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Southwest CEO’s advice to others: ‘Don’t take yourself too seriously’

The key to running a good company, according to Southwest Airlines (LUV) Chairman and CEO Gary Kelly, is to be passionate about what the company does and also to be humble.

"Don't take yourself too seriously" he told Yahoo Finance's All Markets Summit: The Path Forward. "We want to strive to be the best and that is a never-ending pursuit but it just pays to be humble because sometimes things don't go perfectly."

Kelly learned those lessons during the 36 years he has devoted to Southwest. He started as a controller at the airline in 1985 and worked his way up to chief financial officer and vice president of finance. The board appointed Kelly CEO in 2004, a position he will leave early next year when he becomes executive chairman.

"I think it is a very good time to transition in the sense that Southwest is so well prepared financially, our people are superb," Kelly said.

His biggest source of pride is that Southwest has never, in the 50-year history of the company, laid off any of its employees.

"Herb Kelleher said our people come first and they'll take care of our customers and then everything else takes care of itself in terms of other stakeholders, especially shareholders," said Kelly, referring to Kelleher who was part of the team that founded the airline more than five decades ago.

Southwest employs 56,000 people and stresses what it calls The Southwest Way. "Employees will be provided the same concern, respect and caring attitude within the organization that they are expected to share externally with every Southwest customer," according to Southwest's company guidelines.

"It is the most important thing," Kelly said. "It always has been and it always will be at Southwest Airlines, the culture is very, very strong."

But not without hiccups, as the airline has grown to one of the U.S.'s largest carriers under Kelly's leadership.

ry Kelly was on hand at the Grand Hyatt in downtown Denver on Wednesday, January 9, 2008 to announce 18 new non stop flights with 6 new destinations out of Denver. More than 300 Southwest employees are here in Denver for a marketing meeting. After the announcement Kelly dispatched the employees out to the streets to downtown Denver to distribute free tickets, coupons, and gifts. Cyrus McCrimmon, The Denver Post  (Photo By Cyrus McCrimmon/The Denver Post via Getty Images)
(JS) SOUTHWEST010908_CM11 - Surrounded by employees with red fleeces, Southwest Airlines CEO Gary Kelly was on hand at the Grand Hyatt in downtown Denver on Wednesday, January 9, 2008 to announce 18 new non stop flights with 6 new destinations out of Denver.

Southwest recently suffered a setback when it had to cancel thousands of flights in early October. Kelly called it a cascading combination of bad weather, staffing shortages at the airline and at the air traffic control center in Jacksonville, Fla.

"It impacted us significantly because we had close to 200 airplanes that by Friday evening were out of position with 66 different locations that we needed to get them and our flight crew to and in my history at Southwest, I don't remember an event like that, that created such problems," Kelly said.

Southwest is now rebuilding its network as it emerges from the pandemic and implementing new strategies to avoid repeating the October cancellation setback.

Other airlines use a hub and spoke system to route planes and crews. Southwest uses a point-to-point linear route system and is updating it with a strategy called backbone, "which is a real dense set of frequencies between important city centers in our route map. And we'll build those back and it will definitely create better resilience for us to recover in the future," Kelly said.

Turbulent road to recovery

Southwest is also attempting to staff up, hiring 5,000 new employees by the end of the year, as it adds more flights. Kelly recently told Yahoo Finance Live that balancing capacity with staffing continues to pose some challenges.

"We're seeing a little bit higher attrition, higher access to leaves, a little bit higher absenteeism. And, you know, people are just, they're still struggling through this pandemic. So we just need to be mindful of that," Kelly pointed out.

He serves as chairman of the board for Airlines for America (A4A), an airline industry trade group that lobbied Congress successfully for close to $40 billion in government assistance. Every U.S. airline used the grants to avoid laying off thousands of employees during the worst of the pandemic. Kelly said the future looks better for airlines but may include turbulence like rising jet fuel prices which are up 60% year-to-date.

"Traffic demand obviously collapsed in 2020," Kelly said. "It has recovered nicely in some ways and in other ways not so much. Two broad groups of travelers, business and leisure travelers, leisure travel is very strong and business travel is still quite weak."

Kelly said nobody knows how many years it will take for the industry to fully recover. "Things have changed a lot as we all know in this pandemic environment." But he remains optimistic and has advice other CEOs can use to improve their businesses.

"I think the words love, humor, those are all important for us. And it all leads up to the strong desire to take great care of our people and then in turn our customers," he said. "We care about our people. They are a family and all of that is critically important to our success."

Adam Shapiro is co-anchor of Yahoo Finance Live. Follow him on Twitter @Ajshaps

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