Originally Posted by
shoelu
You're absolutely correct, Kelly is no Anderson.
Kelly did not preside over $4 billion in losses at Northwest between 2001-2006. During those years Kelly was VP of finance and then CEO of a company that continued to add to its 30 consecutive years of profitability.
Kelly did not gut employee contracts in bankruptcy with such popular ideas as NewCo and GroundCo. NewCo set out to establish a low-cost regional carrier that brought back laid-off pilots with a new wage of $58,000, less than half of their previous salary of $120,000. GroundCo sought to wipe out 5,000 of the 14,000 jobs held by various airport ground workers and ticket agents. Kelly did not reneg on billions promised to creditors through BK.
You are absolutely correct, Kelly is no Anderson.
You've got your facts wrong. Richard Anderson was CEO of NWA from 2001-2004. Northwest didn't file for bankruptcy until 2005. The "gutting" of contracts and the formation of "Newco" didn't occur until after he left.
Yes, Kelly and Southwest made a once-in-a-lifetime bet on fuel hedges after Sep 11. They used the government money (from the sep 11 airline bailout money) to buy numerous fuel contracts that would secure low fuel prices for years to come. Southwest then had unprecedented growth across the country as they undercut other airline's ticket prices. I'm not saying there's anything wrong with this but let's be honest, Kelly was very lucky. He placed a huge bet on fuel (with money that wasn't his) and it paid off big.
But now that the fuel contracts have expired and Southwest is on equal ground with it's rivals, Kelly and Southwest are realizing that they may have bit off more than they can chew. Southwest is no longer able to expand, their profits have been reduced, they're having problems with the Airtran merger, they're leaving money on the table by not collecting baggage fees, and they've consistently had the worst on-time performance of any airline this past year.
I'm not counting Southwest out because they always seem to succeed. But this next year will be interesting. Delta seems to love the chance to compete head-to-head with Southwest now and consistently beats them. Southwest's entry into Atlanta was a failure. And Spirit is a true "low-cost" airline that is growing and I don't see Southwest being able to compete with their prices.
We'll see....