Southwest Airlines (LUV) - Get Free Report had a high-profile meltdown that stranded tens of thousands of passengers over the holidays. The airline then fumbled its response to those problems multiple times.
First, Southwest blamed the weather -- and while storms led to the problem, it was clear by how the other airlines were operating that something deeper had gone wrong. After that, Southwest dropped the ball in how it apologized and compensated its passengers who got stranded, had to rent hotel rooms during the busy holiday season, or had to find another way to get home.
It was a series of errors that left customers angry and questioning whether they could trust the airline. That's a huge problem for a company that has built its reputation on being honest and transparent with its passengers.
In reality, though, people only have so many choices when it comes to air travel. That means that while people may be wary about flying Southwest, the airline's combination of value and flying to an awful lot of places probably will have them doing it anyway.
That's good news for Southwest, but the airline has a problem that goes much deeper than its software. Southwest's pilots are angry with the airline and they're speaking out about it very vocally.
Southwest Airlines Has a Pilot Problem
The Southwest Airlines Pilots Association (SWAPA) released a scathing letter that started by sharing two quotes, one that touched upon the philosophy under which Southwest was built and the other on where it is now. The first was from the airline's founder Herb Kelleher.
“You put your employees first. If you truly treat your employees that way, they will treat your customers well, your customers will come back, and that’s what makes your shareholders happy. So there’s no constituency at war with any other constituency. Ultimately, it’s shareholder value that you’re producing,” said the company's founder and former CEO who passed away in 2019.
The second quote came from current Chairman and former CEO Gary Kelly.
“Arguably, our shareholders have suffered for a long time when it comes to getting a return and our employees have been very well taken care of,” Kelly said.
The airline's pilots clearly don't believe the company continues to live up to those ideas. In the letter SWAPA released, it took bold shots at current management.
"How did we get here? How did we go from the most stable and profitable airline in history to the greatest meltdown in airline history? As with most organizations, the answer can be distilled down to one word: Leadership. Actually, in our case, it’s three words: Lack of leadership," the association shared.
Southwest Knew a Meltdown Was Coming
SWAPA shared that while the recent meltdown was a major event, it was not the first technology-based service interruption the airline has experienced.
"Systemwide meltdowns at Southwest Airlines have been increasing in frequency and magnitude over the past 15 years. From the original Midway Meltdown (and then the second larger one 1/3/2014) to destroying our on-time-performance with the added 'virtual airframes' experiment to the “router brownout” (2016) to the 'Jacksonville Center debacle' (Columbus Day weekend, October 2021) to what we are experiencing today," the letter declared.
The pilots' association believes that these issues were predictable and avoidable.
"There has never been any real accountability for the decision-makers as a result of any of these fiascos, or the numerous smaller ones in between. If the saying that 'insanity is doing the same thing over and over again while expecting different results' is true, then what is it when the same people are allowed to do the same thing over and over again? Supreme insanity, perhaps?" the letter continued
The pilots clearly believe that the airline has lost its way and that Kelly has decided to focus on building shareholder value at the expense of employees.
Herb’s legacy and the culture he built from the ground up was centered on his employees and empowering them to make proactive decisions at the lowest level possible. However, the culture that Gary Kelly ushered in with his ascension to the throne was the exact opposite. Gary’s vision was to become the darling of the investment community while building an insulated and vertical hierarchical structure where all decision-making authority was slowly stripped from front-line experts with the most situational awareness and moved further up the cubicle chain in Dallas far removed from line operations.
That's actually some of the kinder language in the letter which comes at a time when the overall airline industry faces a pilot shortage. This could bring the issues to a head as the pilots' association believes the airline has chosen to return billions to shareholders in stock buybacks while raising executive pay over investing in technology.
"As CEO, Gary Kelly made a conscious decision to make the less than necessary investments in tech upgrades in favor of maximizing shareholder return because, well, 'our tech’s been working ok for 20 years.' While Gary’s financial acumen cannot be debated, his poor operational leadership and judgment have been demonstrated repeatedly with each meltdown and finally laid bare with the current situation we find ourselves in," the pilots added.