Ed Bastian, Chief Executive Officer, Delta Air Lines 
Interviewer: Alan Murray, Chief Executive Officer, FORTUNE


Brainstorm Health 2022 - Back To The Future: One On One With Delta’s CEO

Conferences

Back To The Future: One On One With Delta’s CEO


Brainstorm Health 2022 - Back To The Future: One On One With Delta’s CEO


So as all of, you know, our theme this year is focused on an interconnected world and of course one of the industries that keeps the world interconnected is the airlines industry. Uh, and you can imagine what a wild roller coaster ride that industry has been on for the last couple of years, travel disappearing in 2020 and coming back roaring back this year, we're going to talk about that. Also keeping the health and wellness of both employees and, and customers and central focus has been critical and on top of that you have a few little things like a war, a surgeon, fuel prices, uh, supply chain, snafus and more to deal with. Uh, Delta Airlines. Ceo Ed bastian has worn many hats over the course of the past two years and has tapped into lessons from 9 11 to manage through this crisis. He's joining us now to talk about that and more. Please join me in welcoming Ed to the stage and we did not coordinate our clothing. So we look pretty good. Um Thanks so much for being here. What airline did you fly in on Delta? Delta. Good. Yeah, no, I know I I ran into you once in a Delta Sky Club. You eat your own cooking regularly. I was right off the Sky Club bar, that was my dinner that night. So, uh, so airline travel is back to pre pandemic levels greater than pre pandemic levels. How would you describe it? I would say demand is greater than pre pandemic levels and the industry as a whole is trying to catch up Because remember we started the year just 60, 90 days ago, we saw it on the crown wreaking havoc throughout the US. So january and february were really quiet demand months and then come Presidents Day and um Akron seemed to settle out. Everyone started the book, their book, their travel, They just need to get out of their house, they need to get back to their, just start crazy. And and we see the same phenomena going on internationally as well as countries are starting to open. So, europe now is, is the same thing. We see it slowly starting in asia Korea. Now, it's the same thing in Australia. Japan is starting to open. So it's uh, it's great to see everybody back. But you know, they came back so fast. We just don't have all the crews and the equipment and the resources to handle the huge, huge push. I want to talk about that. But when you say they've come back, you know what I heard a few months ago was, oh, business travel will be slower to come back. That's not what you're seeing now. What we're seeing domestically were pretty, pretty much back in terms of the revenue. Domestic revenue is back on on business travel and growing. It's not just back, it's growing, it continues to back. Some of its unsustainable. Some of it's a surge from pent up demand and that's true internationally, not just domestically amazing. And how is that being affected by supply chain problems? Labor shortages, How are you dealing with all of that? Let's say. Uh, let's on the supply chain though. Uh, commodity prices, fuel is certainly a huge pinch point for us, particularly the refined cost of jet fuel we're paying today Close to twice the price we are paying for jet fuel. And just in 2019 you are last normalized calm period. And um, and that, that's showing no signs of abatement. That's going to stay very, very high. So it's pushing pricing up at the same time. On the resource front. We've hired 15,000 people Over the last 15 months essentially. And one of the reasons why is we, we had 20% of our workforce early retirement, 2020 when the pandemic hit. So we're out hiring every type of job from a technologist to a mechanic too, pilot to a ramp agent to arrest people. We are, we are, we are getting them. Um, and we're getting them essentially at our existing scales. We're not having to go out and race scales. We've always, we've always paid good wages. Uh, the brand is really strong. It's a, it's a highly desired brand to work for and this is somewhat of a once in a lifetime opportunity to get inside Delta And then start to build your career. Yeah. And we have people from all walks of life joining us. Yeah, fascinating. So you've had this incredible rollercoaster ride? Right, 2020 and travel just stops now you're back bigger than ever. What? How has the airline changed because of that roller coaster ride? Well it's your your your analogy of a roller coaster is exactly what I feel. And we're on the kind of the word when we're holding on, holding on and you know we've got our seatbelts buckled in. Uh it's changed a lot. Um There's a lot of things that we went through the experience of covid that we wanted to make sure that we we came out of it better and stronger and differently than before. Cleanliness and wellness certainly is a huge part of that. And there's not a delta plane you get on today that is not markedly cleaner and present better than where we where we were pre pandemic And part of that's the reason is we got rid of all of our older planes. We got rid of over 200 aircraft during the pandemic and bought a lot of new ones. Was that because of the air circulation issues? No it was just it was just it was it was a benefit to the wellness. That was not wellness intended because we're just wouldn't have the demand. So anything that was going to age out in the next 3 to 5 years we just immediately got rid of but we kept buying new airport experience is huge. We've we've opened up our new L. A. X facility the first phase of it here over the next 12 months we're gonna have a brand new L. A. X. Terminal experience which is fabulous. Including the best sky club you could ever imagine. And outdoor patio overlooking the runway. Next month we open our new laguardia Airport. We've opened a new Salt Lake City airport last year. We got a new expansion coming to Mexico. So we put the pedal down and we started moving fast during the pandemic. As soon as we knew that we were going to be okay, We started accelerating development. We're getting these projects done years ahead of time and billions of dollars cheaper. Yeah. And what about maintaining the connection with your customers through all of that? Oh it's it's been it's been incredible. One of one of the things delta was was known for going through the pandemic was blocking the middle seats. We blocked the middle seats for full 14 months. No one else did that anywhere close to that because we wanted costly. It was hugely costly but we wanted our customers to feel comfortable on board. But as I tell our people even more importantly to me, I wanted our people to be comfortable on board serving those customers. You know, they didn't want they lived there inside the plane or at the at the gatehouse. They were even less comfortable during a pandemic serving full planes. And and so putting people first is what we did. The the brand is in the strongest position we've ever seen. We one JD Power awarded the best overall airline of the year. Last year. We you guys recognized us, the Wall Street Journal did too. And all of the things we've done through this through this process is designed to, we're not trying to get back to 2019, we're trying to get better, fascinating. 20 you hired the chief health officer, one of the companies that did that, what what was that all about? What's the, what's the job of chief Health? Henry Henry Ting is the chief health officer. You featured him yesterday. Thank you for having him here. He, he enjoyed it. Uh, he was one of the top guys from the male clinic. Um, he was their chief values officer, which meant there kind of basically their chief customer experience officer. He's a cardiologist. He wanted to come to the airline to, to reinvent well wellness from an inside out model rather than, you know, we, we work with healthcare companies, we work with insurance companies, we work with providers, but you know, we don't have anybody representing us our interest, you know, and, and as a result of that, we don't have the advocacy. We don't have the back, you know, from the, from the, from the consumer side into the model. How do you back upstream and re engineer the process to make sure care gets to where it needs to be at the time of the efficiency of delivering, you need a medical professional and then, so he's built a team, so that's part of his, the other part is understanding the wellness of our, of our people. We've got a, he's hired several clinicians, he's got several nurses, several doctors, he's brought in around emotional wellness, mental wellness, big, big focus for us, financial wellness. Another another thing that Henry, Henry is involved with and we're working on the financial challenges, are people experience to this and then certainly social wellness and that sense of belonging that everyone has has experienced. So that's all in in Henry's ambit. And the view is if we are a better provider and support to our own people, they're just gonna do that much better for customers. So one of the things that happened during the pandemic was kind of increased attention to climate and the effects of climate. That's a huge challenge for your industry. I mean, they're they're they're not going to be electric planes in my lifetime or your lifetime, I'm pretty sure. So, so how are you dealing with that? I mean, what is, what is Delta's plan to to get Eventually to zero emissions? It's, it's the biggest challenge we face and we were working on it. Pre pandemic, the pandemic may be positive to touch because people weren't flying. So, you know, the urgency kind of moved to some other parts of the business, but we're back strongly, I just hired a new chief sustainability officer, our first chief sustainable officer. She comes to me, she came from from General Motors, uh, pam fletcher, she was instrumental in the entire development of GMS Electronic Of the TV platforms. And she's been working on that for 20 years. And I said, Pam, I need that same kind of impetus in the airline as the autos had 20 years ago. And how do you start to make sustainability cool, desirable, investable? We need to track capital to the marketplace. Now, there's so much capital being thrown at tv, uh, by governments and investors and the like, we need to create that same forum around. If you're not talking about capital for Delta, you're talking about capital to create a new ecosoc create the ecosystem. We can't, we can't create sustainable aviation fuels on our own. First of all the world supply and the nation's supply is so nascent. If Delta were to go out and acquire all the sustainable aviation fuel that exists would be enough for us to fuel our planes for one day and only us. And, and as an industry, we've made a 10% commitment by the end of the decade to get to 10% of our fuel being BNSF, working closely with the White House on blender tax credits and incentives for the energy companies to come in and and put the investment in the capital, but knowing they're going to have a consumer on the back end because no one's going to create a product that they know the consumer can't afford it. Yeah, so, uh, and I I have a new book out this week called Tomorrow's capitalists that focuses on the rise of stakeholder capitalism. How ceos are increasingly devoting time, energy focus to social goals, not just direct return to shareholders. And you have a significant part of that book uh in part because of something you did uh after the Parkland shootings where you made the decision to pull a discount program that you had for people traveling to the N. R. A. Conference and you did that in spite of the fact that you're based in the state of Georgia where the majority of members of the state legislator are are also members of the N. R. A. So, can you talk about why why you did that? I think it was fairly uncommon at the time to see that kind of an action by a ceo what was behind that and where you think that's taking us uh in terms of businesses role in society? Well, it was it was it was not an easy decision clearly, um particularly given there were tax credits and other things that were that we knew would be at risk if we if we made that decision, but it was one in which what we saw happen after the Parkland shooting and the response that the N. R. A. Provided to it. I'm not trying to pick old wounds here uh made us uncomfortable having an affiliation be seen as sponsoring the N. R. A. Or providing special privileges or benefits. And and they were relatively small discount. It was a miniscule thing. Um, but it had much, much harsher impact and outsized impact relative to the the financial benefit it was triggering and uh it was something that our our kids um um the kids of particle and reached out to me and they made me work. I didn't even know we had it. And when I found out about about it and went to our sales team and said we just can't be doing this. And we went on the website and we saw how it was, it was it wasn't profile very well and have kind of an old letter head. It was just it was obviously not, well not a relationship you want to invest in and um and we said we need to we need to exit it and of course it had an outsized impact. Yeah, well, so and since that time you've seen really kind of an explosion of ceo activism. Uh there was the north Carolina law about transgender access to public bathrooms that a bunch of companies uh stepped in on, there was a kind of a mass resignation from president trump's advisory councils after the Charlottesville riots and his uh ambivalent response to that. Uh And then of course the biggest example we've seen this year is the hundreds of companies that voluntarily pulled back their businesses in Russia, prior to any kind of sanctioned, uh, requirement, from your perspective, what's going on here? I mean, is this a good thing? Is it a bad thing? Why is it happening? I think it's a good thing, uh, doesn't come without a lot of risks. And, and, uh, a lot of vulnerabilities. It's not something we're accustomed to dealing with. It's something we'd rather not deal with. Rather not because, well, it's a controversy. Well, we've, we've all grown up allen, you know, wanting everybody to love us. You know, we're about selling airplane tickets are not about trying to be a legislator or a politician or trying to be a social advocate. But there come times when what you see happening in the divisiveness in society is impacting your own people and your people are feeling and carrying the weight of that. And Russia, Russia was different. Like Russia was a patriotic thing. That was, that was relatively easy to do. I mean, it doesn't make it, uh, easy, but I mean, it's costly, but it was the right thing to do. And that, that, that line was pretty pretty clear. Um, voter rights legislation in Georgia, which was hard, it was hard for me. Um, and I needed to do it, or, or Parkland. And so you, you wind up getting into a situation where you want to make certain the values of your company that you espouse to your people and your customers? Our first informal. And when you see something that you perceive is in violation is against the, the values of the enterprise. You have a real question on your hands as to what to do with it. So how do you decide? Because we are such a divided society. There are so many hot button issues. You know, your there's increased pressure for you right now. It's it's happening on the row. V wade leaked. Decision. Will you, will you speak out on roe V wade? You can't speak out on every issue and you don't want to get caught up in the, you know, the my perception is one of the reasons businesses are doing this is because they think the political system is broken. And if you get caught up in the same dogfight that the political system is, you're you're going to be no more effective. So how do you decide which issues to take on and which issues to leave? Well, you, you you do it very carefully. Uh, you never uh, you don't, you don't want to go too too too quick, but you can't be a delay either because, you know, delayed almost. Make sure, make sure that you're dragging your feet like you're being forced into something. Uh, the way I've I've come to it since I've had been around this for for a handful of years now is that you have to kind of have a strategy real time all the time. And it's been about what, who are you, what are your values? What do you promote? You gotta play offense on this stuff, not just defense. And when you're put into those kind of situations, alan you can't win because you're gonna, you're gonna annoy somebody is going to be angry in large numbers on on either side. By the way, it doesn't matter. And the more in which you can, you can let people know and get out ahead what you're for, what your values represent, how you're thinking about issues. And it's not just the lobbyists and what's going on politically. It's with your customers, is with your communities, it's with your employees. I think the better off people will be able to look through your lens and start to understand where you came from when you, when you face difficult challenges like that. Well, thank you for that and thanks for what you're doing and keep the airline in the in the air long enough for me to get back to Connecticut and we're gonna do that. And many times I'll look for you in the Delta Sky Club will see you there. Thank you very much. Thank you. Thank you