Alaska Airlines' Chief Riding Out the Turbulence

Bill Ayer has weathered a reorganization, safety worries and economic challenges, but he feels the worst has passed and customer loyalty will keep his company on top.

Bill Ayer has weathered a reorganization, safety worries and economic challenges, but he feels the worst has passed and customer loyalty will keep his company on top.

Alaska Airlines Chairman Bill Ayer spent an hour fielding questions about operational mishaps, flight delays, laid-off ramp workers and pay cuts for pilots.

Then, asked how he's enjoyed leading the Seattle-based airline since 2003, Ayer laughed. Hard.

"You know what? We've got a great team," he said during a one-on-one interview Monday, flashing the tired but relieved smile of a man who believes he's put a crisis behind him. "We are faced with a challenge, and I think everyone really has stepped up to the challenge."

Ayer has reason to be upbeat. Alaska earned $55 million in 2005, making it the second-most profitable U.S. airline behind Southwest.

Yet since Christmas, a rash of problems in the air and on the ground has put Alaska's operations, and Ayer's leadership, under a microscope.

In the interview, Ayer defended the company's decision last May to lay off 472 union workers and hire Menzies Aviation to handle its ground operations at Sea-Tac Airport. He acknowledged the timing of the switch was lousy, and that nine months later Menzies continues to have trouble hiring and retaining enough qualified people.

Ayer also said Alaska's investigation into last month's spate of five pressurization-system problems within 10 days has found no connections among the events, calling them a "coincidence."

He is not happy that Alaska finished last in on-time performance in 2005, and admitted it's been a "bumpy road" as Alaska has tried to make changes to remain profitable.

But he is optimistic that, for passengers and employees alike, the worst is over.

"It's been hard on everybody. It's been a lot of work," he said. "We're all looking forward to things settling down here a bit, and I think that's coming."

Trying times

Perched on the edge of an armchair in his large but simple office overlooking Angle Lake Park in Sea-Tac, Ayer is by turns stern, conciliatory and enthusiastic.

Tanned from a recent ski trip to Colorado, he exudes energy and, at 51, looks younger than his age.

Yet the challenges have been relentless during Ayer's time in Alaska's executive suites.

He was president when Flight 261 crashed off the coast of California in 2000; became CEO three months after the Sept. 11 attacks, and rose to chairman in May 2003, just before fuel prices began a two-year climb to crippling record highs.

Ayer has worked in the airline industry without interruption since 1978, when he finished his M.B.A. at the University of Washington. He has been in the Alaska Air Group family since 1982, when he joined the operations staff at Horizon Air. (Horizon Air and Alaska Airlines are subsidiaries of Alaska Air Group).

As he prepared to succeed John Kelly as chairman in May 2003, Ayer realized that Alaska had reached a critical inflection point.

"We looked at the landscape about three years ago now, and said the track we're on, the track the industry is on, is not a viable one," he said. "What we need to do is figure out how we change our business plan to be successful."

The answer was complicated.

If Alaska wanted to keep pace with the likes of Southwest and offer the lowest possible fares, its costs would have to be cut dramatically.

Yet Alaska's growth to that point, and the fierce loyalty of its frequent fliers, were largely due to its reputation for superior customer service.

"We know that our employees, our people, are the critical differentiator. They are the only long-term, sustainable competitive advantage we're ever going to have," Ayer said.

"The challenge that we have here, on the leadership side, is to make changes that will ensure our viability and long-term success, and do it in a way that keeps people engaged and maintains that [customer service] difference in the marketplace."

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