Play Hard, Fly Right

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He predicts that United Airlines, the second largest U.S. carrier, could still go the way of U.S. Airways, which announced last month that it plans to seek government loan guarantees. Just two weeks ago, Bethune announced that to boost revenues, Continental and U.S. Airways are discussing a code-sharing alliance that would allow passengers to book flights on one airline but travel on the other for part of the route. "Fact is, we're all losing money. At Continental, we're just losing less than everybody else," he says. "If we don't survive, no one is going to survive."

It's telling that when Bethune talks about "the industry"--including his assertion that all airlines are losing money — he really means full-service hub airlines: American, United, Delta, Northwest Airlines, Continental and U.S. Airways. He omits Southwest — long the industry's best-run and most profitable carrier, whose market capitalization is larger than the Big Six's combined — and other moneymaking budget carriers like Frontier Airlines and start-ups like JetBlue Airways.

"Having low-cost start-ups keeps us honest," he admits. "They tend to flourish when we get too arrogant and we refuse as an industry to lower prices and we treat people like we're doing them a favor to take them somewhere. A couple of big airlines are in trouble for taking that attitude." But Bethune argues that it's unfair to compare the financial performance of Southwest — which flies point to point — with a full-service carrier like Continental, which maintains hubs all over the country to shuttle people among cities without enough passenger traffic for direct flights. "The hub-and-spoke system serves people in places like Sarasota, Florida, who want to go to Sacramento, California," Bethune says.

Though he was paid $4.2 million last year, Bethune, 60, often portrays himself as the champion of the little guy — the fellow in seat 18C back in coach class. In his 1998 book about the Continental turnaround, From Worst to First — a reference to Continental's rank in passenger-satisfaction surveys — Bethune describes being reared by a divorced mom in 1940s San Antonio, Texas. He got his education not from books so much as from his dad, who flew a crop duster in Mississippi. At age 15, young Gordon was put in charge of handling the 55-gal. drums of pesticides and herbicides and getting the "landing field"--really just a meadow — ready so his dad could put down his J-3 Cub after sunset at the end of a long day of spraying. A small smudge pot and the headlights from a 1950 Plymouth provided the only landing lights.

Bethune's mantra today is simple: "We get you there safely, on time, with your underwear." To ensure that workers keep those goals in mind, he pays bonuses for every month they beat competitors in the government's on-time ratings. Although Continental's record fell below 80% in 2001 because of security delays after 9/11, other airlines also saw their records slip. Bethune paid bonuses 11 out of 12 months. So far, he has doled out $44 million, and after January he increased the bonus checks from $65 to $100. (Here, too, Bethune ignores Southwest and America West, which have beaten Continental's on-time performance this year. He says the smaller airlines' "cocktail napkin" record keeping — unlike the computer-generated reports of the majors — make their claims suspect. A Southwest spokesman laughs: "Look at the DOT figures. The cocktail napkins beat the computer week after week.")

Southwest Airlines' Herb Kelleher used to be the most colorful guy in the sky, but he's retired. Enter Bethune, who loves flying fast, driving fast and living life to the fullest. For the trip home to Houston aboard Continental's new plane, Bethune took the yoke while employees cracked open Champagne and partied in the aisles. No one seemed particularly concerned when he did a flyby and wiggled the wings at anyone who might be enjoying the late-spring skiing on Mount Rainier. But they all confessed to a real fear of riding in his Porsche on the streets of Houston, where he often exceeds speeds of ... well, we promised not to tell. Bethune also likes to cruise around on his Harley-Davidson low-rider but grouses that at his age, he's "only got a two-hour butt." When he gets a chance to take a few days off, he goes angling for bonefish or salmon or travels to vintage-watch shows (Patek Philippe timepieces are among his favorites).

Even amid the tensions and grumbling inherent in a shrinking business, Bethune is widely liked and admired by Continental's 48,000 employees. Nearly 90% of the workers surveyed at the end of last year by FORTUNE magazine said it was "fun" to work at Continental — one reason the company made the magazine's list of 100 Best Places to Work during four of the past five years. Bethune has given away, by raffle, more than 100 Eddie Bauer Edition Ford Explorers to workers with six months of perfect attendance. And he has doubled company life insurance for employees. "We don't have sky Nazis on our airplanes," says Bethune. "It's nice when they walk up and say, 'Hi, can you put that bag away?'--not 'You s___, you've got to sit down.'"