Southwest CEO Jordan finds himself in eye of storm after airline's holiday debacle

[February 08, 2023]  By Rajesh Kumar Singh

CHICAGO (Reuters) - Bob Jordan, Southwest Airlines Co's CEO, faces the biggest challenge yet in his 35-year career at the airline that has built a customer-friendly reputation.

After a high-profile systems meltdown in late December that left thousands of U.S. passengers stranded and fuming, Jordan must guide the airline's recovery from the snowstorm and related technology breakdowns that forced the cancellation of almost 17,000 flights and is estimated to have cost it more than $1 billion.

Jordan, 62, took the helm as CEO just last February. He has apologized and taken responsibility for the troubles, but the company has sent mixed messages, saying its technology worked just fine and it was the weather's fault despite no other airline suffering such a breakdown in service.

Southwest's struggles reached a notable low on Jan. 28 when comedy sketch TV show "Saturday Night Live" lampooned the Dallas-based airline's technology and service.

The carrier will now answer to U.S. Congress on Thursday when Chief Operating Officer Andrew Watterson testifies before the Senate Commerce Committee. The move has caused some industry-watchers to wonder why Jordan failed to accept the invitation despite his plans to attend an employee rally in nearby Baltimore on Wednesday. Southwest said the hearing conflicted with other commitments.

"I don't think they're being consistent enough about what message they're putting out," said Evan Nierman, CEO of global crisis management firm Red Banyan. "The public is more concerned about the computer system, not the weather system."

"It is hard to imagine he has anything more pressing on his schedule than being present in Washington to testify before the lawmakers," Nierman added about Jordan.

'ETERNAL OPTIMIST'

How Jordan navigates these turbulent times could determine the success of his tenure. Troubles like these can be costly for executives as JetBlue Airways Corp founder and CEO David Neeleman discovered in 2007 after that company suffered its own operational meltdown and he was forced to step down.

There is no evidence Jordan is at the same risk and he told Reuters last month: "I'm not focused on that one bit."

Southwest did not make Jordan available, but Chief Financial Officer Tammy Romo, who has worked with him for decades, said he loves to spend time in the field with employees. "I don't track where Bob is all the time, but I know he is out on the road," she said.

Linda Rutherford, Southwest's chief communications officer, said Jordan was not afraid to push people when necessary, saying after the December problems arose Jordan encouraged the employees involved to pick the best solution even if that meant mass cancellations. She also credits his collaborative leadership style and described him as an "eternal optimist."

Union officials disagree that the technology used by Southwest is fine, however, having flagged a lack of investments in that area as a risk.

Southwest Airlines' Bob Jordan speaks as he is interviewed by CNBC outside the New York Stock Exchange (NYSE) in New York City, U.S., December 9, 2021. REUTERS/Brendan McDermid/

'ONE THUNDERSTORM FROM A MELTDOWN'

Weeks before the holiday meltdown, Casey Murray, president of the Southwest Airlines Pilots Association (SWAPA), warned on a podcast: "I fear that we are one thunderstorm, one (air traffic control) event, one router brownout from a complete meltdown. Whether that's Thanksgiving, or Christmas, or New Year, that's the precarious situation we are in."

SWAPA Vice President Tom Nekouei told Reuters that while Jordan has the potential and "fortitude" to fix the problems at Southwest, he has not yet brought "a massive change in philosophy."

Nekouei also criticized the company's decision to reinstate its dividend even while it has several unsettled labor contracts, including with the pilots.

Jordan, in his 15th job at Southwest, has defended the dividend decision as a reflection of the company's strong balance sheet.

He also said during an earnings call last month that the company's technology "worked as designed" even while it has hired General Electric Co to improve Southwest's crew rescheduling capability and consultant Oliver Wyman, a unit of Marsh McLennan, to recommend operational changes.

After taking the reins in February 2022, Jordan unveiled a "back to basics" strategy aimed at restoring the low-cost airline's traditional operational reliability and efficiency. Modernization of operations was one of the five focus areas of the plan.

In October, Jordan, who started his career at Southwest in 1988 as a computer programmer, put Watterson in charge of the airline's operations.

Some union officials call the appointment Jordan's best move yet. Watterson, one of the few outsiders in company leadership, has a strong background in operations, including when he was with Oliver Wyman and Ernst & Young. He joined Southwest in 2013 from Hawaiian Airlines, where he was vice president of planning.

Last week, Jordan also named a chief information officer who will help manage the airline's technology investments, upgrades and system maintenance.

Jordan's second year on the job as CEO will likely determine his future, said Robert Mann, a former airline executive who now runs a consulting firm.

"He has the opportunity here to create a victory from the jaws of defeat," Mann said.

(Reporting by Rajesh Kumar Singh in Chicago; Editing by Ben Klayman and Matthew Lewis)

[© 2023 Thomson Reuters. All rights reserved.]
This material may not be published, broadcast, rewritten or redistributed.  Thompson Reuters is solely responsible for this content.