"This Is Your Captain Speaking"

How well did CEO Gerald Grinstein ride the turbulence when he announced his plan to bring Delta Air Lines in for a soft landing?

Gerald Grinstein, CEO, Delta Air Lines

Conference Call | September 8, 2004

When CEO Gerald Grinstein took the mike to announce his plan to pull Delta Air Lines out of a three-year, $5 billion nosedive, he was speaking to a number of distinct audiences. Employees, shareholders, creditors, analysts, and even the odd journalist were all buckled in.

In a sweeping speech that covered everything from layoffs and network restructuring to better lightbulbs in cabin reading lamps, Grinstein methodically — and at times charmingly — laid out a stark map for the future. "Our people want and deserve the facts as we know them, no matter how difficult," he said. Analysts and investors applauded the straight talk, though Delta's shares dropped on the news.

But really, there was just one audience that mattered. "Bankruptcy," Grinstein said, "is still a possibility . . . if the pilot early retirement issue is not resolved." Get that, everyone? The boss was talking to Delta's 7,500 union pilots, the highest paid in the industry. He has asked them for $1 billion in pay concessions; they've offered $700 million. This year, several hundred pilots have retired, in part out of fear of future pension cuts. It's the pilots who, in the coming months, will determine Delta's fate.

Grinstein has faced down unions before. He maneuvered Western Airlines and Burlington Northern railroad through complex union negotiations, and his blend of compromise and empathy, by all accounts, saved both from disaster. He was the guy Delta's board tapped when Leo Mullin, unable to draw concessions from the pilots, resigned as CEO in January.

And this conference call was, ultimately, a negotiating ploy: His jab at the union was subtle (at just a few sentences, it was briefer than his digression on lightbulbs). But the thinking was clear. When talks deadlock, cast your opponent as the holdout. Get investors and other employees to see that their welfare depends on resolution of the conflict, and hope their pressure swings the deal your way.

The union was onto this tack: "It is unfortunate that our management has chosen a Webcast environment to deliver this ultimatum," said Air Line Pilots Association executive Chris Renkel. But Grinstein's gambit was compelling nonetheless. He came off as both optimistic and reasonable (he suggested profit sharing, a prize the union has always requested and been denied). He cast Delta as a company with a powerful future — if only those danged pilots would pitch in.

As Grinstein, 72, described his vision, it was with the tone of a man who has seen dynasties rise and fall, and eras pass. "It will never be a situation in which we can . . . say, 'We got it right. Thank God. Now we can coast for a while,' " he warned. Right. Grinstein has been there and done that. And he's getting good at it.

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