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Southwest's charismatic leader Kelleher to step down

The 70-year-old CEO will turn over most of his daily duties in June but will remain as chairman.

Herb Kelleher, the wisecracking, chain-smoking New Jersey native who co-founded Southwest Airlines nearly 30 years ago and came to personify the company, said Monday he will resign in June as chief executive and president of the nation's largest low-cost carrier.

Kelleher, 70, will remain chairman of the Dallas airline's board with a new three-year contract but will hand over much of his daily decision-making power to two longtime associates.

James Parker, 54, the airline's vice president and general counsel, will become chief executive and vice chairman of the board. Executive vice president Colleen Barrett, 56, will become president and chief operating officer, the first woman to hold that title at a major U.S. carrier.

The announcement ends years of speculation about who would succeed Kelleher, known for his chain smoking and love of Wild Turkey whiskey.

Kelleher was diagnosed with prostate cancer in 1999 and underwent eight weeks of radiation treatment. He has since declared himself fit, but Wall Street became nervous with how closely the future of Southwest was linked with the charismatic, but aging, leader.

Yet neither hard living nor cancer caused Kelleher to slow down, he said. It's his age. He and the board had agreed to announce a succession plan by his 70th birthday. That passed last week.

Analysts said Kelleher would continue to exert great influence as chairman, and they expect few if any changes at the company.

"Herb may have been the figurehead and built the company, but it was totally a team effort," said Julius Maldutis, an analyst with CIBC World Markets Corp.

Kelleher was a private attorney in 1967 when a banker client suggested they start a regional airline. Southwest Airlines started flying in 1971, and Kelleher, who became CEO in 1978, represented his company as few executives do, partly through offbeat advertising and partly through stunts such as arm-wrestling another airline's CEO for the rights to a disputed advertising slogan.

"I didn't become such a visible symbol of Southwest Airlines because I wanted to," he said. "That was something that just evolved over time."

But Kelleher's importance to Southwest lies not only in image. He also nurtured a new breed of airline: low fare and low fuss.

Travelers approved. The company under his leadership has risen to the largest stock-market value among all U.S. airlines at about $13.4-billion _ roughly equivalent to UAL Corp., AMR Corp., Delta Air Lines Inc. and Northwest Airlines Corp. combined.

In the past five years, shares in the company have tripled. The stock closed Monday at $17.35, down 54 cents.

About 100 cities each year ask Southwest for service, betting the carrier's low fares and frequent flights will bring crowds of new tourists and business travelers. The airline selects only a handful of hopefuls annually.

Tampa International Airport officials started lobbying Southwest in 1987. Former TIA chief George Bean, a chain smoker like Kelleher, chatted up Southwest's boss during cigarette breaks outside a Washington hearing. The two also discussed TIA's prospects when Kelleher was in Tampa to receive the Tony Jannus Award for his aviation achievements.

In 1995, Southwest announced plans to fly to Tampa as part of an expansion into Florida.

The airline kept adding flights and new cities. Southwest now ranks as TIA's No. 3 airline, carrying more than 16 percent of the airport's 16-million passengers last year.

Southwest's passenger loads at TIA grew 25 percent in 2000, putting the carrier on track to pass No. 1 US Airways and No. 2 Delta as the airport's largest airline late this year or in early 2002, TIA executive director Louis Miller said.

_ Times staff writer Steve Huettel, the Associated Press, Dallas Morning News and Los Angeles Times contributed to this report.