The Motley Fool's readers have spoken, and I have heeded your cries. After months of pointing out CEO gaffes and faux pas, I've decided to make it a weekly tradition to also point out corporate leaders who are putting the interests of shareholders and the public first, and who are generally deserving of praise from investors. For reference, here is last week's selection.
This week, we're going to delve deep into the heart of one of America's most-hated sectors, the airline industry, and I'll show you why Southwest Airlines (NYSE: LUV ) CEO, Gary Kelly, is flying high above everyone else.
Kudos to you, Mr. Kelly
There's not much to like about the airline sector from the ground up. Airlines are notorious for endless fees, have notoriously bad reputations for the quality of their customer service, and have a hideous track record when it comes to profitability. In fact, there have been more than 100 bankruptcies in the airline sector just since 1990.
Southwest has completely changed that mold. Southwest is one of the few no-nonsense regional airlines that doesn't charge its fliers for their first two checked bags. This may seem like a benign act, but it's had incredible implications. To begin with, it encourages more fliers to check their bags. Most airlines prefer passengers not to check their bags, as it absolves them of potential loss liabilities. Southwest sees things differently. With more fliers checking their bags, Southwest spends less time loading and unloading passengers and luggage from their planes which allows them to spend more time flying. So while Delta Air Lines (NYSE: DAL ) will charge $125 for a third bag and $200 for each additional bag, you'll only begin incurring a fee with Southwest starting with your third bag.
A step above his peers
Southwest is also consistently profitable due to its tight cost controls, its high satisfaction rate among its customers, and the fact that it's successfully hedged its fuel costs for years. US Airways (NYSE: LCC ) is one of the few airlines that chooses not to hedge its fuel costs, which can occasionally work in its favor, but often doesn't since oil prices tend to trend higher.
Southwest has been profitable in each of the past 10 years, which, may I add, encompasses the back-end of the negative impact of the tragic terrorist attacks, and the worst recession in 70 years. Not even regional airlines Alaska Airlines (NYSE: ALK ) or JetBlue Airways (Nasdaq: JBLU ) , which have relied on their route flexibility and competitive pricing to undercut the national airlines, have been able to stay profitable every year over the past decade. Simply put, Southwest is unrivaled.
But, there's one final piece to the Southwest puzzle that makes it great and places Gary Kelly well above his peers -- its 401(k) contribution match for its pilots' retirement savings plan. I might be kicking tires since pilots generally are compensated well, but the fact that Southwest matches dollar-for-dollar up to the first 9.3% of an employees' contribution is practically unheard of when it comes to company generosity.
Sometimes it doesn't take rocket science to be a great CEO. In Gary Kelly's case it's as easy as keeping customer satisfaction rates high, keeping fees reasonable, perpetuating a long history of consistent profitability, and supporting a 401(k) match that's off the charts. Mr. Kelly easily flies into the rafters as a truly incredible CEO and gets a well-deserved two thumbs-up from me.
Do you have a CEO you'd like to nominate for this prestigious weekly honor? If so, then head on over to the new "CEO of the Week" board and chime in with your fellow Fools on who deserves some praise. If you don't have a nominee yet, don't worry: You can still weigh in on other members' selections.
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