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The recent crash of an Air demonstrates just how quickly word-and video footage-of a tragedy can cross the globe. A spotless reputation one minute, one marred by question marks the next-one disaster can quickly plunge even the most revered of companies into jeopardy. In such an image-conscious and media-frenetic world, a CEO's ability to tread carefully, yet respond rapidly in crises is critical. But it's no easy feat. For a close-up look at grappling with the aftermath of tragedy, CE goes behind the scenes with Alaska Airlines CEO John Kelly, who has been besieged by federal probes, lawsuits, and scandal-hungry media since the January crash of Alaska Air Flight 261. 

Day One

January 31, 2000, 5:30 p.m.:

Alaska Airlines Flight 261 from Puerto Vallarta to San Francisco is reported to have fallen off the radar scope approximately 20 miles north of the Point Mugu, California, coast… The Coast Guard has been dispatched…

“John, Greg and Jack need to see you right now. It’s urgent,” said Barb Johnson, CEO John Kelly’s assistant, catching her boss mid-stride as he exited CFO Brad Tilden’s office, a can of diet root beer in his hand. It was 4:45 p.m.

Minutes before, Jack Evans in media relations had fielded a call from the FAA in L.A. forwarding a local TV reporter’s inquiry about a plane going down. Greg Witter in communications frantically called flight operations but no one answered. He tried the VP of technical operations and again there was no aswer. Within seconds, another reporter was on the line asking about an Alaska plane in the water even as flight operations called to confirm the apparent fate of Flight 261.

Kelly headed for Evans’ and Witter’s cubicles, soft drink still in hand, where Evans told him, “We may have a plane in the water.” After operations confirmed the information, Kelly returned to his office to collect his emergency procedures manual, laptop, and cell phone. He flipped on his office TV to see CNN going live with the story just before rushing across the street to the company’s crisis command center.

By 5:15 p.m. Kelly and Witter were drafting the first of a series of public and Web site announcements and canceling all print and broadcast media advertising. The media relations department swelled to 53 as pre-selected staffers from other departments joined the effort. A representative from nearby Boeing called, offering an aircraft with communications capabilities. At 8 p.m., Kelly and his team were in the air to L.A. for a press conference attended by relatives and friends of the passengers and crew of Flight 261. In L.A., they were joined by psychologist Joe Des-Plaines of FEI Behavorial Health, retained by Alaska Air for its Compassionate Assistance Relief Effort (CARE) program. CARE provides emotional support to family members of passengers involved in an accident and coordinates efforts with the National Transportation Safety Board (NTSB).

Both CARE and the company’s Critical Incident Response Program (CIRP) were initiated by Kelly, who overhauled the company’s crisis management program soon after taking Alaska Air’s helm in 1995. “When I first came to Alaska, I said, ‘Let’s have an emergency drill,”‘ he recalls. “What became evident was that all of our procedures were focused on operational and hardware issues: aircraft status and sending out incident teams.”

As someone who had been down the path of both personal and professional tragedy before, Kelly recognized the limitations of an operations-focused crisis program. As CEO of Horizon Air, he had weathered a crash and the ensuing aftermath in April 1988, then lost his wife of 20 years, Cheryl, to breast cancer in May 1990. While no one died in the Horizon crash, there were injuries, and Kelly came away from the experience with an understanding of the human element. “I personalized everything. I felt responsible, blamed myself as CEO, and tore myself apart,” he recounts. “We didn’t have response programs, grief or trauma counseling. It took me two years to deal fully with the Horizon crash. I told myself, ‘Never again will I go through this.”‘

Even as he launched CARE and CIRP, Kelly was continuing a cost-cutting program instituted by his predecessor, CEO Raymond Vecci. It’s this program that has raised questions about the airline—–and Kelly-compromising safety for the sake of boosting profits. Local newspapers have repeatedly painted Alaska as a flouter of rules, charging that the very maverick spirit credited for its fast growth has encouraged, as a Seattle Times article put it, “a culture that condones sidestepping safety regulations for the sake of saving money.”

It’s a charge that Kelly vigorously denies. “That makes no sense whatsoever,” he asserted when a reporter raised the issue at a post-crash press conference. “All we offer is safe air transportation, and we’re going to compromise that for a one-year profit?”

Refuting such allegations, which continued to mount in the weeks and months that followed the crash, would prove the biggest challenge of recovering from the tragedy of Flight 261.

January 31, L.A. Airport press conference, 11:15 p.m., Kelly speaking:

“We’re doing whatever we can for the family and friends as we wait out the search and rescue efforts. The crew on this aircraft are as experienced as you would want to have.”

Still dressed in that morning’s shirt and jacket, Kelly’s remarks at that evening’s press conference at LAX were given during that uncertain period when grief was tempered by the hope that rescue efforts would meet with success. His speech moved those present. “I watched John [Kelly] speak from the heart at that press confer-ence,” remembers Alaska Airlines flight attendant Chalis Blankenship. “He didn’t even use a script.”

As Kelly later reflected, a script was not an option in a situation where up-to-the-minute communication was crucial. “As I walked into that press conference, our VP said, ‘I’d like to introduce the chairman and CEO of Alaska Airlines, John Kelly,’ and that was it. You’re the CEO. The buck stops here.”

Less than 24 hours later, after 42 vessels had combed the crash site vicinity for hours, hope for survivors dwindled. CIRP and CARE were in high gear. “Openness became a theme in everything we did,” Kelly explains. “Our whole focus, even prior to the TWA 800 loss, was to respond quickly to the needs of survivors, friends, and families and immediately get information to the press,” Kelly says. (When Flight 800 went down shortly after departing New York’s JFK airport for Paris, TWA officials were criticized for impersonal communication with victims’ survivors.) “It was, ‘Let’s be open, let’s be proactive, let’s be timely.’

“What we also learned from TWA, beyond reaffirming our basic response posture, was the need to speed things up, literally go into hyperspeed in communicating with the media, because the media are really communicating with the world. The loss of Flight 261 was on CNN before our public relations function had even kicked in. And they (the media) wanted everything right now-names, hometowns, next of kin, everything.”

Empowerment proved a critical component of CIRP. “I didn’t have to say to any of our media or public relations people, ‘Here’s how it should be,'” Kelly notes. “They had the power to go do it. They decided to put out a press release every hour. That’s how I could go to L.A. to face the media, because we wanted to be upfront and accountable. I wanted to be there, where the families and friends would be.”

The tragedy also moved airline industry insiders, crash victim organizations, and local community residents to action. Workers from Alaska Air rival Southwest Airlines sent food and flowers and took over shifts for Alaska Air employees; a FedEx pilot brought a box of cookies to an Alaska counter; families of Egypt Air victims sent flowers; the family organization from TWA flight 800 sent each victim’s survivors a handwritten note and roses; local businesses donated items to family members; and children from an elementary school wrote condolence notes, as did Kelly as part of his CARE responsibilities.

As the airline worked to help its employees and friends and family members of those on board the flight cope with the tragedy, an NTSB investigation into its cause-standard post-crash procedure-was launched. The investigation, in turn, intensified media scrutiny.

Day Two

February 1, 2000, L.A. Times:

“Alaska Airlines has been the subject of an Oakland, CA, federal grand jury investigation over maintenance and repair records for some MD-80s in the past year… John Kelly, chairman and CEO, said the plane involved in the crash was not the subject of any investigation.”

The investigation cited by The L.A. Times involved Alaska Air’s Oakland, CA, maintenance facility. It was reportedly prodded by a whistle-blowing insider, lead mechanic John Liotine, who alleged in October of 1998 that Alaska managers had signed off on maintenance work that was never performed.

As speculation about Alaska Air’s maintenance practices and the cause of the crash began to snowball, Kelly took steps to alleviate any concerns about the rest of the airline’s fleet. On February 10, after the NTSB announced that Flight 261’s stabilizer jackscrew-a major component on the Boeing MD-80’s horizontal stabilizer-showed signs of damage, both Alaska Airlines and American Airlines announced plans to inspect 318 MD-80 and MD-90 jetliners in service (34 of which were Alaska planes) for damaged horizontal stabilizers.

Meanwhile, grieving for the crash victims continued. Kelly attended memorial services held by Alaska Air on the shores of the Pacific. He joined friends and family members of the passengers and crew of Flight 261 as they each kissed a flower and placed it in a wooden chest that was carried by helicopter to the crash site and released into the water.

For Kelly, the moment was powerful. “We looked across the sea and hugged and cried together,” he said later.

Day 45

March 15, from Alaska Air:

“Sixty-four mechanics at Alaska Airline’s Seattle maintenance base assert in a letter to John Kelly that they had been `pressured, threatened, and intimidated’ into cutting corners on safety.”

By spring, despite efforts to cooperate with ongoing federal investigations centering around the January crash and its maintenance record-keeping procedures, Alaska Air was under siege. Several West Coast newspapers were aggressively covering the ongoing development and more than six lawsuits had been filed against Alaska Air on behalf of crash victims’ families.

Particularly disturbing was the letter from 64 maintenance workers citing six cases when mechanics believed a plane was returned to service before it should have been. In one case, two mechanics said that over the course of seven hours, they were repeatedly pressured by management to sign off on a plane in Spokane and, when they refused, a different team was sent in to sign off on the plane so it could be flown-sans passengers-back to Seattle.

The company viewed the letter as a wake-up call. Kelly responded by announcing plans to hire a team of 13 outside safety experts to perform a comprehensive audit of the airline’s safety measures, establish a telephone hotline to his office for employees with safety concerns, and recruit for a new post: VP of safety. Throughout, Alaska steadfastly maintained that the concerns raised by the mechanics were rooted in failed communications-that no planes had taken off without proper preparation and approvals.

Day 50

March 20, from Alaska Air:

“The airline and the FAA are continuing to investigate the allegations raised by the 64 maintenance employees in Seattle. Fifty-one employees have been interviewed so far, and not a single safety concern warranting any action involving any of our aircraft has been uncovered. ‘We have found no evidence that any aircraft was returned to service in an unsafe or unairworthy condition or in violation of any Federal Aviation Regulation,’ Kelly said.”

Three of the six incidents cited in the mechanics’ letter involved John Falla, the manager of base maintenance in Seattle, who was placed on administrative leave. Falla’s attorney would later tell The Seattle Times that the allegations were spurred by mechanics’ anger over “reductions in overtime.”

Newspapers following the story honed in on the fact that the pressure to keep planes in the air as opposed to in the maintenance facility is pervasive in the competitive airline industry and alluded to a decline in overall safety practices since airline deregulation. It’s a charge that infuriates industry insiders. “As a factual matter, that allegation is a bunch of crap,” says Herb Kelleher, chief executive of Southwest Airlines. “It’s come up before and in actuality the safety record of the nation’s commercial airlines has improved tremendously since deregulation. In fact, President Reagan appointed an independent commission to look into the issue and the commission reported back that airlines are about twice as safe as they were before deregulation. But the facts don’t seem to slow anyone down.”

The safety practices issue inflamed debate over culpability. Critics suggested Alaska Air was more aggressive than most in its efforts to minimize ground time. Defenders countered that similar incidents would likely come to light at any airline subjected to the intense scrutiny Alaska Air has been under.

In April, an FAA “white glove” investigation, launched as a result of the mechanics’ letter, judged Alaska Air’s maintenance records inadequate. “It’s more than a paperwork problem,” warned Nick Lacey, the FAA’s director of flight standards, at the time. “Aviation accidents come as a series of small errors and the inability to detect small errors.” At the same time, Lacey was quick to point out that the findings involved lack of documentation, not evidence of poor maintenance. “If we had found maintenance that was not performed or sloppy… we would not hesitate to shut the airline down,” he said.

Day 89

April 28, The Wall Street Journal-Alaska Air Aims to Restore Credibility After Plane Crash:

Alaska Air said it is voluntarily reviewing the maintenance records of 81 jets in its 88-plane fleet to make sure that all the necessary work was done and signed off on… “I would expect we will find slight paperwork kinds of problems, nothing related to safety,” Mr. Kelly said.

The wear and tear of continual scrutiny began to show. “When you’re under a magnifying glass every concern comes out,” Kelly told the Journal. “Every issue that comes up becomes a big issue.”

Despite the corrective measures taken in response to the FAA findings, in May the FAA threatened to strip Alaska Airlines of its authority to do heavy maintenance on its aircraft-a move that would have effectively grounded six planes a month out of a fleet of 88, slowly strangling Alaska’s ability to fly. In the meantime, Alaska Air was fighting hard to get its views across. A May 22 company press release detailed inaccuracies in a Seattle Times article, quoting Witter saying, “Grieving families as well as our many employees want to get to the bottom of the Flight 261 tragedy. Careless reporting and anonymous speculation don’t serve anyone.”

The FAA backed off on its threat June 29, after Alaska Air reported its efforts to improve procedures-a document Kelly shared with the media and posted on an employee Web page. The measures included hiring a new VP of safety (David Prewitt, a direct report to Kelly), filling two executive vacancies for VPs of safety and maintenance; creating an 11-member office of safety; committing to hiring at least 130 new mechanics (with 82 already on board), promising to revise its general maintenance manual, and completing a thorough review of every “C” check aircraft in the fleet to ensure that all paperwork was accounted for and all work properly done.

By now, Kelly’s responses to reporter queries hinted at mounting frustration over the gap between media portrayal and reality. “The FAA found 150 instances out of 267,000 entries where a paperwork discrepancy was found,” he told the Seattle Times in a written response it elected not to print. “That’s a compliance rate of 99.94 percent of all entries. And in every case the maintenance or repairs that had been called for had been completed. That said, no one here is content with a 99.94 percent compliance rate. We just can’t settle for less than 100 percent. As we’ve told the FAA, our intent is to be a model of safety and compliance.”

The FAA’s Lacey had blamed Alaska supervisors for the “serious” breakdowns in documentation and quality assurance, saying, “We think the root cause is really management [in]effectiveness and a certain amount of sloppiness.” Yet, Alaska Airlines has been recognized again and again by trade, professional, military, and consumer groups for service, safety, and social responsibility. The Department of Defense, for example, commended Alaska Air for “strong oversight of all maintenance activities.” Ironically, the FAA itself had applauded Alaska for outstanding training in Oakland in late 1999, citing “dedication to quality and concern for the safety of the traveling public.”

But a Seattle Times follow-up article suggested the relationship between Alaska Air and the FAA’s Seattle regional office, the agency charged with policing it, has been too cozy for comfort-or objectivity. The paper quoted Mary Rose Diefenderfer, the ex-FAA chief inspector first charged with watching over a pre-Kelly Alaska Air in 1992, and chronicled a long history of alleged questionable safety conduct on the part of Alaska management and token penalties from the FAA.

Day 155

July 3, Seattle Times:

“The problem was that my team of inspectors and I kept bringing up safety issues,” Diefenderfer said…. “Alaska didn’t like us bringing up these safety issues, so they complained to the FAA management. And when Alaska Airlines wasn’t happy, FAA management was not happy.”

The article went on to enumerate several instances when FAA inspectors reported Alaska Air for skirting regulations and recommended disciplinary measures only to see the airline given the proverbial slap on the wrist. According to the article, Liodine’s charges about the Oakland, CA, maintenance facility spurred Tom Tesseny, the FAA inspector assigned to the airline, to recommend an $8.7 million fine in June of 1999, which his supervisors later knocked down to $44,000.

“It’s important to understand that when the FAA recommends an action against an airline there is a legal process in place for carriers to appeal their case,” Kelly says, disputing charges that Alaska Air enjoys preferential FAA treatment. “We’ve done just that when we’ve felt a recommendation didn’t fully take into consideration all the relevant facts. Sometimes we’ve prevailed, but many more times we haven’t. If you look at other carriers, you’ll see we’re treated no differently, despite claims to the contrary.”

In the wake of the Flight 261 tragedy, Robert Wagstaff, an Anchorage attorney specializing in aviation liability litigation, points out that a bigger and more pressing issue is Alaska Air’s culture of complacency. “Flight 261 shouldn’t have gone out if there was any question about the jackscrew,” asserts Wagstaff, referring to the plane part widely reported as causing the crash.

During the doomed aircraft’s last heavy maintenance check in Oakland, mechanics initially found those parts at their maximum allowable wear tolerance and planned to replace them. But five more checks of wear found the results within tolerance, so the parts weren’t replaced. That decision is now being cited in lawsuits filed against Alaska-and has become a key factor in the controversy surrounding the airline’s maintenance practices.

“Why squeeze every last service hour out of a part when the consequences of failure are so catastrophic?” demands Wagstaff, a private pilot with 34 years’ flying experience. “You can almost understand this flawed service philosophy from an underfunded, marginal bush operator, but certainly not from a major carrier.”

As Wagstaff sees it, Alaska Air got cocky. “Alaska beat the competition in its local Alaska market and then moved South,” he asserts. “Complacency is a real danger in aviation. Combine complacency with a ‘We’re No. 1!’ attitude and add what appears to be a lack of a true safety culture and there then exists a formula for disaster.”

Culpability for the crash of Flight 261 will be decided in the courtroom. But in the meantime, the battle for Alaska Air’s corporate reputation remains in full swing-and may be critical to its future. “What you want after any tragedy is for the story to go away as quickly as possible,” asserts Robin Cohn, author of The PR Crisis Bible.

After all, continued negative press could impact travelers’ airline choices, and Alaska Air has already been hit hard by the costs of a maintenance overhaul. As CFO Tilden pointed out in a Web Q&A posted after the firm’s second quarter, “The direct costs of the accident are covered by insurance, but you can’t say it isn’t having an impact on our business. Things like more frequent maintenance inspections mandated by the FAA and lost business from canceled flights and schedule reductions are not covered by insurance.” He estimated the cost of additional maintenance and engineering and flight operations staff hired at “roughly $17 million.”

Kelly downplays the possibility of negative media coverage scaring its customers away. “We’ve found that a customer’s experience when they fly on us is what matters, not the news media,” he says. “If they have a good experience, they tend to ignore what they read in the newspapers.”

At the same time, the company’s mounting concern over what it views as inaccurate and antagonistic media reports has led it to publish its own side of the story on its employee Web site. “Brace yourself,” reads the opener of Culture Clash, a missive that warns employees of “misguided arguments” likely to appear in the Seattle Times and posts Kelly’s answers to the Times’ questions, virtually none of which were used.

Is Alaska Air the innocent subject of a witch hunt? Or a firm alerted to its flaws by tragic fallout and scrambling to reform? Somewhere in between? The question continues to fuel debate-as does the ongoing media scrutiny. “Kelly has been very responsive,” says Cohn. “The question then is, why is there a problem? The fact that they were aware of a problem with maintenance before the crash is keeping the story going.”

But Alaska Air’s responsiveness has kept the fallout to a minimum. “They did a good job of containing the story,” says Cohn. “We’re still hearing about TWA. If the company doesn’t respond well with the press and with compassion, the story expands.”

“I thought Alaska Air’s communication was good,” adds Southwest’s Kelleher. “John Kelly flying down to the scene was a wonderful thing.”

Clearly, Alaska has avoided the mistake made by predecessors like Exxon Oil’s Lawrence Rawls, who provoked suspicion——-and the media’s wrath      by stalling communications after the Valdez oil spill in 1989.

Today’s scribes are no more forgiving. Former Coca-Cola CEO Doug Ivester was unseated after a bungled product recall, while the blame-volleying antics of Firestone CEO Masatoshi Ono and Ford’s Jac Nasser have both CEOs in the hot seat. And President Vladimir Putin’s woefully inept handling of the recent Russian Kursk sub disaster has painted him as cold-hearted and calculating-not an image leaders look to cultivate. “The Kursk disaster is the biggest wake-up call for companies around the world that an accident is going to be covered,” says Cohn. “And if a company doesn’t jump in and get involved immediately, it’s going to look very bad.”

“One of the most important things from a crisis communications standpoint is to make yourself available within a reasonable amount of time,” adds Kelleher. “Obviously, in these situations tending to the needs of the passengers and the employees who were on the plane comes first. But once you’ve done everything you can for those folks, it’s essential to make yourself available to the media with as much information as you can knowledgeably disclose.”

Throughout the past nine months, Alaska Air continually maintained a policy of open communications, readily supplying information as it became available, quickly countering misleading allegations with factual responses, and taking measures to address concerns raised. Will these efforts enable the airline to restore its tarnished image and overcome the traumas ahead-or will Alaska Airlines itself suffer the same

fate as the passengers and crew on Flight 261? Kelly is betting on the former. “You bet we’ll survive,” he says. “And it won’t be because we’ve dodged some bullets.

We’ll survive because of our unique pioneering culture.”

Jan 31  

DAY 1:Light 261 disappears off California’s coast; CEO John Kelly flies to Los Angeles International Airport and addresses media at an on-site press conference.

Feb 1

DAY 2: Crash investigations launched. Newspapers report that a federal grand jury investigation of Alaska Air’s maintenance and repair records had been under way prior to the crash.

Feb 3

DAY 4: Mourners gather on the shores of the Pacific Ocean to take part in memorial services for the passengers and crew of Flight 261. “I was drawn to the water,” Kelly recalls later. “I had to touch it.” Alaska Air retires flight number 261 in “honor of the 88 passengers and crew members who were lost.”


DAY 11: The National Transportation Safety Board reports that Flight 261’s stabilizer jackscrew, recovered from the ocean floor, shows signs of damage. Alaska Air announces plans to inspect the horizontal stabilizers in all of its MD-80 and MD-90 jetliners.

Mar 15           

DAY 45: Sixty-four Alaska Air mechanics write a letter to Kelly and Bill Ayer, Alaska Air’s president, complaining that “many amongst us have been pressured, threatened, and intimidated” to follow unauthorized maintenance procedures.

Mar 20

DAY 50: Kelly pledges to address the safety “problem” raised by Alaska mechanics. “It may be one of communication, it may be one of substance or style or whatever, we have to address that one way or another.”

Apr 4

DAY 65: The FAA launches a “white glove” audit of Alaska Air’s Oakland, CA-based maintenance facility, which is already under federal grand jury investigation.

May 25

DAY 116: After its investigation concludes that Alaska Air mechanics failed to properly document repairs, the FAA threatens to strip Alaska Air of the authority to maintain its fleet. Local newspapers continue to trumpet story developments.

Jun 2

DAY 124: Kelly responds to the FAA results publicly, stating, “I’m pleased to say that many, if not all, of the findings the FAA outlined in its news report this morning were addressed by us over recent weeks as soon as they were raised by the FAA d


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