Southwest Surprises With a Telling New CEO Pick

Southwest CEO Gary Kelly has been talking about succession for a long time. He’s been in the job for 17 years, and the end was certainly going to come sooner rather than later. Yesterday, the plan was officially revealed. Long-time Southwest exec Bob Jordan will take over next February when Gary moves up to Chairman of the Board, and that is a surprise on multiple levels. It also says a great deal about the future.

You might remember Bob’s name from the past. He had risen in the ranks at Southwest doing various jobs, but in 2011 he really stepped into the limelight with the dual role of EVP/Chief Commercial Officer as well as the President of AirTran as Southwest worked to integrate its acquisition. Eventually the latter role went away with the disappearance of AirTran as a separate entity, but he seemed poised to ascend into the President role as heir apparent to Gary. That did not happen.

In 2017, Southwest announced that Tom Nealon would become President. Tom was CIO for a spell in the early 2000s, but he left and had come back in 2016 as Executive Vice President Strategy & Innovation. Bob soon after moved into the role of EVP Corporate Services which according to his LinkedIn page seems to encompass HR, Communications, Training, and a few other areas.

On the surface, it looked like Bob was pushed aside in favor of Tom, someone who was more of an outsider compared to Bob, but I didn’t take it that way. As I saw it, Bob was tired and he just didn’t want to be in the rat race. He didn’t want to retire either, so he took on an internally visible role but one that kept him out of the external limelight and all the stuff that comes with that kind of exposure. This made it seem like the stage was set. You had Mike Van de Ven running the operation, Andrew Watterson running the commercial side, and Tammy Romo running finance as Tom Nealon had his eye on ascending to CEO.

The announcement yesterday is decidedly bad news for Tom. In theory he stays on as President, at least that’s the messaging so far. But I can’t imagine a world where he sticks around. I’d imagine we’ll see him quietly retire at some point. He’s too high up to get fired. This is Bob’s airline now, as it once was expected to be.

What will change with Bob at the helm? I wouldn’t expect much. Bob and Gary have grown up together at the airline, and Bob considers Gary his mentor. (You can watch the two of them talking about it yesterday in this video Southwest put out.) I would expect this to be a smooth transition between two like-minded leaders. I wouldn’t expect Bob to make big waves, because he’s been behind a lot of the strategy that has evolved over the last several years. But I also don’t expect Bob to be there for long.

It’s been a brutal year, and Gary has had to clash with labor as he tried to get the airline through the pandemic. While it’s not to the same extent by any means compared to what we saw at these airlines, I almost view Bob in the way I view Oscar Muñoz at United or going further back, Jerry Grinstein at Delta. Those two were brought in to calm things down. They were caretakers while they worked to heal wounds and prepare their companies for what the next aggressive leaders would bring. That was Scott Kirby at United and Richard Anderson at Delta.

Like I said, Southwest doesn’t have the same kind of wounds that existed at United and Delta back then, but a familiar face like Bob might be just the right person to come in for a couple years. At 60, he’s not a young CEO, and he’s not going to stick around for 17 years like Gary. I see him as a great transitional figure, and that brings up the question of… who is next?

I don’t think you put Bob in a role like this without having a longer term plan. In a Bloomberg interview, Gary said the airline was really focused on bringing in an internal candidate. The board wanted someone on the inside, so going outside wasn’t even a consideration. Now, it’s possible Bob could bring in an outsider to learn for a couple years in the same way that Gary tried to do with Tom, but it’s more likely that the existing talent pool will be tapped for Bob’s eventual successor.

When the news broke, I had more than one person ask me why I thought EVP and Chief Commercial Officer Andrew Watterson didn’t get the job. Andrew has the job today that Bob had back in 2017. Andrew reported to Bob for a long time, and it’s his organization that has led some significant initiatives at the airline during the pandemic, including adding an incredible number of new cities. A transition that has Bob in the role for three years followed by Andrew stepping in would make all too much sense, if things go right.

That’s not to say he’s the only candidate at the airline. CFO Tammy Romo is certainly capable, and of course there are outsiders. But whoever it is, I imagine that’s already part of this plan that sees Bob move up to take this role now next February. This is just the beginning of a longer transition plan that an airline like Southwest with its strong culture rightfully takes very seriously.