Southwest Airlines Executive Chairman Gary Kelly retires early, Board announces new members
DALLAS – Southwest Airlines Executive Chairman Gary Kelly is accelerating his retirement, effective Nov. 1.
"Gary Kelly's been a part of Southwest for decades. Obviously, he's the former CEO for a long time, so it is quite a bit of a shift to not have him involved in the company, but I think this is part of the compromise southwest had to make," said Ryan Ewing, founder of airlinegeeks.com.
Ewing is an airline industry insider who believes one reason for the abrupt change could be a drop in Southwest's third-quarter profits. It fell by nearly two-thirds to $67 million.
"They were one of the margin leaders in the industry for a long time, and in the past couple of years, they've kind of fallen from that status," Ewing said.
Six other directors will also proceed with their previously reported retirement. On Thursday, the Dallas-based airline announced the appointment of six new independent directors.
The news came as a shock to loyal Southwest flyers Gary and Rhoda Sjoberg.
"All those board members have to do is not screw things up. That's their big challenge to keep Southwest, Southwest," Gary said.
"Is it by choice that they're leaving, and the new board members, what do they have to offer? Will they be changing what Southwest currently offers? Because as frequent fliers, we actually like Southwest the way it is, and I do travel a lot," Rhoda said.
This comes as Southwest announced other major changes earlier in the year, including an end to open seating starting in 2025.
"Why would you make it more complex," Gary said. "Don't make it United. If we wanted to fly United or American, we would be on United or American."
The new directors include David Cush, Sarah Feinberg, Dave Grissen, Gregg Saretsky, Patricia Watson, and Pierre Breber. All appointments will take effect Nov. 1.
Breber previously served as vice president and chief financial officer at Chevron. Cush guided Virgin America to its first annual profit, led a successful IPO, and negotiated its acquisition by Alaska Airlines. Feinberg has been the administrator of the Federal Railroad Administration, chief of staff to the U.S. Secretary of Transportation, and interim president and CEO of the New York City Transit Authority. Grissen was the former group president of Marriott International.
Saretsky is the former CEO of WestJet, and Watson has been the chief information and technology officer at NCR Atleos since October 2023. Saretsky will now chair Southwest's Finance Committee, which oversees its operational and strategic plans, with Cush and three additional directors to join.
"On behalf of the Board, I want to thank Gary for his countless contributions to Southwest throughout his career," said Southwest Director Rakesh Gangwal. "He leaves an indelible mark on Southwest as a pioneer of the Company's growth into the largest domestic carrier with an industry leading network, reputation, balance sheet and a bright future."
Following his departure from the Board, Kelly will become chairman emeritus. According to the news release, the Board will appoint an independent chairman and reduce its size to 13 members as of Southwest's 2025 Annual Shareholder Meeting.
Kelly previously planned to retire next year following pressure from the hedge fund Elliott Investment Management, which has acquired an 11% stake in the airline and pushed for changes to enhance its financial performance and stock price.
Elliott holds Southwest's management responsible for the airline's stock price dropping by more than half in three years. Along with Kelly, the hedge fund sought to replace CEO Robert Jordan, but he will remain in his role.
In a statement, Kelly expressed satisfaction with Southwest and Elliot's collaborative agreement, noting that the partnership continues to refresh the Board by adding new directors with diverse and complementary skills and experience.
"I am confident this Board will continue to hold the leadership team accountable for executing its transformational plan and delivering financial performance," Kelly added. "It has been the honor of my lifetime to work with our People and serve our Customers in making Southwest the leader it is today. I believe Southwest's best days lie ahead under the vision and leadership of Bob Jordan and the oversight of this reconstituted Board."