In 1972, Southwest Airlines was a small Texas carrier with four Boeing 737s, a pile of legal bills, and almost no cash. It had spent years in court just to get off the ground, fighting established airlines that wanted to keep it out of Texas skies. Barely a year after its first flight, the company needed money badly enough to sell one of its four airplanes. On paper, losing a quarter of the fleet meant losing a quarter of the flights, and for a young airline that could have been the beginning of the end.
Herb Kelleher was the San Antonio lawyer who had helped found the airline with his client Rollin King. When rivals sued to block it, Kelleher led the legal fight for years, taking it to the Texas Supreme Court and the U.S. Supreme Court before Southwest finally carried passengers in June 1971. In 1972 he was the company's lawyer and a director, not its chief executive; Lamar Muse was president. Kelleher would become CEO in the early 1980s and lead the airline for about twenty years. But the crisis of 1972 shaped everything he would later stand for.
The answer to losing an airplane came from the ramp. Bill Franklin, the vice president who ran ground operations, told his crews they would turn an airplane around at the gate in ten minutes, down from roughly twenty-five. Agents, flight attendants, and ground crews studied racing pit crews and attacked every step of the turn: unloading, cleaning, provisioning, boarding. Beginning in May 1972, three airplanes flew most of a schedule that had been built for four. Muse later wrote that on-time performance and flight completion actually improved after the change.
Kelleher drew a lesson from moments like that and never let it go. The people who saved the company were not in the boardroom. They were the ones sweating on the tarmac. His philosophy, repeated for decades, put employees first, customers second, and shareholders third. He explained it as a chain: "Your People come first. And if you treat them right, they'll treat the Customers right." Happy customers come back, he went on, and that is what makes shareholders happy.
He backed the words with money. In 1973, right after Southwest's first profitable year, the airline started a profit-sharing plan for employees, the first in the U.S. airline industry. A portion was originally steered into Southwest stock, and over the decades employees came to own a meaningful slice of the company; by 2020 they held nearly 7 percent. The company tells of an early employee who, twenty-five years after joining, was looking forward to retiring a millionaire, largely through profit sharing. For many workers, the plan turned a paycheck into a stake.
He backed the words with security too. For nearly half a century, Southwest never involuntarily furloughed or laid off an employee. That held through fuel shocks, recessions, and the collapse in air travel after September 11, 2001, when much of the industry shed jobs by the tens of thousands. The airline earned a reputation as a place where people stayed, and where a heavily unionized workforce still described high morale. Kelleher also encouraged humor and personality on the job, from flight attendants breaking into song on board to a culture that celebrated people being themselves.
The results were hard to argue with. Southwest turned a profit in 1973 and then every single year through 2019, forty-seven years in a row, a streak without precedent among U.S. airlines. It grew from a three-city Texas carrier into one of the largest airlines in the country. Kelleher died in January 2019, at 87, about a year before that streak ended.
The honest ending is more complicated, and it matters. The pandemic broke the streak in 2020, when Southwest lost about $3 billion. Kelleher's successor, Gary Kelly, gave up his salary, asked unions to accept pay cuts, and leaned on thousands of voluntary leaves and buyouts to keep the promise alive, and the airline got through COVID without involuntary furloughs. But in February 2025, under different leadership and heavy investor pressure, Southwest cut about 1,750 corporate jobs, the first layoffs in its history. Culture is not a trophy you win once. It is a promise each generation of leaders has to choose to keep.
You probably cannot start a profit-sharing plan on Monday. But you can decide, as clearly as Kelleher did, who comes first on your team. If you put your people first, your customers get served by people who feel taken care of. If you put them last, your customers get served by people who are counting the days.
Start by finding your ten-minute turn. Somewhere on your team, people are solving a problem you did not fully see, keeping a schedule running with fewer resources than it was built for. Go find them, learn exactly what they did, and tell everyone. Then look at what your people actually get when they make the organization succeed. Recognition, a share of the gain, protection when times get hard: whatever you control, use it, and be specific.
Most of all, be honest about the trade-offs. Kelleher never pretended that putting employees first meant ignoring results. Southwest ran lean, worked hard, and expected a lot. The bargain was simple: give us your best, and we will treat you as the reason this place works.
In 1972 a struggling airline had to give up a quarter of its fleet, and its people answered by doing the impossible on the ramp. They did it because someone made them believe the company was theirs. Treat your people like they matter more than anyone else, and you may find they will carry you further than any plan could.