Deep Thoughts and Observations by Ken


It wasn’t just the price of jet fuel, or market forces that brought down Delta Airlines. In my oppinion the greatest cause for Delta's woes was a culture of arrogance among management and an adversarial relationship with the equally arrogant pilots. The management at Delta believed their own rhetoric that they were better than everyone else and incapable of failing. In the end it was their air of superiority that blinded them to a changing market. Early on they felt no need to compete with new upstart carriers that would eventually run rings around them.

Delta’s management knew how to make money when times were good but were absolutely clueless when times were bad. Their bloated bureaucracy and archaic systems made it impossible to react in time to changing market forces. They continually miss-read the market and put all their hopes on false assumptions. When they tried to be bold it was too late for their efforts to be effective.

A month before September 11th Delta signed the biggest Pilot contract of any airline in history. It was so great that Pilots could take a 40% pay cut and still be the highest paid in the industry. It was unrealistic and foolish for both sides. The contract would have been difficult for Delta to fulfill even in the best of times, but then the dreadful day came and Delta Airlines fate was sealed. Delta’s fortunes crumbled along with the twin towers.

Other airlines and pilots quickly saw the writing on the wall and realized they were all playing on the same team and both their fates were tied to each other’s. Delta management and the pilots however took an opposite approach. Like a giant tug-o-war they dug in their heels and refused to budge an inch. Delta management lavished themselves with huge bonuses and perks at the same time they were demanding deep concessions from the pilots. The pilots with their unyielding union made unrealistic demands themselves. They were both equally to blame. By the time management and the pilots could reach an agreement it was at least a year too late.

Delta should have taken out bankruptcy back then. They would be alive and healthy today and on their way to a prosperous future, but their pride kept them from doing it. Now they have waited too long again. What ever they do now will merely be rearranging the deck chairs on the Titanic. Most likely they will be liquidated or sold before they can ever emerge from bankruptcy. 60,000 People will probably lose their jobs because Management and Pilots had to get into a pissing match. I hope they are all satisfied.



Comments
on Sep 15, 2005
I seriously doubt they will be liquidated. Chapter 11 specifically allows protection from creditors, and allows re-organization.

As a Gold Medallion flyer with Delta (five years now) who knows the company quite well..I think the blame is three fold.

1. Previous management who scoffed at the discount airlines.
2. Gas prices
3. 9/11

So basically i agree with you.
on Sep 15, 2005
Thatoneguyinslc

I think a merger between a couple or three airlines is the most likely scenario. The problem is that no airline is in a financial position to acquire another and assume all the debt load of the other. You better use those miles because they may not be worth anything in the future.
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