Will Delta CEO take off early?
By Mary Jane Credeur
Atlanta Business Chronicle
Updated: 7:00 p.m. ET Dec. 12, 2004A $1 billion reduction in pilot pay.
Another $1 billion in new financing.
Plus a massive restructuring plan that aims to restore profitability and ensure long-term survival for the nation's third-largest airline.
Delta Air Lines Inc. CEO Jerry Grinstein has accomplished these things in the scant 12 months he's been at the carrier's helm, prompting some industry watchers to speculate that the 72-year-old Grinstein may step down before his two-year commitment is up.
People close to the company believe Grinstein will remain CEO until at least next summer while a successor is groomed, and that he may remain chairman for a while after the transition occurs.
Aviation consultant Mike Boyd, CEO of The Boyd Group in Denver, said he wouldn't be surprised if Grinstein steps down early because the executive is "only there to do a job, not build a career."
"I think as soon as he gets that job done, we will see him step down," Boyd said.
Grinstein acknowledged to a group of reporters in September that waking up at 5:30 a.m. every day to run Delta "has taken a toll" and that he missed his hometown of Seattle where he and his wife, Lyn, have their permanent home.
Although Delta narrowly avoided bankruptcy a couple of months ago when the pilot negotiations were at an impasse, Boyd noted that the carrier's outlook has "markedly changed for the better" over the past month.
Delta's pilots ratified a new contract in November that cut their pay by $1 billion, and the company got $1 billion in new financing from American Express Co. and GE Commercial Finance.
Portions of Grinstein's "transformation plan" will be implemented in early 2005, and Delta stock has traded near $8 in recent days, an eight-month high.
"Delta is a whole lot closer to being out of the woods than we think," Boyd said. "The work isn't finished, but the big job -- the visionary part and the hard bargaining -- is being done right now."
Executive recruiter Joel Koblentz, a partner with Morgan Howard Worldwide, noted that because Grinstein was brought in as a turnaround man, the company's board must plan for succession "real soon."
But finding the right kind of leadership in the airline industry is tough nowadays.
"Not just anybody has the right set of skills to run an airline," Koblentz said. "Relations with labor have been strained, and Delta has been hard on suppliers and vendors. The person who follows Grinstein has to be very cognizant of these things, and they have to be focused on keeping customers happy and trying to make a profit. It's a lot to ask."
Delta spokesman John Kennedy declined to comment on whether Grinstein is considering stepping down from Delta earlier than originally planned.
"Delta consistently declines to comment on industry rumors and speculation concerning its executives," Kennedy said.
Whoever succeeds Grinstein as Delta's next CEO will have "very, very large shoes to fill," said airline analyst Henry Harteveldt of Forrester Research Inc.
Grinstein had been a Delta board member for 15 years before taking the CEO and chairman job on Jan. 1. He succeeded then-CEO Leo Mullin, who retired amid controversy when it was revealed that Delta paid dozens of top executives retention bonuses worth $17 million plus pension trust funds worth another $44 million.
Grinstein's top job as Delta CEO was to negotiate wage cuts with the pilots.
Many in the industry doubted it would happen, since relations were damaged by the earlier retention bonus tiff.
But Grinstein held his ground, and an 11th-hour pay concession deal was reached just hours before Delta's board was prepared to file for Chapter 11 bankruptcy protection on Oct. 28.
"Gerald Grinstein is one of the finest CEOs in the airline industry today, and he has had to make some very tough decisions at Delta," Harteveldt said. "But people respect him and he's made amazing progress that, quite frankly, has surprised some people who didn't think it was possible."
Grinstein declined his own salary of $500,000 for the first and fourth quarters of this year. The company granted about 300,000 shares of options to each of six top executives in November, but Grinstein didn't get any.
Delta has not yet made any changes in the executive suite that indicate a clear heir-apparent. Grinstein told reporters on Sept. 8 when he unveiled his "transformation plan" that his successor likely would come from inside the current management group.
Some people close to the company believe the list may already be narrowed to these four officials:
Joe Kolshak, 47, senior vice president and chief of operations.
Lee Macenczak, 42, senior vice president and chief customer service officer.
Paul Matsen, 44, senior vice president and chief marketing officer.
Mike Palumbo, 57, executive vice president and chief financial officer.
Observers expect Grinstein to delegate more responsibility throughout the spring as Delta restructures 51 percent of its network, makes cosmetic changes to its fleet and works at winning back customer loyalty.
The big job for the next CEO is to implement the long-term survival plan that Grinstein has drafted, noted Jeff Sonnenfeld, director of the Chief Executive Leadership Institute at Yale School of Management.
"Delta really needs to identify an executive who knows the industry and knows the customer and can bring some imagination and rationality into this troubled industry," Sonnenfeld said.
By Mary Jane Credeur
Atlanta Business Chronicle
Updated: 7:00 p.m. ET Dec. 12, 2004A $1 billion reduction in pilot pay.
Another $1 billion in new financing.
Plus a massive restructuring plan that aims to restore profitability and ensure long-term survival for the nation's third-largest airline.
Delta Air Lines Inc. CEO Jerry Grinstein has accomplished these things in the scant 12 months he's been at the carrier's helm, prompting some industry watchers to speculate that the 72-year-old Grinstein may step down before his two-year commitment is up.
People close to the company believe Grinstein will remain CEO until at least next summer while a successor is groomed, and that he may remain chairman for a while after the transition occurs.
Aviation consultant Mike Boyd, CEO of The Boyd Group in Denver, said he wouldn't be surprised if Grinstein steps down early because the executive is "only there to do a job, not build a career."
"I think as soon as he gets that job done, we will see him step down," Boyd said.
Grinstein acknowledged to a group of reporters in September that waking up at 5:30 a.m. every day to run Delta "has taken a toll" and that he missed his hometown of Seattle where he and his wife, Lyn, have their permanent home.
Although Delta narrowly avoided bankruptcy a couple of months ago when the pilot negotiations were at an impasse, Boyd noted that the carrier's outlook has "markedly changed for the better" over the past month.
Delta's pilots ratified a new contract in November that cut their pay by $1 billion, and the company got $1 billion in new financing from American Express Co. and GE Commercial Finance.
Portions of Grinstein's "transformation plan" will be implemented in early 2005, and Delta stock has traded near $8 in recent days, an eight-month high.
"Delta is a whole lot closer to being out of the woods than we think," Boyd said. "The work isn't finished, but the big job -- the visionary part and the hard bargaining -- is being done right now."
Executive recruiter Joel Koblentz, a partner with Morgan Howard Worldwide, noted that because Grinstein was brought in as a turnaround man, the company's board must plan for succession "real soon."
But finding the right kind of leadership in the airline industry is tough nowadays.
"Not just anybody has the right set of skills to run an airline," Koblentz said. "Relations with labor have been strained, and Delta has been hard on suppliers and vendors. The person who follows Grinstein has to be very cognizant of these things, and they have to be focused on keeping customers happy and trying to make a profit. It's a lot to ask."
Delta spokesman John Kennedy declined to comment on whether Grinstein is considering stepping down from Delta earlier than originally planned.
"Delta consistently declines to comment on industry rumors and speculation concerning its executives," Kennedy said.
Whoever succeeds Grinstein as Delta's next CEO will have "very, very large shoes to fill," said airline analyst Henry Harteveldt of Forrester Research Inc.
Grinstein had been a Delta board member for 15 years before taking the CEO and chairman job on Jan. 1. He succeeded then-CEO Leo Mullin, who retired amid controversy when it was revealed that Delta paid dozens of top executives retention bonuses worth $17 million plus pension trust funds worth another $44 million.
Grinstein's top job as Delta CEO was to negotiate wage cuts with the pilots.
Many in the industry doubted it would happen, since relations were damaged by the earlier retention bonus tiff.
But Grinstein held his ground, and an 11th-hour pay concession deal was reached just hours before Delta's board was prepared to file for Chapter 11 bankruptcy protection on Oct. 28.
"Gerald Grinstein is one of the finest CEOs in the airline industry today, and he has had to make some very tough decisions at Delta," Harteveldt said. "But people respect him and he's made amazing progress that, quite frankly, has surprised some people who didn't think it was possible."
Grinstein declined his own salary of $500,000 for the first and fourth quarters of this year. The company granted about 300,000 shares of options to each of six top executives in November, but Grinstein didn't get any.
Delta has not yet made any changes in the executive suite that indicate a clear heir-apparent. Grinstein told reporters on Sept. 8 when he unveiled his "transformation plan" that his successor likely would come from inside the current management group.
Some people close to the company believe the list may already be narrowed to these four officials:
Joe Kolshak, 47, senior vice president and chief of operations.
Lee Macenczak, 42, senior vice president and chief customer service officer.
Paul Matsen, 44, senior vice president and chief marketing officer.
Mike Palumbo, 57, executive vice president and chief financial officer.
Observers expect Grinstein to delegate more responsibility throughout the spring as Delta restructures 51 percent of its network, makes cosmetic changes to its fleet and works at winning back customer loyalty.
The big job for the next CEO is to implement the long-term survival plan that Grinstein has drafted, noted Jeff Sonnenfeld, director of the Chief Executive Leadership Institute at Yale School of Management.
"Delta really needs to identify an executive who knows the industry and knows the customer and can bring some imagination and rationality into this troubled industry," Sonnenfeld said.
