The Final Days of Delta Air Lines

No, Delta Air Lines, Inc. isn’t going under. However, as of November 3, 2010 Delta’sflight attendants staid employee culture will have forever changed. On that day 20,000 flight attendants will find out if they will become unionized or remain as they have for 86 years, non-union.

This is one commentary I would love to reread a few years down the road and admit that I had been overly pessimistic. Unfortunately this event is destined to be a lose-lose proposition for the company because of the parties involved, the emotion and contention surrounding the issue, and the relative impotence company leadership has to orchestrate a desirable outcome; no matter who ends up being the winner.

Over the years Delta has assimilated other airlines through mergers and acquisitions; Northeast, Western, Pan Am, and most recently, Northwest Airlines. This latest acquisition has presented a different set of integration problems, mainly in terms of melding Northwest’s distinctly different employee culture into Delta’s.

Throughout its history Delta has had an enviable reputation in the industry for maintaining relatively peaceful and cooperative relations with its various labor groups. So unusual was this environment in the airline industry that up until CEO Dave Garrett retired in the mid 80’s, company employees were often described by outsiders as ‘Deltoids’, while inside they referred to each other as family members. Founder C.E. Woolman was a purveyor of the old business adage that “if you take care of your employees, they’ll end up taking care of you”. This philosophy was a proactive policy which kept organized labor at arms length. Even when subsequent C-suite executives moved away from this patriarchal model the employees repeatedly rejected union organizing whenever it came to a vote. Only the pilots and a small group of flight dispatchers are represented by organized labor. When compared with other airlines even these relationships have been cooperative and for the most part non-confrontational. Delta has never had to deal with a strike by its own employees.

The same cannot be said for the employee groups at Northwest Airlines, now fully vested employees in the Delta brand. The Northwest employee environment had been heavily unionized and battle hardened as a result of years of contentious dealings with their management. Each labor group had their own reasons for maintaining this perspective, however one would have thought those reasons would have become moot, at least temporarily, when they came under Delta’s leadership. Union organization was a primary goal from day one for each labor group coming into the Delta fold.

As a result of their deep mistrust for management, rank and file Northwest employees are conditioned with a bias for organized labor to conduct their collective bargaining. It became apparent early on that this perspective endures no matter whose name is on the airplane; and now Delta must deal with it.

The high priced process of acquiring financing, ironing out legal details, and getting federal regulators onboard with a Delta – Northwest marriage was the easy part. Delta now faces the most difficult phase of this latest acquisition; the seamless integration of vastly different cultures into a single entity.

My observation from the inside is that the legacy Delta flight attendants do not appear to be well suited for this confrontation based on their years of peaceful co-existence with Delta management. They came to a gunfight with a knife and find themselves reeling from the realization that their longstanding relationship with the company will change as a result of the new kids on the block.

On the other hand, the veracity and group think of the Northwest pro-union advocates has done nothing to ingratiate themselves to their new colleagues that hold any difference of opinion on the matter. Simply put, it has evolved to the edge of civility.

Because of the various companies now assimilated under the Delta name over the years it is not unusual to hear one employee ask another if they are an “RD” or Real Delta (as opposed to former Western or Pan Am). The Northwest flight attendants have taken to parodying this moniker into “Real Dumb”; the underlying reason for past resistance to unionization. So much for “can’t we all just get along”?

Why is this important and why will it change Delta forever? The employee that spends the most time with the customer in the airline industry is the flight attendant. And as the saying goes,”if mama’s not happy, nobody’s happy”. If the flight attendant labor group votes to have union representation then work rules and the way things have been with management for eight decades will change dramatically. Human nature being what it is, certain behaviors and attitudes will surface signaling that many of Delta’s legacy mama’s (and papa’s) are unhappy.

On the other hand, if the outcome of the vote is to reject unionization there will be 7000+ ticked off former Northwest “mama’s dealing with the Delta customer. Neither scenario is good in a customer service industry that disguises itself as a transportation entity. As a result of this lose-lose situation, the next 6 months will test the human side of how Delta will deal with this conundrum.

Maybe the best to hope for is: “Delta is dead. Long live Delta

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4 Responses

  1. Very interesting, Scott. Thanks for the insider perspective. Always enjoy the airline industry pieces. LMT

  2. Your article is filled with gross inaccuracies.

    Delta has NEVER been union free…let alone for “80 some years”…Semantics dictates that your idea of the Northwest merger was business as usual with Delta’s past combinations. This couldn’t be farther from the truth. At the time of the merger, Delta was in no position to buy anything…let alone an airline like NWA valued far more than itself. (pre-merger balance sheet and market cap.)

    Delta MERGED with Northwest…something it has never had to do in the past. Northwest brought the superior financial position with it, and it’s current and former management (for better or worse) took control of the company. It will serve Delta well to adopt NWA’s historical operational excellence.

    Delta’s culture changed by being run by a group that had zero previous experience of more than a few years at the company. Most coming from Northwest, including it’s CEO.

    Moreover, unionized Northwest out flanked Delta for decades in financial profitability, operational excellence and customer satisfaction by generally accepted industry standards. Wall Street got it right when it declared that NWA had cleverly taken over Delta. The Delta brand survived because of billions in tax credits (IRS forbid them from being transferred) and the hope of maintaining lower cost (cheaper) non union employees.

    Unionized Delta pilots (since 1945) enjoy some of the highest standards of pay and work rules in the industry…which can not be said for Delta’s other non union employees.

    Lastly, I think you should spend more time reviewing the professional, operational and financial success of UNIONIZED airlines such as Southwest (the most heavily unionized airline in America) before tainting your article with your obvious bias against unions.

  3. Globetrotter …. the “article is filled with gross inaccuracies” as you submit is YOUR first inaccuracy … there are only my opinions, my observations, and resourced facts …. the Delta NWA business transaction was NOT a merger as most loyalists of NWA have asserted > it was an acquistion by any standard, a standard you must come to live with … the rest of your comments are welcome here and can be characterized as your opinion, and not much more … have a great day!

  4. If you would like to call being run by your acquired group and “acquisition”…that’s OK.That appears exceptionally difficult for the Delta ego. Semantics doesn’t change the facts.

    Furthermore, how does one acquire something that it doesn’t have the money for? (the merger was structured based on a stock swap/hardly and acquisition if you want to talk finance)The structure of the deal only seems important to the mentality of the former Delta fans as they have never faced a merger such as this.

    My opinion is based on the financials (still available for review) of both companies pre-merger (the official word used by Delta/NWA management). Northwest’s being the superior balance sheet of the two.

    In my opinion the use of a term such as RD is somewhat fictitious seeing how there is a huge number of Western (who was almost the size of Delta at it’s merger) and Pan Amer’s in the ranks of pre-merger Delta.

    This new company called Delta will forever share the storied history and culture of Northwest Airlines, one that crossed the sky above oceans when delta was still a regional…regardless of who at New Delta wants to admit it.

    The union issue has simply struck NWA employees as odd being that the best paid/treated employees of the company maintained contracts i.e. pilots, management.

    Additionally, SWA is the most heavily unionized airline in America…I dare say the best run, best employees relations, and most importantly, most profitable. So much for the non union argument.

    Good luck!

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