ND76

This is a transcription of my notes taken during the Richard Anderson (RA) presentation. My personal writing style is to number my paragraphs.

1. RA believes in a corporate culture based on a “servant relationship”, which serves both customers and employees. The success of the company is dependent upon successful employees. If both customers and employees are taken care of, then the shareholders will be taken care of too.

2. RA used the phrase “cutting a different swath at Delta”; stressed ethics; “cultural piece just as important as the business”. Delta has one of the highest corporate governance ratings. Operating in this manner “creates sustainability”.

3. RA likes the concept that the CEO and the Chairman of the Board roles are split.

4. 15% of ownership of Delta is in the hands of employees. RA claimed that $300 million in profits will be shared by Delta employees.

5. RA said that Delta was the only major airline without forced employee furloughs. Delta has been hiring. They had 65,000 applications for 600 flight attendant positions; 18,000 applications for 300 pilot positions; over 20,000 applications for 600 reservation agent positions.

6. Declared that 2011 is the “Year of the Customer”. DL intends to shine on the customer side.

7. Delta runs SAP software; adopted SCEPTRE (sp) from Northwest—this software originated at Republic Airlines, used for maintenance issues tracking; they are engaged in a program to verify maintenance records on every single aircraft in the DL fleet; still one year of work left on this project.

8. RA intends to “revive the DNA” that made Delta so successful over a number of decades. His role as CEO is to “unleash” the “DNA of Delta”.

9. Fleet repainting into new Delta livery to be completed by the end of the first quarter of 2011.

10. Flat beds in BE on all 767-300T, 767-400 and 777-ER aircraft to be completed by April, 2011

11. New ATL international terminal to open by “Spring 2012” and indicated that work is ahead of schedule

12. Proud of new mayor of Atlanta and the Director of the Atlanta Airport (incumbent used to run TPA and SLC airports).

13. On good weather days at ATL, 99.5% of checked bags successfully delivered to customers. Bag system between Concourse D and main terminal has been replaced with new system; now working on new bag system between Concourse E and main terminal.

14. New terminal at JFK “can’t happen soon enough”.

15. $500 million to be invested in new technology over the next 3 years. DL is currently “replatforming” technologies in airport kiosks and at delta.com RA views technology as the company’s R&D department, and understands that technology needs to drive customer satisfaction. Stressed a $100 million current investment in Delta.com

16. RA indicated that GOGO internet is being installed on all 70 seat RJs.

17. RA indicated that 50 seat RJs are not to be flown more than 90 minutes; the goal at DL is to get this down to 60 minutes.

18. DL is investing in “interior maintenance” using a “50 foot rule”; that is, equipment has to look good from 50 feet away.

19. RA indicated that a priority is to build systems, methods and staffing to recover quickly from storms or mechanicals (the term “convective weather” was used all day by the DL leadership team).

20. Considerable investment going into the existing 52 Sky Clubs; DL is installing “power poles” for recharging electronic devices in the clubs and at gates in ATL and JFK; claims to have acquired 1,000 of these poles.

21. RA said he is personally involved with TSA to establish “high value customer” (HVC) priority lines in as many airports as possible. Said that MCO firmly opposes a HVC TSA line.

22. RA’s opinion is that TSA is doing a good job. He let it be known that he had a “bad Christmas” due to the attempted bombing of DL255 at DTW. Praised John Pistole, the new TSA chief and former #3 at the FBI as “first rate”. Said TSA does “reasonably good jog at managing the lines”. He is with us on the issues we face with TSA—hates the little plastic bags for toiletries; said his toiletries were taken from him at DUB on a recent flight. RA recognizes that Delta has to be a customer advocate for issues with respect to CBP and TSA. Because of the Fort Hood massacre, there will be no “trusted traveler” program with the TSA.

23. RA said he always flies coach—doesn’t want people to be mad at him for taking the last F seat—prefers the exit row window.

24. RA said that Sky Clubs will “always” have free liquor and snacks, and that the goal is to make the clubs as comfortable as possible; emphasized the new power poles doing into the clubs.

25. New way of allocating the best seats on the airplanes—they have lists of the best seats on the airplanes (i.e., bulkheads, exit rows, first two rows on the right on ex-Song 757s, rows that have a little more leg room than others), and they are testing a system to ensure that the most senior elites who are not seated in F end up in the best Y seats. RA actually said “he didn’t think it was right for frequent flyers not to get the best seats”.

26. RA said DL is working on a technology so that a traveler who didn’t get his bag from the belt doesn’t’ have to seek out a DL employee; when a bag is lost, DL intends to be on top of it first.

27. RA said that “a lot of people really, really care about Delta’s systems working well”.

28. RA said that his people read FlyerTalk every day, and that comments are distributed to management team every morning.

29. RA spoke about airline alliances. Said that the model is Air France (AF)/KLM (KL)/Alitalia(AZ). Indicated that management on both sides of the pond treat the joint venture (JV) between DL and AF-KL as the “same company”; executives interact as if they were the same company. Indicated that they need to operate the JV in this manner to get around the alien ownership restrictions in the US federal Aviation Act. Believes that alliances should have a math where 1+1=3. Believes that alliances are in “nascent stages” right now. The TATL JV is unique, started at NWA when RA was there in 1993, with 3 flights per week MSP-AMS, then grew to 4 flights per day MSP-AMS. Indicated that DL is “closing seams” partner to partner. Believes in co-locating gates and facilities like at AMS, and getting technologies at partner airlines to work together.

30. RA tries to fly one leg of an international trip on a competitor to see what their product is like; comes back with a list.

31. Indicates that members of the Delta board of directors do book tickets on delta.com. Indicated that DL is rebuilding the search engine on flights.

32. With respect to innovations in the aviation industry, he pointed to three: (1) carbon fiber fuselage on the Boeing 787; (2) the new Pratt & Whitney Gear Turbo Fan, which will result in a 15-20% saving in fuel economy; and (3) a new narrow body engine (my notes indicated being developed by GE and Rolls Royce) that burns hotter. RA indicated that almost all innovations recently have come from the engine manufacturers. RA wants to find an answer to the question “why don’t we fly a little faster”.

33. RA told a FlyerTalker who indicated 16% of his trips involved an IRROP of more than 60 minutes that “Delta needs to make it worthwhile to make it worth your while to continue to fly Delta when there is an IRROP.

andymo99

33 points and not a single comment on SkyMiles award availability? Not surprising if he was addressing an investor conference, but in front of FT aficionados... both surprising and disappointing. Also, nothing on the difficulty of booking same via delta.com?

Was there a Q&A portion?



PS - ND76, thanks for the great notes.

ND76

There were six other presenters, including an IT manager, an e-commerce manager and Jeff Robertson. The issues you raised were gone over in considerable length over the course of the afternoon with those gentlemen. I'll work on transcribing my notes with the other presenters between now and Monday when I have time (I'm leaving for day two in a few minutes). Richard's presentation was over in less than an hour--he did take a few questions, the answers to which I merged into the overall presentation. Richard covered an amazing amount of territory in a relatively short time. For one, I was terribly impressed with him-- I thought he was amazing in terms of his grasp of all the issues--I think he is about as customer oriented as anyone in a service industry business.

PRWeezer

+1 on the great notes! I was following along on Twitter yesterday & there was discussion of award availability, I'm sure those notes will be forthcoming once the others are done with their jam-packed schedule this weekend. Look forward to hearing all the insights, sounds like a valuable experience all around.

Singleflyer

When you say all 70 seat RJs will have GoGo what are the aircraft type?

Just the CRJ-700 or will that include the CRJ900 and EMB 170/175?

Thanks

zsmith2

I second that, Richard blew me away. He is a great CEO for the employees and customers.

mike_plat

Maybe he could moonlight and replace one of the SkyDragons in ATL!

acjflyer

Thanks for the updates everyone, I especially like Anderson's focus on revitalizing the Delta DNA, which is definitely there, and deepening integration with AF/KL. ^

mot29

Given past discussions about changing the NW 787 orders for a different aircraft, is this an indication that DL is still going for the 787s (whenever they finally get delivered)?

Thanks for the very informative notes.

Wiirachay

Thanks for sharing, ND76.

To the rest of FT: How many B767-300s does DL operate? And of those, how many of them are "T?" It's great that the 764s and 77Es will be completed soon!

To the DL lurkers - hopefully you'll somehow share your insight in the future regarding these topics:
* What's the strategy of dealing with the many hubs? MSP seems like another redundant international hub. CVG seems like a redundant domestic, as it's close to DTW.
* What will be done about the A330s? The business class seats aren't being replaced. Is DL planning to get rid of the planes or just run these planes on secondary international markets?
* Why aren't the international B757s being retrofitted with new business class seats? It's a severely inferior product. What are the plans?

I've always liked RA - he did good things for NW. Perhaps bring back a good award search engine, booking platform, and decent award availability?

sbm12

Thanks for the notes!

With glasses or without?

Seriously, though, from 50' away everything other than some hoodlums tagging the fleet with spray paint should look pretty good. I'm not particularly impressed with this level of view.
I would never expect an airline CEO to say anything else. If they belittle the TSA they have to deal with problems on a much larger scale than we do. Doesn't mean I believe it though.

I find this most interesting. He's focused on compensation rather than solving the problem. If the problems are all weather then there isn't really much they can do about it as a company but with that high a number of delays, unless this is that the FTer, odds are it isn't all weather.

And I hate the idea that the focus is on comp instead of fixing the problems.

wbl-mn-flyer

Nonsense

http://finance.yahoo.com/q/mh?s=DAL+Major+Holders

houserulz77

I'm wondering if perhaps some of these holders are also providers of savings/retirement programs for DAL employees.

For instance, the data you cite mentions that Fidelity owns a significant portion of DAL stock. Fidelity is also the largest provider of 401(k) services in the U.S. Obviously a DAL employee would have to chime in here, but could this be a contributing factor to the figure quoted?

mllafrica

thanks for the notes. Now to hear about awards and the booking engine...thanks for doing the needful for all of us who didn't attend.

troyintn

Thanks for the notes. Overall I good read, I am just skeptical any more of the entire industry. It is getting batter at the moment, but I am sure they will be loosing gobs of money soon and will start cutting again.