Now Parker must prove he can pilot Southwest, the most potent force in the airline business, through a period of unprecedented turbulence in the industry. So far, Parker’s kept his company on a steady flight path. While its major competitors were forced to drastically cut flights and jobs after September 11, Southwest kept all its planes and employees flying. The airline remarkably expects to turn a profit for the year, the 29th consecutive year it’s done so. And it will continue its rapid expansion in 2002, choosing new destinations from among the 144 cities that literally are begging Southwest to come to town. Because Southwest’s typical fare of $85 draws so many new travelers away from competitors, the Department of Transportation has a term for the way average ticket prices fall when the airline starts serving a city: “The Southwest Effect.”
Kelleher says he entrusted his airline to Parker because of “acumen, dedication and altruism.’’ That last one may be overstating the situation a bit, but the key to Southwest’s success is keeping its costs low, and that includes executive pay. Parker, who declined his paychecks for the difficult fourth quarter, draws the smallest salary of the big-airline CEOs, with an annual pay of $312,000–a relatively modest sum for a company with revenues of about $6 billion and a stock-market value of more than $14 billion, greater than all other major airlines’ value combined (Parker’s stock is worth more than $10 million).
Parker, an unassuming San Antonio native with undergrad and law degrees from the University of Texas at Austin, certainly has the acumen to know he’s no Kelleher, whose marketing stunts and tireless cheerleading have earned him living-legend status. Kelleher has one of the best highlight reels of any top executive–from sketching out his idea for a new airline’s route network on a cocktail napkin in 1966 to staging an arm-wrestling match with another company’s CEO for the rights to an ad slogan. Parker has said self-deprecatingly that he is a mere 60-watt bulb compared with the sun-bright intensity of his predecessor. (Kelleher thought Parker’s comparison was unfair, and teased him by asking, “What makes you think you’re 60 watts?”) Susan Donofrio, an industry analyst with Deutsche Banc, says Parker is doing a great job thus far, but notes that Southwest will miss having Kelleher, who’s even dressed up as Elvis for some ads, as the ubiquitous face of Southwest–“He’s like the Colonel and Kentucky Fried Chicken.” Parker hasn’t played the King, but he did wear a T shirt that said trust me. I’m a lawyer when he playfully tried to bribe the judges at a cheerleading contest among Southwest departments.
Since joining Southwest as a staff lawyer in 1986, Parker, 54, has played a key role in keeping a tight lid on the airline’s single biggest cost: labor. Most notably, he negotiated an innovative 10-year contract in 1995 with its pilots in which their union agreed to freeze pay for five years in exchange for stock options. As general counsel, Parker had to learn all aspects of Southwest’s business, and started to lead many projects, in part because of his diplomatic skills. “I try to stay out of the way of people who know what they’re doing.”
These days, Parker’s in his office–decorated in Tex-Americana artwork–from 7 a.m. to 8 p.m., working on projects such as expanding check-in operations to reduce lines caused by tightened security. And Southwest’s pilots are demanding a big pay hike, saying they’re losing ground to pilots at other airlines. Jonathan Weaks, president of the pilots union, has warned about “a train wreck” in upcoming negotiations. Parker says, “There is a little posturing going on.”
Parker knows how to posture, too. On his desk there is a sign that says NO WHINING. When asked if he follows that directive himself, he jokes no: “That doesn’t apply to me.” If Parker does his job well, the only people who’ll be whining are Southwest’s competitors.
