Transcript

Rapid Response: Finding windows of opportunity, w/Delta CEO Ed Bastian

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During the pandemic. Not many companies were impacted as deply as the airlines were. And the determination it took to pick up the pieces. felt like you put the company on your back. And you gotta start marching.

And you didn't quite know where you're going, but you knew enough to put one foot ahead of the other, and you start building momentum and start gaining renewed followership, and sooner or later people say, I want to go there. I'm not quite sure where you're going, but will you take me with you? We got through it. We're just starting again. It's the new delta, which is starting to soar. We have a lot of new people at the company because we had a lot of very large early retirement offer. So we hired over the last year 25,000 new people.

One in four employees of Delta are new within the year, and bringing the new employees into the culture to create a more resilient culture. A culture that takes even greater care of each other, that's what's next. That's Ed Bastian, CEO of Delta Airlines. Following the turbulence of the pandemic, Delta's managed to navigate its way out of the clouds. Generating fifty percent of the airline industry's total profits in twenty twenty two.

Enough to disperse five hundred and sixty three million dollars in profit sharing. to its employees. As announced last week. I'm Bob Sapian. Former editor of Fast Company, founder of the Flux Group, and host of Masters of Scale Rapid Response.

We've chronicled Ed Bastian's leadership journey through two prior interviews since Covid hit. The last time in twenty twenty one when the world was still very much in the grip of the virus. Now we revisit Delta in a very different moment. For the economy and the travel business. With new initiatives like free Wi-Fi on board every flight and the hiring of twenty five thousand new employees over the past year.

Delta is poised for yet another new chapter. If you haven't heard our two previous episodes with Ed, I encourage you to go back and listen. In this episode and across all three moments. Ed provides meaningful lessons about leading people and making hard decisions. It's an inspiring roadmap for working through uncertainty.

To unlock opportunity. I'm Bob Safian. I'm here with Ed Bastian, the CEO of Delta. This is Ed's third time on Rapid Response. Ed, thanks for joining us. Always good to be with you, Bob. So you first came on this show in the early days of the pandemic.

Planes were mostly empty of passengers. In twenty twenty one, we talked about The pressure on business leaders to take stands on social and political issues. It was pretty chaotic. Since then

Things haven't Calm down all that much. Uh you know, you had low demand to high demand staffing and workforce challenges. Weather disruptions, inflation pressures, rising fuel prices. As you look back As you think about this journey.

Do you think about Business differently because of this experience? Do you find yourself waiting for things To calm down? Or

That we all have to sort of accept a new pace, a new kind of metabolism. I don't want to go back. I want to go forward. And it's without question been the most difficult three years of our history of my professional career. My personal life. But there's so much that we've learned.

during this period of time as to Who we need to be To be better in the future. And you know, you ask yourself some of the Reasons why

You went through the pandemic. One of the reasons it was I do believe was to get our attention on a few things. Wellness. Taking care of people.

Ensuring that You really appreciate travel. And the experience of being together Like never before. Things we took for granted. For way too long.

have now come around and There's a newfound joy in it, and it's one of the reasons you've seen this tremendous amount of demand that I think is gonna stay around for a very long period of time. Mm I went back Through our earlier conversations. And y you've made some

Amazing predictions. About air travel bouncing back. About investing in airport Improvements. You literally told me we're gonna accelerate investing in Wi Fi to be sure

We're stronger relative to our competitors when we come out of this. And now you're rolling out free Wi Fi. These high impact decisions that you made at really acute moments. And like have they become A model in some ways for business decisions in any environment. I never lost faith.

that we're gonna get through this and 'Cause I knew how important travel is to the world. When the moment came to make big decisions Retiring large numbers of planes, but buying Brand new planes in very large quantities about

accelerating the development of airports about moving or technology to the cloud about Bringing Wi Fi free. to all of our customers. Today, but also, you know, increasingly international over the next year.

Those are massive. Decisions on our part. That we could not have moved as quickly pre pandemic. Because we're Busy operating.

And so we said if we're gonna go through this down period, let's take advantage of the window. And as a result, we've come out Even greater momentum. than we were pre pandemic.

Last month we reported our results for the twenty twenty two year. And Delta generated a full fifty percent of the entire industry's profits in twenty two. Despite the fact that we only fly about twenty percent of the capacity in the industry. You've just had your annual employee appreciation day. Announced.

Profit sharing to the team of Five hundred million dollars. Not the one point seven billion of twenty nineteen, but A sure signal of this turnaround.

I know sometimes you get some heat from Wall Street for sharing this much wealth. But it's something you've defended. Why is that important? Well, our people are most important asset. And We live in a industry that's complex that you have to trust your employees

As much, if not more, than many other industries. There's Past profit sharing day was so rewarding because we went through a couple of years without it. And Yeah

really puts a bow tie on the year for us. Where we generate value for our shareholders. We generate great value for our customers. And we can give proper thanks to our employees.

It equates to about fifteen percent. Of the profits. of the company that we distribute and it was over five hundred and fifty million dollars. And to your point on Wall Street. Wall Street understands.

That this model works at Delta? You've seen more and more companies adopting. These profit sharing models because The ultimate alignment Of an employee.

To take care of a good customer. And let the prophets reward them for the good job they've done. It's stakeholder capitalism and Yeah, what's the reason why we do what we do? Well that gives you great reason when you can align all those those motivations together.

Your workforce has changed dramatically over the last year. Grown. A lot. We have a lot of new people. at the company'cause we had a l very large

Early retirement. Offer so we hired over the last year twenty five thousand new people. One in four. Employees of Delta are new within the year. And

bringing the new employees into the culture to create a more resilient culture. A culture that takes even greater care. Of each other. That's what's next. With all that hiring, I know you're working with one ten to improve diversity.

Despite Many businesses committing to new diversity initiatives. A lot of people are frustrated that things haven't improved faster. Do you feel that way? I would never say that I'm satisfied'cause we always can do more and and be better.

But it is a silver lining that the pandemic created with so many of our more experienced talent retiring than any of New leaders getting opportunities to step forward. Who look different, who think different. I went public in twenty twenty with what our

current diversity picture look like From the top to bottom. how many you know black employees we had at the frontline level, so how many black leaders and there was a big gap between those two numbers, and same thing for women, same thing for other minorities. I'm not gonna be

satisfied Bob until the face of our leadership team reflects Both the face of our customer mix In the face of our frontline employees. And so that means we've got a long way to go. But the way you continue to propel progress is being accountable. being public on your commitments.

And accountable and reporting. how you're doing along that journey and every year We give our most current stats. We've made some great progress, for example, with women. Five years ago Only fifteen percent of our top

Leaders the top one hundred officers of the company were women. Today that number is closer to forty percent. In five year time. You can't do these overnight. One ten has been a critical enabler for us to help us think differently. One of things that they've helped us with is changing the job specs, taking four year college degree requirements off most of our our job specs, including our pilots, by the way.

in hiring people for the skills, for who they are, what they've accomplished in life, not necessarily what diploma they've received,'cause we know so many diverse work groups never had an opportunity to get in that classroom. And we're finding marvelous new talent. That we're we're open to now. The other thing we're doing a lot of is working with with local university here, Georgia State to

Have apprenticeship programs, training academies. our frontline employees that want to move into higher knowledge level positions. And you see the impact you're having on not just individuals, but families. their children will have opportunities they didn't have because of the decisions that we're taking today. And that's that's really rewarding. In the pandemic

You had to personally be more front and center for the brand, internally and externally. You told me as a CEO you're thrust into being the face and voice like never before. It's almost like you've become a celebrity.

What are the repercussions of that? Has that Let up at all? Yeah, no, it it hasn't because the expectations just continue to to mount The only celebrity I want to be is a celebrity amongst our own amongst our own employees and

Be able to reward them and thank them. Because if it wasn't for them, there would be no me. I think Delta has been seen as transcending a bit of the airline space to A company navigated the pandemic period. that people look to

Because Yeah, the airlines were pretty much gutted. I mean, we're down to about five percent of our revenue base and A very short order and You not many companies were impacted as deeply as the airlines were. And the determination it took to pick up the pieces.

It felt like you put the company on your back. And you gotta start marching. And you didn't quite know where you're going, but you knew enough to put one foot ahead of the other and you start building momentum and start gaining renewed followership. And sooner or later people say, I wanna go there. I'm I'm not quite sure where you're going, but Will you take me with you?

And that that happened around the company because there were so many unknowns. So people needed a reason to believe and they needed someone that was going to be Marching forward and and that's what we did. And so they got engaged in these airport projects, they got engaged in the the conversion to wifi, they got engaged. In creating uh new health experiences for our customers to keep them even safer than ever before.

We're blocking the Middle Seats all through the pandemic, a decision that we took that garnered a tremendous amount of goodwill from our customers. These big high impact decisions that you made. Are there parallels now? of things that you're doing that are gonna have this kind of major impact. Two to three years from now, this kinda like what is the rapid response that you're focused on now?

It was a real adrenaline rush. On the other hand, it was a real panic. To get through the pandemic. But I can tell you that we're using a lot of the same tools. to move forward. Well you've got

Largely our US travel. Patterns back. The next thing for us to do is to implement some of those same Opportunities on a global scale. You've seen a lot of growth. That we've announced at different parts of the world for that reason.

Working very closely with the airlines that we are partners and investors in from Version Atlantic to Korean Air to Air France. Because ultimately the real value we get to create is on a global scale, not just a local scale. And so the next step of our

continued emergence is reclaiming the international skies, not just the uh the US skies. twenty twenty one was business travel. You know, the future of work. And how that would sort of impact

Delta's business and and impact culture overall. Do you have a sense about what that evolution looks like? From here. When we spoke, you know, I mentioned I thought traditional business travel May never recover beyond Seventy to eighty percent.

Of what it was, and I think that's turning out to be the case. In fact, today. traditional business travel for us is right in that seventy five to eighty percent mark. But what the pandemic has created is more mobility because people aren't going to the office as much. They're going on trips, they're taking long weekends, they're working from different locales. And all of that benefits our industry.

People were prnosticating that The pandemic particularly would be the death of an airline like Delta, which relied heavily on business travel. on a premium experience And the low fare airlines were the ones that were going to have a heyday. At our expense has actually turned out to be just the opposite.

The Low Fair Airlines are all pretty challenged right now. Whereas the premium airlines uh which Delta's at the top of that heap. are doing as good, if not better, the the best demandset we've ever seen. Because people value their health. They value the the care that they receive. So we have today

Far more of our revenues come. Outside of the main cabin, which is the most price sensitive part of our business. Then when you measure that against all the revenues we get on premium services and our loyalty programs and our cargo and our MRO. We ha we have a whole host of businesses.

In a very diversified light. And the pandemic tests that and our business model passed that test. When you've built substantial wealth through your business, it's often tied up in a single equity position. The upside is real, but so is the risk, and knowing when to act isn't always obvious.

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There's gonna be two types of companies. Those were great at AI and those that went out of business because they weren't. How do we build a future? That is human centered. I'm Rana El Kalyubi. And on my podcast Pioneers of AI, we answer that question and so many more.

As an AI scientist, entrepreneur, and investor. I know what it takes to build AI that works for everyone. Every week, I sit down with the pioneers shaping our future. And we take you behind the scenes of the AI that's transforming our lives. Find pioneers of AI wherever you tune in. Hey listeners, Bob here. If you listen to Rapid Response on Masters of Scale, you may be missing half the show.

Because every Friday we release a second rapid response exclusively in the rapid response feed. The guests and topics are just as compelling and timely from Ford's CEO to NASA's administrator to the lessons from The Devil Wears Prada. It takes about 10 seconds to find, just search rapid response wherever you listen to podcasts and hit follow to make sure you never miss an episode. I hope to see you there. Before the break, we heard Delta CEO Ed Bastion talk about remaking the business coming out of the pandemic. As he looks to the future.

Now he shares leadership insights. About pursuing technology that truly fits your business plan. When it's wise to speak publicly about political issues. And why he thinks sleep could be the secret weapon for improved performance. We've seen some

Tech. Meltdowns at Some other airlines? You know, and we've certainly heard about challenges with the air traffic control systems being outdated. The move to Wi Fi, as complicated as it's been. Is simple compared to

The whole systemic tech that is embedded all across the industry. How do you make sure the airline Is on the right. tech curve in the right places.

And managing the financial and organizational resistance to New things, whether that's AI related, you know Everyone's obsessed with chat GPT today. Like h how do you balance those things? In our business it's easy to chase shiny objects. We

Wanna make certain that the investments that we are making in technology are gonna be sustainable. And be of real value. Technology is second only to our people. Our technology is the lifeblood. Even through a pandemic, we didn't stop our technology investment. In fact, we accelerated it as we're going to the cloud with AWS and now Majority of our technology is really resilient and

much more agile and flexible and cheaper to operate. Technology is something that you also have to make certain that you understand Your business model what you want for the future. So the technology you're building isn't technology for technology's sake. We spend

Well over a billion dollars a year. In technology, both in capital and operating cost. It's something that you always have to kinda try to stay ahead of. 'Cause you can't let the technology get ahead of you. So as a leader, you need to make sure that you're pointing the company in a direction and letting the technology push you there.

Rather than us try to be pulled by the technology and and there's an enormous amount of new technology that's out there I'm sure the AI and the the chat bots and Uh will all be a part of our future. But they don't have to be a part of our present.

Over the last three years, CEOs have been Called to take positions on social, political issues in a way that they weren't before. Delta's taken certain positions on Uh voting rights and other things. How do you decide?

Now What things to weigh in on on public issues. The bias is not to wait in ever. It's never comfortable to see your Your name bandied about by our political leaders or headlines for

Reasons other than running a great airline. So I think you always look to avoid that. If you can. Sometimes you can't. You have to ask yourself, how does it affect your people?

How does it affect your business? And is this something that Yeah, Delta has a relevant voice in. When you are the largest private employer in the state of Georgia as we are, or city of Atlanta as we are, and You've got a lot of people that are depending

on this airline. And a lot of consumers want to know. How companies feel. About some of the political you know divisiveness that we all experience.

In today's world, inevitably, fifty percent are gonna agree with you, fifty percent are not gonna agree with you. You just have to accept that. And if it still passes the test that it's important to say something, well you know. Try to make your point and get out. You don't want to get stuck in it. Do you have any Advice for the

Other business leaders about The lessons to take from Where we've been over the last three years. And about the phase of change that we're in now. Yeah, I I was always someone that likes to move. I tend to be impatient. I tend to want to get things done quickly.

And I've learned in the pandemic, and I'm still that way. I'm I haven't changed that about me. But how you do it and having a little more patience and a little more Grace for each other maybe goes further. And kinda pushing yourself harder than you uh Otherwise good.

One of the things that I encourage all leaders to look at, especially you know, taking care of large groups of employees. is about their well being. I think we all came through this. Feeling like we're vulnerable. Ви вulnerable to a physical disease, but it led to

vulnerabilities emotionally. It led to vulnerabilities financially. It led to vulnerabilities socially. You historically we would have thought that was more the employees responsibility to take care of those other aspects. Delta, I don't think that way anymore.

We've hired mental and emotional health counselors to help our people work through issues. That they may be dealing with Well, you've got a financial safety net that we've created, a financial well being program that I'm struck by the fact that The surveys say fifty percent of all Americans

would not have five hundred dollars in cash they could lay hands on in time of crisis. That's just an awful Scary place to be. You're just one step away from a real challenge and how you're gonna find that cash. I don't want any of those people to be Delta employees. And so we've created

bank accounts for each one of our employees and put a thousand dollars in each of them. to hold as an emergency safety net in case That need ever arises. They'll know it's theirs and their decision to take. But the only thing I ask in turn is that they take a financial literacy course that we offer online. And set an appointment with a financial counselor that we offer for free to learn about how to manage maybe their budget or their credit score a little better.

And get better at it. We offered it the first of January. We had over twenty thousand people sign up in the first month alone. So if anyone thinks the need's not there, it's there. It's there in abundance. You want your employees more than ever to be their best self.

to help drive your business forward, because if they're not their best self They're not gonna be able to take the best care of you, our customer, and then the strength of our brand promise. Delta has created a feature length documentary about navigating the pandemic. You appear in the film, you're involved in the production.

Why did you decide to do a film? Th these podcasts weren't enough for you? Oh they uh they could have been, I guess. Before the pandemic hit. Delta is a company that went through nine eleven. It was a company that had been through bankruptcy through

Major recession. Political. And geopolitical crises, fuel price spikes, you name it. And we survived, you know, through all those. And in the years leading up

to twenty twenty. I would always speak to our younger employees and let them know This is not an easy industry. It's not always for the faint of heart. So we sent out making a documentary pre pandemic. And I brought my former board members together and people that were around to help us navigate the bankruptcy period and the

The nine eleven period. So I would memorialize those remarks for all time and show our people what it took to get here. And have a newfound appreciation for what we do. Well, lo and behold, we uh filmed it. And then two weeks later the pandemic hit.

So We put that on ice. 'Cause there's another chapter to write. And sure enough, the pandemic created a lot of chapters. And so we captured a lot of the footage that

that we went through the last three years. And we've now created a a documentary called The Steepest Climb. to let people know how we navigate and what we had to do and I've watched it a couple of times and I candidly I don't enjoy watching it that much'cause it's painful to have to relive it. But it's helpful.

I mean, it has been hard. Are are you tired? Ha ha. Are you tired from all of this? I am not tired. I am excited. Every day when I get up, I I know my value. And when I look about what we've been through

It's been a real honor to lead this company through the three hardest years of its history. One of the things I learned from Doctor Henry Ting, our chief wellness officer is the importance of sleep. And I I encourage everyone to focus on their slip. The quality matters even more than the quantity. I may not always get a high

quantity of sleep, but I get good quality and There's this product called Aura. This ring I I wear at night to sleep to measure that and Tell you that more than anything has gotten my head in a good place. I wake up in the morning no that I'm rested and ready to tackle the day because You know, when you when you deal with as many things as I find myself dealing with, I process them overnight.

And I think I'm up crossing and turning and wrestling and trying to make decisions in my sleep was actually quite therapeutic. Because it's your R E M, it's your kind of your memory consolidation and your mind's Finding a way to kind of Push through all that stuff.

But sleep is a huge underrated Hard Particularly for busy professionals. Everybody knows to work out and watch what you eat and Friends around you giving good advice.

Sleep's really, really important. So I often end by asking the guests. What's at stake now? And in twenty twenty one when I asked you that, you said

Holding on to everything we've gained during the pandemic. Making sure the investments we made translate to the other side. You seem to have succeeded there. So What's at stake from here?

for our company not to feel like well wow we made it. We got through. Yeah, we can kinda start to coast. No, we're just starting again. It's the new Delta. You'll see this company continue to soar because we know our customers want what we provide. They want to travel

The world needs to be brought closer together, not further apart. And we're the means by which the world comes together. We truly are. And that's a noble mission. This has been great. Thank you for doing this with me again. Bob, it's always fun to talk to you.

Well, all I can say is sleep well. Thank you. Master Scale Rapid Response is a wait what original. I'm Bob Safi and your host and masters of scales editor at large. Our executive producers are June Cohen, Darren Triff, and Jordan McCloud.

Our chief content officer and interim president is Lori Hoffman. Our producers are Chris Gautier. Marchamako Tonina. Adam Skews. Catherine Clark Gray.

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