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Originally published February 16, 2012 at 12:21 PM | Page modified February 16, 2012 at 7:57 PM

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Alaska Air Group's internal Q&A with Ayer and Tilden

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Bill Ayer

Q: You started at Horizon as manager of charter sales in 1982. After 30 years at Air Group, what made you decide to retire as CEO?

A: I've been fortunate to have worked with thousands of dedicated people over these 30 years. We've achieved a lot, and we did it during a time when the airline industry fundamentally changed following deregulation.

I believe that a CEO can overstay his or her welcome and there should be different leaders for different times. And one of the principles of great companies is to develop strong successors for key jobs. So, after 10 years as CEO and working with the board for the past several years to plan for this transition, the time seems right for me to step down and let Brad take Air Group into the future. He's a very smart and passionate leader who has the right vision for our company. And even though his title change does not take effect until May, Brad is Air Group's top leader now.

Q: What will you do as chairman and how long do you expect to remain in that role?

A: The board has asked me to remain as chairman for the transition, so in conjunction with Brad and Phyllis Campbell, our lead director, I'll continue to set board agendas and run the board meetings. I will also have occasional involvement with airline industry issues. For example, I've just joined the NextGen Advisory Committee, which is helping the FAA modernize airspace, navigation and the air traffic control system. My tenure as chairman will be up to the board, but it won't be long-term. Other than for a transition, my belief is the new CEO shouldn't have the old one looking over his shoulder.

Q: You've been CEO during the most difficult years in the history of the airline industry. Why has Air Group successfully navigated through times in which every other legacy carrier went bankrupt or stopped flying?

A: One word: people. Our ability to work together and our openness to change sets us apart. A small company feel makes it easier. We'll continue to face competitive pressures, a weak economy and high oil prices, so change will be a constant. The only thing we can't change is facing up to realities and executing a business plan with a long-term perspective.

Q: What are you most proud of and what are your fondest memories?

A: First and foremost is that we've really embraced safety and compliance as our No. 1 goal. My most gratifying times have been watching individuals or teams achieve things that even they thought were impossible. Our recent improvements in on-time performance, customer service, cost control and network management are examples — and some of these weren't our strong suits in the past. That we're now ranked first in so many areas and that we're the only legacy airline to have never filed Chapter 11 should be points of pride for everyone.

Thirty years seems both like a long time and only an instant. The early days (pre-Air Group) at Horizon were difficult, and we were always worried about having enough cash to make payroll. Not a very fond memory, but one that has shaped our conservative financial approach. The past years have gone quickly, and I've had tremendous opportunities to learn new things and work with so many talented people in lots of different areas.

One day I'll never forget is when we took an eagle named Volta from the Raptor Center in Sitka to the New York Stock Exchange. The idea was to do something different that would be noticed by the Wall Street crowd. We certainly succeeded because the eagle got a little excited at the closing bell ceremony and showered the crowd below. Every time we go back to the NYSE, we're reminded about Volta's performance by those who were on the receiving end!

Q: In 'Character & Characters,' Robert Serling wrote that Alaska Airlines has 'an uncanny knack for picking the right leader at precisely the right time and, conversely, each leader has been succeeded by the right new leader.' How do you believe that observation applies to yourself and to Brad?

A: I do think that's been the case at our company, and I've observed it first-hand. First, about Brad. He has strong values, sound judgment and the tenacity to stick to a plan, even when there's debate or disagreement. He has been my right-hand person as we made the series of important but often difficult decisions over the past 10 years. He's helped drive the plan forward and is responsible for much of the success we're enjoying today. Brad has my and the board's complete confidence to lead the company as we confront more competition and new challenges. Most importantly, he knows the power of teamwork and is committed to working with all 13,000 employees to make sure we continue as an industry leader in safety, customer service, operational and financial performance, and technological innovation.

While others will be the best judge of what we've accomplished, I'm certainly proud of how we're positioned today. There are a few principles we've discovered that I think will serve us well long into the future: controlling what we can control; recognizing that customers ultimately determine our success; knowing that having low fares and low costs are required for long-term profitability and growth; and not being afraid to implement important changes even when they're really hard or unpopular. We also decided that being just a great airline isn't good enough. To prosper long-term, we need to meet the needs of customers, employees and shareholders, in a balanced way, which is what great companies do.

Brad Tilden

Q: You are only the seventh CEO at Alaska in the 55 years since Charlie Willis first held the position in 1957. What are your thoughts?

A: I feel very honored and humbled by the prospect of leading this great company. I could not be more proud of Air Group — of who we are, what we represent or where we're headed.

Everyone knows Bill sets a high bar for himself, his officer team and the company, and I hope people appreciate how skillful his leadership has been in keeping Alaska out of bankruptcy and in navigating the unprecedented challenges of our industry. None of the airline executives had any example they could turn to through the last decade of turmoil — Bill led the way. There were a lot of lonely moments for him, and what he's done took tremendous courage. But look at the results. No one, with the possible exception of Bill himself, would have predicted this performance by Alaska and Horizon vis-à-vis the other airlines. It's remarkable.

Q: What's your vision for Air Group, and how do we get there?

A: I think we have a destiny — to be the first airlines to truly transform ourselves and break the malicious cycle of boom and bust that has plagued the industry. We've done a lot of great things in our history, but this is

something that hasn't yet been accomplished.

Our future should be one where we continue to grow and prosper and provide terrific service to our customers and great jobs for our people. We should do this in a way where good begets good and we get stronger as we go — reinvesting in our business, enhancing our product, making ourselves more competitive, and further reducing our vulnerability. It has to be earned through performance, but we should have a future where we are a strong, independent, Seattle-based company. And very importantly, our people should feel like this is a great place for them to use their talents. They should feel like this is fundamentally a good company and that they're in an environment where they can do well and have rewarding and fulfilling careers. I have every confidence in the people that make up Alaska Air Group and I believe we will make this future vision a reality.

With respect to the 'how do we get there' part of the question, we'll do a lot of what we've been doing. First, we'll work hard and be aggressive. Second, we need to understand what it takes to win: work together, believe in each other and push Air Group to new heights. In terms of specific actions, we've put a lot of thought into the Five Focus Areas, and they will be a good road map for us.

Q: What are the biggest challenges Air Group faces?

A: There are a lot of things to worry about in this industry, but for me, three issues rise above the rest. First is safety. Having gone through the tragedy of Flight 261 twelve years ago, we can never let that happen again. We have to

make safety our highest priority every single day.

Second is low-cost competition. Low-cost airlines have been gradually eating away at the rest of the industry for 20 years, and we would be smart to assume this will continue. We've made good strides, but we're not out of the woods yet and need to prepare ourselves for more low-cost competition.

And third is the challenge of keeping us all aligned, working together and supporting each other to keep Alaska growing. If you look at the downfall of other airlines over the past 10 years, I would say that reason No. 1 for their failures is an inability to work together to address problems and pursue opportunities. I think Alaska and Horizon are in better shape than most on this front — but it's very important and I do worry about it. We put the FlightPath program together to help address this concern.

Q: You joined Alaska in 1991 in the Accounting Department and have held various leadership positions in the past 21 years. What defines your leadership style and how will that change now that you are CEO?

A: While I try to keep a positive outlook, I suspect I wear people out sometimes with questions and prodding. More than one person will tell you that I have a bit of a 'Brad is never happy' reputation. But I am happy. I love being here, and we have a fabulous leadership team and a terrific group of frontline employees. I know this business is brutal, but I believe that we can get through anything if we apply ourselves with an unrelenting effort to improve.

As to what may change with regard to my leadership style as I move into the CEO role, I would say 'not much.' I will focus on helping our leadership team identify and write down our most important goals (like the Five Focus Areas), and I will push for honest assessments of progress and for good plans to keep us moving forward. I also think it's important that we understand that we will win or lose on the frontlines, and all of us in leadership positions need to spend even more time working with our frontline employees to fight the competitive battles that we need to fight.

Q: You're a private pilot. When did you first know you wanted a life and career in aviation?

A: I remember climbing aboard a 727 when I was in kindergarten and I think that's when the aviation bug bit me. I grew up near Sea-Tac, and I would love to come out and watch airplanes take off and land. There used to be a good

place to do that where the third runway is located now. I learned to fly at

Renton Airport during the summers of my college years.

But more than that, I've always wanted to work at Alaska. I remember reading about Alaska while in high school and college — in the late 70's and early 80's

- when we were expanding like there was no tomorrow. I like what Alaska and Horizon do — connecting people and communities throughout our route network — and I think it's important. This company also has very good values and great people. We're big enough to be able to do things right, but small enough to know and care for each other and our customers.

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