Sky Talk

New Southwest Airlines president combines tech and people skills

Tom Nealon oversees finance, marketing, revenues and all of the airline’s technology platforms, including the website and a new reservations system that will go live in May.
Tom Nealon oversees finance, marketing, revenues and all of the airline’s technology platforms, including the website and a new reservations system that will go live in May.

Tom Nealon has been a chief information officer at three large Dallas companies, but he doesn’t consider himself a tech guy.

Instead Nealon, who was named president of Southwest Airlines in January, says he’s a businessman who happens to have a technology background.

That combination of skills is particularly relevant at the Dallas-based carrier and other airlines these days. In recent months, the airlines have suffered from a series of computer outages that stranded hundreds of thousands of customers, putting a spotlight on the importance of technology to their operations.

At Southwest, Nealon sees technology as a “fundamental enabler” of the airline’s growth strategy, helping to make its operations more efficient so employees can focus on customers.

“We need to be digital,” Nealon, 56, said during a recent interview in his office at Southwest’s headquarters at Dallas Love Field. “We need to strengthen our customer experience. But our customer experience is always going to be centered with our people.”

When Southwest canceled thousands of flights last July after a backup router failed, Nealon drew lessons from both the technology and people sides of the business.

“We let a lot of our customers down and it was painful to watch and it was painful to see,” he said. “And what was more painful to see is what our front-line employees had to do to work through it.”

Nealon said he knew members of a girls’ lacrosse team who were stranded by the outage, who were provided sleeping bags and pizzas by Southwest employees. Nealon credited employees who “go above and beyond” with helping the airline recover from a customer service disaster.

Nealon now oversees finance, marketing, revenues and all of the airline’s technology platforms, including the website and a new reservations system that will go live in May.

He said he believes his job is not to focus on month-to-month performance, but rather to strengthen Southwest’s “LUV” culture. Nealon said he loves talking to employees about their jobs and their passion for Southwest’s customers.

“Yes, [on-time performance] is important but you’re not going to get to it if you don’t have the people, if you don’t have the heart and soul,” Nealon said, reflecting on how he views his role as president.

While his promotion to president has led some industry analysts to speculate that Nealon may be a possible heir-apparent to Southwest chief executive Gary Kelly, he said his return to the company in late 2015 did not include any commitments that he might one day lead the Dallas-based carrier.

He first worked at Southwest for four years last decade.

“Our vision is to be the world’s most loved, most flown, most profitable airline and that’s a pretty bodacious vision,” Nealon said. “The reason I came back in [to Southwest] is I really believe in the vision.”

From chips to airlines to clothing

Nealon’s first job out of college was to replace all of the IBM 1288 optical scanners at Frito Lay, the very scanner that his father had developed as an engineer at IBM.

“I was taking that out and putting in new handheld computers. So Tom Nealon [Sr.] put it in and Tom Nealon [Jr.] took it out … my dad and I got a big laugh about that,” Nealon said.

Charlie Feld, who was chief information officer at Frito Lay at the time, had known Nealon since he was a teenager from Feld’s many business trips to IBM. Feld said he knew Nealon had the right temperament to eventually be a leader at the snack manufacturer.

“He was the first college graduate we put in the data center,” said Feld, who hired Nealon right after he graduated from Villanova University. “I wanted him to learn about [information technology] from the ground up.”

While at Frito Lay, Nealon worked on the help desk, in the programming department and with the financial planning group. After Feld left, Nealon stayed with the company and in a few years was promoted to CIO.

In 2000, Nealon decided to join Feld’s IT consulting group, working for a couple of large corporate clients when Southwest hired Feld’s firm to help modernize the carrier’s computer systems.

Feld told Southwest that he couldn’t do it but that “I said I had a great guy that culturally and technically and leadership-wise will be a good fit, so Tom went in as their CIO.”

Nealon spent four years as the top technology executive at Southwest at a time when the carrier had to comply with new security requirements following the terrorist attacks in 2001. He wasn’t looking to leave the airline when Southwest’s then-President Colleen Barrett asked Nealon to have dinner with JCPenney’s chief executive Mike Ullman to discuss technology challenges facing the department store chain.

“It was a one-hour dinner that became a three-hour dinner,” Nealon recalls, adding he was intrigued by how the traditional retailer was trying to adapt to an e-commerce marketplace. “By the end of the dinner, I called Colleen and said, ‘I think we have a problem. I think I want to go do this.’ 

Although he loved running the e-commerce business and digital ventures at JC Penney, Nealon said he missed the airline industry and kept in touch with his colleagues at Southwest. When Kelly asked Nealon to join Southwest’s board of directors in 2010, he immediately said yes.

“I said, ‘Are you kidding? That would be awesome,’ ” Nealon said. “It made me more and more homesick for Southwest.”

Walking away from the executive suite

When Ullman retired at the beginning of 2012, Nealon decided to leave the executive suite as well, but not because he was getting a new boss.

Nealon’s wife, Shannon, was diagnosed with brain cancer and Nealon knew he had to put aside the demands of a high-profile executive job to focus on his wife and three children.

“I didn’t work. I was making breakfast for my kids, taking care of Shannon,” Nealon said adding he went to all the soccer games and school plays. “There were two years where I did not work and it was the easiest decision in the world.”

To stay involved in the business world, he began working with a few corporate clients as part of Feld’s leadership coaching and training firm. He also joined Fossil Group’s board of directors.

“Everything great about Tom came to the surface in those couple of years, in terms of his strength and optimism and his ability to work his way through stuff,” Feld said.

As his wife’s health improved, Nealon knew it was time to get back in the game. Kelly, who had worked with Nealon when he was CIO at Southwest and on the carrier’s board, approached Nealon in late 2015 about coming back home to Southwest.

Back in flight

His first two months back in a full-time job, Nealon said he spent all of his time meeting with every senior manager to understand what was working at Southwest and where the carrier needed to improve.

“What I realized is there was a lot that was working,” Nealon said.

The company had completed most of its integration of AirTran Airways, which it purchased in 2010, but the international routes it gained from that acquisition were not performing as well as they could. Nealon said most of passenger traffic on Southwest’s flights to Latin America are American leisure travelers flying south.

To tap into potential Latin American passengers wanting to travel to the U.S., Nealon said the company needed to invest in technology including foreign currency exchanges and point-of-sale programs.

Southwest’s new reservations platform will give the carrier more revenue management capabilities and functions to sell to international customers, Nealon said. The carrier, which has spent more than $500 million on the new system, began selling domestic tickets on the new system in December and plans to completely cut over from its old system on May 9.

Even though the new system will give Southwest better price controls over its fares and the possibility of adding new ancillary charges, Nealon reiterated that the carrier won’t charge passengers for the first two checked bags.

“It’s part of our brand,” Nealon said. “It’s part of our promise to our customers, and we’re not going to change it.”

Andrea Ahles: 817-390-7631, @Sky_Talk