The Idea: Unconventional moves—from employee profit-sharing to the purchase of an oil refinery—have made the U.S. carrier an industry leader again.
A version of this article appeared in the December 2014 issue of Harvard Business Review.
Delta’s CEO on Using Innovative Thinking to Revive a Bankrupt Airline
Akio Kon/Getty Images The Idea: Unconventional moves—from employee profit-sharing to the purchase of an oil refinery—have made the U.S. carrier an industry leader again. At Delta we understand the perils of the traditional airline business model. The industry has in recent decades been known for short-term thinking, destructive decision making, and poor employee relations. However, […]
Summary.
When Delta emerged from bankruptcy, in 2007, its leaders knew that a full recovery would depend on innovative thinking. They began by instituting an employee profit-sharing program and a unique stock ownership plan that gives 15% of the company’s equity to pilots, flight attendants, ground crew members, and support staff. Delta also deepened its foreign partnerships by buying a minority stake in three overseas carriers: Aeroméxico, Brazil’s GOL, and Virgin Atlantic—while strengthening its existing alliance with Air France–KLM. It moved toward vertical integration by acquiring the Trainer oil refinery, outside Philadelphia—a decision that shocked both aviation and oil industry observers, but succeeded in driving down the company’s fuel costs while making its executives smarter about hedging, buying, refining, and transporting fuel. And it took back its reservations system, becoming the only U.S. airline to own and control the data around it. Thanks to these and other unconventional moves, Delta is now one of the healthiest, most profitable airlines in the world.
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