Delta Airlines formal report Assignment 5-1

Prepared for Prof. William Stewart MBA 707, E2WW Summer 2010

Prepared by

June 20, 2010

Background & Financial Data

Employee Relations & Merger Delta employs 81. June 20.2.106 employees.65 (quick ratio). 1 .000. 2009). New York-JFK. and the Chief Executive Officer. 2007). Salt Lake City. there could be a negative financial impact if there is not a successful integration of business practices and operations. In addition. Paul.Assignment 5-1.79. Amsterdam and Tokyo-Narita. like most in the industry sees a negative return on investment of -1. 2009).86. The stock for Delta is currently $14. (Delta Airlines. indicating Delta is in a somewhat stable position to repay its short-term debt over the next year. Stewart. Delta anticipates a $500 million cost to integrate the companies over the next three years. The company culture at Delta could be strained due to the recently finalized merger of Northwest Airlines and Delta. In 2009 annual reported revenues were $28. while profit was -$1. The current ratio is . Detroit.1 billion. Memphis. Atlanta. 2009). and the availability to liquidate quick assets to pay off the current liabilities is . (Delta Airlines.2 billion. 2009). Prof. The company is headquartered in Atlanta Georgia and operates in ten hubs world-wide. Richard Anderson. MBA707-E2WW. There is a significant focus on employee relations and whether or not union representation will be present for the employees (currently 39% of Delta¶s workforce is unionized). Competition Delta¶s faces competition from above and below as the premium airlines gain the most profitable customers and the low-cost carriers attract more price-conscious travelers (Manning & Gross. is paid a salary of $600. Cincinnati. 2010 Delta airlines (DAL) provide scheduled air transportation for passengers and cargo throughout the United States and around the world (Delta Airlines.09. Paris-Charles de Gaulle. Debt to equity for the airline is 70. The airline. The ability to compete effectively depends on the ability of the airline to maintain a cost structure that is competitive with other airline carriers (Delta Airlines. Minneapolis-St.

Social Responsibility & Diversity Delta¶s mission statement is. 2009). 2009).Assignment 5-1. 2009). Marks. et al. and removed associated capacity-related costs.´ by Gerald Adolph and Justin Pettit. While Delta has been impacted by the recession. "We²Delta's employees. and community partners together form a force for positive local and global change. 2009). ³Making the Most of M&A. Delta removed 18 mainline passenger aircraft from the fleet in 2009. 2010 According to Strategy + Business article. Prof. June 20. Iverson. Delta managed to reduce staffing by 4% from the previous year through voluntary reduction programs and normal attrition (Delta Airlines. dedicated to bettering standards of living and the environment where we and our customers live and work.. it has decided to take a proactive and control oriented approach by ³right-sizing´ their operations rather than downsizing by lay-offs (Zatzick. more airlines will be following the lead of the Delta and NWA merger and it is necessary for the survival of the industry and the best strategy to save jobs. Fortune 500 in 2010-up from number 111 in 2009. customers. retired the entire fleet of 747 freighter aircraft and plans to remove over 30 regional jets from the network beginning in mid-2009 and continuing through early 2011 (Delta Airlines. 2009." Delta¶s 2 . Right-sizing In the downturned economy many airlines are forced to downsize. By December 31. The company has reduced domestic and international capacity to better align with demand. 2009). including aircraft fleet and staffing. Delta has been successful in its ³right-sizing´ efforts and was listed as number 84 in Forbes Magazines. Stewart. MBA707-E2WW. Adolph and Pettit claim those airlines that do not jump on board will be forced out of business (Adolph & Pettit. Delta has offered voluntary exit incentives to all its workers except pilots and others in specialized positions (Zatzick.

2010 corporate culture focuses largely on their social responsibilities and diversity within the workforce. To improve the environment further. Tribeca Film Festival. the Carter Center.d. Improving the environment is an issue close to home for Delta and the organization works aggressively to reduce emissions and become better environmental stewards (Website). the Dr. improving the environment. Four areas of focus are. and encourages the promotion of arts and culture through the National Black Arts Festival.000 pounds of worn aircraft carpet from Atlanta landfills (the equivalent of 15 acres of land).d. the Children¶s Miracle Network. n.). and the Fox Theater (Delta. advancing global diversity. St. improving global wellness. June 20. Stewart. The Breast Cancer Research Foundation. The company also supports the Washington. as well as the Latin American Association (Delta. n. Delta has also diverted 221. Joseph Lowery Scholarship at Morehouse University. Jr. MBA707-E2WW. 3 . Improving global wellness is an initiative Delta takes seriously and partners with the American Cancer Society.Assignment 5-1. DC Martin Luther King. Jude Children¶s Hospital. n. the High Museum of Art.). Atlanta. and Pride celebrations in New York. the Guthrie Theatre. National Memorial Project Foundation. Habitat for Humanity. Delta was the recipient of the Corporation of the Year Award from the Georgia Association of Museums and Galleries in 2010. and many other organizations (Delta.d. Delta has fully funded the building of two Habitat for Humanity homes by its in-flight recycling program. Prof.). and promoting arts & culture (Delta. the Minnesota Orchestra. n. the company sponsors the United Negro College Fund. n. the Atlanta Symphony Orchestra. In Delta¶s effort to advance global diversity. and Minneapolis. and in 2009 recycled over 2 million pounds.). Inc.d. Delta has partnered with The Nature Conservancy (Delta.d.).

To maximize returns to Delta customers. shareholders. Delta anticipates a $2 billion revenue increase. employees. and women-owned businesses in the overall strength of the U. Stewart. Prof. ³Delta Air Lines recognizes the critical role of small. The airline is in a position to continue to look for merger and acquisition opportunities and will focus on strengthening the balance sheet (Delta Airlines. and the communities in which we operate.Assignment 5-1. 2009). n. There is no immediate need for significant aircraft purchases and none are foreseen for the next three years. and improve customer service. Delta will continue to utilize the ³right-size´ rather than downsize concept and plans to generate highly competitive unit costs by continuing to strengthen the network. Delta seeks to utilize the products and services of qualified small.d. June 20. and women-owned businesses (MWBE¶s) (Delta. minority. Latin American. economy and ultimately to Delta stakeholders. women¶s. and creating more alliances within the industry. and a more comprehensive and diversified route system (Delta Airlines. 2009). and Asian and Pacific Islander networks to ensure they incorporate employees from all of these diverse backgrounds. gay & lesbian. Delta¶s philosophy on diversity is.). The completion of the Northwest merger will put the airline in a better position to manage through economic cycles and volatile fuel prices. minority. 4 .´ Delta partners with several black. 2010 Diversity of suppliers and within its workforce is one of Delta¶s greatest commitments. MBA707-E2WW.S. invest in the fleet. Conclusion Delta will continue to implement strategies in 2010 that will allow the organization to generate revenues. Delta will continue to manage costs and free cash flow to conserve liquidity.

com 5 . G. Delta.Assignment 5-1. 2010 References Adoph. June 20. (2009). J. & Pettit. Strategy & Business. MBA707-E2WW.. Making the Most of M&A. Prof. Stewart.

R.Assignment 5-1. Marks. Safety +Business.. Which Way Should you Downsize in a Crisis? MIT Sloan Management Review. June 20. 6 . Annual Report. & Iverson.. Manning. (2007. (2009). Prof. 2010 Delta Airlines. (2009). C. Stewart. 51(1). Zatzick. C. MBA707-E2WW. 79-85. L. The Big Squeeze. July 24).

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