Delta Air Lines'
shares rose 5.1% after the carrier shook up its executive suite, allowing it to move forward with a plan to restructure the company and wring concessions from unionized pilots.
Recently, Delta has seen a number of high-level executives leave at a time when the company says it needs pilots to take a 30% pay cut or consider a bankruptcy protection filing. On Wednesday, the carrier established a new leadership team that it hopes can staunch deep losses, like the $384 million one posted in the first quarter, and return the carrier to profitability.
In reaction, shares rose 26 cents to $5.41, as part of a wider sector rally on hopes jet fuel prices will ease.
"As a team, our goal is to transform Delta into a pre-eminent company that regains sustained profitability by focusing our talents and energy on our people and customers," said Gerald Grinstein, CEO. "To get there, our team must be characterized by determination, agility and a willingness to run the company in non-traditional ways."
The non-traditional approach is a key element, with Delta planning a top-to-bottom review of its business model, which analysts say could include some drastic changes -- anything from selling assets to reinventing the way routes and hubs are structured. But with the executive departures, the restructuring plan, originally set for release in July, has been pushed off to the end of the summer.
Of the executive changes Delta made Wednesday, the most critical was the appointment of TWA veteran Mike Palumbo as CFO, just one month after he joined the company as interim CFO. Palumbo replaces Michele Burns, former CFO, who became
CFO at the beginning of May.
The company also replaced Fred Reid, former COO and president, who left the company in March to head up Virgin Atlantic's still-unnamed, U.S. low-cost operation. Joe Kolshak, formerly the company's senior vice president of flight operations, will become the new COO, but as Grinstein previously hinted on a conference call discussing earnings -- the company did not name a new president.
The appointments are effective June 1, but Delta isn't finished drafting executives to join its leadership team. The carrier says more announcements will come soon.