One airline that investors weren't abandoning was Southwest Airlines, a relative upstart with a chief executive who'd insured his company against a volatile spike in fuel prices. While other carriers got crushed by a 54% price jump, fuel contracts secured in the futures markets helped save Southwest more than $1 billion.
And at a time when other airlines were forced to cover rising costs by charging for formerly free services such as checked baggage, beverages and blankets, the hedging program at Southwest helped CEO Gary Kelly avoid such customer-service pitfalls. While passenger patience was being tested elsewhere, Southwest maintained its low-priced, people-centered business model and kept its stock valuation well ahead of its peers, a feat that made Kelly a finalist for the 2008 MarketWatch CEO of the Year award.
Kelly, whose reign as CEO began in 2004, is on a sometimes difficult quest to follow in the footsteps of Herb Kelleher, the airline industry's highly praised apostle of the low-cost-carrier model and founder of the Dallas-based company. A mostly successful journey, in the midst of such a wrenching year for airlines, makes Kelly's accomplishments in 2008 all the more remarkable.
