In decade since its merger, Delta has transformed
In the 10 years since Delta Air Lines acquired Northwest Airlines, the Atlanta-based carrier has transformed itself from a struggling company fresh out of bankruptcy into a financial powerhouse.
Along the way to making billions of dollars in profits a year, Delta has also expanded its workforce in Georgia and vastly improved its on-time performance.
But it hasn’t been all smooth sailing.
Within a few months of its merger, a recession drove the company to cut staff and slash flights. Within a few years, the airline was also selling off facilities.
“We went through takeover battles. We went through a bankruptcy. It was always about keeping Delta my Delta,” said Delta CEO Ed Bastian, referring to the tagline the company used when rallying its employees to fend off a 2006 hostile takeover by US Airways.
But, after all the growing pains, “We’ve created the most valuable airline in the world,” Bastian said.
When Delta announced its merger with Northwest, then-CEO Richard Anderson said the consolidation was “about addition, not subtraction.” The merger agreement closed Oct. 29, 2008.
The deal allowed the company to keep the name Delta and maintain its headquarters in Atlanta.
Delta consolidated operations and shut down flight training and maintenance facilities at Northwest’s old campus in the Minneapolis area.
Delta had committed to keep a “Delta North” headquarters in Minnesota along with at least 10,000 jobs there as part of assuming bond debt from Northwest in the merger. Instead, Delta paid off the bond debt early and shut down the Delta North headquarters.
Ultimately, much of the work was shifted to Atlanta, where Delta has a massive headquarters campus by Hartsfield-Jackson International Aiport and operates its largest hub by far, with about 1,000 departures a day. In Georgia, Delta now has more than 33,000 employees, up from about 25,000 at the time of the merger.
The airline industry has been shifting toward lucra- tive international routes for growth, and the merger helped Delta with that transition.
But some smaller towns are left without airline service as a result.
“If you’re in one of the markets that lost service because no one in the (airline) industry is bothering to serve that particular small city anymore, then Delta didn’t help you,” said Robert W. Mann, an airline consultant based in Port Washington, New York.
The Delta-Northwest merger triggered a series of difficult union battles, as Northwest’s highly unionized workforce meshed with Delta’s mostly nonunion workforce.
For the most part, the combined airline’s workforce voted against unionization. Delta remains mostly that way, with the pilots as its major unionized work group.
Since the merger, Delta has returned to a “paternalistic” culture similar to its early days under founder C.E. Woolman, Mann said.
That includes huge profit-sharing checks paid out to employees every Valentine’s Day and big pay raises.
WAVE OF MERGERS
The Delta-Northwest deal also kicked off a series of major airline mergers, including United-Continental, American-US Airways and Southwest-AirTran.
Other airline executives looked to the Delta-Northwest deal as a model for how to integrate two airlines, including getting a pilot deal done before the merger and quickly deciding on IT systems for a combined company, Mann said.
“Previously, these things resulted in a lot of handwaving and hand-wringing, hair-on-fire sorts of rationalizations as to what to do,” Mann said. Other airlines have looked to “maybe accomplish them as elegantly as Delta and Northwest did.”
Delta CEO Ed Bastian arrives to unveil the new A220 aircraft, while celebrating the 10-year anniversary of merging with Northwest on Oct. 29 in Atlanta.