“We’re all about finding ways of raising discretionary revenue.”

– Michael O’Leary, CEO of low-cost Ryanair (RYAAY), floating the idea of charging passengers to use his planes’ restrooms. While we understand that CEOs need to find creative ways to make money, it’s getting ridiculous! And just in case you thought he was joking, O’Leary told the Dublin press, “Eventually it’s going to happen. It’s just that we can’t do it at the moment because we don’t have a mechanism for charging you.” Hope you can hold it! –Jessica Shambora

Reinvent!

Every manager is supposed be doing that these days. You know, there’s a lot more risk in reinvention than just the uncertainty of your fancy new business model. In your rush to reinvent, you could well leave your core values behind.

I’ve been contemplating this lately for several reasons. For one, I’m sold on the wisdom of Jim Collins, the management guru who was part of a recent Fortune cover package in the February 2 issue. Collins ID’s why companies like Procter & Gamble (PG) and IBM (IBM) perform well in the downturn: “What we have found is that what really matters is that you actually have core values–not what they are. The more challenged you are, the more you have to have your values. You need to preserve them consistently over time.”

And then there’s ad maestro Roy Spence, who wrote the latest Guest Post here on Postcards and contends that “purpose” is the secret of long-lasting greatness for two companies he’s worked with closely over the decades. From its start, Southwest Airlines (LUV) has been in the “freedom business” of democratizing the skies with low-cost fares, Spence explains. He remembers the day when Sam Walton, Wal-Mart’s (WMT) founder, first uttered the purpose of his retail startup: “At Wal-Mart, we are in business to save people money so they can live better,” Sam said.  (For the latest scoop on the world’s largest retailer, read my colleague Suzanne Kapner’s Wal-Mart feature in Fortune’s current issue.)

“Values” and “purpose” are a lot like the “character of the company.” That’s a phrase that Howard Schultz, the founder of Starbucks (SBUX) suggested to eBay (EBAY) when he was on that company’s board of directors several years ago. Meg Whitman, then eBay’s CEO, created a class, in fact, called “Character of the Company” to teach new employees core values.

I saw Whitman last week on stage, talking to MBA students at the Drucker School of Management at California’s Claremont University. “What kind of a company do you want to run? You have to know what the code of behavior is early on,” she told the students. Granted, both eBay and Starbucks have hit the wall on growth lately and are struggling to reinvent themselves. But I think Whitman and Collins and Spence are right: If you know your core values–your purpose, the character of your company–at least you have a compass to direct you.

Whitman, as you may have heard, is doing a little reinventing herself these days, running for governor of California. She left the students with this advice about making tough decisions in any situation: “If you’re making a decision, think about having your mother in the room–or your husband or your son or your daughter. Would you be proud to have them watch? Or would you be proud to have that decision on the front page of the New York Times? If not, it’s probably not the right thing to do.”

Photo courtesy of Dave Mead

When the ashes clear from this economic Armageddon, the leaders and organizations left standing will be the ones that stand for something. That have a clear purpose.

I’m sure of this because I worked with two CEO-founders who indeed stood for something: Herb Kelleher of Southwest Airlines (LUV) and Sam Walton of Wal-Mart (WMT). I worked with these iconic entrepreneurs on their companies’ advertising, marketing and internal culture. They taught me that performance is driven by the core purpose of an organization. This is true particularly when crisis is all around.

So what is purpose anyway? Purpose is the definitive difference you make in the marketplace and the world.

During more than 30 years, when I worked up close and personal with Herb Kelleher, he preached and practiced the purpose of Southwest Airlines every day. Herb’s purpose? To democratize the skies. Herb was in the Freedom business. He used to always say, “Keep costs low and spirits high and the people of Southwest Airlines will keep LUV in the air.”

By making a difference, Herb’s company made money and made history. In 1971, only 15% of the American people had flown because air travel was reserved for the elite. Southwest Airlines helped to change that. Today, over 85% of the American people have flown.

The legendary Sam Walton called me “Ol’ Roy,” after his dog and also after Wal-Mart brand Ol’ Roy dog food. In fact, I was the person who got Sam Walton and Herb Kelleher together for the first time. It was a dinner in 1990 that any CEO would have given anything to be a part of.

And it was a few years before that I heard Mr. Sam, as he was called by so many of his friends and associates, first articulate the purpose of Wal-Mart. “At Wal-Mart, we are in business to save people money so they can live better,” he said. And now “Save money. Live better,” a powerful purpose statement that we helped rediscover, is the company’s tag line and is embedded in its culture worldwide.

Today, 88% of Americans agree that “what a company stands for is more important than what it sells.” And according to a recent Cone Inc. study of Millennials, 79% want to work for a company that cares about how it impacts or contributes to society.

Purpose isn’t everything. But more than ever, purpose trumps everything.

Roy Spence is co-founder and CEO of GSD&M Idea City, a marketing and communications firm whose clients include Southwest Airlines, MasterCard (MA), John Deere (DE) and BMW (BMWF). Also founder of the Purpose Institute, he co-authored It’s Not What You Sell, It’s What You Stand For: Why Every Extraordinary Business is Driven by Purpose, just published by Portfolio.

For more on Wal-Mart, read Suzanne Kapner’s piece on the changing of the guard at Wal-Mart as Lee Scott hands the reins to new CEO Mike Duke.

Happy Friday! At least we have an auto bailout — some reassurance to end another rough week.

As I’ve monitored the page views on Postcards (way up this week!), I’ve noticed a pattern: lots of interest in good news and lessons in leadership — maybe because this is so hard to come by these days. Thursday’s post on Execution dispensed management advice from successful CEOs like IBM’s (IBM) Sam Palmisano and Verizon’s (VZ) Ivan Seidenberg. Another that struck a chord: Tuesday’s post about the second coming of JetBlue (JBLU) founder David Neeleman — or make that the fourth coming, given that his new airline, Azul, in Brazil is his fourth startup. Not bad for a guy who got bounced at both JetBlue and Southwest (LUV).

Monday’s post, Jamie Dimon: No bonuses for you!, drew more traffic than any other since we launched Postcards in June, except one. That most popular post happened to be The Great Depression, as I remember, which sounds like a downer but isn’t. It’s a charming and inspiring reminiscence by my 91-year-old Uncle Walt Stoiber in Ohio.

As for the Dimon post, it drew loads of comments — some negative (“Dimon should stop sending jobs offshore,” wrote Giuseppe Ciaccia, a laid-off employee in New York) but generally positive, like this one from a reader called “working hard” from Newark, Delaware: “Jamie and his team…deserve to be rewarded, but that can come at a later time.” The post also drew speculation about the identity of two former Citigroup (C) execs who followed Dimon to Bank One in 2000 and refused bonuses when that company was in trouble. Among the guesses: Heidi Miller, Bill Campbell, Charlie Scharf , Mike Cavanaugh, Jim Boshart, Steve Black, Frank Bisignano. All those execs followed Dimon to JPMorgan Chase (JPM), where he’s now CEO. My good sources tell me that, actually, the two execs were Charlie Scharf and Jim Boshart. While Boshart retired from JPMorgan Chase in 2004, Scharf is a prime player, as head of retail banking. He, by the way, was Dimon’s assistant straight out of college in 1987, when Dimon and Weill were running Commercial Credit, pre-Citi.

In this era of Bernie Madoff and greed galore, it’s good to hear about people who put a company’s interest above their own. As Dimon said at the Yale CEO Summit last week, “Business is more Shakespearean than MBA.” That’s right, in business as in life, the bad guys get their comeuppance. The good suffer, but usually they win in the end. Keep the faith!

David Neeleman, the founder and former CEO of JetBlue (JBLU), launched his fourth low-cost airline Monday. This one is in Brazil. It’s called Azul, which means “blue” in Portugese. It’s a lot like JetBlue: TVs at every seat-back, leather seats, extra leg room, nonstop flights between cities that previously lacked nonstop service.

Who knows if Azul will take off, but Brazil’s economy is growing faster than most (6.8% in the third quarter), and the government there projects 4% expansion in 2009.

Neeleman, 49, has a track record, for sure, and in harsh times like these, he’s an inspiration. At JetBlue, where he owned 6% of the stock, he gave away his full pay each year and never took a stock option. Last year the board fired him, following the airline’s haphazard response during a February ‘07 ice storm that left passengers stranded on runways for hours. But nothing seems to get Neeleman down. For his new airline, he’s raised $150 million from U.S. and Brazlian investors. He’s put in $10 million himself.

I spoke with Neeleman at length this spring, for a roundtable interview called Lessons of the Fall. It featured two other former CEOs, Jim Donald of Starbucks (SBUX) and Ed Zander of Motorola (MOT), as well. All were quite candid. But Neeleman stood out. A few highlights:

Neeleman’s attention deficit disorder, not diagnosed until he reached his 30s, helped him figure out that he’s better at creating businesses than fitting into established ones. In 1993, five months after he sold Morris Air, his startup, to Southwest Airlines (LUV), Southwest boss Herb Kelleher ousted him. “There wouldn’t be a JetBlue today if Herb hadn’t fired me,” Neeleman said. “So it’s really not what happens to you. It’s how you deal with it and what you make of it.” (Neeleman wrote about his ADD in this Guest Post.)

Last year, getting  fired from JetBlue “just about killed me,” he said. “The day that a couple of board members came to my office and said, basically, we want you to step down as CEO and be the chairman and be responsible for strategy, I was flabbergasted. I couldn’t believe it. Just the fact that I was flabbergasted, either I’m the biggest idiot on the planet or maybe the process could have been better.” But he recovered quickly. “Are you going to become a victim the rest of your life? Or are you going to say, hey, there’s nothing I can do about it from this point in time, and I’m going to go on and do something great?”

A Brazil-born Mormon, Neeleman has nine children: seven girls and two boys. What advice does he give them? “Feel your passion. Life is too short to be working in a job that you hate, and for people who you don’t respect. Go find what you love in life and then go do that. Don’t do something just because of the money and don’t do something just because somebody else wants you to do it. Do it because it’s something that you love doing. If you do that, you’ll be the best.”

As for his newest venture, Azul, he characterized it this way: “More insanity. When I left JetBlue, I thought there are two things I didn’t want to do: start another airline and run a public company. The stars aligned in Brazil. There are about 42 million people traveling a year by air,” he said, “I think that number should be closer to 160 million.  There’s 150 million people that go by bus, 14-hour, 16-hour, 24-hour bus rides. We’re going to try and get more people to fly.  If we can do that and raise that number to where it should be, then there’s going to be plenty of business for the two major competitors and ourselves.”

“So, it’s going to be a lot of fun. It’s going to be challenging. It’s going to be something that hopefully will be the highlight of my career.” What will be different from JetBlue? “It doesn’t snow down there. We’re not going to be de-icing airplanes.”

P.S. To see Neeleman on video, talking about his leadership lesson at JetBlue, click here.

‘Tis the season for confessions. First comes denial — every mortal’s classic response in a crisis. But in times like these, any leader worth his or her lofty position and pay recognizes mistakes soon enough. True confession is the mark of a confident leader. So, what’s your biggest mistake?

In the past week alone, we’ve noticed a positive trend: leaders fessing up. “GM has made mistakes in the past,” General Motors (GM) CEO Rick Wagoner told Congress on his revisit to Washington last week. Duh, you say? Well, for the boss from the capital of denial, Detroit, this was a serious gear-shift. The front page of Saturday’s New York Times detailed the errors of Wagoner’s ways, as he saw them: agreeing to expensive union contracts, failing to invest enough in small cars, and failing to adapt its plants for flexible manufacturing. Wagoner’s admissions should help GM secure its bailout funds, but they may be too little too late to help him keep his job.

Vikram Pandit, Citigroup’s (C) CEO, suggested his own errors as well. Last Monday, TV interviewer Charlie Rose asked Pandit, “What are the lessons you have learned…and what do you regret?” When he stepped into the top job late last year, Pandit told Rose, he inherited loans and businesses that he wished Citi didn’t possess. “We’ve moved really fast,” Pandit said, adding, “I keep thinking about it. Is there something I could have done sooner?”

What that might that be, the Citi chief didn’t say. But Pandit’s obvious self-doubt that he moved quickly enough to fix Citi seems healthier than the obfuscation of another Citi exec, Bob Rubin.

The onetime U.S. Treasury Secretary, who went on to be chairman of Citi’s executive committee and is now a senior counselor and board member, responded this way to the Wall Street Journal’s query about regrets: “I guess that I don’t think of it quite that way.”

Asked if Citi’s board bears some responsibility for the company’s near-fatal financial problems, Rubin said, “Maybe there are things, in the context of the facts we knew then, we should have done differently.” Given his evasiveness here and elsewhere (including in a prescient year-ago interview by Fortune’s Carol Loomis), the critics are piling on Rubin. In his Sunday New York Times op-ed, The Brighest Are Not Always the Best, Frank Rich wrote that Rubin has sounded “as self-deluded as [former Defense Secretary Robert] McNamara in retirement.”

Sure, it’s easy to criticize these days. And what a boom time for critics and cynics it is! In movie theaters now, Frost/Nixon, about a TV interviewer poking Richard Nixon to admit to crimes in Viet Nam and Watergate, is a relevant and suspenseful tour de force.

Meanwhile, last week, we saw on real-live news President Bush telling ABC’s Charlie Gibson what the rest of the world has known for a while: Saddam Hussein didn’t possess WMDs when the U.S. declared war on Iraq: “The biggest regret of all the Presidency has to have been the intelligence failure in Iraq,” Bush admitted to Gibson. “I wish the intelligence had been different, I guess.” If he had known  then that Saddam’s WMD’s didn’t exist, would there have been a war? “That is a do-over I can’t do,” the President replied. “It’s hard for me to speculate.”

So we see in our multiple global crises: Confession is one necessary step toward recovery. But it’s not sufficient. Management guru Jim Collins noted this last week in a terrific talk at the Fortune 500 Forum in Washington, D.C. Outlining five stages of decline, Collins said that “denial of risk and peril” is one stage, but leaders can recover if they confront “brutal facts” — i.e. the mistakes that took them downhill in the first place.

In the end, however, even a true confession isn’t good enough. Consider some evidence. An amusing Web site called perfectapology.com cites as “the perfect business apology” JetBlue (JBLU) founder David Neeleman’s pride-swallowing PR effort after the February 2007 ice storm that left planes stranded on New York runways and the airline’s reputation in tatters.

The fact is, though, that Neeleman’s apology, coupled with JetBlue’s clever Customer Bill of Rights, did loads of good, but it wasn’t enough to keep him in the CEO job, as he told me last spring in “Lessons of the Fall.” The board decided that Neeleman, though contrite, lacked what it takes to carry JetBlue back to greatness. So they fired him.

Note to Wagoner and Pandit and all those other CEOs under the gun: Admit your mistakes, but then, you’d better deliver.

By Jessica Shambora

Today marks the opening of Terminal 5, or T5, JetBlue’s (JBLU) flashy new $743 million home at JFK, an event I have been anticipating with, perhaps, excessive zeal.

Over the past few years, the JetBlue terminal at JFK has been the portal through which I have traveled back and forth between the San Francisco Bay Area, where I grew up, and New York City, my new home. I’ve done that trip an average of six times a year. Which is to say, I could probably draw a map of that terminal to scale. I am also familiar with its myriad flaws, from cramped and grimy restrooms to dark and dingy gate areas.

My excitement grew when I learned I was to be on board the second plane to arrive at the new terminal. As my flight prepared to leave Denver late last night, the captain told us that, although we were ready to depart earlier than scheduled, he had strict instructions not to do so since a flight from Burbank had been awarded the honor of the first plane to arrive. (Later, a customer service rep at one of several “Just Ask” help counters at T5 informed me that J.D. Power himself had been on board the historic flight.)

Disembarking flight #98, I had high expectations, based on JetBlue’s hype and my own hopes. T5 was indeed clean, bright and spacious, with a European, minimalist aesthetic. But it’s still just an airport. I tested the seating — quite ergonomic (but why black and not bright blue?). And I wanted to try out “re:vive,” which allows customers to use touch-screen monitors to order meals that are delivered to the gate area a la table-service dining. But that program wasn’t yet up and running.

Wandering into the 55,000-square-foot central marketplace, I found two raised seating areas. The rows of steps were reportedly inspired by the Metropolitan Museum of Art; overhead, a ring of screens displayed images of people walking. Three chic restaurants straight out of Manhattan’s Meatpacking district lined one side of the marketplace. A food court redolent of a cross between fast food and Whole Foods (WFMI) lined the other. “It’s very futuristic, feels like the Jetsons,” said Leslie Hsu, an entrepreneur from Millburn, N.J., who was munching on organic, gluten-free baked goods and orange Mint bottled water.

Generally, though, travelers seemed unfazed (disclaimer: it was 6 a.m.). Some made use of free WiFi. Others were curled up, exhausted, in an area with colorful geometric furniture. Meanwhile, the JetBlue troops scampered about, shaking hands and slapping each other on the back.

Captain Grant Johnson, who piloted my flight from Denver, eagerly told us that T5 “reinforces our commitment to our customers, despite the hiccups with the economy and fuel prices. This is an investment looking out 10, 20 years.”

He’s right in suggesting that T5 could provide a morale boost — and may help lift JetBlue’s 30% market share of passengers at JFK. Good news is sorely needed since JetBlue is likely to report a third-quarter loss on Thursday. And the stock is trading at $5 a share, which is near its all-time low and down from a high of $30 five years ago. At least JetBlue is making sure that its consumers aren’t suffering as much as its investors are.

For more on JetBlue, read founder and former CEO David Neeleman’s Postcards guest post.

Investors in airlines are nervously awaiting United’s (UAUA) earnings report Tuesday. Last week’s announcements from American Airlines (AMR) and Delta (DAL) spotlighted the awful state of the industry — and the opportunities for vulture investors. When AMR Corp. and Delta announced second-quarter losses of $1.4 billion and $1 billion, respectively, their stocks surged 32% and 27%.

Amazing, isn’t it, that this level of pain is considered positive news for the airlines? Most of the losses are due to writedowns related to impending reductions of U.S. service. In fact, the major airlines are cutting back more now than anytime since right after 9/11. Delta, which is due to merge with Northwest (NWA), plans to reduce its domestic service by 13% in the second half of this year — and add flights abroad, where the growth lies. On Sunday, Midwest Air Group (MEH) announced that it’s grounding one-third of its planes to reduce costs in the wake of crippling fuel costs. Among the cities losing service: San Diego, Baltimore, St. Louis, and Fort Lauderdale, Fla.

These cutbacks aren’t good, of course, for so many communities across the United States. Last week I flew to San Luis Obispo to visit my childhood friend Diane, her husband Tom, and their two boys. San Luis Obispo — or SLO, as the locals say — is a charming city along California’s Central Coast (home of High School Musical’s Zac Efron!) and one of my favorite places to visit. Delta and American both are ending service here in the coming months. Paranoia runs so deep that a United worker at the SLO airport on Saturday told me that he’s heard rumors from a dozen people that United may be ending service there too. “We’ll probably be the last to know,” he said nervously. United hasn’t disclosed any such plans. But if it pulled out, San Luis would be left with just one carrier, U.S. Airways (LCC) — and higher airfares, for sure.

P.S. Investors ultimately may win from the service reductions, plus all those new fees for checked bags, frequent-flyer award tickets and more. The long-term losers will be consumers who pay higher prices for ever more annoying hassles in travel.