I recently took an early morning flight from Calgary, Canada, to Philadelphia, USA, with a stopover in Salt Lake City. The layover was so short that I could only have a cup of coffee at the Delta Lounge, hoping to have an early lunch on the 4-hour Philadelphia leg of the flight. The meal was so satisfying that I dosed off right afterwards. Upon waking up, I decided to watch a short movie since I still had nearly two hours to go. As I scrolled through the menu, my eyes caught a documentary, titled A Century of Flight. It is the story of Delta’s journey over the last 100 years, making it the first Airline in the United States to make the 100-year mark. The name Delta came from the Mississippi Delta region the airline originally served.
The Delta story is one of courage, resilience, community, teamwork, accountability, authenticity, and exemplary corporate leadership. Founded in Atlanta in 1925 by C.E. Woolman as the first ever aerial crop-dusting company, Delta’s first commercial flight came about four years later. It was a bumpy 5-hour flight over a distance of only 427 miles. But it grew from there to become arguably the largest international airline in the world.
In the course of its growth, Delta faced at least four major challenges, each of which could potentially drown the airline. The first major challenge was the aviation fuel shortages of the 1970s, one in 1973 due to the OPEC oil embargo as a result of the Yom Kippur War and the other in 1979 due to disruption of oil supplies because of the Iranian Revolution. About the same time, the Airline Deregulation Act was passed under the presidency of Jimmy Carter in 1978, which replaced federal control over airline fares, routes, hubs, and market entry with market competition. The intense competition that followed led to the failure of some airlines, including PanAm, TWA, and Eastern Airlines. Delta did not only survive; it gave its employees a pay raise, even when the Wall Street Journal said it was a bad idea in those challenging times. The employees responded by contributing toward the airline’s purchase of a new aircraft, a Boeing 767. It was named Spirit of Delta, which came to define the communal spirit driving the company.
The second major challenge came during the terrorist attack of September 11, 2001, which led airlines to shut down for four days. By this time, online booking sites, which began to take advantage of the Internet a few years earlier, had become very prominent. In the following years, Delta lost funds, buckled, and, in 2005, filed for Chapter 11 bankruptcy protection, which gave room for reorganisation, rather than liquidation.
The management did something extraordinary at this point. Already demoralised employees were summoned to a meeting at which they were fully informed about the company’s plight and given a chance to ask questions and make suggestions for recovery. They were delighted that management answered their questions fully and outlined solutions to the problems identified. Above all, Ed Bastian, then Finance Controller, apologised for the situation of the company and assured them that the company would come out of bankruptcy. The employees, who had reluctantly attended the meeting, came out upbeat.
The strategy paid off and allowed Delta to overcome the third major challenge in 2006, when US Airways made a hostile takeover bid for Delta Airlines. The management was able to rally the support of its employees, creditors, and even the public to oppose the bid. Delta employed two main strategies. One, the management, led by CEO Gerald Grinstein, brought to the Congressional hearings on the takeover some Board members, uniformed pilots, and uniformed flight attendants, all saying No, while US Airline’s management came with a bunch of lawyers. The optics was not lost on the Congressional committee. Delta also mounted successful rallies and media campaigns to oppose the bid. Delta succeeded, emerged from bankruptcy in 2007, and began to thrive.
In that year, the company went public on the New York Stock Exchange and the following year, it merged with Northwest Airlines to become the largest commercial airline in the world, with 1,100 planes in its fleet. The Delta Airlines brand was retained. Eleven years later, Delta reported a $4.8 billion profit and distributed a profit share worth $1.6 billion, the highest of any company in the world at the time.
The fourth challenge was COVID-19, which led to drastic reduction in passenger load. Drawing on the spirit of Delta again, Delta employees volunteered and took over a vaccination centre in Atlanta and were vaccinating about 5,000 people a day at peak. To Delta’s credit, not a single worker was laid off during the Covid years.
Three major factors underlie Delta’s success. One is Delta’s unparalleled commitment to its workers. Through the years, Delta management developed and nurtured a value system of mutual respect between management and staff, which encouraged a communal spirit. This was made possible by the management’s accountability and openness, especially in challenging times, which helped to build trust in the company’s leaders.
Two, since 2007, when the company went public, the company made sure that every worker got stock in the company but CEO Gerald Grinstein decline his share of $10 million. The company used the money to establish a Care Fund tapped to bail out employees in need. A profit-sharing programme also was developed, which has since paid out an average of $1 billion annually. More recently, the company established an Emergency Savings Programme. Participating employees earn $1,000 dollars to fund a rainy day account.
According to the current CEO, Ed Bastian, “At Delta, our No. 1 job is taking care of our people—our success flows from this simple concept. Sharing profits with our people, along with providing tools and education to help manage and grow their wealth, is part of our responsibility as a values-led organisation.”
Three, the Delta management is top-notch. The leaders listened. They took every step to save the company and make it thrive. Former CEO Grinstein and current CEO Bastian could be credited for the current buoyant state of the company. Their people-oriented management style and resilience carried the company through major challenges. The employees paid back with hard work, dedication, and loyalty to the company and its leaders.
Nigerian leaders and the Nigerian public have a lot to learn from Delta management and their workers, respectively. The company’s employees rewarded the responsiveness and accountability of Delta management with loyalty and hard work. The result is a values-led organisation built on mutual trust.
Next week, I will examine Delta’s profit margins over the years, the place of the Nigerian route in Delta’s lucrative business, and necessary improvements to add value to the route and for the customers.
