Former Southwest CEO Muse dies He helped airline get off the ground 12:43 AM CST on Tuesday, February 6, 2007 By TERRY MAXON / The Dallas Morning News tmaxon@xxxxxxxxxxxxxx M. Lamar Muse, the feisty airline executive who helped launch Southwest Airlines Co. in 1971 and then left in a boardroom fight seven years later, died late Monday of lung cancer at a Dallas retirement home. He was 86. Herb Kelleher, one of Southwest's founders and its chairman since 1978, said Mr. Muse was "extremely important" to the Dallas-based carrier's success, bringing the airline the experience needed to get Southwest started. M. Lamar Muse Mr. Kelleher called Mr. Muse "a cantankerous genius. ... He was the perfect person ? because he was tough, he was competitive, he was hard-minded ? to get Southwest Airlines off the ground and turn it into a moneymaker, with all the opposition that we had and as bitter as it was." Longtime airline industry executive and consultant John Eichner said Mr. Muse developed Southwest into the low-fare, high-productivity machine that it remains today. Airlines across the world, such as Ryanair Ltd. in Ireland and WestJet Airlines Ltd. in Canada, became successful by copying Southwest, Mr. Eichner said. "They're all doing this pattern of Southwest Airlines, which really was Lamar's pattern," Mr. Eichner said. "It really was one of the big innovations in the airline industry that made these startup airlines possible." In 1981, Mr. Muse and son Michael Muse, who left Southwest along with his father, established another low-fare carrier based in Dallas, Muse Air Corp. ? or "Revenge Air," as many labeled it. Southwest bought its competitor in 1985, effectively ending Mr. Muse's career running airlines. However, he remained interested in the industry to the end, often coming up with new ideas. Even in his early 80s, he was pushing the concept of a low-fare airline based at Dallas/Fort Worth International Airlines and flying Boeing 757s, and had encouraged Southwest to lease two gates there. Born in Houston in 1920, Mr. Muse grew up in Palestine, Texas, where he graduated from high school in 1937. He attended Southwestern University in Georgetown for two years before switching to Texas Christian University in 1940, leaving after his junior year. He joined Price Waterhouse as a certified public accountant in 1941, his time there interrupted by a stint in the U.S Army Corps of Engineers from 1943 to 1945. He left Price Waterhouse in 1948 to go to work for Trans Texas Airways, followed by jobs at American Airlines Inc., Southern Airways, Central Airlines and Universal Airlines. Mr. Eichner said Mr. Muse called him after a year with American in its New York City offices, saying he didn?t like the cold, the commute or the big city. Mr. Eichner took his job, and Mr. Muse joined Southern Airways in 1962. He was president and chief executive officer of Central Airlines in Fort Worth from 1965- to 1967 and Universal Airlines in Detroit from 1967 to 1969. Pushed out at Universal in 1969, he moved to Conroe, where he was living when he heard about the airline that Rollin W. King and Mr. Kelleher had thought up. "Rollin and I jointly agreed we needed someone with experience to operate a real airline with heavy equipment. ... Everyone was happy to have Lamar come on board," Mr. Kelleher said. "In typical Lamar fashion, he hit like a whirlwind because we had to raise additional money. We had spent all our money on litigation. I was doing it for free at the end. He went out and raised some money lickety-split." Mr. Muse kept in his office the $1.25 million deposit slip from March 10, 1971, that provided the startup funding for Southwest, including $50,000 out of Mr. Muse?s pocket. The framed slip was hung in his room at the Dallas retirement home where he spent his last weeks. As Mr. Muse recalled in a 2002 autobiography, Southwest Passage, the carrier he joined as president and CEO had few employees, no airplanes and the name "Air Southwest." "Since Air Southwest sounded to me like some Mickey Mouse, third-level carrier, I convinced the board to change the name to 'Southwest Airlines Co.,' " Mr. Muse wrote. The tiny carrier began operations on June 18, 1971, with three airplanes. It had to sell a fourth airplane that was arriving later that year to meet payroll, and airline employees figured out a way to operate about the same schedule with three airplanes by "turning" the airplanes more quickly between flights ? in 10 minutes rather than 25. The carrier in its early days featured female flight attendants wearing hot pants to call attention to itself, and offered a one-way fare of $20 on its flights from Dallas to Houston and San Antonio. In early 1973, Braniff began offering $13 fares on Southwest?s routes, a half-price fare that threatened to steal many of Southwest?s customers. Southwest and Mr. Muse responded with large newspaper ads proclaiming: "Nobody is going to shoot Southwest Airlines out of the sky for a lousy $13." Southwest gave travelers a choice: They could fly on a full $26 fare and get a free bottle of liquor, or get the $13 fare. The offer boosted ridership so much that Mr. Muse later credited the Braniff offer for Southwest?s eventual financial success. The carrier realized that it could maximize revenues by charging full fares during the day and lower fares at nights and on weekends. In a 2002 interview, Mr. Muse said the carrier figured out its eventual operating philosophy bit by bit. "We fumbled around for 18 months before we found the formula," Mr. Muse said. "After we got the formula, all it was was cookie-cutting." He persuaded Southwest?s board to give employees a share of profits, paid out in Southwest stock for many years. Although the carrier did not provide pensions for employees, the profit-sharing enabled many long-time employees to become millionaires. But even as the carrier turned profitable and kept growing, Mr. Muse began butting heads more and more with Mr. King. Finally, in March 1978, Mr. Muse sent the Southwest board a letter of resignation, with the intent of forcing a showdown that would end up with the board choosing him over Mr. King. It was, Mr. Muse later said, a "big mistake." The board accepted his resignation and put Mr. Kelleher in as chairman. Southwest later that year brought in Howard Putnam as president and chief executive. Mr. Kelleher , who took over Mr. Putnam?s jobs when Mr. Putnam left for Braniff in 1981, said he learned a lot from watching Mr. Muse in action. ?He never acted as a mentor,? Mr. Kelleher said. ?He wasn?t the sort of person who would say, ?Now, sit down and I?ll tell you these things.? But I tried to be a fairly keen observer of what people do and what works and doesn?t work. In that sense, he was a real educator to me.? Muse Air followed Southwest?s model, but with McDonnell-Douglas aircraft and a no-smoking policy. However, Muse Air was launched during a period of high fuel prices, a growing recession and intense competition from Southwest and Houston-based Continental Airlines Inc. Lamar Muse retired from Muse Air in May 1984, but returned that December as chief executive officer and chairman, just long enough to engineer its sale to Southwest in 1985. Southwest renamed it TranStar Airlines Corp., ended the smoking ban and eventually shut down the carrier in August 1987. Mr. Eichner, retired from the airline consultancy of Simat Helliesen & Eichner Inc., said Mr. Muse was one of the three smartest financial people Mr. Eichner had encountered in the airline industry. Mr. Muse helped create a model for deregulated airlines despite his long experience pre-Southwest working for airlines regulation by the Civil Aeronautics Board. "People who are real geniuses think outside the box, and Lamar really thought outside the box," Mr. Eichner said. "Lamar was very good at solving problems for an airline like Southwest Airlines and he did a good job of setting up Muse Air," he said. "Lamar was really one of the real pioneers in the business." In an interview Wednesday, Mr. Muse said he was proud of helping establish Southwest Airlines, but particularly pleased to have helped build a new YMCA facility in Palestine. He set up irrevocable trusts in 1997 to fund the YMCA, named after his parents, Hiram and Nan Muse. "That was what I was the proudest of," Mr. Muse said. "I created something." On Jan. 29, a weakened Mr. Muse traveled to Palestine to present a $350,000 check to YMCA officials, and informed them that Mr. Kelleher would donate $150,000 over three years. Mr. Muse was preceded in death by his first wife, Juanice, and his brother, Ken, of Montgomery, Ala. Survivors include son Michael L. Muse of Dallas; daughters Deborah Ann Muse and Diane Muse Kinnan, both of Dallas, and Lisa Muse of Liberty Hill; sister Marian Thompson of Palestine; three grandchildren, and one great-grandchild. He is also survived by ex-wife Barbara and her daughters, Culleen Vaughn and Connie Grizzard, both of San Antonio; and two grandchildren. _________________________________________________________________ Get in the mood for Valentine's Day. View photos, recipes and more on your Live.com page. http://www.live.com/?addTemplate=ValentinesDay&ocid=T001MSN30A0701