Devoted to Managers and those that seek to improve their management skills

As Boeing is Southwest's sole supplier of planes, how do you ensure a competitive price for a new plane?

Kelleher was being interviewed at the time he was asked that question in front of a live audience. His answer to the question was really brilliant.

First he says that Boeing (BA) and Southwest Airlines (LUV) had always had a good relationship, being the launch customer of three of the Boeing models. And at the time they had 385 of their planes in the Soutwest fleet. He added that Boeing had never tried to take advantage of the fact that they were the sole supplier of Southwest.

He then tells a humorous but ingeneous story about when he negotiated with Boeing one time. He said: "Now, I will tell you that when I negotiated I did call Airbus, and I said: Would you send me some of your Airbus (cigarette) lighters? So when I went in to negotiate with the Boeing people -- oh, excuse me, I dropped something.

When those from Boeing at the negotiating table leaned over and picked up the Airbus lighter - he said that he believed they got the message.

The point is that you can't assume anything in negotiations, and even in a good relationship, you're still negotiating. He was simply reminding them that even in a good relationship business is business. As he said, "they got the message."

Other Herb Kelleher Sources:

A Culture of Commitment

HERB KELLEHER

The wild turkey

Herb Kelleher on the Record, Part 1

Herb Kelleher Talks about How Southwest Airlines Grew from Entrepreneurial Startup to Industry Leadership

Belief Model for The Leadership of Herb Kelleher (Southwest Airlines)

Herb Kelleher, Chairman, CEO and President, Southwest Airlines

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