Bob Jordan (CEO of Southwest Airlines)
On Wednesday, October 6, I had the privilege to interview Bob Jordan. Mr. Jordan is the Executive Vice President and incoming CEO for Southwest Airlines. He has over 33 years of experience in the airline industry across 15 different roles with Southwest. This interview has been edited for length and clarity.
Joshua Kupietzky: How did you start your career in the aviation industry?
Bob Jordan: You know it was by accident, almost. I came out of college at Texas A&M, and I went to work for Hewlett Packard in California. I was looking to get back into the Dallas area in Texas, and my mother in law mailed me the help wanted ads. And there was an opening at Southwest Airlines for an HP programmer. So, I applied and ended up getting the job, but Southwest was so much smaller. I knew very little about aviation, and especially Southwest Airlines. W're, you know, almost 800 aircraft today, and we were, I think, 88 aircraft when I joined. And we're 55,000 people today, and we were 7,000 then. So I will admit I didn't know much about aviation, in fact I got a card welcoming me from Herb Kelleher, and I wasn't quite sure who Herb Kelleher was. But I certainly found out over the years.
JK: Congratulations on your new role! Now is perhaps the most difficult time in the history of aviation. What do you see as your top challenges and opportunities on day one? And how do you think Southwest will navigate out of the COVID crisis?
BJ: You know you're right, a lot of people talk about 911 and 911 was, you know, terrible. It was terrible for the country and it was terrible for aviation and our industry and so many others. But this is so much worse. We had demand fall 97% in weeks, and then we rocked along for a long period of time last year where demand was down 70% to 80%. And you just can’t survive something like that. We had all voluntary retirements and leaves—at one point, between those two, we had 20,000+ people on either a leave or on early retirement—again, all voluntary, but it's just completely unprecedented. I think the main thing is it's not over. We're still coming out of it. What's clear is ’22 is going to be a year of continuing to get out of the pandemic. Hopefully we'll be out by the end of the year, but there's still work to do. I think we're still going to have waves; I think there'll be less and less and less but we think the pandemic is still with us. And the pandemic left a lot of slop—we still have people coming off of leaves, and we're still working hard to get staffed. Staffing is a huge issue in terms of hiring. So we're just not out of all of that. The good thing is, we went into the pandemic asa terrific company with terrific people—very disciplined, a strong balance sheet. o we went in really strong, and our people managed through the pandemic as good as any airline. We're the only airline that came out of the pandemic with more cash than debt by a lot. Nobody else is in that position. So, I think the bottom line is we're still managing through it. So ’22 is a year of continuing to manage that, but we've had a lot of exciting opportunities in front of us. We're getting 114 planes next year. We will put a lot of those to work, basically getting the network back to where it was in 2019, because we cut a lot of things to fund the 18 new cities that we opened. So we have a lot of really good growth opportunities. But our fundamental strategy isn't different; I think the big difference is we just have work to do to continue to get out of the pandemic. There are a couple different focus areas. There's just such a focus on environmental sustainability that's emerged here in the last couple of years. So you'll see us talk a lot more in the next couple of weeks about our carbon emissions reduction plan, and then the emergence of diversity, equity and inclusion, things that we need to work on as a country and as a company.
JK: You touched on staff shortages as a very big challenge. So given the staff shortages and the difficulty of finding quality staff, currently, what is your strategy for recruiting qualified people to come and work at Southwest instead of working at any other US carrier?
BJ: Let me just back up for one minute on what's going on. I have been here almost 34 years. When we wanted to grow, it was always: Can we get enough airplanes? Can we get enough gates at airports? I've never seen a time where it has been, “Can we get enough people?” The constraint has never been people and staffing, so it's the first time that we've seen that, and you still have about 10 million people that have not come back into the workforce from the pandemic. It's hard to know where they are and how to get them back. We were going through some data yesterday, and for those that left the workforce, it’s sort of equally split: male and female, people who have kids and don't have kids, and across age. But I think the fundamental reason why we win is we're a great company with a great culture and we treat people right. We start with treating our employees the right way. We pay well. We have terrific benefits. We have a culture that attracts people, a 50-year track record of hiring terrific people, so we're gonna win. The issue is, it's just a smaller pool that's applying—it’s not that we're not winning. It's the pool of applicants, the pool of available labor is just much smaller. Pre-pandemic we used to get 42 qualified applications per job opening. And today we are getting about 14. So we're getting more than our share. It is just the pool is so much smaller, right now. But I'm convinced we will win; it's just going to take a while. I think these labor issues or hiring issues will be with us most of 2022.
JK: Southwest announced yesterday that they're going to mandate vaccines for employees. But will you eventually require all passengers to be vaccinated to fly with Southwest?
BJ: On the employer mandate, I think it's important to understand it's the government mandating it. As a federal contractor‚ because we carry Department of Defense folks, we have military charters, we move our military around, we carry the mail, all kinds of things— we’re required to abide by the order, which requires you to get your workforce vaccinated, and there are limited exceptions or accommodations that they can apply to. So it wasn't Southwest Airlines, it’s Southwest complying with this federal order that we must comply with as a federal contractor. And so far that's all gone pretty well. I know that some of this is controversial but it feels like it's gone pretty well so far. On the customer side it's very similar: it wouldn't be Southwest mandating. I think that’s something for the federal government to take up.
JK: What is your vision for the long-term future of Southwest, and how does it differ from past CEO’s?
BJ: You know, I am getting that question about every two hours. This is a great company, but just because we're changing CEOs, we're not pivoting our strategy or our culture. I like to say the DNA of the company is unchanged. As a senior member of the leadership team I've been part of setting the strategy that we've been on. Now there will be tweaks; I've got some things that I feel are very important, and you'll be hearing about those. But ... [my promotion to CEO] isn't even effective till February 1st. Lots of times I joke, if people ask me my number one goal, I say it's to get to February 1st. ...Again, the social responsibility; doing good around diversity, equity and inclusion, and carbon emissions. I think that's really important, so you'll hear us talk a lot more about that. I've got a lot of focus on what I'm calling modernizing our operation. Our operation folks are terrific, but one of the things that is clear, especially through the pandemic and all the ups and downs with the schedules, is that they can use better tools. We use the term warrior spirit; I think you see the warrior spirit at work in our stations every day. People are just making things happen, but we're a big company. If you look forward we'll have in the next few years at some point 5000 flights a day. We can have upwards of 400 in Denver where we are getting 16 new gates. You know how complicated the airline industry is, you know, the logistics are incredibly complicated so terrific people, especially in our airports, need the tools that can manage that complexity. So I've got a big focus on what I'm calling modernizing the operation. You'll see more of that come out here over the next couple of months as it actually becomes effective. Those were a couple, but the DNA of the company is not changing.
JK: With many people, especially business travelers, spending more and more time on video conferencing then meeting in person. What are your thoughts on the future of business travel for Southwest?
BJ: First, I don't know that this is figured out; I think, like everything, just about the time somebody says, “this has changed forever.” ...Forever is a long time, and I think this all has yet to settle out. I do think there's a time and place for virtual; I mean we're using it. We implemented it very quickly in May of last year, and because of that, today we can do things we were never able to do. I was on a meeting earlier where we talked about this vaccine requirement for employees. We could set up a meeting in the click a button and talk to 3,000 people spread across the country, from our all of our leaders, frontline supervisor, and up. And in the “old days”, you'd have to call them all to Dallaa. I mean it was impossible. So they're good things to me that have come out of this. But nothing beats being in-person, especially on the business side, when you need to meet, when you need to sell, when you need to win a contract, it is going to happen in person. So here's what I would say to break it into two pieces: we've seen that leisure demand (until the delta wave happened) in the summer was actually higher than in 2019. So it's not the same as business, but we're actually seeing demand above 2019. When you look at business it stalled during the delta wave, but we were on a good clip to get somewhere close to 2019 here over a period of time. Are we going to get all the way back? If I was predicting, I would say no, I would say that we get close to pre-pandemic, but there's a piece of this that's gone away. And then second business travel typically comes back slower, virtual or not, it just comes back slower. We happened to be talking to some folks earlier at a large bank and a large consultancy yesterday. And so I asked them the question, “What are y'all doing for business travel?” And their answer was, “We're probably traveling 20% less, but the examples were not domestic, they were travel for two days to Hong Kong for a two hour meeting… I'm doing Zoom or WebEx now. So I'm hopeful that the decrease is actually not domestic, and so we actually benefit, because the pullback is in long haul international as a whole.
JK: How has the continued spread of the Delta variant changed Southwest’s operations for the rest of the year? Are there plans to scale back flying or destinations?
BJ: Man, that's an hour-long question, because everybody has to pivot. If you go back to last year, you’ll remember at the beginning, no one quite knew. Nobody knew how it spread, nobody knew how contagious it was. And so you had to figure all that out, and you had to create an environment where people feel comfortable to fly. That's the only way we're going to get business back. You saw us launch this Southwest promise around cleaning and disinfecting and masks, and all kinds of things related to how we make that a safe environment.
JK: This past year, Southwest started flights from new airports such as Chicago O’Hare, Miami International, and Houston Geroge Bush. Is there a business strategy change since Southwest has never flown from these airports?
BJ: Yeah, several things in there. When you have business fall 90%+, you've got to go seek revenue wherever you can. So that's the basic reason why you saw us open (and we're still opening) 18 new airports, and also expand Hawaii.And the good thing is they're all relatively small, mostly leisure, some business airports as you noted, and they're all working. The big macro answer is we've always been a business airline. We fly where people want to fly—where there's business. We are on time, we have high frequency, we have low cost, we are a business person's airline and people miss that sometimes. So going into intercontinental, to some extent Miami and especially O'Hare, it is very consistent with our strategy of being in business markets, and we figured out that we can make smaller airports work, and it's really a good thing.
JK: With Southwest currently only operating 737s, are there plans to get larger aircraft now that Southwest is flying out of larger airports?
BJ: We get the aircraft question all the time, about both about Airbus and Boeing. A twin aisle and a different or larger jet comes up a lot as well. Especially the Boeing/Airbus question, we look at the question routinely just to make sure—we owe it to our shareholders to make sure we have the right jet and the right deal, and we have a terrific deal with Boeing. We do have a lot of variants of the 700: we have the classic 7,we have the 8, we have the 8 Max and then we'll be taking the 7 Max next year. So we do have multiple variants of the 737 I think the way to look at it is we have a lot of opportunity in front of us, for markets the size of the 737-700, and -800. We probably pulled some of those forward with opening the 18 cities, but we have dozens and dozens of market opportunities that wouldn't take a new jet, and it just adds a lot of complexity— especially if we add something that's a twin aisle. It's just the complexity we don't need at this point. We don't need it in order to grow.
JK: With JetBlue starting service across the Atlantic using a single aisle aircraft, are you also looking into flying across the Atlantic with a single aisle aircraft?
BJ: We've looked at those kinds of things in the past, the capability of an aircraft..., but no. I mean we look at that thing periodically in terms of what the aircraft could do, but in terms of a commercial opportunity right now, no, we don't need to do that. And the international markets are still tough. I mean, the prediction is the international market is going to grow back much slower than the domestic market.
JK: Have you seen the demand for domestic travel increase as a result of the depleted international market and international restrictions?
BJ: Yeah, I think it's hard to attribute why people are doing things, but if you look at the summer, the leisure demand was really strong and actually the leisure demand was stronger than in 2019. Then the delta wave hits. You've got to believe that a piece of that is pent up travel; people call it “revenge travel”. Once things are open, they're going somewhere, and domestic is more open, and probably in some people's minds less risky, and a lot easier because of all the conditions. Then, international, especially for-international, you could certainly speculate that we picked up demand where people would have gone to Europe, and now instead they are going to go someplace domestically or near-international. So you got to believe that's a piece of it. And our fares were really attractive too, as always.
JK: We started by talking about your background in the aviation industry. What advice do you have for young people trying to start a career in the aviation industry?
BJ: I think, one, it's a fascinating industry. I wasn't trying to get into aviation., but I've loved every minute of the opportunity and it's just, it's a mile a minute, and you never quite know what's gonna happen next. I like change. I like a lot of activity, and you're going to get that in the airline industry. It's just a lot of fun. This is the place to work, really, if you want to have a career in aviation, if you want to have a career period, Southwest Airlines is the place to be. And the good thing is we just hit our 50th year; we're 50 years old at this point. And we've got an awesome long run in front of us. So I just think it's a terrific place to start a career and to have a career. If you asked me for career advice...I always say the same thing, which is don't try to overplan or overthink your career. If you trust your leader, and they're looking out for you, and an opportunity arises, even if it's a little out of what you might have thought, take it. Take it and go, and you'll enjoy it. Of the 15 jobs I’ve done, I have applied for one; all the others have been my boss, typically Gary Kelly, our current CEO, just asking me to go do something. And even if I didn't feel like I was qualified to do it, he did, and I went and did it and just learned a lot and went on to the next thing. So I would just say don't overthink your career.
