Even in bankruptcy, the airline industry seems doomed to repeat its own mistakes.
tightened its belt yet again. Just a week after seeking Chapter 11 protection, the big Atlanta-based carrier
set plans to eliminate as many as 9,000 jobs on top of the 8,000 it has cut in the last year. Delta is calling for staffwide salary givebacks too, mostly in the 7% to 10% range.
All told, the moves will help Delta to slash annual costs by $3 billion.
No one doubts the cutbacks are necessary. Hefty overhead and a sharp rise in energy prices have laid low big carriers such as
( NWACQ), and even stronger players such as
have grown dependent on gimmicks like fuel-price hedging. And to his credit, Delta CEO Gerald Grinstein saved the deepest cut for himself, docking his own pay 25%.
But underlying Delta's latest plan is yet another optimistic assumption, the likes of which you'd think industry execs would have gotten over by now. Delta is assuming it can zip through bankruptcy court in just over two years.
Delta's comments echo those made by United parent
almost three years ago. In December 2002, CEO Glenn Tilton pledged to get United back on its feet in just 18 months.
But today, UAL is still operating under bankruptcy protection.
Last week it disclosed plans to emerge from Chapter 11 on Feb. 1 -- nearly 38 months after its bankruptcy filing.
"Delta will move quickly and decisively to do what is necessary to beat our competitors and meet our financial commitments, and this means we will become a smaller, more cost-efficient airline, with a strengthened network and a stronger balance sheet," Grinstein said Thursday. "Our transformation will be sweeping and fast-paced; it must be if we are to survive and thrive as a stand-alone company in control of our own destiny."
You can't fault Grinstein for trying.
But considering all its other problems, a race against time is the last thing Delta needs right now.
Dumb-o-Meter score: 90.Considering United's experience, time should be getting some good odds against Delta.
2. Ask Someone Else
is cutting costs, too.
The online media and travel company said Wednesday that it would do away with the domestic help at its recently acquired Ask Jeeves business. CEO Barry Diller said the unit would be rebranded Ask.com, dropping the P.G. Wodehouse-inspired butler icon that since 1996 had given the so-called natural-language search engine its name.
Last year Ask Jeeves tried to boost Jeeves' profile by sending him to the gym. A revised logo gave him a tan and some better clothes. "Svelte, baby," John Battelle wrote in his SearchBlog. But recent consumer research indicated that even the fitter Jeeves "inhibits how people view our brand," an Ask Jeeves spokeswoman told The Wall Street Journal.
Speaking Wednesday morning at a Goldman Sachs event in Manhattan, Diller said the company finally concluded that the butler has outlived his usefulness. "I don't see many tears on the floor," he joked.
That's right. When it came to drawing users, the butler didn't do it.
Dumb-o-Meter score: 85. At last Jeeves can ditch that silly South Beach Diet.
To view Colin Barr's humorous video take on Jeeves, click here
Sleeper Car, Anyone?
3. Swedish Meatballs
has made an important addition to its lineup.
The Lexington, Ky., bedding company already sells both the Classic Swedish Sleep System and the Deluxe Swedish Sleep System. Its Web site promises to show shoppers both The Perfect Mattress and The Ideal Pillow, along with Unparalleled Support.
Tiresome? Sure. But this week Tempur-Pedic went one better, rolling out The Flimsiest Excuse.
Tempur-Pedic warned investors that it wouldn't make third-quarter or full-year earnings estimates as a result of what it called a slowdown in the U.S. furniture channel. But where manufacturers across the nation have blamed Hurricane Katrina and flagging consumer sentiment, Tempur-Pedic went beyond the call. It blamed car sales.
"Recently available industry data indicates that the U.S. mattress industry got off to a slow start in the third quarter and has been experiencing a more modest growth rate than we previously anticipated," CEO Robert Trussell informed readers of a Monday afternoon press release.
Then, echoing comments made in August by
, he added: "Our retail store customers and industry analysts attribute this trend primarily to the very attractive incentives offered by the U.S. automotive industry this summer. We believe these promotions diverted consumer spending away from other 'big ticket' items such as mattresses."
So lots of people who needed new mattresses suddenly went out and bought
Explorers instead? Um, we'll have to sleep on that one.
Dumb-o-Meter score: 80. Funny how Select Comfort (SCSS) isn't having the same problem.
4. Total Recall
( GDT) may be having some issues with its products, but it continues to have a way with words.
The Indianapolis-based medical device maker warned Thursday that
some of its pacemakers could fail. In a press release headlined "Guidant Initiates Voluntary Physician Advisory on Certain Pacemakers," the company said some Insignia and Nexus pacemakers "might permanently lose pacing output without warning." Pacemakers send electrical pulses to the heart to correct a slow heartbeat.
There have been no associated deaths, though Guidant conceded that "the clinical behaviors associated with these failure modes can result in serious health complications." The alert was issued after a plant inspection by the Food and Drug Administration.
Guidant says it recommends doctors use "normal device monitoring" to make sure the problems don't crop up in the future. It also notes that the FDA "has determined this communication action to be a recall."
Of course, you can understand where Guidant is tired of those. In recent months, Guidant has recalled 88,000 heart defibrillators and issued warnings about 28,000 pacemakers because of malfunctions,
The Associated Press
reported. Guidant also has been sued over its alleged failure to recall faulty devices in a timely manner. And the company's second-quarter earnings were hit by a $113 million charge to cover the cost of some of the recalls.
Sorry, strike that. We mean "communication actions."
Dumb-o-Meter score: 78. It's hard to recall a time when these problems weren't hovering over Guidant like a dark cloud.
5. Evil Eye
There they go again, saying bad things about
More than a year after going public with its famous pledge,
handling of investors. It has gotten knocked around for the way it did its IPO and for
subsequent stock-selling by some key executives.
But this week, a group of authors went a step further. They sued Google over its plan to scan books in five libraries to make their text available for searches, citing copyright law. "We're not against the basic notion of making books searchable and viewable on the Internet in some limited way," said Authors Guild executive director Paul Aiken. "We are against doing it without a license."
Google defends its plan, saying book-scanning is allowed under the legal doctrine called fair use. But legal experts
aren't so sure. "Fair use is a puzzle," Jonathan Zittrain, a professor at Harvard Law School who teaches a course on cyber law, told
Jonathan Berr. "There are some areas where I think it's clear. This isn't one of them."
What does seem clear is that like
and other powerful companies before it, Google is going to keep making enemies regardless of whether it is "evil."
Dumb-o-Meter score: 73. "We regret that this group chose to sue us over a program that will make millions of books more discoverable to the world," a Google exec said. Well, that's one way of looking at it.
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