Old Hand Steadies the Ship
Tuesday, May 1, 2007
ATLANTA -- Gerald Grinstein took the helm of Delta Air Lines at an age when many chief executives have given up the corner office for leisurely days of fly fishing or sailing. He stepped in at the urging of Delta's board in 2004 to help rescue the reeling airline -- battered by problems in the late 1990s that only worsened after the Sept. 11, 2001, terrorist attacks.
"On the emotional level, I had the question to face up to: At 71, do you have the energy and drive to turn this company around?" he said.
Grinstein did. It turned out he had other attributes, too. He was able to draw on years of experience in the airline business as well as sharp political skills honed during time spent working on Capitol Hill. In the midst of the airline's toughest financial battles, he was able to beat back an aggressive takeover attempt by US Airways.
His performance as a turnaround artist will be on display tomorrow when Grinstein rings the bell at the New York Stock Exchange, marking Delta's emergence from bankruptcy protection yesterday.
Grinstein, who plans to step down in coming months, has led by example, executives and employees said. When the airline slid into bankruptcy in September 2005, he sought ways to trim $3 billion in expenses. He slashed jobs -- about 24,000 during his tenure -- and reduced pension and health-care benefits, but he also took a cut in his own pay and reduced that of other top executives.
He trimmed his pay more substantially than that of his two top lieutenants and -- at $337,500 a year -- makes less than they do. Grinstein also turned down millions of dollars in additional compensation for bringing the company out of bankruptcy. That money will instead be used to start a charity fund for employees in trouble, executives said.
"Jerry sets the tone," said James M. Whitehurst, the carrier's chief operating officer. "In a world that in many ways has created these rock-star CEOs, you don't see companies with rock-star CEOs doing that well."
Still, some employees, who all spoke on condition of anonymity because they feared reprisals from executives, are bitter about the job cuts. Some think Grinstein didn't take a big enough pay cut himself. But even critics give him high marks for being able to hold the company together.
The airline projects it will make a pretax profit of about $800 million this year, its first since fiscal 2000.
The $9 billion hostile takeover bid in November helped rally workers and executives in a joint battle to remain independent. Employees worried that US Airways chief executive Doug Parker would eviscerate Delta.
"Parker gave us a gift," said Edward Bastian, Delta's chief financial officer. "No question about it."
Grinstein, who worked for 12 years on Capitol Hill as a lawyer for the Senate Commerce Committee and as a top aide to Sen. Warren G. Magnuson (D-Wash.), said he never believed the merger would pass regulatory scrutiny. But he was concerned that the bid could do just as much damage to Delta by delaying its exit from bankruptcy protection by hampering its efforts to buy new planes and retain executives.