I know.700UW said:
WorldTraveler said:
Focus on Costs May Have Blurred Delta's Vision
Indeed, despite its current profitability, Delta serves as a case study of a corporate overhaul gone awry. In trying to change an expensive, paternalistic culture -- Delta offered seven weeks of vacation to senior employees, for example, and blank-check health benefits to all -- Mr. Allen and the board may have cost the airline more than they saved it.
''They certainly put a big dent in Delta's corporate culture and in customer perception of service standards,'' said Samuel C. Buttrick, an airline industry analyst at Paine Webber. ''Morale fell a lot further than costs did.''
To a large degree, Delta's problems have been masked by a strong economy that has led to prosperity for all airlines. And Mr. Allen has served as a lightning rod for much of the blame for past errors.
There are many examples, old and new:
*Following the lead of American and United in acquiring new routes across the Atlantic in 1990, Delta paid a steep premium the next year for most of Pan Am's assets, a decision that led to hundreds of millions of dollars in losses.
*In a recent news release about its new paint scheme for its planes, Delta boasted that it studied the issue for no less than four years before making a decision.
*Delta was among the last airlines to begin electronic ticketing.
Mr. Allen announced the results of that number crunching at a news conference on April 28, 1994. Delta would cut $2 billion, or about 16 percent, from its annual operating costs and eliminate up to 15,000 jobs. The goal was crystallized in a program called Leadership 7.5: by the middle of 1997, Delta vowed to cut its basic operating expense, measured by the industry yardstick of what it cost to fly one passenger seat one mile, to 7.5 cents, from 9.26 cents.
