In decade since its merger, Delta has trans­formed

The Charlotte Observer (Sunday) - - Business - BY KELLY YA­MANOUCHI

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.

COM­BIN­ING WORK­ERS

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.”

CUR­TIS COMP­TON TNS

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.

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