Balancing the bottom line, keeping customers happy and spreading the “LUV” is what keeps Southwest veteran Tammy Romo loyal.
Tammy Romo might occupy one of the top jobs at Southwest Airlines, but the chief financial officer and executive vice-president says her raison d’être is to serve. “I would hope that everyone whom I work with would view me as a servant. The role comes pretty naturally to me, I think, because I love it here so much,” she says.
“Love” is a word closely aligned with the Dallas-based carrier’s identity. Customers love Southwest, employees love Southwest and investors do, too. Last year was another record earner for the airline, known as LUV on the New York Stock Exchange, marking its forty-sixth consecutive year of profitability.
For Romo, love is the guiding principle that helps to differentiate Southwest in the competitive airline industry. “I believe our people and our culture are by far our key strengths at Southwest,” she says. “We have a mission that I really like, because it’s simple and sincere. Our employees carry out that mission with pride, and we have a very caring and loving culture here at our airline.”
As a leader responsible for managing the airline’s finances – a task that may not always appear congruent with her people-first mentality, Romo helps foster an environment of caring among her team by reinforcing the notion that both a strong mind and strong heart are needed for success. “We want to protect our balance sheet because it allows us to take care of our employees, our shareholders, our lenders and our vendors; we take that very seriously.”
The University of Texas at Austin alumna, who has a Bachelor of Business Administration and is a certified public accountant in the state of Texas, started at the low-cost carrier in 1991 as a manager, doing financial reporting after spending time as an audit manager at Coopers & Lybrand in Dallas. “It didn’t take long for me to drink the Kool-Aid,” she says with a laugh.
That’s not to say her job hasn’t been full of challenges over the course of her almost three-decade-long career. From the fuel price spikes after the first Gulf War to the almost collapse of the industry following 9/11 in the early to mid-2000s, every day brings a new test, which is one of the reasons she’s stayed put. “The airline industry is not for the faint of heart … I can tell you truthfully that there has never been a day that I haven’t wanted to come in to work; there’s always something going on,” Romo says.
Those challenges forced Romo and Southwest to come up with a new strategy for the airline’s future. In 2011, they bought AirTran Airways. In recent years, they’ve revamped their frequent flyer program and launched fleet modernization efforts. While Southwest remains a predominantly domestic carrier, Romo says these efforts have allowed the company to acquire a new set of capabilities, including longer-haul flights. “When I started, flying internationally seemed like a dream, but it’s been really fun watching that turn into a reality.”
Today, Southwest occupies a 24 percent market share and is the number one carrier in many of the 10 largest metropolitan areas in the United States, including Las Vegas, Phoenix, the Bay Area and Washington, DC. It carries at least one-third of domestic travelers in several of those markets and transports about 120 million passengers annually. In the past five years, Southwest’s stock has topped the industry, making it a darling of Wall Street.
Those figures give Romo the confidence that she and her team are making the right financial decisions, even in the face of criticism. Southwest famously lets bags fly free – a value proposition that has its detractors. After all, in the third quarter of 2018 alone, US airlines recorded $1.3 billion in revenue from baggage fees, according to the Bureau of Transportation Statistics. But Romo maintains that the policy brings in money in other ways. The airline industry is very competitive, and it can be tough to distinguish yourself, she says: “It’s a differentiator for us.”
“We want to protect our balance sheet because it allows us to take care of our employees, our shareholders, our lenders and our vendors.” – Tammy Romo
Southwest has, however, found other ways to pad the bottom line. In September 2009, for instance, it introduced the EarlyBird Check-In fee, which in its first year netted $100 million in additional revenue. In 2017, that figure came in at just over $350 million. Last year, the airline began a variable pricing model on its EarlyBird product, which peeved some, but nonetheless continued to perform above expectations in the last quarter of 2018. This type of ancillary fee works for the airline’s customers because it’s not one that’s forced on them, Romo says: “For customers who care about boarding first, it gives them an option. It fits with our brand really well.”
Taking the lead
As of last year, only 10 of the top 100 airlines have female CFOs, including Southwest, according to FlightGlobal. In general, women are underrepresented at the senior management level in the aviation industry, despite studies like one from consulting firm McKinsey that finds that companies with gender-diverse executive teams are more likely to outperform their less-diverse industry peers.
At Southwest, 25 percent of executives are women, and they make up almost 30 percent of the board. In the finance department, over half the leaders are female, including Romo, who was promoted to CFO in 2012 after her predecessor Laura Wright retired. “I do think it’s important that we have an inclusive environment, and women certainly play a big role in that,” Romo says.
She notes that Southwest has long supported initiatives that encourage women leaders. In 2009, through the sponsorship of the airline’s then president Colleen Barrett (named one of the world’s most powerful women by Forbes in 2005), Romo participated in Leadership Women Texas, a competitive program that provides educational and developmental opportunities for women in that state who want to advance as leaders. “It was wonderful,” Romo says. “We visited a lot of the cities that Southwest serves, and it gave me an opportunity to really understand the issues, challenges and opportunities that were impacting the cities we were serving.” The airline continues to send women to the program and to its sister initiative, Leadership America.
Romo admits to spending a lot of time at the office, but outside her busy work life, she likes the simple things, such as spending time with her family, including her two children, her husband and her dog; and her friends – “I treasure that.”
She reads a lot, too. But instead of escaping into fiction, Romo spends her time with material that helps her be a better leader in the industry. “I may not find all of it enjoyable, but hopefully it helps me stay on top of what’s going on within our industry and with the economy,” she says. One of her recent favorites? Mindset: The New Psychology of Success by Carol S. Dweck.
Whether it’s her choice of extracurricular reading or simply the fact that Romo loves what she does, according to the numbers, she’s clearly in the black.
This article was originally published in the 9.2 April/May issue of APEX Experience magazine.