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Southwest's colorful CEO starts treatment for prostate cancer

The flamboyant chief executive of Southwest Airlines said Wednesday he has prostate cancer, which his doctor said was caught in the early stages.

Herb Kelleher, 68, who pioneered no-frills, low-cost air service and built Southwest into one of the country's top airlines, began commuting for eight weeks of radiation treatment in Houston.

Analysts were reassured by an upbeat prognosis from doctors, though they remain concerned about who will succeed the colorful executive. Kelleher relishes his image as a heavy-smoking workaholic with a penchant for Wild Turkey bourbon and an evangelical zeal for a friendly workplace.

"As long as he can hold a shot glass, I want him running this airline, and so does every Southwest shareholder," said Glenn Engel, an analyst with Goldman Sachs. "The day when it appears Herb is mortal, then Southwest's stock will go down more than it did today."

Dallas-based Southwest's stock dropped as much as $1.06\ before closing at $16.37{, down 12{ cents.

Kelleher displayed his characteristic humor and loud, cackling laugh during a half-hour conference call with reporters in which he said his "mundane, routine" case of prostate cancer would not interfere with his ability to run the airline. His current contract expires the end of next year.

The company also played down the news. In a news release, Southwest emphasized that Kelleher plans to be in the office throughout his treatment _ and included a quip that Kelleher thought his colleagues would be disappointed to find him around so much, given his usual heavy travel schedule.

But while companies are much more open these days about what might be ailing their top executives, and are obliged to disclose anything serious, there is another sensitive issue fewer are willing to discuss: the company's succession plan should something happen to the chief executive.

Southwest, which has been criticized for not being more open about who might succeed Kelleher well before Wednesday's announcement, is particularly close-mouthed. A recent shareholder resolution, for example, called for Kelleher to divide his duties, given his penchant for smoking and flying, so that the company would no be longer be subject to "one-man rule," and Business Week ran a scathing commentary this month about his lack of a successor.

Although Kelleher's prognosis is very good, according to his doctor, the news clearly fuels concern over whether anyone at Southwest could take Kelleher's place. Kelleher with his larger-than-life personality is closely identified with the success of the company.

James Higgins, an analyst with Donaldson, Lufkin & Jenrette, said Southwest has "a deep bench" of executives capable of replacing Kelleher.

"Whether they have his personality and his visceral understanding of labor relations is another question," Higgins said. "He is an impossible act to follow."

A spokeswoman said Southwest has a succession plan that has been reviewed by its board, but details have not been made public because identifying future leaders might be divisive.

Kelleher, a lawyer from San Antonio who started the airline with one of his clients, was named chairman in 1978 and assumed the titles of president and CEO in 1981. His spirited leadership _ including dressing up as Elvis, a leprechaun and a cross-dressing male nurse _ are part of the fabric at a company known for high customer satisfaction. Fortune magazine named it the country's most admired airline and, this year, the best place to work in the United States.

Southwest is the nation's seventh largest airline in terms of revenue, though the fourth-largest carrier in terms of number of passengers.

_ Information from New York Times was used in this report.