September 11 changed the airline industry. It's a good thing that the state's top airlines each have the right guy calling the shots.
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THE AIRLINE INDUSTRY COLLECTIVELY flew into its worst storm ever on September 11 when terrorists took over three airliners and used them as weapons to strike America (it is believed that a fourth plane, which crashed into a field, was retaken from hijackers). The government-ordered shutdown of U.S. airports in the wake of the attacks dealt a blow to the entire industry. But the three major airlines based in Texas—American, Continental, and Southwest—slowly are rebuilding and finding some patches of blue sky amid the smoke and dust.
We thought this would be a good time to check in with the CEOs who run the three Texas airlines and see how they’re doing. One thing became clear after our interviews with American’s Donald J. Carty, Continental’s Gordon Bethune, and Southwest’s Jim Parker: The guys at the helm have different personalities, but they’re the right people in the right place to deal with the aftermath of a world that went terribly wrong on September 11.
From Chief Executive to Chief Empathizer
Donald J. Carty
American Airlines, Fort Worth
Background: A Canadian by birth, Carty holds a Harvard M.B.A.
CEO since: 1998 (succeeding Robert Crandall)
Career ladder: Carty held management stints at Air Canada, Canadian Pacific Air in Canada, Celanese in Canada, and Americana Hotels.
Flight plan at American: In 1979 the airline named him vice president of operations research and he rose to senior vice president and controller. Carty left in 1985 to become president and CEO of Canadian Pacific Air in Canada. He returned to American in 1987 as senior vice president of airline planning. Before he succeeded Crandall, Carty was responsible for the operations of American’s and American Eagle’s domestic and international route systems.
Personality: He’s reserved, measured, and polished.
Management style: Carty is known as a much more affable manager than Crandall. He has worked to improve relations between management and American’s labor unions.
Big score: American acquired TransWorld Airlines for $625 million.
On the record about the fallout from September 11: “One of the things that affected me personally is watching our company and thousands of employees affected in such a severe way. It’s made me feel closer to them and certainly increased my affection for the company and the people who run it.”
No Fear of the F-Word (“Flying,” Of Course)
Gordon M. Bethune
Continental Airlines, Houston
Background: Bethune grew up in San Antonio and Austin, and he is a graduate of Harvard business school’s Advanced Management Program. Bethune is a licensed commercial pilot and airframe and power plant mechanic. He was a mechanic for the U.S. Navy.
CEO since: 1994
Career ladder: Bethune held management stints at Piedmont Airlines, Braniff, and Western Airlines. Before joining Continental, Bethune was vice president and general manager of a Boeing commercial airplane division where he was responsible for 737 and 757 airplanes.
Personality: He’s gregarious, profane, and blunt.
Management style: Bethune is known as a great communicator. He’s approachable and hands-on with employees.
Big score: Bethune turned around Continental after it emerged from bankruptcy protection for a second time. What was once considered the worst airline in the business became one of the best. Business and aviation magazines have named Bethune one of the top global managers and most influential executives. Before September 11, Continental had racked up 25 consecutive profitable quarters.
On the record about the fallout from September 11: “This country, this world, doesn’t work without airlines. I mean, the business has changed—it’s changing, it always has been. Maybe not this kind of overnight, dramatic change. What should we do? Well, we should do the things that got us here because the marketplace told us what to do. We want employees who like their jobs, who run a clean, safe, reliable airline—on-time, consistent. That’s what made us who we are. That didn’t change. Your consumer attitudes about what you want didn’t change. How much you want of it—that’s what has changed. That’s why when I see my competitors changing themselves, we ain’t doing that. We know what consumers want. They just don’t want as much of it, so we need to back off on how much we’re offering. But you’re not going to go to Seattle without flying.”
And another thing: Bethune has some choice words for those who criticized his appeal to the federal government for an assistance package for the airlines in the wake of September 11. We can’t print them, but they involve words like “shove,” “goat-smelling,” and “butt.”
James F. Parker
Southwest Airlines, Dallas
Background: Parker was born in San Antonio and he grew up in Fort Worth. He holds a law degree from the University of Texas.
CEO since: last June
Career ladder: Parker worked as a lawyer and then joined Southwest as general counsel in 1986.
Personality: He’s low-key, quiet, unassuming, witty, but not as outrageous as chairman and former CEO Herb Kelleher.
Management style: Parker is laid-back and personable, but tough and serious when he needs to be. But he’s no Herb clone. Don’t expect him to don an Elvis suit like Kelleher has done to entertain employees.
Big score: Last year he succeeded Texas’ most famous airline executive, Kelleher, assuming most of the duties of the day-to-day operations of Southwest along with Colleen Barrett, Southwest’s longtime culture guru who’s now president and the highest ranking woman in the airline business. Even after September 11, he still can claim to run the nation’s most successful airline.
On the record about the fallout of September 11 on a fun-loving company like Southwest: “We’ve kind of dampened some of the events of merriment. We didn’t do our traditional Halloween celebrations. Some parties and events have been reduced or eliminated for cost-cutting reasons and other events have been postponed or eliminated because they didn’t seem appropriate because of the situation in the country.”
This just in: Parker and Southwest’s management team made a decision not to slash capacity even as other carriers made massive cutbacks in the months after the attacks. The strategy so far has paid off: Southwest reported a rise in its number of December travelers. It was slight—only up six-tenths of a percent from December 2000—but it was enough to make Southwest the first carrier to see an increase in traffic since September 11.