Spring Break
Delta Air Lines COO Shares Lessons in Leading a Turnaround
Ron Levin (NJ), Contributing Writer
Issue date: 4/10/07 Section: News
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Citing conclusions of recent research in which the airline industry was the only sector to have under-performed the S&P 500 in every type of economic cycle, Whitehurst nevertheless characterized it as among the most fun, exciting and dynamic of all industries.
Whitehurst, who is on the shortlist to become CEO once Delta emerges from the "fastest major bankruptcy in airline history" on April 30th, outlined several key distinctions between Delta's journey through Chapter 11 and that of UAL, the parent company of United Airlines. Speaking on the day before RCs were scheduled to tackle UAL's bankruptcy challenges in FIN2, Whitehurst asserted that some of the problems that prolonged United's bankruptcy were rooted in poor leadership.
He pointed to UAL CEO Glenn Tilton's $33 million incentive pay package for guiding United out of bankruptcy, a process that required drastic cuts in the compensation of United's rank-and-file. While wages and benefits were also reduced at Delta, Whitehurst affirmed that Delta's current CEO, Gerald Grinstein, would not earn a penny in cash or shares when the carrier emerges from bankruptcy. Following the principle that "Generals eat last," Delta's executives will earn incentive compensation only after achieving future milestones and rewarding employees first.
Whitehurst, 38, a former BCG consultant who joined Delta as Assistant Treasurer shortly after 9/11, pointed to other leadership initiatives that have helped Delta achieve its turnaround. He said that he is currently is traveling around the globe, visiting all 45,000 employees worldwide in order to communicate openly and honestly about Delta's state of affairs.
The significance of "signaling" was another leadership lesson Whitehurst emphasized. Delta, despite being in Chapter 11, has been spending an incremental $25 million per year to keep its planes the cleanest in the industry. Not only does he believe that this has been a positive signal to customers, but also he asserts that it has kept flight crews happier and healthier. It is an idea that has paid for itself just in the reduction of flight attendant sick time. He also mentioned chic new flight attendant uniforms, the installation of live TV in the cabins, fresh organic food options, as well as a new "carbon neutral flying" initiative as being additional signals to employees and customers that Delta intends to thrive as a safe, clean, and reliable airline for the long-term.
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