Delta soaring to record heights – a decade after emerging from bankruptcyDelta CEO Ed Bastian delivers his comments to shareholders as Frank Blake, the airline's non-executive chairman and former CEO of the Home Depot, listens (Photo by Maria Saporta)
- By Maria Saporta
NEW YORK – The annual meeting of Delta Air Lines Friday morning became a high-flying affair as CEO Ed Bastian declared two all-time records.
The company’s market cap is approaching $40 billion, and Bastian said: “Last night, we closed at an all-time high.”
And then on Friday, Delta was expecting its busiest day ever.
“We will be flying 651,000 passengers,” Bastian said in a brief interview after the annual meeting. “It’s the highest in our history.”
Bastian also was cognizant of how far Delta has come in the past decade when it was in the middle of a bankruptcy and after the 2006 hostile takeover bid by US Airways. That led to cries from the public as well as a marketing campaign to “Keep Delta My Delta.”
The company now is considered one of the strongest, if not the strongest, U.S. carrier.
“We had the good pleasure last month of celebrating the 10th anniversary of the relisting of Delta on the New York Stock Exchange and Delta coming out of bankruptcy,” Bastian told the handful of shareowners who attended the annual meeting in the law offices of Davis Polk & Wardell at 450 Lexington Ave. in New York City.
Bastian particularly thanked the company’s employees for standing with the airline during the hard times.
“The key tenet of our success has been ensuring that all our stakeholders – our employees, customers and shareholders – that they all share in our success,” Bastian said. “Our employees are our DNA. The strong financial, operational and customer service results in 2016 would not have been possible without the dedication and determination of our employees.”
Bastian went on to say the company appreciates the support of its employee base by reinvesting in them. He said the company had increased its average employee compensation by 80 percent since 2010.
The company also invested about $11 billion in its people in 2016, Bastian added. The company’s profit-sharing plan paid out $1.1billion in February based on Delta’s 2016 performance.
In addition, the company paid $91 million in shared rewards to employees for meeting on-time arrival, baggage handling and flight completion factor performance goals in 2016 as well as contributing more than $2 billion to its defined benefit retirement plans. Delta also increased its 401(k) contributions to the maximum 9 percent to ground and flight attendant employees.
Unlike the 2016 annual meeting, no protests greeted Delta executives and board members in front of the law offices. Last year, pilots had lined up in front of the Cravath, Swaine & Moore law offices holding posters saying: “First Class Airline. First Class Contract” and “Labor Risk…Back on the Table?”
There was no sign of such discontent this year. Last year, the annual meeting only last 8 minutes.
In 2017, it lasted nearly a half hour as Bastian outlined the airline’s success in the past several years and as two members of audience spoke favorably to Delta’s executives and board members.
Other highlights. Bastian mentioned the company generated $3.8 billion in free cash flow in 2016, of which $3.1 billion was returned to stockholders through dividends and share repurchases.
“Over the last six years, we have reduced our debt by $8 billion and returned $7.5 billion to our owners,” noted Bastian, while mentioning the airline was named among Fortune Magazine’s “Most Admired Companies” in 2017, and it was rated Fortune’s “Most Admired Airline” – a rank it has enjoyed for six out of the past seven The company also followed through on its commitment of contributing 1 percent of its net income from the previous year in donations to key charitable organizations – donating a total of $37 million around the world.
“In closing, we’ve had a good year,” said Bastian, adding he’s even more excited about the next 10 years.
Civil rights advocate Jesse Jackson quickly stood to a microphone after Bastian’s comments and he complimented the company for its dedication to diversity. He said United Airline does not have one African-American on its board.
And Southwest Airlines has one African-American director – Atlanta’s own Veronica Biggins, a search consultant.
Jackson also thanked Delta for making a significant contribution to the “Maynard Movie” about Atlanta’s first African-American mayor – Maynard Jackson.
“Thank you for bringing that to our attention,” Bastian told Jackson (no relation to the late Mayor Jackson).
“Y’all are doing so well I’m almost ashamed to say it,” Jackson told Bastian. Then he noted Delta’s service to the African continent – mentioning South Africa and Nigeria in particular, but he added the quip – “you were a little late in discovering that.”
And Jackson complained that the mileage costs to Africa were higher than the mileage costs to Europe.
To that, Bastian said costs are set by the market.
Later Jackson also said he appreciated Delta having African-Americans on its board. Currently, Kathy Waller, the chief financial officer of the Coca-Cola Co.’ and William H. Easter III, retired CEO of DCP Midstream LLC – formerly Duke Energy Field Services LLC serve on the board.
Former Atlanta Mayor Shirley Franklin retired from Delta board on Thursday, and the company honored her and another outgoing director – Kenneth Woodrow – at a board dinner Wednesday night. Delta has a mandatory retirement age of 72. Woodrow attended Friday’s annual meeting while Franklin decided to take an early flight back to Atlanta instead.
Only one other person addressed the board – Martin Klein, a noted attorney who has a base in New York and Palm Beach. Klein said he, his wife and daughter are big Delta customers.
“Certainly we are not the largest shareholder,” said Klein, adding that he and his family “only fly Delta,” and he appreciated the kindness and loyalty they’ve received over the years.
In short, the 2017 annual meeting was a celebratory occasion for Delta.