Wednesday, April 12, 2006

Delta Airlines, Remember Eastern Airlines?

I was young when Frank Borman, CEO of Eastern Airlines, was fighting his financial and competitiveness woes. Eventually selling to Frank Lorenzo and Texas Air for almost nothing. (A good review of Frank Borman, his astronaut years and his years at Eastern, can be found in his autobiography Countdown.)

The problems faced by Delta are similar to those faced by Eastern -- weighty and stifling labor agreements and other unexpected expenses like higher fuel costs and employee entitlements.

Delta pilots, attendants, maintenance, etc. can be as stubborn as they wish but it all comes down to competitiveness.

Each of these parties tries to get the best deal for themselves, regardless of the overall impact on the business' competitiveness. A few win in the short-term, but all lose in the long-term.

With the pilots voting to strike and the public picketing underway, one cannot be too optimistic over the eventual outcome.

These efforts will end up hurting all Delta stakeholders--its investors, suppliers, customers and its employees, especially in Atlanta, Cincinnati and Salt Lake City. I feel bad for those impacted.

Competition is brutal. Corporate and union management during the years of plenty failed to plan properly for the years of draught.

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