting laid off from tech companies that could help it out.”
Southwest The company acknowledged that they had not made any improvements to the crew scheduling system, in spite of complaints from flight attendants and pilots. Watterson described the system as its “Achilles’ heel” The December breakdown.
According to the airline, it’s looking at every aspect of operations to find what produced the meltdownExpectations are high for “swiftly” To draw conclusions. It hasn’t said how many passengers were affected, but the company is reimbursing travelers for canceled flights and hotels, meals and other related expenses.
Its share has fallen slightly in the wake of the travel scandal, even though the wider market has grown. Southwest The 2022 performance of the largest US airlines was the worst, with 21% falling. The reputational damage may lead to more volatility, and its shares will underperform the S&P 500 Index by 5% over the next two months, according to Nir Kossovsky, CEO of reputation risk insurer Steel City Re.
Jordan said he’s committed to getting the company back on track, regardless of what it takes.
“We have a 51-year history of doing really well, operating really well,” He said. “This one event, which is significant, won’t define us.”
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