From Deseret News archives:

Leading Delta — No autopilot for airline's CEO in his first year at the helm

Published: Sunday, Sept. 7, 2008 12:19 a.m. MDT
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"Richard is incredibly hands-on, very operational, and that is a change," compared with previous Delta chief executives, said Delta President and Chief Financial Officer Ed Bastian.

In a document called "Rules of the Road," one of the first papers Anderson distributed at Delta after he arrived, Anderson writes: "We run a meritocracy. ... No 'new jobs' for nonperformers."

He also instructs: "Always be collegial, even in tough conversations."

One of those tough conversations came when Delta moved to terminate Delta Connection contracts, including with Mesa Air Group's Freedom Airlines. Mesa sued Delta, and a judge ruled the airline must resume the flights pending a trial.

Anderson will also face scrutiny from others watching to see how the airline lives up to its promise to not cut any frontline workers as a result of the merger or eliminate any of the combined carrier hubs. Delta is already shrinking its hub in Cincinnati by 22 percent this fall, compared with a year earlier, among other cuts.

"I think the jury's still out on what kind of leader he'll be for Delta," said Cathy Cone, head of a group of retired Delta employees. "It's going to be a real challenge to merge the two companies."

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Integrating two airlines whose operations sprawl across the world is a monumental task, involving the combination of everything from fleets to flight schedules, work forces and information-technology systems.

"We want to get the merger done and get it successfully integrated," Anderson said. But that's not his only major challenge. "The issue that we face perennially in this business is this unbelievable cyclicality," Anderson said.

Historically, the health of the airline industry tends to mirror the economy: When the economy is weak, the airline industry suffers, and when the economy is strong the industry benefits.

In the second quarter of this year, Delta lost $1 billion, after recording $1.2 billion in special charges for write-downs, severance and closing some facilities at airports. Excluding the special items, Delta reported a $137 million profit. A year earlier, Delta had a $274 million profit, excluding special items.

Anderson said Delta must grow revenues 8 to 12 percent a year while improving cost efficiency by 5 percent a year — even when it's cutting back flight capacity. Delta can accomplish that, he said, through the Northwest acquisition and through growth of other businesses such as cargo and maintenance.

He hopes Delta will be consistently profitable by 2010.

Recent comments

10 million pages of documentation? You would have to read 500 pages...

Anonymous | Sept. 9, 2008 at 11:15 a.m.

Two average airlines at best come together to form a giant. Any bets?

Tim | Sept. 7, 2008 at 2:59 p.m.

No transportion system pays for itself. All are subsidized in one...

Zadruga Guy | Sept. 7, 2008 at 2:47 p.m.

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Jeffrey D. Allred, Deseret News

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