Branson woos Delta chief

[Neubyfly]

Branson woos Delta chief for US carrier
By Caroline Daniel in Chicago
Published: February 22 2004 22:33 | Last Updated: February 22 2004 22:33


Sir Richard Branson is in final discussions with Fred Reid (pictured), president and chief operating officer of Delta Airlines, about the vacant post of chief executive of Virgin USA, the British entrepreneur's new low-cost carrier.


The appointment of such a senior figure in the US airline industry, once tipped as the next chief executive of Delta, would be a coup for Sir Richard, who has been keen to set up a US airline for the past five years.

It is also an indication of how far momentum in the US is moving from legacy airlines to low-cost carriers. Virgin USA could begin operations early next year.

The talks, which are understood to centre on contract terms, began in December after Mr Reid, 53, was passed over as chief executive of Delta when Leo Mullin resigned abruptly. The job went to Gerald Grinstein, a 72-year-old airline veteran and Delta board member. Mr Reid could leave Delta as early as April 15th, according to people familiar with the situation.

Mr Reid has considerable experience in the airline industry. He joined Delta in 1988 as head of marketing and became president and chief operating officer in May 2001. Before joining Delta he was the first American to lead a big non-US airline, serving as president of Lufthansa when the airline was privatised.

His international expertise, especially in forging airline alliances, could be useful to Sir Richard in knitting together his global airline assets, which include Virgin Blue in Australia and Virgin Atlantic.

Virgin declined to comment on the appointment. Virgin USA, which is expected to make an announcement within the next month, is also deciding between San Francisco, Boston and Washington as the location for its headquarters.

However, there is considerable uncertainty about the business model because the US is already a highly competitive market. There are also concerns about the ownership structure. Under current regulations, Sir Richard cannot control a US airline or control a majority stake.

 

[lowecur]

If this pans out, then the fact that Barger is staying put is a relief for B6.

Don't know much about Fred Reid, but I'm sure he's looking for a position where he can build his ideas from the bottom up. Even if he was a candidate for the DL top job, he still may have given that second thoughts with their labor problems. Since Embraer is the likely candidate for the third mfg co in the discussions, there should be an announcement shortly as to their choice. With the MAA deal, they would be nuts not to go ERJ.

 

[dlredline]

If this pans out, then the fact that Barger is staying put is a relief for B6. . . . With the MAA deal, they would be nuts not to go ERJ.

Lowercur,

No big surprise that Dave Barger will (more than likely) stay put. 'Blue is David and Dave's baby, and we're glad they're here. As far as MidAtlantic, don't be so sure that MAA will be getting those E170's. Word is if the credit rating drops on U, financing for these planes will be "kaput", and they'll (again, more than likely) get sent to someone like Mesa to regionally feed. With 50% J4J jobs at Mesa versus 100% at MAA for the furloughed pilots, once again the furloughees get hosed. Getting to be a broken record at USAirways.

Red

 

[tbkane]

This I think would be good news for Delta. Freid Reid's favorite airplane is the RJ, and I think that getting him out of the way will only help mainline grow and fight. With Hollis retiring this week from World, and him being a former DAL exec, I could make a case for him coming back.

He was beloved by the people at DAL. I think bringing him back could go a long way torwards a very fast morale boost that is desperately needed. Another replacement I could see is Gordon Bethune. Although he would not be my choice. It is interesting that both Hollis and Bethune left about the same time a Reid.

This is pure speculation on my part, but I have a lot of time to hope for a good replacement these days.

 

[NYRANGERS]

Hey Troy,

I agree, I have also been hearing good things about Hollis Harris and his relationship and performance at Delta. I think that a Fred Reid departure would not be such a bad thing. We need a new CEO and not one from within.

This may also put an end to the "retention bonus'". It has not done much with regards to Leo (although he was probably fired), if Fred goes that may end it.

I suspect there will be a new CEO announcement once and if concessions (realistic ones) are negotiated.

Regards

 

[lowecur]

red

Lowercur,

No big surprise that Dave Barger will (more than likely) stay put. 'Blue is David and Dave's baby, and we're glad they're here. As far as MidAtlantic, don't be so sure that MAA will be getting those E170's. Word is if the credit rating drops on U, financing for these planes will be "kaput", and they'll (again, more than likely) get sent to someone like Mesa to regionally feed. With 50% J4J jobs at Mesa versus 100% at MAA for the furloughed pilots, once again the furloughees get hosed. Getting to be a broken record at USAirways.

This business is in a deflation cycle that is not going to stop until all the airlines are on a level playing field. I really have very little concern that the 170's won't be on the property shortly. Word has it that offers have been upwards of $400M for the Shuttle and other assets, and that's just the beginning offers. There was a great meeting between Bronner and the MEC on Thursday, and reports said the MEC was behind him 100%. He's a great salesman. UAIR will do just fine. They'd better, as I just booked a flight from PBI to SYR with travel on the 170 in May.

 

[G4G5]

IF USAir's bond rating drops then Ge has the OPTION to get out of the ERJ170 financing.

Too many variables. What you need to consider is that GE is tied to USAir in many other financing deals. If they were to pull the ERJ170's would almost certianly mean the death of USAir. Then who pay GE for the leases on all the other USAir Aircraft and Engines? While they may find someone to take the 170's they will never find someone to keep paying them the equivallent of what USAir pays them every month.

I wouldn't look for them to pull out of the deal anytime soon.

 

[General Lee]

I agree with both TBKANE and NYRangers. It looked like Grinstein was skipping over Reid anyway---promoting Jack Smith (the GM guy) to head of the board, and keeping the top job himself--moving with his wife from SEA to ATL. Fred Reid was the head of Lufthansa for awhile, and probably knows Branson. He really was an RJ guy---and I think we need somebody that can think outside the current thinking and move us forward. Yes, we also need to go forward with "less pay"--and I think it still will be in the very low 20%'s---eventually---maybe sooner than later. Grinstein has a salary of $500,000 a year(he is mega rich anyway---partnering with Bonderman of Texas Pacific Group fame---owning a small investment company with $250 million in holdings), and Jack Smith also took a smaller salary (with lots of stock options I bet)---so Fred Reid (with his $1 million or more salary a year) is probably feeling the heat anyway.

Bye Bye---General Lee

 

[MedFlyer]

The writing was on the wall when Grinsteing skipped over Reid last year.

The real danger is that DL seems to have no one at the helm. I don't see Grinstein as being much of leader....he's just trying to run damage control. Reid is shopping himself around, Escarra and Burns are always whoring themselves out to the boards of other companies, so the question is, who's in charge at DL??? Leadership vacuum's at airlines are dangerous things, DL's stock price is low enough that any corporate raider could come along and pick DL up for cheap.