3 Execs Leave as Southwest Airlines Faces Challenging Year

Wimberly, Ridley and Carmichael did not respond to phone messages and e-mails requesting comments for this story.

Regardless of why the executives departed, it's clear that Southwest is in a time of transition. The airline posted its 33rd annual profit this month with earnings of $548 million for 2005.

But Kelly warns that the airline faces as much as $600 million in increased fuel costs as hedging contracts expire this year.

And Kelly says the company will need double-digit revenue growth to meet its goal of boosting profit by 15 percent.

Southwest today faces many of the same challenges as traditional hub airlines, consultant Klaskin said. That includes higher labor costs with an older work force and a less-flexible corporate structure that has been built over decades.

"Southwest isn't JetBlue," he said. "They have a lot of the same issues American has."

Boyd said Southwest's management team is keenly aware that the next several years will be difficult.

"You hear all of this glowing press about how great Southwest is doing," he said. "Make no mistake about it, Kelly and his folks don't believe a word of it."

In coming years, Boyd predicted, Southwest will be forced to re-evaluate long-standing practices like not assigning seats and using a single airplane type in its fleet.

Linda Rutherford, the airline's vice president of public relations, acknowledged that Southwest's management style has slowly evolved since 2001, when Kelleher stepped down as president and chief executive.

"For the longest time, we had just one man running everything, and now it's a little more inclusive," she said. "And that was an adjustment."

Under Kelly, previously the chief financial officer, Southwest's longtime drive to contain costs has gotten even stronger, she said.

"Everyone knew that coming from his position as CFO, there was going to be a lot of cost discipline and operations discipline there," she said. "But I think he's done great adjusting to the other parts of his role as CEO."

Kelly said that he works hard to make the airline an attractive place for top executives and that he's aware that rivals would love to snare his top officers.

"We have a hard-work culture, but it's still a place where we like to have fun, where it's very informal," he said, noting that he was wearing jeans and boots that day, as he often does.

He also added that the airline has no shortage of experienced executives to replace anyone who leaves. Southwest has hired just one outside executive in recent years -- Joe Harris, a labor lawyer with a long history of representing Southwest. He has been selected to fill Carmichael's position.

Wimberly's job is being taken by Mike Van de Ven, a 12-year veteran who was most recently senior vice president of planning.

Ridley's position will be taken by Jeff Lamb, who formerly reported to him as a senior director in Southwest's learning and development group.

Given the challenges that are in store, a change in some management positions could be a positive, Boyd said.

"This is why if you're an airline, the most dangerous competitor in the country is Southwest," he said.

Klaskin adds that Southwest is well-positioned to ride out the storm.

"The thing you have to remember about Southwest is they have tremendous bench strength," he said.

Rutherford agreed.

"Things here are a lot like a family, where you're not going to just pick up and move on to something else unless there is someone ready to move into your leadership position," Rutherford said. "And that's the case now."

Fort Worth Star Telegram

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