Create a Customer-Focused Culture
To create a customer-focused culture, Grinstein said Delta is "recommitting to its heritage" by listening to its customers and delivering what they want: simplicity, comfort and style, flexibility and reliability, and a great experience, all at a great value.
"Our recently announced SimpliFares(TM) in Cincinnati illustrate what we mean by simplicity," Grinstein explained. "We're making our SkyMiles loyalty program easier to understand and awards simpler to redeem, especially through delta.com, and continuing to find new ways to provide passenger-friendly, self-service technologies. We are going to take the fine print out of the way we do business to make it easier for customers to do business with us," he declared.
As part of these technology improvements, Delta will increase by 15 the number of cities with kiosk check-in capabilities, and expand its services offered through the delta.com website. The company plans to introduce capabilities to allow customers to find lower fares and obtain refunds and reissues online. Delta's goal is to migrate 50 percent of its customer transactions to delta.com.
In addition to maintaining two classes of service, upgraded and updated cabins, with features such as leather seats with more comfort and better lighting, will be phased in over the next 18 months to offer more inviting interiors. The first MD-88 with the new interiors will begin flying by the middle of this month.
"Importantly, we've built in cost savings to help pay for these improvements," he noted.
Greater flexibility for the customer will be accomplished by offering more flights and better schedules. "To get our customers where they want to go, when they want to go, we will aggressively compete in our key hubs and cities and invest and grow where there is the greatest demand," Grinstein said.
"It's all about customizing our network and fleet to meet the customers' different needs," he added. The Delta Solution provides customers the benefits of strengthened hubs and focus cities and increased point-to-point flying, in part, by:
-- Redesigning Delta's primary hub at Atlanta's Hartsfield-Jackson
International Airport to add more flights than any airline has ever
flown from any one city, while at the same time reducing congestion;
-- Growing Cincinnati and Salt Lake by re-deploying aircraft currently
used at Dallas/Ft. Worth; and
-- Adding 31 new nonstop flights to 19 additional destinations from its
focus cities of Boston; New York-JFK; Columbus, Ohio; and Ft.
Lauderdale, Orlando and Tampa, Florida.
"Difficult decisions had to be made," the CEO added when explaining that in order to afford the expansion and pursuit of new opportunities, the company needed to dehub its Dallas/Ft. Worth operation and discontinue all service to Amarillo and Lubbock, Texas. "A commanding market presence is critical," Grinstein asserted, "and we didn't have it in Dallas." The dehubbing of Dallas/Ft. Worth will help the company retain and build a strong, competitive pattern of service in Atlanta, Cincinnati and Salt Lake City.
Delta anticipates that it will record accounting charges in connection with the decision to dehub Dallas/Ft. Worth, the amount and timing of which have not been finalized.
Other strategic network changes central to the company's larger transformation include growing Song initially by adding 12 aircraft to its current fleet of 36 beginning in the late Spring of 2005, increasing seasonal domestic service, capitalizing on alliance partnerships and expanding international destinations. In addition, Delta plans to simplify its fleet by retiring at least four fleet types in four years, while increasing aircraft utilization through more efficient hub scheduling.
Excel at Operational Performance
"Giving customers a great experience also means excelling at operational performance," Grinstein emphasized. The planned continuous, "un-banked" hub in Atlanta is unique in its design. It will create a constant flow of arrivals and departures that will increase capacity while reducing congestion because of the efficiencies built into the system.
By eliminating the peaks and valleys and decreasing the amount of time it takes to turn an aircraft, the company said it would able to add 81 flights daily and seven new destinations, while decreasing hourly departures and arrivals by approximately 20 per hour. "This is great for the customer because it means less of a wait in a less-crowded airport," the CEO said.
Grinstein noted that to deliver the essentials of a customer's great travel experience - including clean aircraft, friendly service, on-time performance and reliable baggage handling - will require flawless execution and greater productivity from every member of the Delta team. "We'll be doing more with less," he said.
Plans were also unveiled to keep flight crews together throughout the day in an effort to help the airline and its crews be more efficient.
Sustain Profitable Growth
"All of these improvements and changes add up to a great value for our customers," Grinstein said. "By investing only in what our customers value, streamlining our operation, and fixing our cost structure we will be able to take it to the competition and win. Our goal is to become an efficient and respected competitor and to be in a position to grow profitably."
In another in its series of moves to promote profitable growth, the company today announced its intent to file for new U.S.-China service in order to expand its global network.
Profit sharing planned in the face of additional job losses, pay cuts and benefit reductions
The CEO emphasized that the changes necessary for viability will add customer value and contribute to Delta's survival and any future success. "Regrettably, the changes also will impact Delta people," he said. "Achieving our goals will require enormous change. To take it to the competition, we will have to work harder and more efficiently for less, but if we work together, we should win together. That is why Delta is adamant that its employees have the opportunity to share in any success their contributions help make possible."
The further restructuring of Delta's employment costs is a "necessary but painful" part of the company's long-term viability and growth equation, Grinstein said. The airline's employment costs continue to be higher than those of network and low cost carriers.
Delta has called for approximately $1 billion in annual savings from its pilots, and the company and the pilots' union continue to meet in an effort to find mutually acceptable solutions. In addition, the company today announced further employee- and management-based cost saving measures.
"Our people want and deserve the facts as we know them, no matter how difficult, so there's no sense sugar-coating the situation," Grinstein said before providing employees with the available details of the reductions, which included:
-- a reduction of between 6,000-7,000 jobs over the course of the next 18
months;
-- a 15 percent reduction in administrative overhead costs, including
management reductions;
-- reductions in compensation throughout the company, to be announced by
the end of September and implemented at a later date; and
-- increased employee contributions to health care costs.
Delta anticipates that it will record accounting charges in connection with the employee job reductions, the amount and timing of which have not been finalized.
In noting the top-to-bottom reductions, the CEO restated his commitment to the principles that the sacrifices necessary for Delta's recovery must be mutually shared, and that employees will benefit from any recovery.
Delta is set to unveil the employee reward program when it is finalized later in the year, which will include a combination of equity, profit sharing and incentive payouts tied to company performance.
"From the outset, our plan was to achieve long-term viability by pursuing a 'Delta Solution' unique to us to carve out new territory in the aviation marketplace, and to 'do it once and do it right.' In doing so, we're trying to create the right airline for the new era," Grinstein said. "Given the severity of our financial situation, there are no guarantees for success and there is no time to waste, but with this plan and the commitment of Delta people, who are second to none, I am realistically hopeful about Delta's future."