Delta Replaces Its CFO, Makes Other Exec Changes As It Prepares to Record Hefty Loss

[Flying Freddie]

AP
Delta Replaces Chief Financial Officer
Wednesday July 20, 3:46 pm ET
By Harry R. Weber, AP Business Writer Delta Replaces Its CFO, Makes Other Exec Changes As It Prepares to Record Hefty Loss

ATLANTA (AP) -- Delta Air Lines Inc. abruptly replaced its chief financial officer and made other executive changes Wednesday, including reinstating a top senior position, as it prepared to record another hefty loss amid persistently high fuel prices.

The departure of Michael Palumbo, the second CFO to leave Delta in 14 months, was announced in a statement in which the nation's third-largest airline said there is growing urgency to its transformation efforts.

The Atlanta-based company, which will report second-quarter results on Thursday, is trying to avoid a bankruptcy filing.

"Persistently high fuel prices and increased competitive pressures have added new urgency to our efforts," Chief Executive Gerald Grinstein said. "Today our airline must be prepared not only to deliver more, but to deliver it more quickly."

Spokesman John Kennedy said Palumbo was leaving to pursue other opportunities. He said he could not elaborate.

Palumbo is being replaced by Edward H. Bastian, a six-year Delta veteran, who is returning to the company to become executive vice president and chief financial officer, effective immediately.

Palumbo was named Delta's chief financial officer after Michele Burns left the position in May 2004 to take a similar job at bankrupt energy supplier Mirant Corp.

"It was a personal decision and Michael gave us time to find a successor and he will be available to us for transition purposes," Kennedy said.

Also Wednesday, Delta announced the reinstatement of a chief operating officer position, which will be filled by Jim Whitehurst, currently senior vice president and chief network and planning officer. He will assume oversight for operations, customer service, network and revenue management and corporate strategy. Kennedy said the airline has not had a chief operating officer since Fred Reid retired from Delta early last year. In other moves, Joe Kolshak, currently senior vice president and chief of operations, is being given added responsibilities for government affairs; Lee Macenczak, currently senior vice president and chief of customer service, is being given added responsibilities for public affairs; and Paul Matsen, currently senior vice president and chief marketing officer, is being given new responsibilities for technology and corporate communications.

 

[180ToTheMarker]

Also Wednesday, Delta announced the reinstatement of a chief operating officer position

They can save money by creating another executive position...go figure.

 

[Stifler's Mom]

I wonder how much this severance package will cost?

 

[Palerider957]

......Gentleman, I thinks it's time we make our way to the life boats.

 

[radarlove]

I think everyone knows what comes next.

 

[miles otoole]

I think everyone knows what comes next.

No, what?

 

[radarlove]

This.

 

[TCAS]

No, what?

General Lee pontificating on how these are all strategic, well planned actions by senior management to solidify Delta's already strong market presence!

 

[~~~^~~~]

leaving this alone for now.

 

[miles otoole]

General Lee pontificating on how these are all strategic, well planned actions by senior management to solidify Delta's already strong market presence!

Do you mean ""Delta is not failing to plan, and we are certainly not planning to fail," -DL CFO?"
Of course I had to find her/him on the regionals forum. Apparently she/he posts more there than on the majors.

 

[capt. megadeth]

I wonder how much this severance package will cost?

Ha ha....that was the first thing that popped into my mind when I read the title.

 

[Reebo]

not to pure salt in the wounds, but i think the career expectations of a Delta pilot just got flushed down the toliet. this is not good news for anyone. when will the downward spiral end?

 

[LearLove]

nothing

 

[LearLove]

more of nothing

 

[AA717driver]

Man, I thought Palumbo was a trooper. He stayed with TWA for the long haul.

Next opportunity for him is making one of those Corona commercials...TC

 

[~~~^~~~]

Actually, the loss was narrower than I expected. Delta is in narrow financial straights, but this indicates that mainline is making a decent operational profit. Now if we could keep operations from sqandering money on indecent gay rights campaigns, perhaps the airline could see a slight profit.

The rub is that Delta needs some profits in order to obtain competitive aircraft. The 787's need to replace 767-200 flying and 737-800 & 900's would make excellent MD80 replacements. Unfortunately these airplanes require cash. Getting more RJ's on "zero money down" deals is not an answer.

 

[michael707767]

Actually, the loss was narrower than I expected. Delta is in narrow financial straights, but this indicates that mainline is making a decent operational profit. Now if we could keep operations from sqandering money on indecent gay rights campaigns, perhaps the airline could see a slight profit.

I agree with you. Things are not great but they are coming around. Keep in mind, we are about a year or two behind AA in our efforts to restructure and lower costs. I think a lot will hinge on pension reform going forward. If we get it, a fair chance of avoiding BK, if not BK is a certainty.

I also think the answer in the future is to stop moving passengers in small jets, but to start increasing gauge.

 

[~~~^~~~]

I also think the answer in the future is to stop moving passengers in small jets, but to start increasing gauge.

Delta needs to use the airplanes appropriate for the route, traffic and time. Most of the 40 seat RJ's go to markets where the local government is paying fees, sometimes in the millions, to secure service to a major hub. (BPT and ISO were examples at one time) If it makes you feel better, you can consider these scheduled charter flights. You should also like the idea that they bring the revenue to your 757 that makes up a high percentage of its marginal profit.

Delta will have to go up in gauge and the CRJ200's have many less markets they can serve profitably at current fuel prices. But they tend to generate higher revenues to offset their cost, when they are used correctly.

~~~^~~~

 

[spanky2]

At June 30, 2005, Delta had $2.0 billion in cash and cash equivalents and short-term investments, of which $1.7 billion was unrestricted. Cash flows used in operations were $122 million in the June 2005 quarter. Capital expenditures for the quarter were approximately $240 million, including approximately $150 million for regional jet aircraft delivered under seller financing. During the quarter, Delta also completed the sale of one MD-11 aircraft, resulting in proceeds of $26 million. In addition, Delta deferred delivery of eight Boeing 737-800 aircraft from 2006 to 2008. As a result of these deferrals, Delta has no mainline aircraft deliveries scheduled in 2006.

Parking jets, selling jets, deferring jets ... and buying more RJ's. Watch for BIG retirements in Aug & Sep ...

 

[Rick James]

Delta needs to use the airplanes appropriate for the route, traffic and time. Most of the 40 seat RJ's go to markets where the local government is paying fees, sometimes in the millions, to secure service to a major hub. (BPT and ISO were examples at one time) If it makes you feel better, you can consider these scheduled charter flights. You should also like the idea that they bring the revenue to your 757 that makes up a high percentage of its marginal profit.

Delta will have to go up in gauge and the CRJ200's have many less markets they can serve profitably at current fuel prices. But they tend to generate higher revenues to offset their cost, when they are used correctly.

I agreee 100%, operating 50 or 70 seat a/c on routes that could have filled an MD90 doesn't jive. Delta along with UA need to figure this out, otherwise these RJ's will cause more problems than they solve.