In today’s Airlines Confidential podcast former Spirit Airlines CEO Ban Baldanza walks through what issues are decided solely by management at an airline (in his experience) and what questions rise to the level of discussion by the Board of Directors. Baldanza is a board member of JetBlue and a former board member of Wow Air.
There are clearly things that fall under the board’s purview – mergers, hiring and firing the CEO – and things that clearly don’t like which aircraft to schedule on a given route. But where’s the line? As Baldanza explains,
- Level of detail discussed at each airline will vary by board
- boards get involved in decisions likely to have a material impact on the finances of the company or how it’s perceived by investors and lenders
- Labor contracts and major fleet deals are some decisions that would fall under that umbrella
- Specific decisions like scheduling aren’t generally part of board deliberations, though boards may be given a report that include things that have happened at the airline since they last met
In his book Southwest Passage Lamar Muse, founding President of Southwest Airlines, relays the story of his ouster – the precipitating issue, in his telling, was that he’d placed a $1000 deposit on a new aircraft order without the board’s approval. In his mind he had authorization to spend $1000 to secure a deal option, in airline co-founder Rollin King’s mind he had exceeded his authority in placing an aircraft order without board approval. It was this board battle, that Muse lost, that led to Herb Kelleher taking operational control of the airline.