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Tue, Jan 29, 2008

Report: Anderson Focused On Improving Delta's Fortunes

No "Honeymoon" For New CEO

In one sense, Richard Anderson was blessed to come onboard as CEO of Delta Air Lines at just the right time -- immediately after the Atlanta-based carrier, then led by Gerald Grinstein, successfully negotiated the pitfalls of Chapter 11 bankruptcy, and emerged leaner on the other side.

But Anderson (right) -- who also held the CEO title at Northwest Airlines, during one of the most tortuous periods in that carrier's history -- didn't spend much time resting on his predecessor's laurels. In the five months since he took the helm at Delta, he's turned the industry on its ear by actively seeking out a merger with either Northwest or United Airlines, reports The Atlanta Journal Constitution.

Those parties will need to tread very carefully, for such a deal to occur. The goal is to create a Delta-fronted super-airline, possibly the world's largest carrier... while also steering clear of roadblocks posed by the Department of Transportation, which tends to frown on any union that would suggest a monopoly. For that reason -- and others -- many feel a Delta-Northwest merger is more likely, over a deal with larger United.

It's worth noting no one involved with those talks has publicly confirmed a merger is in the works. Analysts and pundits alike agree it's a sure thing, though, and boldly note Anderson and other Delta executives have been working 14-hour days to speed a merger through.

What's less certain is whether those talks will bear fruit... and some officials at Delta fear a hastily cobbled-together deal could fall through. Despite the uncertainty, however, some analysts think a Delta-Northwest merger could be announced in the very-near future.

Anyone expecting short-term financial gains from such a union, however, should prepare to wait things out awhile.

"If Delta and Northwest merge, we will not even recognize the new airline in three years," said airline consultant Terry Trippler, who adds he's a friend of Anderson's but stresses he has not discussed a potential merger with him. "It will be a lean, mean flying machine and a force to be reckoned with. Everybody in the business will be playing catch-up to Delta."

Some would say it's ironic Delta is spearheading a merger now... just over one year after the airline, led by Grinstein, fought off a hostile takeover bid by US Airways. As ANN reported, creditors shot down that deal, after hearing protests from Delta employees and managers, and politicians. They may be kicking themselves now, though... as the current value of Delta is roughly half of US Airway's final $10 billion offer.

A combined Delta-Northwest would have a market value of about $8.5 billion, according to the AJC, based on Friday closing prices.

Just as Grinstein managed to gain loyalty from Delta workers, by showing solidarity with them against the US Airways takeover, Anderson has managed to attract support for a decidedly no-nonsense management style. A former Texas prosecutor, Anderson issued a memo to his senior staff shortly after becoming CEO, stressing his beliefs. Under a section called "Face Reality," Anderson bluntly wrote "Speed Wins. Be decisive and do not delay. Speed in execution is the difference between success and failure."

Anderson is viewed as a shrewd operator by those who have dealt with him before. Mark McClain, a veteran pilot who dealt with Anderson on several occasions as head of the Northwest branch of the Air Line Pilots Association, says the CEO may present an easy-going facade... but watch out.

"I won't say he'll smoke one by you intentionally, but you better know what you're doing if you negotiate with him," McClain said in an interview last year. "He's all business beneath that affable exterior. He'll do what's necessary."

Anderson's disarming style has also impressed some of Delta's old-line workers. Tony Charaf, the airline's senior VP for tech operations, related a story to the paper about Anderson's recent visit to an engine shop... not always a venue corporate types are comfortable in, or especially familiar with.

"When I walked by I said, 'This is a [Pratt & Whitney] 2037 that goes on our 757's,' and he said, 'I know that. Are you still having any problems with the gearbox?'" Charaf said. "I was amazed."

FMI: www.delta.com, www.nwa.com

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