TMF: I am casting about for an analogy to what Southwest has achieved in other industries. You mentioned the extraordinary performance of your stock over the last 30 years. Is Wal-Mart
Parker: Yeah, I think there are comparisons. Herb Kelleher and Sam Walton became great friends and admirers of each other. There are similarities. We are in different businesses, of course. You have to adapt the business to the line of commerce that you are in. But there are similarities in terms of great value, low cost, consistent growth, and so forth and appealing to people's sense of value.
TMF: You just mentioned your predecessor, Herb Kelleher. For those who don't know or remember Herb that well, he is widely credited, of course, with much of the company's success. He is known for his affinity for whiskey and for doing some hard smoking as well. I want you to compare and contrast Jim Parker's CEO to Herb Kelleher's CEO.
Parker: I said when Herb gave up the titles of president and CEO and Colleen Barrett became president and I became the CEO that Herb was such a legend that we had to divide his job up, and the way we were going to split it up was Colleen was going to handle the smoking and I would take care of the drinking.
TMF: How hard has it been to follow in the footsteps of somebody who achieved so much?
Parker: Nobody can be another Herb Kelleher, and it would be a mistake to try to be Herb. I would just be a poor imitation. But I have drawn so much strength from the support of our employees who have just been so extremely supportive and just come up to me all the time every time I get on an airplane and express their support and their affection.
I was going through an airport the other day and the employees figured out I was there and they came up and I was getting lots of hugs and kisses. We are a very affectionate company. I got on the airplane and I thought to myself, "Well, the CEOs of those other big airlines may make a lot more money than I do, but I bet I get more hugs and kisses than they do."
TMF: Now, Jim, in some way this whole interview was a prelude to this next question. You mentioned the affection at Southwest Airlines. You knew this question was coming, but we need the bare facts. Southwest fired two pilots recently for flying naked. What happened?
Parker: Well, I can't talk in detail about pending internal matters, but a couple of pilots exercised some very bad judgment and we terminated their employment. We are just trying to convince our pilots to keep their clothes on.
TMF: Can we assume, Mr. Parker, that at this point in time you are, in fact, fully clothed?
Parker: Boy, I am fully clothed. (Laughs)
TMF: This is not a company-wide problem, then. OK, Jim, what sparked your interest in the airline business in the first place?
Parker: I never really envisioned myself working for a corporation or any business. All I ever wanted to do was to be a lawyer. I am a lawyer by trade. Herb Kelleher, one day out of the blue, asked me if I wanted to go to work for his law firm. I did and we represented Southwest and it was just the most exciting company in a very exciting business that I had ever encountered. When I had the opportunity to come here as general counsel, it was just an opportunity that I couldn't pass up.
TMF: Jim, a lot of investors looking at the stock chart of Southwest Airlines over the last three decades would see, well, they will all see a climb up Mt. Everest, something that looks quite a bit like that. But for a number of those investors, that would indicate to them a stock to avoid because it has already done so well. Speak to the potential investor in Southwest Airlines about the future prospects for the business.
Parker: The key thing about Southwest's growth over the last 32 years, I think, is its consistency. We have been profitable for 30 straight years. We have grown every year. We have a tremendous opportunity ahead of us. Right now, we have 377 airplanes; we have over 400 more airplanes coming from Boeing that we have on order or option or have purchase rights for between now and 2012.
We have never tried to grow faster than we could digest. We tried to take everything in bite-size chunks and digest our growth every year. That way, I think we have the kind of financial strength that can assure our ability to continue to grow and perform over the next 30 years the same way that we have over the last 30 years.
TMF: Given the state of the industry and your mindset running the operations at Southwest, do you think this is a time to really play offense because you can pick up some new routes now as competitors are struggling... or do you think Southwest should really be defensive here because you are at a very tough time with a lot of outside factors that you don't normally deal with?
Parker: We have been pretty much playing defense since 9/11. We have slowed down our growth, slowed down our capital spending, pushed back some of those aircraft orders into future years because this was a unique set of circumstances, really, in the history of our nation and the history of our business. Not only were we faced with an economic slowdown, but also we had the terrorist attacks and really the threat of more terrorist attacks.
I think that as the mindset of America gets past the concern of terrorism -- and hopefully we will get past that, although we can never totally put it out of our mind -- we are returning to maybe a more normal environment. I think that is the kind of environment where you might see Southwest become a little bit more aggressive.
TMF: Jim Parker is the CEO of Southwest Airlines. Jim, thanks for joining us again on The Motley Fool Radio Show.
Parker: Thank you. It was a pleasure.