THE MORNING RANT - Herb Kelleher’s Prophecy Fulfilled: “The biggest threat to Southwest Airlines will come from within, not from other airlines”

While I don’t currently know anyone working for Southwest Airlines, several people I’m close to worked for another of the major airlines in the years before and after its bankruptcy. Based on what I saw at that other airline, Southwest regrettably followed a similar path.

The airline business requires a tremendous level of human staffing that cannot be replaced by machines - from gate agents, to flight attendants, to mechanics, to pilots, and many others behind the scenes. The necessity of such staffing, and the need to retain and adequately compensate these critical employees, is a source of great frustration to the elite business school graduates who get into executive positions and lament the tremendous labor expense required to run an airline.

Obsessed with expense reduction, and oblivious to the incentives (and disincentives) they are creating, staffing is stretched to the breaking point with brutal schedules and short layovers. Equipment gets scheduled with no margin for error, and because of the obsession with cost reduction, backup staff and equipment are not readily available.

Loyalty is a reciprocal thing, and when executives make it clear that they think of employees as their greatest (and most annoying) expense rather than their greatest asset, employees lose respect for and loyalty to those running the company. It’s hard for elite business school graduates to understand, but when they take actions to make employees “more productive,” especially if there are no corresponding reductions in impediments to efficiency, they are quite likely incentivizing higher absenteeism.

Southwest used to have fanatically loyal employees who were supported by a CEO (Herb Kelleher) and executives who exhibited reciprocal loyalty to the employees. Those days are long over. Under the current regime, Southwest has incentivized operational breakdowns and absenteeism, and it’s getting a whole lot of it.

Bloomberg confirmed the validity of this SW Airlines memo from the VP of Ground Operations, dated December 21, 2022, which was just before the Christmas cold blast that hit the country so hard.

Listen to some of this adversarial language:

…we will direct Employees alleging illness to provide a doctor’s note on the first day to return…

Failure to comply will be considered insubordination and abuse of sick leave which will result in your termination.

Given the emergency and the need to have a heightened verification of illness, Telemedicine or Telehealth doctor notes will not be accepted…

…the Company will deny requests for reported personal absence…

Failure to comply will be considered insubordination which will result in termination.

”Due to the emergency…we will use mandatory overtime regardless of the employee’s status.

…failure to comply will be considered insubordination which will result in termination.

When the only tool you have is a hammer…

Here is the memo:

Speaking only for myself, I was not able to even get in to my doctor’s office when I was dealing with flu and bronchitis this past Fall. I could only talk to my doctor by Zoom. As an alternative I could visit a “minute clinic,” except they had no open appointments for several days. I’m guessing if it was that hard for me to see a doctor, there were plenty of Southwest Airlines employees who couldn’t get in to have a face-to-face appointment with their doctors. Were they all fired? That’ll improve operations, won’t it?

Then there’s this story:

Southwest scrambles to fill key staff shortages with HQ workers, memo reveals [NY Post – 12/29/2022]

“Southwest Airlines resorted to drastic measures in an attempt to get its planes off the ground, pushing corporate workers to pick up shifts as schedulers.

Southwest told Insider that the corporate employees who volunteer for the shifts would be trained by crew schedulers in a “train the trainer” approach.”

This debacle is just a monumental failure by the Southwest executive team.

Here is a fascinating analysis from Southwest pilot Larry Lonero that he put on his Facebook page 5 days ago.

What happened to Southwest Airlines?

I’ve been a pilot for Southwest Airlines for over 35 years. I’ve given my heart and soul to Southwest Airlines during those years. And quite honestly Southwest Airlines has given its heart and soul to me and my family.

Many of you have asked what caused this epic meltdown. Unfortunately, the frontline employees have been watching this meltdown coming like a slow-motion train wreck for sometime. And we’ve been begging our leadership to make much needed changes in order to avoid it. What happened yesterday started two decades ago.

Herb Kelleher was the brilliant CEO of SWA until 2004. He was a very operationally oriented leader. Herb spent lots of time on the front line. He always had his pulse on the day-to-day operation and the people who ran it. That philosophy flowed down through the ranks of leadership to the front-line managers. We were a tight operation from top to bottom. We had tools, leadership and employee buy-in. Everything that was needed to run a first-class operation. When Herb retired in 2004 Gary Kelly became the new CEO.

Gary was an accountant by education and his style leading Southwest Airlines became more focused on finances and less on operations. He did not spend much time on the front lines. He didn’t engage front line employees much. When the CEO doesn’t get out in the trenches then neither do the lower levels of leadership.

Gary named another accountant to be Chief Operating Officer (the person responsible for day-to-day operations). The new COO had little or no operational background. This trickled down through the lower levels of leadership, as well.

They all disengaged the operation, disengaged the employees and focused more on Return on Investment, stock buybacks and Wall Street. This approach worked for Gary’s first 8 years because we were still riding the strong wave that Herb had built.

But as time went on the operation began to deteriorate. There was little investment in upgrading technology (after all, how do you measure the return on investing in infrastructure?) or the tools we needed to operate efficiently and consistently. As the frontline employees began to see the deterioration in our operation we began to warn our leadership. We educated them, we informed them and we made suggestions to them. But to no avail. The focus was on finances not operations. As we saw more and more deterioration in our operation our asks turned to pleas. Our pleas turned to dire warnings. But they went unheeded. After all, the stock price was up so what could be wrong?

We were a motivated, willing and proud employee group wanting to serve our customers and uphold the tradition of our beloved airline, the airline we built and the airline that the traveling public grew to cheer for and luv. But we were watching in frustration and disbelief as our once amazing airline was becoming a house of cards.

A half dozen small scale meltdowns occurred during the mid to late 2010’s. With each mini meltdown Leadership continued to ignore the pleas and warnings of the employees in the trenches. We were still operating with 1990’s technology. We didn’t have the tools we needed on the line to operate the sophisticated and large airline we had become. We could see that the wheels were about ready to fall off the bus. But no one in leadership would heed our pleas.
When COVID happened SWA scaled back considerably (as did all of the airlines) for about two years. This helped conceal the serious problems in technology, infrastructure and staffing that were occurring and being ignored. But as we ramped back up the lack of attention to the operation was waiting to show its ugly head.

Gary Kelly retired as CEO in early 2022. Bob Jordan was named CEO. He was a more operationally oriented leader. He replaced our Chief Operating Officer with a very smart man and they announced their priority would be to upgrade our airline’s technology and provide the frontline employees the operational tools we needed to care for our customers and employees. Finally, someone acknowledged the elephant in the room.

But two decades of neglect takes several years to overcome. And, unfortunately to our horror, our house of cards came tumbling down this week as a routine winter storm broke our 1990’s operating system.

The frontline employees were ready and on station. We were properly staffed. We were at the airports. Hell, we were ON the airplanes. But our antiquated software systems failed coupled with a decades old system of having to manage 20,000 frontline employees by phone calls. No automation had been developed to run this sophisticated machine.

We had a routine winter storm across the Midwest last Thursday. A larger than normal number flights were cancelled as a result. But what should have been one minor inconvenient day of travel turned into this nightmare. After all, American, United, Delta and the other airlines operated with only minor flight disruptions.

The two decades of neglect by SWA leadership caused the airline to lose track of all its crews. ALL of us. We were there. With our customers. At the jet. Ready to go. But there was no way to assign us. To confirm us. To release us to fly the flight. And we watched as our customers got stranded without their luggage missing their Christmas holiday.

I believe that our new CEO Bob Jordan inherited a MESS. This meltdown was not his failure but the failure of those before him. I believe he has the right priorities. But it will take time to right this ship. A few years at a minimum. Old leaders need to be replaced. Operationally oriented managers need to be brought in. I hope and pray Bob can execute on his promises to fix our once proud airline. Time will tell.

It’s been a punch in the gut for us frontline employees. We care for the traveling public. We have spent our entire careers serving you. Safely. Efficiently. With luv and pride. We are horrified. We are sorry. We are sorry for the chaos, inconvenience and frustration our airline caused you. We are angry. We are embarrassed. We are sad. Like you, the traveling public, we have been let down by our own leaders.

Herb once said the biggest threat to Southwest Airlines will come from within. Not from other airlines. What a visionary he was. I miss Herb now more than ever.

I was a Southwest Airlines super-fan throughout the Kelleher era, and for some time beyond his retirement. It’s tragic what has become of that once great company. Perhaps this will be a wake-up call, and operational experts will take over again.

(buck.throckmorton at protonmail dot com)

posted by Buck Throckmorton at 11:00 AM

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