As had been rumored, Delta CEO Richard Anderson has announced he’ll be “retiring” on May 2 of this year. I put that word in quotes, because while he is vacating the CEO position, he’ll remain as Executive Chairman of the Board. Since he joined the airline in 2007, first as a board member and then as CEO just a few months later, Richard has done remarkable things at Delta. Regardless of how you feel about stances on individual policies, it’s impossible to ignore just how much better off Delta is today than it was before he arrived. And he is leaving the airline in very capable hands.
When Richard came to Delta, he found an airline that was in desperate need of leader to move the airline forward. While Delta had historically been known for having fantastic employee relations, the years led by Ron Allen and then Leo Mullin erased much of that goodwill. Delta was a mess when Jerry Grinstein stepped up to the plate in 2004. Jerry was just what the airline needed at the time. He was able to unite the team and lead it through a difficult bankruptcy process. He positioned Delta strategically to be in better shape, and he started to assemble the right people to bring the airline forward. But Jerry wasn’t there to lead the airline into the future. He was there to get it through restructuring so that someone else could step up and lead. Richard Anderson was chosen to be that person.
Richard didn’t waste any time. Just a few months after taking the reins, he announced a merger with the airline he used to run, Northwest. While mergers are always challenging, the Delta/Northwest merger was executed very well. Through the highs and lows of the last several years, Richard and his management team did something incredible. They created a lean, mean, on-time machine without destroying the legacy of the company. In fact, they strengthened that legacy even further.
Richard sharpened the combined airline’s focus. Delta knew it had to grow beyond just Atlanta’s airline and it put huge investments into important business markets.
In New York, Delta turned itself into the preferred airline. It swapped slots with US Airways at LaGuardia, it built new facilities at JFK, and it upgraded the experience across the board. More importantly, it realized the importance of a sales organization at a time when other airlines didn’t get it. This gave Delta a huge leg up in New York as it did in many other markets.
Los Angeles became a big focus, but so did Seattle. Meanwhile, Richard had no qualms about closing Cincinnati and Memphis as hubs, because it was the right thing to do. The Pacific franchise was strengthened as more flights began to overfly the old Northwest Tokyo hub. And the European operation turned into a powerhouse with tighter ties between Delta and Air France/KLM.
But what really stood out about Richard was his willingness to take risks. Delta’s decision to purchase a refinery outside Philadelphia is a perfect example. It took some time, but the refinery makes money today (and makes more jet fuel available for all airlines).
When Delta couldn’t get what it wanted, it went out and bought it. London? It took a big stake in Virgin Atlantic. Latin America? A piece of Gol and Aeromexico did the trick. China? How about a chunk of China Eastern?
Richard’s airline was one that didn’t care about shiny new airplanes. It saw the value of buying older, cheaper aircraft that looked just as new from a customer perspective as if it had rolled off the line that day. And at a time where airline rushed to outsource maintenance to the lowest bidder, Richard built-up Delta’s TechOps division to make sure those older aircraft were well-maintained and reliable.
It’s not clear that all of these will bear fruit, but that’s not the point. Delta under Richard Anderson has been an airline that’s willing to take big chances (not with safety, of course). And that’s the kind of airline customers like to fly and employees like to work for.
That’s not to say Richard’s legacy is all rainbows and unicorns, as regular readers know. Over the last few years, it almost seemed as if Delta was bored. It started doing strange things, and I never hesitated to point that out.
It picked fights with its partners (Korean, Alaska) when it didn’t get what it wanted. And Delta found itself increasingly isolated from other airlines when it came to industry issues. This culminated with Delta leaving the Airlines For America (A4A) lobbying group entirely over a few hot-button issues including reauthorization of the Ex-Im Bank and the semi-privatization of the air traffic control system. Its these issues that made it seem like Richard’s time had come to leave. I won’t dwell on them, because I think that they will only be a sliver of his legacy.
As a final testament to the shape he left Delta in, his succession plan was complete and ready to execute. Contrast that with United, which had absolutely no internal bench strength when its CEO was canned, and this becomes even more impressive. His longtime #2 Ed Bastian (who started during Leo Mullin’s tenure) will rise from President to CEO. Meanwhile Glen Hauenstein (who came in under Jerry Grinstein) will become President. Gil West gets a “Senior” in front of his EVP and COO titles (whatever a Senior EVP means), and takes on additional responsibility including IT. And Steve Sear becomes President of International, in addition to his role leading the sales organization. The airline is in knowledgeable, well-prepared hands.
What does this mean for the future of Delta? The corp comm team put out an interview with Ed Bastian after the announcement. In it, he mentions a continued focus on growing international, improving operations, etc. It sounds, as you’d expect, that he’s going to continue down the path the airline is already on. But that doesn’t mean everything will stay the same. Like any new leader, Ed will undoubtedly put his own stamp on things. With any luck, that will mean a renewed focus away from some of the aforementioned issues that have put a tarnish on Delta’s glow over the last couple years.
As for Richard, while you can never truly understand someone’s legacy on the day he retires, it’s hard to imagine how he won’t be looked upon as one of the greats. He certainly doesn’t have the same cult-like following as someone like Herb Kelleher, but that’s a matter of style versus substance. Richard is tough (as is Herb), but he’s been described as prickly and challenging. In the end, that doesn’t matter. Richard Anderson has been smart, capable and impressive chief executive. Delta, and the entire industry, is far better off today because of him.