'Bent, but not broken' is how Delta Air Lines' new president and chief executive, Leo Mullin, sums up the airline's current performance, identifying customer service improvements as a priority.
As a newcomer to the airline industry it comes as no surprise when he puts his own spin on his first impressions. 'My knowledge is primarily statistical. I believe there has been some erosion in customer satisfaction and we should tackle that as early as possible - it will be a top priority,' he says. Analysts agree that, with all its major US competitors courting the high-yield passenger, Delta must strike a better balance between cost control and service. They also say Delta set this ball rolling earlier this year under Mullin's predecessor, Ron Allen.
By March, says Bankers Trust Research of New York, Delta was no longer focused exclusively on cost, but was pursuing a 'balanced strategy'. Indeed, Delta began improving customer service in April when it unveiled an upgraded transatlantic business class.
Mullin also wants to address internal morale. 'Any company that went through the kind of financial challenge that Delta met would see some effect on morale,' says Mullin. In his first days at Delta, Mullin met the head of Delta's Air Line Pilots Association, Denny Dolan. Alpa members voiced frustration with management policies through informational picketing the day before Mullin took over (see p86), but says the first meeting with Mullin was a 'very positive first step'.
There is much talk of Mullin bringing a 'fresh' style of management to Delta. Gerald Grinstein, non-executive chairman of Delta's board, says they were seeking someone with an 'open management style' who could communicate easily and take a 'fresh look' at the company. Mullin, who was formerly vice chairman of US utility company Unicom, apparently fits that bill. But again, Delta has already been taking a new broom to its management personnel: some 75 per cent of its officers were not in their current positions three years ago.
In other areas Mullin may become more of a fine-tuner than a dramatic change implementer, softening the edges of Allen's sometimes ruthless strategies. On its domestic routes, Delta has pared down mainline point-to-point services to focus more on its hubs, alongside the restructuring of transatlantic operations earlier this year. Both strategies won Wall Street's approval. Delta has turned its performance on the Atlantic from a $540 million loss in 1992 to an operating profit of $208 million in 1996. Further benefits from the transatlantic restructuring should work their way through and improve operating profit by an additional $62 million a year. But to stay the number one US carrier across the Atlantic, analysts say Delta will need to keep its strategies flexible so that it can react to changes that new open skies agreements and marketing alliances might bring.
Karen Walker
Source: Airline Business
