SEATTLE -- Now it's
(DAL - Get Report)
Continued focus on a merger effort may be masking the real story at Delta, which, after spending decades as a consistent No. 3 among the big three airlines, has emerged as the pre-eminent U.S. carrier. Not incidentally, it's also poised to become the biggest, with or without a deal.
The main reason is that in the age of globalization, Delta is spreading its worldwide reach faster than anybody, moving from 20% international capacity in 2005 to 40% this summer, with an eventual target of 50% or more.
But it's not solely international expansion that sets Delta apart. In a commercial aviation system based on hubs, Delta operates the biggest hub in Atlanta, where it offers 1,000 departures a day and where a new runway that opened in 2006 has enhanced efficiency. Delta also has a hub at Kennedy Airport in New York, the world's biggest air travel market.
Furthermore, in a customer service business where employee relations are critical, Delta appears to have found its way to maintaining good relations.
One indication is that Delta led all network carriers in on-time performance during 2007. More telling, perhaps, is that as part of the effort to merge with
, Delta pursued a unique strategy, bringing its pilots into the process before a decision was made.
Now, it appears Delta may be willing to walk away from the deal if pilots cannot reach a satisfactory arrangement to preserve their seniority.
Last week, Delta executives traveled to Seattle to take delivery of the carrier's first new aircraft in six years, a Boeing 777-200LR with more range than any existing commercial jet. As the plane flew to Atlanta, Executive Vice President Glen Hauenstein told reporters that Delta has asked
for a 777 with even more range, so that it might one day fly to Sydney.
Asked about the potential of Delta's hub at Kennedy International Airport, where the carrier occupies the terminal it acquired from Pan Am in 1991, Hauenstein responded: "I think it's a limit of how big can you dream. We have some big dreams in New York."
Some will become reality this summer, when Delta adds a dozen international flights from Kennedy to cities in four continents. At that point, Delta will formally pass United, a unit of
, to become the second-biggest U.S. airline in terms of capacity. It will trail only
which, by the way, has not been growing.
||July 2008 Daily Capacity*
|Source: Delta. *Estimated and measured in available seat miles.
Another key Delta statistic measures revenue per seat mile as a percentage of the industry average. When Delta sought bankruptcy protection in 2005, the number was 86%. For 2007, it was 95%. This year, it is expected to rise to 98%.
Delta's 19-month bankruptcy, which ended in April 2007, was unusual. While most airlines have used bankruptcy to cut costs, particularly labor costs, Delta used bankruptcy to transform itself into an international carrier.
President Ed Bastian recalled talking with Hauenstein in August 2005, shortly before both joined the company. (It was the second stint for Bastian.) "We could see the future," he said. "We saw the jewel in the rubble that needed to be polished up. We realized it would be a long-term deal, but at that stage in our careers, we wanted to make a difference."
As part of the 777 delivery ceremony in Seattle, a steel curtain opened in a Boeing hangar, revealing the 777, named "The Delta Spirit," shimmering in the sunlight. About 150 Delta employees hugged one another and took pictures, and Bastian, who himself seemed deeply affected, said some were crying.