Speeches and Presentations from Southwest Leaders
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Southwest Airlines CEO Gary Kelly addressed a packed room this week at Northeastern University. The group was settled and tuned in to hear about the tumultuous airline industry and instead, Kelly kicked things off in true Southwest Airlines form. Kelly joked with the crowd, proclaiming he was a Boston Red Sox fan. "As a Texas native, you know I had to go looking outside Dallas to find a winning team to root for."
All joking aside Kelly addressed the ebbs and flows of the frenetic airline industry. With more U.S. airlines operating under bankruptcy protection, Southwest Airlines CEO Gary Kelly said Thursday his carrier will have to keep its manic focus on costs in order to maintain its low fares.
"We will have to fight harder to keep fares low and we will have to fight harder to keep up the excellent Customer Service we offer," he told a group of educators and business leaders in Boston at the Northeastern University CEO Breakfast series. "The good news, is that I don't believe the bankruptcy process in and of itself will erode Southwest's cost advantage over its competitors."
Kelly said that despite United Airlines’ bankruptcy, lower cost structure, and lower wage rates, its costs are still 40 percent higher than Southwest's. Southwest will likely be the only major airline to report a profit in the third quarter, he said.
Southwest is poised to put 2005 in the profit column and will likely rack up 33 consecutive years of profitability, a feat Kelly says is a testament to a few fundamental areas of focus: hire great people and keep them; give the Customers what they want; keep costs low; and stay prepared.
Preparations for Southwest include a hefty fuel hedging position that provides "insurance policy" against the escalating fuel costs that are plaguing the bottom lines of its airline competitors.
"It's a brutally competitive industry," Kelly said. "With our productivity, high asset utilization, and terrific people, we are able to offer low fares while remaining profitable. We are relentless in our search for new ways to be more productive. We will need to do that in the face of high energy prices, and everyone knows our brand stands for low fares."
But, of all of Southwest's accolades, Kelly said he's most proud of the airline's 31,000 Employees. "They take care of each other and they care of our Customers," he said. "They are our warriors out there doing the right thing everyday. They are our true strength and heroes."
The airline remains on a growth track, he said, and plans to build on the startup successes of its 2004 Philadelphia arrival and its new service in Pittsburgh, which began on May 4, 2005.
As for the industry, Kelly said a solid argument can be made that there are too many airlines. "We could do with fewer," he said. "Excess capacity is an issue, and the mechanics of merging won't solve all of the problems we have in this industry."
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