Delta CEO Richard Anderson’s Retirement Caps a Remarkable Nine Years for the Airline

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.

Richard Anderson Delta Retires

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.

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10 Responses to Delta CEO Richard Anderson’s Retirement Caps a Remarkable Nine Years for the Airline

  1. Neil S. says:

    As a long time DL Plat who finally got to Diamond this year, I have to say they get me where I’m going, they smile and laugh through it, and in general from a customer POV it’s a great experience. I know we all jab at him for the ME3 thing, but that’s easy to overlook as I pull the Westin Heavenly comforter me on an A330 from SEA-HKG.

  2. A says:

    As someone in a Delta fortress hub city it’s a love/hate relationship with DL but all-in-all they are an airline that is hard to complain about. I’m hardly ever delayed and they get me where I need to go 99% of the time. While I’m not a fan of US bankruptcy law it worked out well for the combined DL/NW as they are now very profitable and run a good operation. Post BK leadership is important and I’ll give Richard his due in being part of that, but I think his dealings for the merger with NW really shaped the greater airline industry beyond DL. Time will tell if the oligopoly of mega carriers is good for the consumer, but it’s clearly the industry standard really started by one Richard Anderson.

  3. flyingcat says:

    If only Whitehurst would give the skinny as to what skeleton’s Bastian has in his closet. By all account Whitehurst was well liked by Delta employees but was anti merger which did not sit well with deal markers.

  4. Voyager9270 says:

    Between the men’s room picture from last week and today’s MacGyver shot, I am laughing aloud at your illustrations on a regular basis. Well done!

  5. PK says:

    His biggest contribution to the US airline industry is how he changed the mindset of Delta about fighting to profitability and not just chasing market share. And he got the other airlines to come along.

    I still remember his comment in an earning call responding to a question on market share. Copied here…

    “We are not going to focus on chasing market share. We are focused on operating margin because operating margin ultimately is what our shareholders want us to produce. And so trying to take market share with very poor operating margin and negative cash flow doesn’t work for Delta. So we are going to just stay focused on keeping our capital commitments in check, generating free cash flow, putting that cash flow back on the balance sheet and keeping our capacity in line with what will produce an operating margin.

    …This isn’t a hobby.”

  6. flyplayne says:

    Maybe one should ask the pilot group who retired before the bankruptcy how they feel about Richard Anderson and Delta in general. The Delta pilots group were the ONLY ones who had their pensions terminated and turned over to the PBGC. Even the Northwest pilots[Anderson then CEO @ NWA], got to keep their company pensions. Most DAL pilots had 25+ years with the company and got pennies on the dollar from the PBGC. I think Mr. Anderson had the ability to correct this situation but chose not to, even in light of the record profits lately. Sound bitter? Wonder why!

    • CF says:

      Flyplayne – Sorry, but to clarify, you’re suggesting Richard Anderson should have come in to Delta and create new pensions to replace the ones that were already terminated? And he hasn’t been a good CEO because he didn’t do that?

      • flyplayne says:

        No I’m not saying that. But he could probably have petitioned the PBGC to RESUME the pensions that 100’s of pilots lost. I hear a LOT of talk from Delta CEO’s about how much the employees mean to the company’s progress. The reward for decades of service was to terminate the pilots pension and turn it over to the PBGC. When Northwest declared bankruptcy on the same day as Delta, the NWA pilots retained their pensions because, I believe, Mr. Anserson said “It was the right thing to do”. NO other group of employees lost their pensions EXCEPT the DAL pilots. It would be nice to at least have someone acknowledge the sacrifice those affected pilots made-JP

  7. Georjet says:

    Of the big ones, Delta is my number one choice. Great article.

  8. David Williams says:

    I do not have admiration for Richard Anderson because as part of the merger deal with NWA he testified to the DOJ and Congress that he would keep Memphis as a hub. As soon as the merger was approved he turned around and started dehubbing Memphis. And left us in the dust with no remuneration for our abandoned airport. This was truly bait and switch. If he did the whole thing honestly I would be a greater admirer.

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