Parker's sudden resignation moves Kelly up

An unexpected shakeup at Southwest Airlines has seen its chief financial officer (CFO) Gary Kelly promoted to chief executive following the surprise retirement of James Parker.

Parker, a 57-year-old labour lawyer, had joined Southwest in 1986 and took on the top job following the June 2001 semi-retirement of Herb Kelleher, Southwest's longtime leader and present board chairman. A low-key personality, Parker had long resisted comparison to the gregarious Kelleher, declining the Texan's publicity-grabbing antics such as arm wrestling with a competitor, or dressing up in a feathered cap and dancing through the airport concourse to publicise new routes.

Parker had also struggled to keep up with Kelleher's flair for staying in touch with Southwest's employees, a flair needed as negotiations with flight attendant unions dragged on for two years. The attendants, represented by the Transport Workers Union, had drawn considerable negative public attention to the pace of talks by handing out leaflets and picketing during Southwest's major expansion at Philadelphia.

Kelleher took over the negotiations personally, achieving a tentative deal within nine weeks. Although Parker insisted that the episode had no bearing on his decision to leave, industry figures, including an executive at a major regional carrier, insist that the re-emergence of Kelleher into day-to-day management was behind his move. Parker would only say that "a combination of things" drove his decision. "That's all in the past and it's time to let somebody else have a turn," he told analysts.

The airline's president Colleen Barrett retains her title and her role as chief morale officer.

Kelly, 49, joined Southwest in 1986, within months of Parker's joining, and became executive vice-president and CFO in June 2001, when Parker was promoted to chief executive. Kelly became a familiar figure to the financial community as he conducted quarterly briefings.

He is credited with devising Southwest's fuel-hedging strategy, which has insulated it from one major source of cost shock. Kelly has also played a key role in Southwest's other cost containment strategies, including its emphasis on passenger-friendly technology. In this, he has been assisted by Laura Wright, the Southwest vice-president for finance and treasurer. Wright will replace Kelly as CFO.

Merrill Lynch analyst Mike Linenberg says that their promotions "underscore the strength and depth of the Southwest 'bench'. As both are well-known and well-respected by the investment community, we think the transition is likely to be smooth and seamless."


Source: Airline Business