Ed Bastian is one of the most accomplished leaders in the world today. He is the CEO of Delta Airlines, a role he has held since 2016, and he has been a leader at the company for over 25 years. During Ed’s time as CEO, Delta has become the world’s most awarded airline, including being named the top-ranked airline by Wall Street Journal, Fortune and others. He was recently named Chief Executive magazine’s 2023 Chief Executive of the Year.
Ed joined host Robert Glazer on the Elevate Podcast to discuss his leadership career, how he thinks about Delta’s strategy and market position, how to build a world-class global culture, and much more.
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CEO Of The Year Ed Bastian On Leading Delta To The Top Of The Aviation World
Welcome to the show. Our quote for this episode is from Tom Peters, “Management is about arranging and telling. Leadership is about nurturing and enhancing.” My guest, Ed Bastian, is one of the most accomplished leaders in the world. He’s the CEO of Delta Air Lines, a role he has held since 2016. He’s been a leader at the company for many years.
During Ed’s tenure as CEO, Delta has become the world’s most awarded airline, including being named the Top Rank Airline by the Wall Street Journal, Fortune, and many other publications. Ed was also named Chief Executive Magazine’s 2023 Chief Executive of the Year. Ed, welcome. It’s great to have you on the show.
Good to be with you. Thanks for inviting me.
Looking Back
I always think it’s helpful to look back at the guests’ early years. I know you’ve described yourself in an interview as a people geek. Do you have any particular stories from your upbringing where you developed passion and fascination with people and with leading people more specifically?
Probably. I grew up as one of a large family. One of nine kids in Upstate New York. My dad was a dentist and had his practice rate in our home. My mom worked for him as a hygienist.
Family business.
My grandmother lived with us and it wasn’t that big a house. We were surrounded by people morning, noon, and night, certainly with my brothers and sisters. I was the oldest in the family.
I was going to ask what number you were.
I probably learned some survival skills and instincts from that experience. More importantly, my parents did a great job of setting a standard for us all and the responsibility that the oldest had to make sure you’re where the bar gets set and your younger siblings continue to follow in your footsteps. Fortunately, we all did. I’ve always been around people. I always get energy from folks. I love to be with groups and be part of experiences.
As you think back to that early career or even childhood, were there any leaders who particularly influenced you or who informed your own leadership style?
No, I read a lot when I was a young professional. I started my career at Pricewaterhouse in New York. I was an accountant and learned a lot from them. I went to Pricewaterhouse because they had the best roster of companies that were their clients. I got offered by a number of accounting firms. They offered me the lease but I thought they had the most value to offer me in turn.
I’d be attracted to companies that I had as clients and leaders within the firm, but I also read a lot. It was a time when there was a lot of change in the world happening. I was always fascinated by how to lead large organizations through success. It’s not that I ever dreamed I’d be a CEO someday. I thought the management of change and leadership was an interesting science.
Was Herb Kelleher someone who came across your radar even before you were at Delta? I’m curious.
Eventually, but I did not step on an airplane until I was 25 years old. Certainly, there was no one in the airline industry growing up.
You had never flown on an airplane.
I’d never flown on an airplane. My first trip was a business trip from New York to Chicago. I was 25. As I said, several years already working as a professional at that point. As I learned more about travel and learned more about aviation, Herb was someone who was a maverick. He had a way of doing things a little differently. Standing out from the crowd. He had a big heart for people.
Joining Delta And 9/11
I know you mentioned you worked in finance and had that big five or maybe six experiences at that time. How did you make the decision to join Delta in 1998?
I was a partner there. I left in ‘92. I went to Pepsi, which was a part of PepsiCo and still is to this day down to Dallas, Texas. I graduated from a small university in upstate New York, St. Bonaventure. I did not have any advanced degrees in business or any other science and I didn’t want to stop my career to go get educated. I already had kids at that point.
I thought the best way to get an education is to work for a company that produces great leaders and great managers. PepsiCo called and I was attracted. I left the partnership to go join Pepsi. It was a time when Roger, Rico and Wayne Callaway, Chris Sinclair and so many great leaders that were there so many great colleagues and peers of mine that I still stay in touch with that run some of the biggest companies in the world.
We were all in that pool together. We learned a lot from each other. I went there for years and learned what I needed to learn. I never thought I’d want to spend the rest of my life selling snacks or beverages. I was traveling a lot and somebody said, “You should be working for an airline. It seems like you’re on an airline all the time.” I made the mistake of saying, “When Delta called, thinking I already knew the industry but it’s a heck of a lot more complicated to run it than it is to fly in it.”
You were young. How old were you when you joined Delta?
I joined Delta many years ago. I was probably around 40.
One of the time things I had was a little wrong. That makes sense. You joined Delta and within three years you were promoted to SVP then you were basically called upon to help lead a major part of getting through 9-11 and suing the economic downturn. What was that experience like?
Coming to Delta initially was exciting because I love to travel, people, and experiences. Delta was on a high. The company was doing quite well. It was a dot-com boom era. People were traveling and flying all over.
It was go-go.
I was happy that I was here. When 9-11 happened, it brought the world to a stop, from our standpoint. I’ll never forget because I was on campus that day and saw the news reports of what happened. Our first instinct was to make sure all of the Delta crew and Delta people were safe. Fortunately, none of our aircraft were used in that terrorist attack but we had to put planes down wherever they went. People up in Northern Canada or wherever we needed to drop planes and get people to the ground safely, then figure out how to start the airline back up again.
Whenever you’re on our campus, in the background, there’s always the sound of planes taking off hundreds of yards away from the runway. We’re pretty close. It’s a comforting feeling. There’s always that background sound that you get used to until it’s not there anymore. The eeriness and the silence were particularly numbing and scary because we didn’t know where we were going as a company.
Fortunately, we were able to start to build our business back and get back on our feet. What happened at that time was not international, which was a big moneymaker for us. It took years for international travel to recover. It took quite a long time for travel in general to recover because of TSA and new security protocols. There are a lot of people that took travel for granted and stopped.
There’s a lot of fear.
There’s a lot of fear at the time. We had to reinvent ourselves. The thing that people don’t understand as well, it wasn’t just 9-11. It was also the advent of the internet that helped bring the big airlines down because, for the first time, people could price and buy tickets from alternative channels. To that point in time, airlines was pretty difficult to shop for airlines price-wise. There weren’t the modern tools. You’d have to call a travel agent and try to figure out or call them.
That was the era of the eSavers too. I remember getting those every Friday.
Travel was one of the first industries that the internet disintermediated in making shopping and in price transparency. It’s something that’s great in the long run but certainly was very painful going through it for the first time.
You came out of that period into being CEO. Were there any enduring lessons? We’ll talk about COVID a little later, but I’m sure there are some things from that. We tend to learn more sometimes in the downturns and the failures that you were like, “I’m going to remember this one.”
There’s no question about you learn much more from when things don’t go right than when they do. We went through bankruptcy, in fact. A year prior to that, I was so disenchanted with the decisions that were being taken. A lot of which were walking away from the company’s values. There had been a lot of leadership changes here at Delta during that period. People were brought in from outside the industry and outside the company. I don’t think they understood the importance of people and staying close to the front lines. Delta was a storied airline at that point. We were 75 years already into existence. In fact, we’ll be celebrating our 100th anniversary.
You learn much more when things do not go right.
$100 flights?
There’ll be lots of hundreds. We’ll have some fun with that, but we do have a history. I don’t know that the leadership team at the time understood how important it was that it was about the people and the culture. It’s not about who’s the smartest guy in the room. They brought in a lot of outside industry experts because all the leaders at the company were homegrown.
You had people at the top who had started on the ramp and worked their way up the chain. For some reason, as they say, “The dawn of the internet,” and other forces were brought to bear. They wanted to bring outside experts into leadership positions of the company. They wound up not being able to respond to the damage that 9/11 did. Certainly, didn’t have the relationship or trust with the front lines that were required to go through such a tough time. I left myself the company for a period of time. I was fortunate that I got called back in to lead the restructuring and lead the change and eventually become president of the company.
Weather, Fuel, And Other Unexpected Variables
Warren Buffett has been famously quoted as saying, “There’s no joy in being CEO of an airline.” I’m sure you would disagree with that. One of the leadership tenets and what he’s getting to you that I believe most in and I’ve heard a lot is control what you can control. Don’t worry about what you can’t control. With airlines, however, you have this variable called weather, which is a critical component of your operations. To a lesser extent, there is fuel, which is subject to all geopolitical and otherwise. How do you teach and coach your people to protect the company and deal with these this variable that you don’t control? It’s a very unique component of your business.
People think that there’s much more outside of our control than within our control. Some days it feels that way, but the fact is that whether or fuel prices or geopolitical events, they affect all of us in the industry. It’s not unique to Delta. There’s not that Delta walks around with a cloud over its head. It’s how you compete and how the resilience you build and the strength you create to make sure you can create within the industry that resilience that others may not have that same level of capability to respond as quickly or with the same level of agility.
We talk a lot about what that means. That means being very nimble. It means making sure your financial risks are well understood and well managed. You pay attention to your balance. You don’t get ahead of yourself too far. Delta has always had historically the best balance sheet in the industry and one of the best anyway. We’ve COVID heard it, but we’re back there again. You want to be a little cautious about that and make certain that your people stay close to you.
Did you do a lot of disaster or scenario planning? As you said, that is true. There are some storms that seem to impact airlines in the same cities unequally. There’s clearly a measure of how you’ve extended yourself or what your response is. Is part of the training doing a lot? How do we handle the unknown and the unexpected?
We always spend a lot of time with summer readiness which we start prepping for in January or winter readiness, which we start prepping in June with our airport teams, reservation, and service teams. We’re always on in terms of getting ready. You’re right, we’ll go through storms, weather, and challenges that every time you look and you turn around Deltas are on top of the operational stack, on top in terms of net promoter score and in terms of resilience. It’s not that we’re organized.
It’s not that the clouds don’t fall over your airplanes.
We don’t have that success, but the success is making certain that you’re prepared and you’re investing in the technologies and the tools, and being realistic about what you can expect. Not putting too much supply out there that exceeds your ability to serve. Air traffic control, everyone knows is now an issue. Congestion in the skies and aviation infrastructure are issues. There’s an untold number of things that are outside our control. I can’t control that.
What I can control is our response to that. We don’t spend time modeling just for the sake of modeling. We spend time understanding how to create more resiliency, strength, recovery, and capability and that our people know that when tough times happen, that’s when customers decide what airline they want to be on. That’s when they see who you are.
There are an untold number of things outside of our control. What we can control is our response to them.
There was a famous quote that my chairman at Delta shared with me at the start of the pandemic is that, “People think out of a crisis that character is formed and found. The reality is it’s not the case because if you don’t have a character going into a crisis, it’ll be revealed who you are.” Crises reveal character. They don’t build character. Our character was shown during that time the hardest of times. Everything was out of your control. Whether it’s blocking the middle seats or the work we did to get through it without furloughing a single employee. There will be case studies written about it for years to come.
Learning From Mistakes
Warren Buffett has a similar quote. I think he said, “When the tide goes out, you see who’s not wearing their bathing suit.” It’s a little bit of a synonym for that. In addition to preparation, things go wrong. You make mistakes. What is part of your culture in terms of the military has this after-action response? How does the team culturally train to learn from mistakes that are inevitable?
As I said earlier, you learn a lot more from mistakes than when everything goes well. We’re always doing after-action reports on every incident, thunderstorm, and opportunity that we’ve had where we had to make decisions and put judgment in play to make sure we’re learning from it. What could we have done differently now that you understand what happened?
One of the things I learned at Pepsi, I talked about my career and one of the reasons I went to Pepsi was to learn how to be a better decision-maker. People have this sense that only smart people make good decisions or experienced people make good decisions. There’s this, how do you become a good decision-maker? It takes experience, talent, and hard work. Primarily, you have to have the courage to make decisions and you make them quickly.
The one thing I learned is that when you’re faced with a decision, the sooner you make the decision rather than waiting to make that decision. The easier the decision is because it’s a smaller decision. Decisions that aren’t taken are decisions in themselves and they can be balled up into a bigger decision. Learning to respond quickly, recover quickly, and correct quickly and not get stuck on that decision enhances your adding average to be a better decision-maker. That’s true whether you’re an airline executive or any other manager running a business. I do believe the sooner you get comfortable making decisions, the better leader you’ll be.
The one crisis that your industry wasn’t tied into, which was the banking crisis. I wrote about this. There were a lot of organizations and places where I had investments that were tied up in SVB or the First Republic otherwise. Some got out emails over the weekend about what they were doing and the saddest. Others were just sitting there holding their thumbs and had the Fed not bailed them out on Monday that would have been in trouble. Again, sometimes people give too much credence to the actual decision as an inflection point, where it’s fundamentally right or wrong, versus you could have executed on either path and made it a good outcome.
That’s exactly right. The fact that you’re out there and you’re moving forward, not studying, and not paralyzed gives you the ability to recover.
I have a personal analogy. It may not be the right choice, but with airlines or anytime I get stuck or rerun or have a problem. I always get on the flight that moves me more towards where I want to go, then stay there. I feel like I’m doing something. It might not be the right choice in a lot of cases, but it’s funny. If I’m offered the choice to wait or keep going, I try to keep going.
Do you look back? Do you look at that flight you were on and ask yourself, “Did you get there sooner or not?”
I do.
What’s your batting average?
I feel better in motion. Even if it’s not the right choice, waiting and feeling helpless. I don’t like that feeling. I like being in motion.
Getting out of harm’s way is always a good decision.
Delta’s Secret Formula
Air travel is a challenging line of work from a customer service standpoint. As someone who’s traveled extensively for many years myself, I often feel like many people on the front lines of airline customer service don’t want to be there. Full disclosure, I’m a Diamond Medallion on Delta. I try to fly Delta exclusively. I’ve seen and felt the difference.
Delta has been ranked number one in customer service by numerous publications, including Business Travel, Wall Street Journal, and JD Power. What’s the difference? I remember Southwest used to hire people that were funny and train them to be flight attendants. The opposite wouldn’t work. Is it the people you hire? Is it the culture? Is it a combination? There’s a difference. I’d love to understand a little bit of the secret formula.
It’s a little bit of all you mentioned. We spend a lot of time on culture here. People look at culture and a lot of people think about that as an outcome as compared to something you can go, form, and create for yourself and continue to evolve and more. I look at culture. I define culture as where your values and your framework of your purpose come into play in terms of defining who you are.
Culture to us is living and breathing. It’s every single day. We’re either putting deposits in the bank or someone’s taking something out of the bank. You want to continue to be putting investments in your culture bank. To give you a quick illustration, I was speaking at a large group company gathering. We call it Velvet with 600 frontline employees from all over the world that we gather from all different functions and whatnot.
We do these. We’ll do fifteen different sessions of these for a day and a half a piece on all different places. We bring all different people together. We continue and give all of our frontline people the opportunity to interact with all of our leaders. Not just me. I lead each one of these. Many of the leaders that we’ll talk about are the different parts of the business. We’ll celebrate success. We’ll talk about what we’ve learned. They’ll ask us questions and we’ll engage.
I’ll have a selfie line a mile long. Whatever it is, it’s fun and enjoyable. People are there and it’s consistent. It’s an internal company gathering. Could you imagine this? We asked them to rate it at the end on a scale of 1 to 5 so that we learn how we’re doing. Consistently, they rate the overall experience as 4.8 to 4.9. I have 600 people for an internal event. It’s unheard of, but we’ve been doing it for many years. We’ve built such a loyal gathering from within. We’ve brought in many new hires. A third of the company is new within the last several years. Those people all come to those sessions because they want to learn, be seen, develop, and understand.
I heard it’s a 4.8. They want to know what’s going on.
You would think we’re handing out money, which we’re not. The opportunity to participate as part of that culture is what we create in teamwork. At Delta, I talk about our company as a team of teams. We have 5,000 flights a day. Every flight that goes off, there’s a team that’s making that happen. It truly is a team of teams in collaboration. It’s the ultimate team sport in this industry.
When you have that, it very much is about pouring into people. Pouring into success, culture, and helping people through and reaching across the various lines of the company to feel like we’re all on the same team. That starts at the top and I lead each one of those sessions I have had for many years. I’ll make sure then we’ll do fifteen of them, religiously. I’ll make certain I’m at each one of these.
The people come there to make certain and it’s not a raw gathering. We’ll talk about the tough stuff. We’ll talk about the things that aren’t going right and the things that we expect each other to do better at. That’s where culture is not just formed. It’s invested in. When they go out to the field, they can share that with their teammates and their customers, what they learned. That spreads through wildfire. You continue to build on that. There are many other examples, but that’s just one way in which we do it differently.
I also read that you have empowered the frontline employees to solve problems. Again, having been across numerous airlines, when you see people yelling and arguing in counters. There’s a lot of, “That’s our policy. I can’t do anything about it.” I can assume it’s hard to be happy with your work when you have no control over the outcome. You feel like I just have to follow the systems. How much do you think your level of empowerment is different and unique?
We want our people never to have to use that as the reason for being here.
I can’t tell you how many times I’ve heard those phrases at an airline.
I can appreciate that but we want our people to understand why. That’s one of the ways in which we do the why. We want our people to be caring, empathetic, and welcoming and realize that we can’t solve all the issues. We just need to be able to do the best we can as we move forward. Those are three attributes of our brand, welcoming, caring, and elevated.
The experience that we want our people to model, whether you’re on board a flight as a pilot, or in maintenance. Getting that and making sure that plane is ready to go on time, whether you’re on a call with reservations or a baggage handler. Those are the themes across which we want our people to continue to emulate. We spend time explaining to them, talking to them, and recognizing when we see it and calling it out and building that as the theme to success.
There’s no easy answer there. It’s the fact that we’re consistent and we do it year in and year out. We’re investing in the technologies and the tools to put them in a position to win. It’s not playing defense, which you’re describing. A lot of is playing offense. We have the best reliability because we have the best engineering talent.
We have the best maintenance practices and part allocations. We have a mindset in our operations control center knowing what we’re good at, what we can do, what we can’t do, where to flex, and where to pull back. Every single day, we’re at it. We communicate well across the company. It’s a company not just with your customers but you communicate with your teams all around the world constantly what’s happening to make certain those deliverables and ensure everyone’s on the same page.
Daily Operations
Running a global airline, I assume that there is a plane somewhere in the world every minute of the day that’s flying non-stop headquartered in Atlanta with such a crazy complex organization. How do you spend your time? How much is on the front lines? I assume you have multiple front lines. What does that look like for you in terms of being in the office or being in the field?
I always prefer to be in the field. I travel a lot. I travel to see our people where they are. This is not a job where you can walk around and see people. People travel themselves. Planes are in an airport. They’re in maintenance bays. I probably spent 50% of my time on the road with our people or in large employee gatherings. That’s my own internal goal when I think about time allocation. I speak a lot. I get opportunities such as this to tell the Delta story.
I’m going to be heading out to Vegas. I’m speaking at a large tech conference. It’s putting our brand in places that people haven’t seen before. We made our debut on the stage of South by Southwest a few weeks ago. The big splash there will show up at the SES in Vegas regularly. We want to be seen as a brand that’s on the move. To be out there and we’re right or wrong, I wound up becoming the face of the brand to a lot of people because I’m on the silly little video on the front of the screen, welcoming everybody on board. You have to be out there continuing to promote and continue to support.
When you fly, you’re not an undercover boss.
It’s impossible. They got to know who I am. The customers know who I am. Many times, you’ll find me in the back. I won’t just be in front. I’ll get the customer. I spent a lot of my flights working. Working the flight and I’ll start in the cockpit and work my way back. I enjoy it, as I say. If I didn’t like people, I was in the wrong job. I do enjoy people.
Do you work on the ground? Do you work baggage or in all aspects of it?
I used to in the early days.
They don’t want you lifting bags.
I don’t need to be doing that, but I’ll spend time on the ramp. I’ll spend time out with our people, where they are in their workspaces.
COVID-19 Experience
As we talked about earlier, running an airline, you get very good at crisis management. COVID was an existential threat to the airline industry. I read Delta lost 95% of its revenue in 30 days. The stat was incredible. I didn’t think it was that bad. Talk about your approach to this COVID crisis, particularly also the role that trust and culture banks played. Probably also some of the lessons you had learned from the 9-11 experience.
COVID was the granddaddy of it all. You put 9-11, bankruptcy, and global financial crisis, and everything possible into one bucket and you amplify it five times. That’s what the pandemic meant to us. We lost 95% of our revenue in the first 30 days. It was worse than that because we had a lot of people looking for refunds for tickets that they had paid for travel they no longer wanted to take. The first 90 days of COVID, we had $100 million going out the door every day, net. We’re losing $100 million a day in cash.
That’s without the planes flying. That’s just operational.
That’s fallen. It’s refunds out. That’s a lack of revenue. We kept the planes flying. We didn’t fly as many. We certainly didn’t fly internationally. We lost $10 billion in the first 90 days of cash. It was monumental. It took us probably a decade to get our balance sheet in the position.
That’s why you have a rainy-day fund. No one ever thinks it’s going to rain.
Ninety days later, it was all gone again. It was pretty devastating. Again, we weren’t singled out. The world needed to work together to understand what was happening. Airlines were a place where people paid a lot of attention. We were very visible during that period. I, as well as other members of my industry, spent a lot of time in DC in the first couple of months. We put together the very first care act. We’re at the White House particularly.
They made some important decisions to protect the jobs of airline workers. They gave us money and if we took the money, we were committed to keeping people on the payroll, which we did. In turn, we had a fly all through COVID. In the US, we weren’t allowed to cancel a single route that we operated pre-COVID because this country is so large. People needed to stay connected, families needed to get together, and people needed to get to the front lines.
That’s your mission, connecting.
That’s our mission. People weren’t traveling back then who wanted to travel. People were traveling because they had to travel. It was hard. Our people kept those airways open when everyone else was told to stay home. In against that backdrop, I spent the first couple of weeks pretty disillusioned. As you can imagine, wondering what in the world was happening but then realized it was the most important time to lead than ever, at least in our history.
I don’t know why I was in the seat I was when the crisis hit but I was going to make certain I viewed it as a privilege. Not a burden to lead. It wasn’t something that I was tasked with. It was something had done an opportunity to do and took a positive attitude every single day. I’d have to give myself that pep talk maybe several times a day because you’re making hard decisions.
It was very much truly one step forward and three steps back some days. You were constantly focusing on what you could do to make it better and to keep everyone with you along the way. Very transparent. We communicated a lot. We used a lot of video tools like this internally as well as externally. We showed a lot of vulnerability.
When making hard decisions, you are taking one step forward and three steps back, but you are constantly focusing on what you can do to make it better.
Our people were able to see me virtually every day in terms of my body language. I was in the office every day and no one else was but hardly anyone else was. To make certain that they knew I was okay, they were following the story and the saga. I talked about what is happening, what we’re thinking of doing, and where we’re trying to go next.
Thousands of people would watch every single day. You were communicating and walking an entire company through the recovery, what we are learning from DC, from the medical profession, and what we’re seeing in the business. By the time that people started to travel again, our people were ready to go. We had 50% of our people volunteer to take time off without pay. We’re a big company. We have 100,000 employees.
One of the biggest obstacles that cut into that $100 million burn a day was to figure out ways to get smaller quickly. You can either furlough or you can work differently with your employees. We chose to work differently. I asked them to take time off without pay. We had 50,000 people take up to two years without pay. We kept their benefits intact. They gave them an opportunity to travel if they wanted. We shrunk the company in half literally overnight. We had a retirement offer for another 20,000.
We got down to a company shape of about 30,000 in six months, which is unheard of in a heavy fixed-cost industry. That saved us a lot of money. It allowed us to keep those middle seats on planes blocked through the course of the entire pandemic. Oftentimes, when you do the right thing, it’s also the smart thing because by blocking those middle seats for as long as we did. That was our reputation as the airline that was taking the best care of its own people and its customers through the crisis. We generated more revenue by not selling the seats than the carriers that decided to sell their seats.
People were more likely to fly because the seats were not full and they had the space.
Our brand was strong going in. We somehow became known as the brand to fly during COVID if you were going to fly because most people, as I said, were not flying because they wanted to fly. A lot of people were flying because they had to fly. We blocked the first-class cabin. Every first-class seat had a seat next to it and others didn’t do that and we did it.
You had more seats by restricting capacity. That’s fascinating.
It was pricing. People were paying more to be on Delta than they would pay to be on any other airline that was selling. The reason I did it was not solely for the customer value, which was great and customers still stopped me to this day and thank me for doing that. It was for our own employees because the employees didn’t want to work a crowded flight any more than customers wanted to sit on a crowded flight or in a crowded airport.
When you say you put people first and it’s your culture. Those words are easy to say, but it’s the actions that people look to that matter. Not furloughing anyone. Only the airline didn’t furlough anybody. Blocking the middle seats throughout the crisis, the only airline that did it and generating the most revenue from it as a result of that. That’s putting people first.
It is easy to say that you will put your team first, but it is the action that people pay attention to.
You also convince customers to take credit and not cash.
We had such loyalty. Our reservation agents were heroes. They would listen to people’s sob stories and the challenges that they were facing and our customers would cry on the phone with our agents. We were all in this together. It wasn’t about Delta. It was about the world. We had billions of dollars in terms of customer deposits that we were holding. The majority of those customers agreed to keep the money with Delta. They could have had it if they wanted, but the majority of them decided to hold onto it. They said, “I want to know that I’m with you through this.” It was a small token at the time of what they could do.
As you said, you need to save money for a rainy day. You need to build trust for when you need it. One thing people might have missed in this is that in February 2020, you paid a record $1.6 billion profit share to employees. You also unveiled an airplane that had the names of all 90,000 employees on it. I have to think that the timing of that goodwill helped you a lot.
In fact, I used it. When I went out in March of 2020, and I didn’t know, I told them that was my vision to get through this and furlough anyone. I told them, I thought it was a crazy idea and didn’t know that I could do it, but that was going to be our goal. We did it, which was marking. I told them that we had paid distributed $1.6 billion so I knew we had made a major deposit into the bank. We also knew that people wanted a break. They wanted to get away from travel and figure out. We kept their benefits intact and people responded. I was just so proud of them.
Strategy Shift
I was curious to ask you. I’m an airplane junkie and one of the things I knew about Delta and noticed years ago was that you had this strategy where you were buying a lot of older jets or the air trans jet or otherwise. You were gutting the inside and making them entirely new so those looked like new planes. It seems like you’ve pivoted in the last couple of years and now we’re buying brand new jets, bigger jets, and long-range jets.
I have a couple of questions about it. Why the strategy change? Can you share how do you know when it’s time to change strategy? Sometimes a strategy works, but then people overdo it past its prime. I’m guessing something in the market changed that made you pivot on that or maybe it’s an ant. I’d love to hear the background on that.
It’s an ant. If a fleet is foundational to us and those fleet decisions that we make when we buy a new airplane. We expect it to be around 25 or 30 years or more. We were opportunistic. We have an incredible maintenance team. Their ability to take a used aircraft, reinvest in it, bring more life to it, and put the Delta shine and brand on was amazing. We did it.
As you mentioned, when Southwest bought AirTran, the 717s didn’t fit with Southwest’s fleet. We knew at some point Southwest was going to be willing to have a conversation, which they did. We took almost 10717s from Southwest. Not only did we take the planes. You take them with customers and routes attached to them as well. Looking back, it was one of the big pivots that we made being opportunistic, having capability but having the courage to move in that direction.
I don’t know a lot of companies in this bold to take on something like that. What it did was it not only allowed us to grow Atlanta even faster with a lot of those planes than in Delta colors. It allowed us to get out of the smaller planes, the 50-seater planes. The 717 is a 100-seater plane. We vacated the planes that people hated, the small little regional jets, which at the time were our largest fleet. We upgraded the airline to a larger mainline cabin that had a lot more utility and a lot more customer amenities attached to it.
That was one of the best plays we ever made. We still did it. By the way, we did during the pandemic. We took some Airbus 350s from LATAM. We’re in the process of converting them to Delta currently. We took a bunch of 737-900s from Lion Air. We’re doing the same thing. Long term, when you’re bringing other people’s fleets into your fleet plan and remember, we’ve got 1,000 planes. It’s a pretty big undertaking. It creates also a lot of inefficiencies.
It creates a lot of incremental work and additional steps in the process. There’s a value. One of the best things that Southwest and Herb Kelleher did over time was use simplicity as their model to create value. We oftentimes in our business use complexity to create value and seek to get paid for it. There’s a middle ground there.
You want to make sure you’re driving where you’re good at and getting value from it. In a thousand plain fleet, you’ve got to have a lot of different models. The more you can align those because you have different pilots trained on different aircraft models, different maintenance practices, and different part ratios. If you’re going to be the most reliable airline in the world, it’s hard to be the most reliable and the most complicated.
Businesses often use complexity to create value and seek to get paid for it. However, you want to make sure you are driving where you are good at and getting value from it.
Program Changes And Backlash
Those things don’t go hand-in-hand. Again, all kinds of things come up. I’m curious to ask you about another challenge earlier you made some large changes to the Delta SkyMiles program. Particularly, I’d say the point enthusiast community had a pretty big backlash around the changes. It prompted the company to walk back some of those changes and change the changes. From a leadership standpoint, I’d love for you to share what was the process of making those changes, listening to the response, and then deciding to say, “We didn’t get it right in some of these areas?” Also, what was missing in the first rollout that created that disconnect?
Anytime you touch loyalty, you’re going to get backlash.
People don’t like change.
Even if it’s changed for good, the people that are benefiting are not the ones that will speak out. It’s the ones that are being.
My other experience is people only focus on what you take away, not what they gain. That’s been my other learning in leadership.
That is fair. We had a problem here. We had a lot of success. We have a lot of loyal customers, high-value customers, and premium customers. We’ve accumulated a lot. Through COVID, we were by far the most generous in extending loyalty and keeping status all through the entire COVID. It wasn’t until 2024 that finally, all those COVID extensions started to burn off. Not only did we keep our medallion, upper-end medallion population intact. We grew it with new people who were starting to come to the airline and fly it during that period of time.
We had more premium customers and more premium demand than we had assets. On top of that, you look at the popularity of the credit card and American Express and the benefits that create. Put a lot of pressure on our people and the assets and started to take your premium assets, whether it’s your clubs or your reservation lines or even the ability to get the upgrades and dilute the quality of the experience for many. We knew we had to make a change. I don’t think anyone disagreed with that. They all wanted us to do it maybe in a little different way that would have maybe harmed the other guy but didn’t harm them.
They benefited them.
They wanted to be the line where the line gets drawn. They wanted to be above the line. They were like, “Everyone else falling below the line.” I got a lot of feedback along the way. Still to this day, I get a lot of feedback on that, but I knew this was going to be painful to go through. Our team did a lot of work and spent a lot of time. This wasn’t a willy-nilly. This wasn’t a brainchild that came in from left field trying to figure out.
It’s hard to get a great customer view or sample. If we take these things away, how are you going to respond? We knew what the answer was going to be. The thing that we saw came back with a lot more fury and a lot more angst than our team anticipated that we were going to have. I was watching it carefully. I was involved in the decisions upfront. I was there. Our team knew that I was a little wary of what we were doing.
They convinced me that no matter what we did, there was going to be backlash. Why don’t we go right to where we thought we needed to go and then do our best to endure it? When we did that, it was way too much. It was too much change and too short a period of time, which was the mistake in that model. You need to walk people through things over time. Especially if you touch anything like loyalty, which is their relationship to what they’ve earned.
After all, our program’s called Sky Miles. It’s not called Sky Dollars. You’re now taking miles and time in planes and devaluing that whole element of earning power. I knew it was going to be tough. When I saw that and I heard a lot from customers, I was very accessible. Everyone knows how to reach me through my email or other means. I read a lot of those letters and people took time to write long letters that were heartfelt. It was like a breakup letter. It was like, “I love you. I love your people. I love what you do, but you hurt me beyond repair. I don’t know that I can stay in this relationship with you anymore.” The theme a lot of them and there were there were some very serious ones in.
As you said, this is loyalty.
You’re touching and breaking the deal. One of our tenants in Delta is we keep our deals. We take good care of people, customers included. I was ready to call the time out quickly and I did within the first ten days of the announcement. I was scheduled to speak at the Atlanta Rotary. It’s a funny story in hindsight. When the announcement came out about the loyalty changes, I was out of the country on business.
When I came back, and I was already seeing overseas what the feedback was. I looked on my calendar and I’m speaking at the Atlanta Rotary, which was right at the center of all of our high-value customers. I’d have hundreds of them right there. I said, “This was a smart thing to put on our calendar, wasn’t it? Maybe I shouldn’t go do that one and have someone else.” Our team said, “No, this is the right time for you to go. Take the heat and just talk to them about what’s happening.”
I told them they were right. I went there and I spoke about it. I explained a little bit of what we were trying to do. Also, I acknowledged that we went too far. We were going to pull up and make some adjustments to it and we did. We made some meaningful adjustments a couple of weeks later. We implemented a few new things and a few new benefits that hadn’t even been in the previous program for truly the long-life members that we have, making them 360s or diamonds for life at lower levels.
The feedback I received consistently after that was, “Thank you. You didn’t necessarily get to where I was hoping you’d get to, but at least you made a valiant attempt and I understand why you had to make change.” In a very interesting way, we ended up in a better spot because of the turmoil that we went through that wasn’t the plan. If we laid out even where we’re at now as the initial plan of attack.
There’s data around that. What you said is key to my leadership standpoint. I watched and said, “We got some of this wrong. We don’t have the answer yet, but give us a few weeks and we’re going to work it out.” Rather than rushing another solution, it sounds like you took some feedback and made that. Rivian had a similar thing and a lot of companies who’ve had a problem then resolved it have endeared more loyalty than had they never had the problem.
By the way, a lot of that feedback went into the formation of how we adjusted the plan and some of the changes that we made.
I watched inches. I benefited. I was one of those people who had a lot of rollovers. The extension of that was super helpful. We don’t all get it right the first time, but too often people double down on mistakes. Again, the learning there from what I saw was, “Cooling off period. We’re taking the feedback, give us a little time and we’ll try to get it right.”
We’ve done a lot of great things here. We’ve done a lot of right things. We’ve been pretty successful for a pretty long period of time here. It’s easy to lose your humility in that. It’s easy for people to think that you come across as a bit cocky or arrogant or complacent or taking it for granted. We’re not. The one thing about our brand that I love is our tagline, “Keep climbing.” Humility is important in leadership. A lot of people don’t recognize that. You need to be aggressive. You need to be courageous and bold, but you also need to be humble. You need to listen. That combination is when you can find great leaders who are both humble but are still hungry and courageous. That’s where greatness is.
Your careers had a lot of stories and a lot of chapters. Do you think you’re going to write a book based on all your experiences?
I get asked that question a lot.
I can think of a whole bunch of titles.
I’ve got chapters yet to rate before I’m done, but we’ll say stay tuned.
Closing Words
Thank you for joining us and sharing your story with our readers. Congrats again on being named CEO of the year. Hopefully, our readers got a good sense of why you won that award and can learn some valuable lessons.
Robert, I appreciate your loyalty to Delta and the business that you provide us. As many of your readers, I’m sure are loyal Delta customers. I want to thank them all for their loyalty to Delta. We’re here every day trying to make your experience that much better.
To our readers, thank you for tuning the show. We’ll include links to Ed and his work on the detailed episode page at RobertGlazer.com. If you enjoyed this episode, please make sure to follow the show to be notified about new episodes and have them downloaded automatically in your app. You can hit follow on Apple, CastBox, Spotify, or Pandora, or your favorite player to get all the new episodes. Thanks again for your support. Until the next episode, keep elevating.
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