Q&A: Southwest CEO Gary Kelly

Q: If AirTran has about 200 daily departures out of Atlanta, how large do you think the (Southwest) operation will be?

A: I think that it could grow significantly larger than 200. I think AirTran has seen as high as 260 or 270 daily departures. They operate a little bit differently than we do. They have more of a hub-and-spoke complex than we have. But it doesn’t look significantly different to us than what we do in Chicago. We’ll have more flights than what they have today when all is integrated.

Q: If Southwest isn’t capable of operating international routes now, what will happen to AirTran’s international routes when the deal closes?

A: Hopefully we’ll have all of this coordinated so that our new reservations system is ready at the time that we would like to integrate the AirTran international flights into Southwest. We could continue to market AirTran and AirTran international flights three years from now if that’s what it takes, until we’re ready to move them to Southwest. [But] we're going to be highly motivated to move as fast as possible.

Q: When will baggage fees go away?

A: Baggage fees would not be charged on Southwest Airlines so at the point in time that we’re no longer selling an AirTran flight and it’s a Southwest flight, it would go away at that point. We haven’t decided what policy changes we would contemplate on Day 1 when we own them.

Q: When would business class be discontinued?

A:For a short period of time you could have a configuration that’s not the Southwest [all-coach] model. During that 24 months [for integration] we would be able to get that done.

Q: What happens to the AirTran executive team?

A: They haven’t been promised anything in terms of ongoing permanent assignments at Southwest Airlines. Their future is up in the air, no pun intended. But they have adequate provisions [from] AirTran to protect their pay, at least in terms of a change-in-control provision. We’ll need to take good care of them so that we can retain their very necessary services during the [transition]. We’re always in need of good people. We’re anxious to get to know them. We may have a good opportunity for them.

Q: Do you think there will be a learning curve for taking over the Atlanta hub?

A: I wouldn’t say that the hub-and-spoke piece is an issue. Inheriting a large daily operation that requires thousands of employees and in the busiest airport in the world, I think that we’re very humbled and I think that we expect we have things to learn.

Q: Why did you decide to acquire AirTran now?

A: We don’t have ambitious growth plans underway, so in other words we have the capacity to think about a growth plan like AirTran. Because I felt like we were ready, I reached out to Bob Fornaro and asked him if he was open to talking about this, and he was.

Q: How much risk is there in this deal?

A: There’s risk in life, so there are no guarantees. We have a very strong balance sheet so we can certainly absorb the roughly $2 billion in debt.

Q: Would you have any interest in the future of operating out of a second airport in Georgia?

A: I would never say never. We’re wiling to be guided by the community’s desires and interests. Here, clearly the desire with AirTran is Hartsfield. We don’t have any other plans underway to serve any other airport (in Georgia), and in fact absent the AirTran deal we don’t have plans to serve the Atlanta area. That’s not to say that we wouldn’t someday, but right now we do not.

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