Delta's Slow Rise to the Top

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These days, Delta Air Lines is one of the most profitable and renowned airlines in the world, known for its widespread global service and customer satisfaction. But back in 2005, when the company filed for bankruptcy, its current success was hard to envision—unless you were following it from the inside.

Seth Kaplan and Jay Shabat of Airline Weekly were among those who could see Delta’s remarkable resurgence firsthand, and they seized the opportunity to tell the story as it unfolded before their eyes.

“It was really late in 2011 when we realized that someday, everybody’s going to realize what’s gone on at Delta,” Kaplan tells BTR. “And wouldn’t it be great to have the book that explained how it happened by the time everybody else realizes what had happened?”

So Kaplan and Shabat got to work, conducting interviews and research to complete the job they had inadvertently begun. Published on January 11, “Glory Lost and Found: How Delta Climbed from Despair to Dominance in the Post 9/11 Era,” chronicles Delta’s incredible rise to the top of the industry.

Delta’s corporate restructuring began well before the company filed for bankruptcy in 2005. Like most of the airline industry, the company was reeling in the aftermath of the terrorist attacks of 9/11, and posted its first financial loss in six years soon afterward. Between customer insecurity following the attacks and fuel prices that had been surging since the late-1990s, Delta found itself in a serious quandary.

After several more years of turmoil, Delta was positioned to file for bankruptcy, and officially did so in September of 2005. It was a low point for one of the most storied airlines in the United States, one that began operating passenger flights in 1930 and had established a solid reputation in the eyes of its customers.

“Earlier in its history, it was actually a rather well-liked U.S. airline, in a family kind of way,” Kaplan explains.

Leading up to the bankruptcy in 2004, Gerald “Jerry” Grinstein, a retired former Delta board member, took the helm as CEO to help turn the company around. The process involved a number of difficult decisions and business moves, including cutting more than 24,000 jobs, freezing employee pensions, and cutting down Delta’s fleet. Kaplan explains, though, that these tough moves paved the way for a rebirth.

“When they were in bankruptcy, they did a lot of things that were very painful for their employees in order to cut costs,” Kaplan says. “But on the other hand, they began to stylize the company to turn it into a cosmopolitan airline.”

The re-styling Kaplan describes was met with widespread skepticism. Not only did it seem like too little, too late, but it also made Delta look like more of a European than an American airline.

“It almost seemed silly at first, for a company that was just trying to get through the day, and a company that nobody thought of in terms of having any kind of pizzazz,” Kaplan says.

But the changes were effective, and finances began to turn around within the company. Even before Delta began churning out enormous profit, however, it seemed clear that the company was shooting back toward the top of the industry.

“Even though they were not earning billions of dollars like they earn today, you saw them making very rapid improvements,” Kaplan explains.

Perhaps the marquee of Delta’s resurgence was its fight against a hostile takeover attempt by US Airways in 2007. Grinstein rallied his employees against the takeover while using his professional contacts in Washington to prevent the forced merger. In the book, Kaplan describes how the CEO placed a doormat with the US Airways logo outside the executive offices with a sign that read “Wipe feet before entering.”

“Grinstein really did a great job of fanning the flames of the employee resentment against US Airways,” Kaplan says. “He wanted them to hate US Airways, and he largely succeeded.”

Grinstein’s leadership helped not only to stave off the hostile takeover attempt, but to create common ground between employees and management going forward—a rarity in the airline industry.

“It brought them together,” Kaplan says. “It unified the rank-and-file employees with management. All of the sudden, they found themselves not as adversaries, but sitting on the same side of the table.”

Though Grinstein played a major role in the process and remains synonymous with Delta’s turnaround, Kaplan maintains that the company’s success wasn’t carried on the back of one man.

“It was a series of people and events,” Kaplan explains. “Any time something goes right or wrong, there’s always some combination of good and bad decisions, as well as luck. Delta did, at various points, get lucky.”

Kaplan also emphasizes that the archetypal hero-villain narrative doesn’t apply to the telling of Delta’s turnaround, and that he and Shabat aim to put readers in the minds of executives forced to make adverse moves.

“You come to appreciate a lot of the nuance,” Kaplan explains. “Somebody made a decision that in retrospect looks like a bad decision, but at the time they might not have had any good choice.”

According to Kaplan, many of the decisions that were made during Delta’s post-9/11 and initial bankruptcy phase helped the company years later.

“Sometimes the seeds of a turnaround are sown long before,” he says. “And even back when things were going wrong, there were certain seeds planted, in the area of technology for example, where Delta really modernized itself.”

Delta now reaps the benefits of its long road back, setting the standard in the airline industry today. From a revamped scheduling system to groundbreaking global partnerships and networks, rival airlines continually look to Delta for new ways to improve.

“They are very much the envy of not only the U.S. industry, but also the global industry,” Kaplan says. “The more you talk to people and the more you write, you realize that this is really something special they managed to pull off. It’s the airline that people thought would not survive.”