The head of Southwest Airlines abruptly resigned yesterday, the same day the airline reported a 54 percent decline in earnings for its second quarter.
After three years as chief executive of the nation's most profitable low-cost carrier, James F. Parker, 57, said a "combination of things" led to his decision to leave.
"This is a very exhilarating, but draining job. At some point you have given all you can give. Our people deserve the leadership that has the energy and focus to carry us onto the next level," Parker said in a conference call with media and industry analysts.
Parker, who said he resigned after his contract expired, had been with Southwest for 18 years. He said he notified the airline's board of his decision yesterday morning.
Gary C. Kelly, 49, Southwest's chief financial officer, was named as the airline's new chief executive and vice chairman. Parker has been Southwest's chief financial officer for the past 15 years. Southwest also named Laura Wright, 44, currently vice president of finance and treasurer, to succeed Kelly as chief financial officer.
Parker was named president and chief executive of the nation's most profitable low-cost carrier in 2001. He replaced the airline's legendary founder and chairman Herbert Kelleher, and steered the company through the Sept. 11, 2001, terrorist attacks. He also oversaw the airline's continued expansion, especially along the East Coast.
It has been a more difficult tenure for Parker recently. For the past two years, he has clashed with the flight attendants' union in bargaining for a new contract. For the first time in years, Southwest flight attendants picketed airports around the country to call attention to the talks.
After reaching a stalemate this spring, retired founder Kelleher was brought in to oversee the negotiations. Two months later, the two sides reached an agreement resulting in Southwest's flight attendants receiving a 31 percent pay increase over the six-year deal.
Benchmark Capital analyst Helane Becker said Parker's inability to smooth over labor relations was a problem, especially since Southwest is one of the most unionized airlines in the industry.
"When the same person handling the negotiations is the CEO, who do employees complain to? If the negotiator says something in the heat of battle that isn't thought out, it holds longer-lasting effects if the negotiator is the CEO," Becker said.
During the past few months, Kelleher also increasingly eclipsed Parker on other occasions. During the much-publicized rollout of its service at Philadelphia International Airport in May, it was Kelleher, a native of the area, who made trips there and met with city officials, not Parker.
Yesterday, Southwest announced it was expanding the number of daily flights in Philadelphia to 41 from 28 by Oct. 31. The move makes Southwest Philadelphia's second-largest airline in passengers, behind Arlington-based US Airways.
Southwest, the nation's sixth-largest airline, missed analyst estimates by reporting net income of $113 million, including $12 million in charges associated with the new flight attendants' contract and the airline's recent buyout plan, which was accepted by 1,000 workers. Revenue rose 13 percent, to $1.72 billion, from $1.52 billion.
A year ago during the same period, net income was $246 million, including a $143 million after-tax government grant related to the war in Iraq.