By HARRY R. WEBER
The Associated Press
Tuesday, August 21, 2007; 10:21 PM
ATLANTA -- Delta Air Lines Inc. fought hard during bankruptcy to avoid being taken over by another carrier. Less than four months after exiting Chapter 11, it reignited speculation Tuesday about a future merger by naming former Northwest Airlines Corp. CEO Richard Anderson as its next chief executive.
Anderson, currently a board member at Atlanta-based Delta and an executive at UnitedHealth Group Inc., will replace Gerald Grinstein on Sept. 1. Grinstein, 75, who had said he would leave Delta once his successor was named, will retire from Delta and from its board.
The appointment of Anderson, 52, answers one pressing question but also raises others, particularly about future consolidation.
"Clearly having Anderson named would raise that speculation," said Philip Baggaley, an analyst at Standard & Poor's. "I don't think it necessarily draws any direct link, but it clearly will raise that thought."
The change at the top at Delta follows the airline's 19 1/2-month reorganization under bankruptcy protection. Delta entered Chapter 11 on Sept. 14, 2005, and emerged on April 30.
In bankruptcy, Delta shed billions in costs and restructured the carrier's operations. It also survived a hostile takeover bid by Tempe, Ariz.-based US Airways Group Inc.
Baggaley said the specter of a possible merger between Delta and another airline did not die with Delta's emergence from bankruptcy as a standalone carrier.
"When the new board of directors was composed, the unsecured creditors gained a much larger voice as the new shareholders of the company, and part of the implicit understanding perhaps for their support in defeating the takeover bid by US Airways was the future board would be open to the possibility of mergers if that appeared to be an attractive opportunity," Baggaley said.
Delta executives, faced with questions about a post-bankruptcy valuation below what they initially projected and below what US Airways offered for Delta, have declined to speculate about whether the airline would consider a deal with another carrier to increase shareholder value.
Anderson told reporters Tuesday that in the long run the airline industry might see some consolidation, but that is not Delta's focus right now.
As for a linkup with Eagan, Minn.-based Northwest, Anderson said, "There is no plans or intentions or previously agreed to plans to merge them."
Besides the consolidation issue, the Anderson appointment also raises questions about Chief Operating Officer James Whitehurst's future with the airline. He had been one of two top internal candidates to replace Grinstein.
Whitehurst was not mentioned in a statement from Delta announcing Anderson's appointment, nor was he on a conference call with reporters that involved top Delta executives, including Grinstein and Anderson.
Anderson declined to speculate about Whitehurst's future with the airline. Grinstein told reporters that Anderson will be reviewing responsibilities, roles and functions with senior managers.
"That conversation has yet to take place with Jim," Grinstein said.
The other top internal candidate to replace Grinstein was Chief Financial Officer Ed Bastian. Delta announced Tuesday that Bastian will be adding the title president to his duties.
Asked if he was disappointed in not getting the top job, Bastian said only that he was looking forward to working with Anderson.
Grinstein had lobbied Delta's board to tap an insider from the company as his replacement. He said in a memo to employees Tuesday that while he believed an internal candidate could run the company, he believes Anderson will be effective as Delta's CEO.
Anderson said in his own memo to Delta employees that there is a solid strategy in place at Delta and he plans to "stay the course."
He added that in the weeks ahead, he will be traveling around the Delta system with other members of the leadership team to meet employees and "listen and share ideas about how we can take Delta to new heights of value, performance and service."
The chairman of the executive committee of Delta's pilots union, Lee Moak, said the pilots hope Anderson will work with employees to improve the company, which employees worked hard to keep on its own.
Moak said he spoke to Anderson on Tuesday morning and Anderson assured him that he believes in Delta's standalone plan.
"Mr. Anderson talked bluntly on Northwest Airlines' situation and he told me he was not coming in as CEO to facilitate a merger with Northwest Airlines," Moak said.
Northwest filed for bankruptcy the same day as Delta and exited Chapter 11 on May 31.
At the same time, Moak said Anderson did not give him assurances there would be no discussion about a possible merger in the future. Moak said Delta needs to be mindful that industry consolidation may occur.
"If we have to participate, we would participate from a position of strength," Moak said.
Anderson has worked at Minnetonka, Minn.-based UnitedHealth for nearly three years. Before that, he was CEO of Northwest from 2001 to 2004.
Besides finding a new CEO, Delta's board also has to decide whether to sell or spin off regional feeder carrier Comair. The airline has not provided a specific timetable for that decision.
Delta shares rose $1.63, or 10.1 percent, to $17.71 on Tuesday.
AP Business Writer Joshua Freed in Minneapolis contributed to this report.