Delta’s Richard Anderson reflects on airline’s route ahead
By Maria Saporta
Friday, February 17, 2012
If Richard Anderson is worried about Southwest Airlines entering the Atlanta market, he doesn’t show it.
Anderson, CEO of Delta Air Lines Inc., sat down for an extensive conversation with Atlanta Business Chronicle two days before Southwest’s inaugural Feb. 12 flight into Hartsfield-Jackson Atlanta International Airport.
The conversation covered several topics — airline competition, the new international terminal, Delta’s strategic emphasis, Anderson’s civic involvement, his thoughts about Atlanta and Georgia, and his reflections on his four and a half year tenure as CEO.
About the only question Anderson would not answer was whether Delta has any interest in acquiring American Airlines or U.S. Airways — possibilities that have been featured in the national media.
Still, there is little doubt Anderson is basking in the financial success that Delta has enjoyed in the last couple of years — a stark contrast from when he went from being just a Delta board member to becoming CEO on Sept. 1, 2007, to help the airline emerge from bankruptcy.
“If you look at what we have accomplished given where we were in 2006 — we now have the highest margins in the industry. We’ve paid down $4.5 billion in debt. We have had two strong years of profitability. And we are heading into another year of strong profitability,” Anderson said. “Our people have accomplished a lot.”
When asked about Southwest entering Delta’s hometown, Anderson acknowledged that “Southwest is a strong competitor,” and that CEO “Gary Kelly is a capable leader of Southwest.”
But he quickly added that Delta successfully competed against AirTran Airways before its merger with Southwest. And that the Southwest model is quite different than Delta’s.
“We have very different business strategies,” Anderson said. “Delta has first class. Delta has the Sky Clubs. Delta has assigned seating. Delta has first checked bag free with an American Express card. And we have a very large footprint.”
In fact, Anderson repeatedly mentioned the synergies between Delta and Atlanta and how vital they are to the region’s economy.
“I would assert Atlanta is the most convenient city in the world to live in. Try to find a city with more frequency. And I think that’s going to be the case for a long time,” Anderson said. “I would doubt that there’s any airline operation in the world that creates more economic value for a community than Delta does in Atlanta.”
Anderson is especially excited about Hartsfield-Jackson’s new international terminal, scheduled to open later this spring.
“I don’t think there is any airport that really has all the pieces that we have here,” Anderson said. “This is the biggest international terminal investment that’s been made at any airport in a long time. In a global economy, it’s important to have a world-class facility.”
That said, Anderson said the terminal will become Atlanta’s new front door — a showcase welcoming visitors from all over the world to Georgia.
For Delta, the international terminal will free up the T-Concourse, which will be converted into a “business concourse” providing hourly flights to key destinations, such as Chicago and New York.
Asked whether fares will go up on flights to cities that have been served by AirTran but will not be served by Southwest, Anderson shook his head.
“It will be as competitive as it’s always been,” he said. “Our prices are set by a very competitive marketplace.”
On a personal basis, Anderson is becoming quite engaged in the Atlanta community. He has been chairing the 2011 United Way of Metropolitan Atlanta campaign, which he believes will reach its goal.
He also has been working with the Metro Atlanta Chamber and the Atlanta Committee for Progress on several local initiatives.
“I like Atlanta a lot,” Anderson said. “It feels very comfortable here. It’s a nice place to live, a relatively easy place to live, a cosmopolitan city, especially if you live in town.”
Anderson and his wife, Susan, live in the understated Garden Hills community — a location he said fits their lifestyle.
“We wanted to be in a smaller, older neighborhood where the houses are close together with the ability to walk to the grocery stores and be part of a smaller community,” he said. “And we wanted to be close to the airport.”
But Anderson said the couple has become enamored with the Old Fourth Ward community, where they attend church.
“The history of the area is just amazing to me — that you can go to the Old Fourth Ward and walk from the decisive battle grounds of the Civil War to Ebenezer Baptist Church,” Anderson said, adding that if he had to do all over again, “I would live in the Old Fourth Ward.”
That sentiment indicates Anderson’s approach to the community — one that focuses more on substance than flash.
When business leader Tom Bell called Anderson to let him know that Grady Hospital needed help, they had a three and a half minute conversation. Anderson asked: “How much do you need?” “$2.5 million,” Bell said. “Done,” Anderson responded.
Anderson said that Delta had to “reprogram some of our sponsorship dollars to community” so it could donate to Grady and the National Center for Civil and Human Rights as well as support the city’s efforts for pension and financial reform. As an aside, Anderson said that the community “absolutely should save the Cyclorama,” which has fallen into disrepair.
“When you look at being part of the fabric of a community like this, both for the success of our enterprise and the city, you contribute to helping the leadership improve the community,” Anderson said.
Anderson applauds the work that Atlanta Mayor Kasim Reed and former Mayor Shirley Franklin have done to put the city on a more stable financial footing. But now he wants to help the mayor reform the city’s business model so that it can make infrastructure investments.
“The city needs more basic maintenance of roads, bridges, parks and sidewalks. It’s about the quality of life,” Anderson said, adding that it is estimated the city needs an additional $25 million to $50 million a year for “basic maintenance” of its infrastructure.
“The basics are important,” he said. “When you think about making an impression for new companies and people, it’s important that the front of our house be impressive when we have visitors.”
Anderson also would like for the Metro Atlanta Chamber and economic development organizations to study the most business-friendly policies for corporate headquarters, banking, malpractice insurance, labor issues or credit card processing that exist in the country.
“I would go around and find the best legal structures for businesses in all 50 states, and then do an omnibus package of legal reforms,” Anderson said.
As for Delta’s investment strategy, Anderson has his eye on Latin America. Delta already has taken a stake in AeroMexico and a stake in the Gol airline in Brazil.
“We have to have Spanish signage in the airport — we need to Latinize Hartsfield-Jackson. This can be a big gateway to Mexico and Latin America,” Anderson said, adding that he has been and continues to be “an outspoken critic” of Georgia’s restrictive immigration law.
Anderson, who has a copy of “Strunk & White’s Elements of Style” on his desk for easy reference, then highlighted his top priority.
“The most important thing for us at Delta is to preserve the culture,” said Anderson, crediting former CEO Gerald Grinstein for doing a “remarkable job re-establishing the culture” of the airline.
And Delta knows that Atlanta is key to that culture.
“Delta is fortunate to be part of Atlanta, and it’s important to our employees to give back to Atlanta,” Anderson said. “Atlanta is central to Delta. When people think of Atlanta, they think of Coca-Cola first, and then they think of Delta.”