Good morning. CFO turnover at major companies continues this year, with Tammy Romo, Southwest Airlines’ EVP and chief financial officer since 2012, planning to retire. However, Southwest didn't announce a successor for the longtime CFO. Rather, it will begin a search for her replacement.
Romo, who joined Southwest in 1991, will retire on April 1, the company announced on Jan. 9. Over the past 33 years, she has held many leadership roles, such as head of investor relations, controller, treasurer, and SVP of planning.
Romo has worked at the Dallas-based Southwest, considered a pioneer of the low-cost airline model, long enough to have been part of the company's remarkable growth story. Southwest made its debut on the Fortune 500 list in 1995 at No. 434. It has earned a spot on the list every year since, landing at No. 159 in 2024.
Southwest opting to conduct a search for Romo's replacement is indicative of what seems like a larger trend. About 1 in 4 of 200 CFOs surveyed indicated that their organizations do not have a formal CFO succession plan to identify and develop internal talent for the role, according to Deloitte’s Q2 2024 CFO Signals survey. And among those that said there isn’t a plan, 28% were from enterprises earning at least $10 billion in revenue. In general, an aspect that can make CFO succession planning challenging is the evolving role of finance chiefs.
Nicolas Owens, industrials equity analyst at Morningstar Research Services, thinks Romo's retirement is “a routine type of matter,” and she’s giving someone else a shot at the role, he told me.
What type of CFO will Southwest need? “I think the person they hire would certainly benefit from having airline experience, just because of some of the quirks of running the airline business,” Owens told me. That includes accounting for mileage programs and handling the balance sheet, for example, he said.
Staying competitive
Last September, the company announced a three-year transformation plan. For example, Southwest, known for its open seating, will begin selling assigned seats in the second half of the year.
In December 2022, Southwest’s outdated scheduling software couldn’t handle the effects of severe winter weather, leaving crews and planes out of position, which caused massive delays. The company’s plan also includes implementing technology for revenue management, reservations, inventory management, and departure control, in which the CFO would have involvement, Owens said.
The C-suite changes at Southwest, including Romo, and Chief Administration Officer Linda Rutherford, who is also set to retire, follow a battle with activist investor Elliott Investment Management. The hedge fund essentially agreed to a compromise with Southwest, including six new board directors and an earlier retirement for Executive Chairman Gary Kelly, Owens said.
“The transformation is a reasonable approach to address what I think is a competitive problem,” Owens said. Everyone from Delta to low-cost airlines like Frontier are competing with Southwest, which “puts them in a bind,” he explained.
“The CFO or even the CEO, can't change the competitive landscape, but they can change how they respond,” Owens said.
Sheryl Estrada
sheryl.estrada@fortune.com
