Delta Air Lines has encountered its fair share of turbulence this year. The nation’s third-largest carrier not only spent the first quarter of 2007 in Chapter 11, it also had to thwart a $9.5 billion hostile-takeover bid from US Airways Group Inc. and convince creditors and shareholders that its new international business model is viable. For CFO Edward Bastian, who oversaw the bankruptcy process, the best reward must have been the impressive profits the airline racked up after emerging on April 30. The rub, however, was that the board opted to name Richard Anderson, the former CEO of Northwest Airlines, to the top spot, instead of Bastian, who was named president in late August. But, as the 50-year-old Bastian recently told CFO, “This is not a business for the faint of heart.”
You’ve just been through some turmoil in the management ranks at Delta. How distracting was the protracted CEO search?
It’s impossible not to be a little distracted at a time like that, but with the benefit of the strong business plan with which Delta emerged from Chapter 11 protection, the company continued to execute its sound business strategy. We have a very strong management team leading this company, and I am glad we have retained the significant majority of that team through this process.
For the first six months of this year, Delta recorded net income of $1.64 billion compared with a loss of $4.28 billion during the same period last year. What made the difference?
We are rebalancing our network. [Previously,] Delta was really a domestic carrier with an international business. We’re now an international business. And that move into the international market doesn’t mean just traditional transatlantic routes. It means going into India direct, going into Dubai, going into Africa, going into economies that are growing at a double-digit pace with metal that we already ownÂÂÂ . We’re also pulling the big widebodies out of the U.S. and sending them internationally, where they’re more profitable. And we’re downsizing — or right sizing, depending on your perspective — domestic aircraft.
When you look back at the whole bankruptcy process, what lessons did you learn?
This is a process that can overtake you with the number of creditors, lawyers, and advisers, and when you’re trying to run a business and also manage all these constituencies it can become very distracting. So first, make certain that you’ve got a strong plan going in, not just a strong plan going out. Second, attack the business model. While our focus was primarily on securing the financial foundation of the company during bankruptcy, we also reinvested the savings in tools like airports and ground equipment. As we told our creditors and our employees, at the end of the day it’s the customers, not a bankruptcy judge, who will decide whether this airline is successful. Finally, you have to have open and honest communication with everyone. I can’t tell you how many sessions — we called them velvet-rope sessions — we held in which we took our employees, a couple hundred at a time, behind the scenes to look at where the business is going.