Charlie_Tuna
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- Sep 29, 2005
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The first e-mails alerting journalists and airline analysts to US Airway's hostile bid for Delta Air Lines were sent across the Internet Wednesday at 4 a.m., Mountain Standard Time.
At 6:15 a.m., US Airways executives were explaining via a nationwide teleconference the details and rationale for the $8 billion offer.
Shortly afterward, CEO Doug Parker and Scott Kirby, president of Tempe, Ariz.-based US Airways, were making themselves available by telephone to journalists, who were not allowed to ask questions during the teleconference.
At the same time, the company's media relations department posted a FAQ on its Web site that asked and answered questions they expected to hear from customers, employees and investors.
The company also put out a lengthy media statement that spelled out, among other things, Parker's efforts over several months to start a conversation with Delta CEO Gerald Grinstein, only to be rebuffed.
It was a public-relations blizzard that made Delta appear off guard. The storied airline, No. 3 in the nation in terms of passengers flown, released a three-paragraph statement that reiterated Grinstein's determination to lift Delta out of bankruptcy next year as a stand-alone airline.
But Delta refused to make its executives available. Company media representatives said airline officials had nothing to add to its news release although later it did share a letter Grinstein sent to employees. In it, he said Delta would review the proposal, reminded employees that Delta has the exclusive right to reorganize itself until next February, and asked for their support.
The starkly different approaches each airline took point up the huge stakes both airlines have in the outcome of what many analysts say is the first chapter in the long-predicted wave of consolidations in the struggling airline industry.
The poles-apart public relations tactics also underscore the sense of purpose that chief executives of major corporations have. Parker, 45, is known as a risk-taker. A spokesman confirmed stories about his run with the bulls in Spain and bungee-jumping during his honeymoon in New Zealand. He led US Airway's successful, though uncompleted, merger with America West last year,
Grinstein, on the other hand, is near the end of his career. The 74-year-old was CEO of Western Airlines when Delta bought it in 1987. Before returning to Delta in 2004, he served as chairman of Agilent Technologies Inc. and Burlington Northern Santa Fe Corp. He has vowed to retire after Delta exits bankruptcy.
"Among the things that a CEO can do, saving a business or merging a business, especially from an adversarial standpoint, is an amazing thing to achieve," said James Lukaszewski, head of The Lukaszewski Group, a White Plains, N.Y., crisis communications consulting firm.
"Whatever the result, if it turns out that they merge, there is only one CEO and one company. If they don't merge, and the pursuer fails, there could be a new CEO. So both are betting their jobs on this transaction," Lukaszewski said.
That explains the scope of US Airway's public relations campaign, which actually began eight days earlier. Philip Gee, who runs the airline's media office, said he was told Nov. 7 that Parker was going to ask US Airways directors to approve a bid to buy Delta. The board said yes on Nov. 14. For his part, Gee was turning to the archive file of US Airway's merger with America West to begin his PR plan.
"We did hire an agency, but it was primarily used for the investor-relations piece," Gee said. "What certainly was a benefit to us was, it wasn't that long ago we were announcing another merger. For me personally, it made all the difference in the world knowing I had done this before. It gives you the confidence that you could do it again."
Mike Korologos, a public relations expert at Riester Salt Lake, said US Airway's broadside came straight from the playbook followed by most companies that launch an unsolicited bid to buy a competitor.
"From a public relations standpoint, US Airways obviously went at it because they are on offense, and you always like to be on offense because you know when the ball is going to be snapped," said Korologos, who did work for the Salt Lake Olympic Organizing Committee.
Delta's answer to the unsolicited bid has led to several interpretations. Korologos speculated that airline officials' decision to say little was a tactic to buy them time, knowing that the future of Delta, its employees and other groups with a stake in the future of the airline was suddenly on the line.
"Employees get frightened. Rather than knee-jerk in reaction to something that's obviously been in the works for a few days, let's analyze the landscape and see what's best for our company and our stakeholders, and then respond," Korologos said.
Conversely, Robert Wakefield, a public relations professor at Brigham Young University, believes Delta blundered when it did not react more vigorously. Companies on the defensive tend to make communication mistakes that can make them look weak, he said.
"When Delta [responded], it was a one-way communication tactic. That kind of strategy never helps an organization, particularly at times when they desperately need trust," Wakefield said.
As of late Friday, Delta executives still had not spoken directly to US Airways about the offer. Also on Friday, Ed Bastian, Delta's chief financial officer, told the Associated Press that he and Grinstein are advising creditors that the airline's stand-alone plan for reorganizing itself is far superior to US Airway's offer. Delta will file its plan with the court in December.
Lukaszewski doesn't buy Wakefield's argument. He believes Delta reacted properly and from a position of strength because CEO Grinstein, who believes most airline mergers fail, did not retreat from his plan to bring Delta out of bankruptcy as an independent company.
"Delta's strategy is, of the two [companies], the stronger one. They can say no credibly. That's a goal people can follow," Lukaszewski said.
On the other hand, US Airways, brushed off by Delta when it attempted to start a private discussion, put itself at risk by going to the public and Delta's creditors to make its case, Lukaszewski said.
By remaining silent, Delta is pressuring US Airway to publicly defend its offer or sweeten it.
Either way, analysts and the media inevitably will begin to pick at the details and make judgements that will become part of the battle as it unfolds, Lukaszewski said.
"In business school, business leaders are taught that the greatest ideas and best decisions are made through the verbal clash of ideas. The strategy is to smash them in the mouth and see what happens," Lukaszewski said.
"I often refer to this as corporate testosterosis. It's really what's happening here. This is the most amazing exercise, and this is how it starts. If peace doesn't work, we'll try war."
The first e-mails alerting journalists and airline analysts to US Airway's hostile bid for Delta Air Lines were sent across the Internet Wednesday at 4 a.m., Mountain Standard Time.
At 6:15 a.m., US Airways executives were explaining via a nationwide teleconference the details and rationale for the $8 billion offer.
Shortly afterward, CEO Doug Parker and Scott Kirby, president of Tempe, Ariz.-based US Airways, were making themselves available by telephone to journalists, who were not allowed to ask questions during the teleconference.
At the same time, the company's media relations department posted a FAQ on its Web site that asked and answered questions they expected to hear from customers, employees and investors.
The company also put out a lengthy media statement that spelled out, among other things, Parker's efforts over several months to start a conversation with Delta CEO Gerald Grinstein, only to be rebuffed.
It was a public-relations blizzard that made Delta appear off guard. The storied airline, No. 3 in the nation in terms of passengers flown, released a three-paragraph statement that reiterated Grinstein's determination to lift Delta out of bankruptcy next year as a stand-alone airline.
But Delta refused to make its executives available. Company media representatives said airline officials had nothing to add to its news release although later it did share a letter Grinstein sent to employees. In it, he said Delta would review the proposal, reminded employees that Delta has the exclusive right to reorganize itself until next February, and asked for their support.
The starkly different approaches each airline took point up the huge stakes both airlines have in the outcome of what many analysts say is the first chapter in the long-predicted wave of consolidations in the struggling airline industry.
The poles-apart public relations tactics also underscore the sense of purpose that chief executives of major corporations have. Parker, 45, is known as a risk-taker. A spokesman confirmed stories about his run with the bulls in Spain and bungee-jumping during his honeymoon in New Zealand. He led US Airway's successful, though uncompleted, merger with America West last year,
Grinstein, on the other hand, is near the end of his career. The 74-year-old was CEO of Western Airlines when Delta bought it in 1987. Before returning to Delta in 2004, he served as chairman of Agilent Technologies Inc. and Burlington Northern Santa Fe Corp. He has vowed to retire after Delta exits bankruptcy.
"Among the things that a CEO can do, saving a business or merging a business, especially from an adversarial standpoint, is an amazing thing to achieve," said James Lukaszewski, head of The Lukaszewski Group, a White Plains, N.Y., crisis communications consulting firm.
"Whatever the result, if it turns out that they merge, there is only one CEO and one company. If they don't merge, and the pursuer fails, there could be a new CEO. So both are betting their jobs on this transaction," Lukaszewski said.
That explains the scope of US Airway's public relations campaign, which actually began eight days earlier. Philip Gee, who runs the airline's media office, said he was told Nov. 7 that Parker was going to ask US Airways directors to approve a bid to buy Delta. The board said yes on Nov. 14. For his part, Gee was turning to the archive file of US Airway's merger with America West to begin his PR plan.
"We did hire an agency, but it was primarily used for the investor-relations piece," Gee said. "What certainly was a benefit to us was, it wasn't that long ago we were announcing another merger. For me personally, it made all the difference in the world knowing I had done this before. It gives you the confidence that you could do it again."
Mike Korologos, a public relations expert at Riester Salt Lake, said US Airway's broadside came straight from the playbook followed by most companies that launch an unsolicited bid to buy a competitor.
"From a public relations standpoint, US Airways obviously went at it because they are on offense, and you always like to be on offense because you know when the ball is going to be snapped," said Korologos, who did work for the Salt Lake Olympic Organizing Committee.
Delta's answer to the unsolicited bid has led to several interpretations. Korologos speculated that airline officials' decision to say little was a tactic to buy them time, knowing that the future of Delta, its employees and other groups with a stake in the future of the airline was suddenly on the line.
"Employees get frightened. Rather than knee-jerk in reaction to something that's obviously been in the works for a few days, let's analyze the landscape and see what's best for our company and our stakeholders, and then respond," Korologos said.
Conversely, Robert Wakefield, a public relations professor at Brigham Young University, believes Delta blundered when it did not react more vigorously. Companies on the defensive tend to make communication mistakes that can make them look weak, he said.
"When Delta [responded], it was a one-way communication tactic. That kind of strategy never helps an organization, particularly at times when they desperately need trust," Wakefield said.
As of late Friday, Delta executives still had not spoken directly to US Airways about the offer. Also on Friday, Ed Bastian, Delta's chief financial officer, told the Associated Press that he and Grinstein are advising creditors that the airline's stand-alone plan for reorganizing itself is far superior to US Airway's offer. Delta will file its plan with the court in December.
Lukaszewski doesn't buy Wakefield's argument. He believes Delta reacted properly and from a position of strength because CEO Grinstein, who believes most airline mergers fail, did not retreat from his plan to bring Delta out of bankruptcy as an independent company.
"Delta's strategy is, of the two [companies], the stronger one. They can say no credibly. That's a goal people can follow," Lukaszewski said.
On the other hand, US Airways, brushed off by Delta when it attempted to start a private discussion, put itself at risk by going to the public and Delta's creditors to make its case, Lukaszewski said.
By remaining silent, Delta is pressuring US Airway to publicly defend its offer or sweeten it.
Either way, analysts and the media inevitably will begin to pick at the details and make judgements that will become part of the battle as it unfolds, Lukaszewski said.
"In business school, business leaders are taught that the greatest ideas and best decisions are made through the verbal clash of ideas. The strategy is to smash them in the mouth and see what happens," Lukaszewski said.
"I often refer to this as corporate testosterosis. It's really what's happening here. This is the most amazing exercise, and this is how it starts. If peace doesn't work, we'll try war."
