Delta's Chapter 11 Reinvention

Necessity, the Mother of Reinvention

In bankruptcy, Delta's plan has been to improve results by $3 billion annually -- $1.1 billion in network improvements including new revenue, $900 million in employee-cost reductions and $1 billion in reduced costs, primarily for aircraft and facility leases.

Beyond the international expansion, Grinstein and his team have made several other major structural changes.

They have cut back on the overabundance of service in the intensely competitive Northeast-to-Florida market, which historically kept Delta's revenue per available seat mile low.

In 2005, Delta RASM was around 86% of the industry average. This year, it is around 93% of the industry average.

Building service from the Northeast to Kennedy International Airport in New York has eliminated a syndrome where Delta used its strong Southeast presence to feed both its Atlanta and Kennedy hubs. "We competed with ourselves," Grinstein explains.

In a typical example of the changeover's impact, Delta's share of Buffalo, N.Y., to Europe traffic has increased from 5% a year ago to 22% today.

Meanwhile, building the Salt Lake City hub to 334 daily departures, with nearly 30 nonstop destinations added since the fall of 2005, means Delta has established a hub that competes with Denver to serve the West Coast and Northwest.

The Salt Lake hub came to Delta in the 1987 Western Airlines acquisition, as did Grinstein, who was Western's CEO. It's considered one of the few successful mergers in the airline sector.

Most mergers are last resorts, Grinstein said, that enable carriers to survive when they would otherwise fail.

When US Airways merged with America West, when TWA merged with American and when Reno Air merged with American, "It was merge or be gone," he says.

Delta, it now appears, is not going anywhere.

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