In the name of cost cutting, Delta Air Lines recently got rid of the lettuce leaf underneath its salads, saving $1 million a year.
But the Atlanta-based carrier, one of the nation's big three airlines, knows it will take a lot more to match the savings United Airlines stands to realize as part of employee ownership.Directors of UAL Corp., United's parent company, on Wednesday approved the employee buyout. If UAL shareholders and members of the unions that negotiated the deal agree, the sale is expected to become effective this summer.
"This is a major, major event in the history of the industry," Bob Harper, a spokesman for Delta, said Thursday. "We certainly see where it leads. American and Delta are going to have to cut costs even more."
Employee ownership of Delta doesn't seem to be in the works, however.
Pilots at Delta are unionized, but unlike United, the machinists and flight attendants are not.
"So we don't see how a United-style buyout would work here at Delta," Harper said.
Robert L. Crandall, chairman of AMR Corp., said recently that the only chance for employee ownership to succeed at his American Airlines would be if it was initiated by the workers. There has been no known move in that direction at the Fort Worth-based carrier.
Even without employee ownership, industry observers say the airlines have plenty of room for productivity gains.
Delta is looking into creating a low-cost, no-frills small airline, as United plans to do under its new ownership scheme, to compete head-to-head with Southwest Airlines, the only carrier to consistently turn a profit in recent years, and other upstarts.
Harper said delaying delivery of new airplanes, salary cutbacks and such savings as ditching the million dollar lettuce leaves, present other possibilities.
Whether this increased competition will mean cheaper fares remains to be seen.
"I certainly hope not," said Barbara Beyer, president of Avmark Inc., an airline consulting firm in Arlington, Va.
"The industry is in total disarray. It's totally broke and it desperately needs to rebuild," she said. The airlines have lost billions of dollars in the last few years.
The concept of employees, with their own personal interests, owning a majority of the company and controlling management also concerns Aaron Gellman, director of Northwestern University's Transportation Center.
The key to industry profitability is a restructuring of the union-management relationship and management must be much more free to control the labor force, he said.
"The problem in the long run is to be able to use workers in their highest and best use," Gellman said, contending this will be a serious problem for United if the employee buyout is completed.
"The greatest danger is if all the other majors go down the same road as United," he said. "If they do, we'll be back to where we were before deregulation, with airlines focused on anything but the marketplace and ignoring what the customers want."