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SWA's Gary Kelly named finalist for 2008 MarketWatch CEO of the Year

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Storm clouds gather, but Southwest CEO has a plan
With a head for numbers and strategy, Gary Kelly is suited to tough times

By Christopher Hinton, MarketWatch
Dec. 4, 2008
NEW YORK (MarketWatch) -- This past summer was as scary as it could get for the world's airlines. As the price of oil doubled from the previous year, fuel costs skyrocketed far beyond the industry's revenue, forcing dozens of smaller carriers into bankruptcy while investors dived for the exits
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.
With recession challenges looming large, observers note that Kelly's differences from Kelleher are also proving to be his strengths in daunting times. Southwest may now stand to benefit further as Kelly balances his pragmatic approach with Kelleher's vision of an airline that makes customers and employees top priorities, and whose magnanimous and boisterous reputation sometimes overshadows Kelly's quieter personality.