Ed Bastian: Delta is back at the top of its game
By Maria Saporta and Collin Huguley
As published in the Atlanta Business Chronicle on July 20, 2018
Ed Bastian, the CEO of Delta Air Lines Inc., is flying high as the Atlanta-based airline “is performing at a level it’s never been in its history.”
In a 90-minute editorial board meeting with Atlanta Business Chronicle on July 13, Bastian spoke of a wide range of topics — from supporting Atlanta’s pursuit of Amazon’s second headquarters to the importance of finding the best general manager of Hartsfield-Jackson Atlanta International Airport to the critical role Delta’s employees have played in the airline’s rebound from bankruptcy.
Bastian also shared insights into his personal story. It wasn’t until he was 25 that he first flew on an airplane. And now he runs one of the world’s largest airlines.
He grew up in Poughkeepsie, N.Y., as one of nine kids. His father was a dentist who had his practice in their house. Their idea of a vacation was piling into a car and going to Florida once a year. Eventually, he got a job in New York City and flew to Chicago out of LaGuardia on business.
“I stayed overnight on a business trip and I thought I was pretty hot stuff,” said Bastian, who shares that story when he gives commencement speeches. “I tell the kids that just because you are finishing school, you have no idea what the future holds. Your path is still uncertain. It’s a constant learning journey that we are on, that’s just the start, not the end. I use myself as that illustration because there’s no way I could’ve known when I graduated college, even, what an airplane was.”
Bastian’s story at Delta is similar.
He joined the airline 20 years ago as one of the first vice presidents who had come from outside the company. At the time, its annual revenues were about $12 billion.
“It was a very local, regional company,” Bastian said. “When 9/11 happened, everything came undone quickly. The company quickly lost its way.”
On July 12, the company reported second quarter 2018 revenues of $12 billion.
“It gives you a perspective of the size and scale that we have grown over this time frame,” Bastian said. “It continues to grow and accelerate. We had, in the month of June, six of our top 10 busiest days ever. It’s great to see the company at the top of its game, but we are very much focused on how we get better.”
The recent, overnight rolling out of Delta’s uniforms for 65,000 employees was “a monumental task” that took a risk by going with the color purple or plum.
“One of the reasons we did it is our customers could not tell our uniforms from our competitors’ uniforms,” Bastian said. “We want our people to stand out.”
Employees are core to Delta’s story.
“When we came out of the bankruptcy in 2007, all of our employees had taken massive pay cuts. The people delivering this great product today are the people that took pay cuts back then,” Bastian said. “When you take that level of sacrifice, they’re the ones that deserve to be paid first when things get better. So we set up our profit-sharing plan, which today is world renowned. And 15 percent of the profits go to the Delta employees. They get paid first.”
Bastian firmly believes “profit-sharing is fabulous.” Today Delta is paying $1 billion a year to its employees — and it has done so for four years in a row.
“We do all of this and we are having great success,” Bastian said, adding that two years ago Delta instituted a community profit-sharing plan of 1 percent of net profits. Last year, it invested $45 million in local communities, including nearly $13 million in Atlanta.
Bastian said Delta’s story is also a great Atlanta story.
“You always want to make sure that you take care of your hometown,” he said, adding that Delta does that by investing in the product, the airport, the community and by having a growth strategy.
Bastian also is looking forward to Atlanta’s hosting the 2019 Super Bowl and likely the World Cup in 2026.
“Those events, whether it’s the Olympics, the World Cup or football, they bring in a lot of traffic for that one event, which is good,” Bastian said. “But the problem is that it also kills the business traffic because the city shuts down for a few weeks. Because of the traffic, the normal people just stay home, they don’t travel. So, it’s not a huge moneymaker for us. But anything that puts Atlanta on a stage is good for Delta.”
International expansion will be key to Delta’s growth – from Latin America to Asia — spurred by a big joint venture with Korean Air — to India.
“Today, probably about one-third of our business is international and two-thirds of our revenues are domestic,” Bastian said. “I’d like to get U.S. and international revenues on par with each other.”
One of the challenges to international expansion is an unlevel playing field.
“These Middle Eastern airlines were getting tens of billions of dollars in subsidies and doing nothing other than just taking traffic from us… We had been working on this topic for a number of years and the Trump Administration — I give them enormous credit — stepped in and said that it was not appropriate.”
Locally, Delta’s top competitor is Southwest Airlines Co., which entered the Atlanta market by acquiring AirTran in 2011.
“We’re much larger than Southwest, much, much larger,” Bastian said. “Southwest only flies in the U.S.; we fly around the world.”
Delta was not scared of Southwest coming to Atlanta. “We are very competitive. We don’t shy from a fight. We were ready for Southwest to enter,” Bastian said. “This town is big enough for two airlines. It’s just a very different product. We are a global airline. They are a local airline. We have different goals and different opportunities.”
When it comes to the governance of Hartsfield-Jackson, Bastian is against a state takeover.
“It’s hard for me to imagine why a different government is going to do a better job when you already have the best performing airport in the world right here,” Bastian said. “We do not support the thought that the state can do better than the city. The issues of corruption at the airport are real, and they deserve all of the attention that they are getting. I’m sure Mayor [Keisha Lance] Bottoms will make big improvements in that situation. But to suggest that another agency will be cleaner, it is hard to understand.”
That said, Bastian believes the city needs to hire the best airport general manager it can.
“The general manager role at the airport is a very important job. It is a big job,” Bastian said. “One of the reasons you’ve had the turnover there is that the city hasn’t had a policy of paying the top talent.”
Bastian said the mayor and search committee are focused on getting the best person.
“You need to have the tools to attract the right person — whether it is a contract or not,” Bastian said. “It’s an important job for the city. It’s an important job for Delta, to have the right partner in there. I think it is something that we should all make certain that the mayor is given every resource she can to attract the right talent.”
Bastian also believes Atlanta has a decent shot at being named Amazon’s second headquarters because of the presence of Delta and the airport bringing the world together.
“The city has a lot to do to improve its education, its infrastructure and its safety. But you’ve got people that are willing to work together,” Bastian said. “And that’s what I love about Atlanta. It still has a small-town feel to it. It’s connected. I don’t think Amazon will change that. I think it will allow us to be more connected.”
Bastian said Delta has told Amazon Atlanta would be a good pick.
“If Atlanta lands Amazon, it would be phenomenal,” said Bastian, who said he has “no idea” about Atlanta’s chances. “I hope we are successful. Delta has weighed in with Amazon saying that Atlanta would be a great place for them to be.”
Meanwhile, Bastian is focused on helping Delta be as strong as it can be — attracting employees — and focusing on millennials.
“The last numbers I had heard is by 2020, they will be the largest single employee group within the company,” Bastian said. “We are hiring a lot. We are in the midst of hiring 25,000 people over the next few years. So, we are hiring a lot and all you have to do is travel and you see fresh, new, young faces on airplanes and in airports. It is wonderful.”
Because many of its longtime employees are retiring, Bastian said the airline is having to replenish its workforce as well as prepare for growth. It will hire 7,000 people this year, with many of those coming to Atlanta.
The company also is investing in its digital offerings.
“Delta, today, we are in the top five e-commerce sites in the country,” Bastian said. “Our digital e-commerce site will go over $15 billion in revenue this year. It’s enormous, what we are creating.”
When asked what keeps him up at night, Bastian made it sound as though he does not lose much sleep.
“I’m not a worrier. If I was a worrier, I couldn’t do this job. I don’t worry about oil prices,” Bastian said. “The thing that I spend the most time thinking about is how do we create the constant pace of change that we can continue to get better and continue to grow?”
“There’s a sense that when you’ve been through the struggles that we’ve talked about here, people want to know if we are there yet. Have we arrived? Can we step back? Can we slow down little bit? No, we’ve got to go faster. We can never slow down.”
That’s why Bastian loves Delta’s 10-year-old tagline – Keep Climbing.
“I’m never going to let that go because that is the spirit of what we want to do,” Bastian said. “We want to soar. We want to fly new places to experiment and to grow and to get better. As much success as we’ve had, I spend all of my time in the company talking about what things we need to do to get better. We spend very little time patting ourselves on the back. We are welcome to accepting that. But internally, we don’t.”