DALLAS — Gary Kelly, the chairman and CEO of Dallas-based Southwest Airlines, will step aside early next year after 18 years of leading what has become the largest domestic commercial airline in the country.
Executive Vice President Corporate Services Robert Jordan will become Kelly's successor as CEO effective Feb. 1, 2022.
Kelly will then become Executive Chairman.
“This was not expected," said Henry Harteveldt, president of Atmosphere Research Group. "To wake up and read this is a lightning bolt type of moment for the airline industry, as well as the choice that was made to promote Mr. Jordan into the role of CEO."
But in a statement, Kelly suggested the transition to a new CEO would be seamless.
"On behalf of the Southwest Airlines Board of Directors, I am delighted to announce Bob Jordan as CEO," Kelly said in a statement provided by the airline. "Bob and I have worked side by side for more than 30 years. He is a gifted and experienced executive and well-prepared to take on this important role. Working closely with President Tom Nealon and Chief Operating Officer Mike Van de Ven, we will begin developing transition plans in the coming weeks and months. These three top-notch Leaders make for a powerful team to lead us forward."
The Dallas-based carrier, under Kelly's leadership since 2004, has grown substantially.
Perhaps most notably, Kelly successfully got Congress to repeal the Wright Amendment, which allowed direct commercial flights to Love Field from anywhere in the country.
In 2009, Southwest began flights to New York City. A year later, in 2010, Southwest acquired AirTran for $1.4 billion in hopes of furthering its expansion and opening new routes.
In 2014, the Dallas-based carrier began flights over water to the Bahamas, Jamaica and Aruba.
Five years later, Southwest launched service to Hawaii.
"As CEO, he has guided the airline's transformation through several major initiatives, including the acquisition of AirTran Airways, the repeal of the Wright Amendment, the launch of international destinations for the first time in Southwest's history, the installment of a new reservation system, introduction of a new frequent flyer program, debut of the new Heart brand and livery, initiation of the long-awaited service to Hawaii, and the introduction of the Boeing 737 MAX 8 into the airline's fleet —all while staying true to the Company's core values and People-centric Culture," Southwest said in a statement.
Despite substantial growth and changes under Kelly, Robert Jordan faces challenges in the new role.
“The thing Southwest needs to do is figure out how it can serve more of the U.S.,” Harteveldt explained. "There’s still many communities in the U.S. that lack Southwest Airlines service, and that’s because they need a smaller plane than the 737."
But the airline should also consider how to compete more in Dallas / Fort Worth, Harteveldt said. After the Wright Amendment, Southwest Airlines lost gates at Dallas Love Field and currently uses 18 of the 20 gates there.
Harteveldt said Southwest's new CEO should consider flights to and from smaller airports in Tarrant County, like Alliance or Meacham, to capture more passengers in that part of the region.
“It could do that, and it might be interesting to see it do that because that allows it to bring its great value to the western half of the Metroplex without having to enter DFW," Harteveldt explained. "It certainly increases their market presence and poses that much more of a challenge to American Airlines and the other carriers at DFW.”
But the recovery from the pandemic continues to be paramount for Southwest.
Last year, Southwest Airlines reduced expenditures by about $8 billion and let employees take leave or retire early to reduce costs. 2020 was the first annual net loss for the company since 1972, Kelly said in January within the company's earnings report. But in April, Southwest Airlines was the first major U.S. airline to report a profit since the pandemic started, the Associated Press reported.
As air travel demand begins to rise, airlines are in desperate need of people upfront to cover it. Airlines remain hopeful in the travel demand for the rest of 2021.
Kelly said his biggest source of pride is that Southwest Airlines has never had a single layoff or furlough in the airline's 50-year history.
Kelly's successor, Bob Jordan, joined Southwest in 1988 and has served in multiple positions including Director of Revenue Accounting, Corporate Controller, Vice President Technology, Executive Vice President Corporate Services, among others.
"Most recently, Jordan led the efforts for the Company's voluntary leave and early separation programs, which were key to reducing the airline's labor expenses during the pandemic and instrumental in avoiding layoffs and furlough actions," Southwest said in a news release.
Jordan, in a statement, said he is honored, humbled and excited to serve as the next CEO.
"The Heart of Southwest is our People; they make the difference for our Customers, and I look forward to serving them," Jordan said. "We have a terrific team of Leaders, many of whom I have had the joy of working alongside for decades. I'm looking forward to working with Gary, Mike and Tom on the transition effort and setting up Southwest for the next 50 years of giving Customers the Freedom to Fly."
Kelly's new role of Executive Chairman comes with the hope of serving in that role through at least 2026, at the discretion of the Board of Directors.