AirTran Ex-CEO: 'Scary Period' for Industry

CHARLOTTE, N.C. -- Looking back, Joe Leonard says he was misled when he was hired at AirTran(AAI Quote), because somebody told him the airline had close to $30 million, when the amount was actually about $10 million.

"I did a bad job of due diligence," says Leonard, who stepped down May 31 as chairman of the carrier he joined in 1999. "If I had done a proper job, there is no way in the world I would have come here." Leonard will turn 65 on July 10.

Things worked out pretty well, though. When Leonard arrived, AirTran was truly in sad shape, but today the carrier "is rocking along," he says.

"It has the best fleet in the industry, morale has never been better, and [CEO Bob Fornaro] is ready," he says. "There's no point in me sitting there and blocking his progression. Nine and a half years is a long time for a guy with a three-year attention span. I'm best when things are sort of chaotic and need major change."

Though AirTran has seen its fortunes take a turn for the better, the same can't be said for the industry in which it operates, given record high fuel prices. "This is a pretty scary period we are going into right now, much worse than 9/11," Leonard says. "That was an event where we knew the outcome, assuming there wasn't a second event. This is a continuum."

The only valid response, Leonard says, is an industry capacity reduction of 15% to 20%. He praised AMR(AMR Quote), which plans an 11% to 12% domestic cut. "American is responsible," he says, while others, which he didn't name, are not. Last week, UAL(UAUA Quote) and Continental(CAL Quote) also announced double-digit capacity decreases.