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Delta is stressing service

ATLANTA — Delta Air Lines wants a better ranking in service measures such as on-time arrivals, and it's looking at paying workers bonuses to get there.

In recent years, Delta, which operates a hub at Salt Lake City International Airport, typically has ranked in the middle of the pack in government rankings for on-time performance, baggage complaints and canceled flights. Part of its turnaround plan is to get back into the top tier.

"We hit those in the top three, we're going to see customer satisfaction skyrocket again," said Lee Macenczak, Delta's chief customer service officer.

He spoke to several hundred Delta retirees in Atlanta Monday about the airline's effort to retool after three years of deep losses.

"We've got to get our people focused back on customers," he told them.

Delta CEO Gerald Grinstein had previously said he plans stock options or other incentives for rank-and-file employees, partly to offset job and wage cuts. Details of those plans haven't been spelled out yet.

"We are looking at monthly performance bonuses," Macenczak said. Delta's service rankings "will be one of the measurement components," he said. Delta has not paid worker bonuses directly linked to service yardsticks, though other airlines have used variations on the idea.

Macenczak, Grinstein and finance chief Mike Palumbo spoke at the retirees' meeting, earning applause when they pledged to make every effort to avoid bankruptcy.

"We are going to work hard to earn (your) trust," Macenczak said.

Some retirees left the meeting reassured.

"I believe that they are absolutely giving it their best shot," said Sandy Rollins, a retired flight attendant who lives in Florida.

Still, the Delta executives said retirees will have to share in the airline's cost-cutting efforts. Many retirees will see their monthly health premiums more than double.

Macenczak said Delta will increase the share of health plan costs some retirees have to pay from 10 percent to 22 percent.

The increase won't apply to people who retired before 1993 or in two early retirement programs Delta offered in the past three years.

Mike Podett, a former Delta station manager who retired in 2001, said he expects his health insurance to jump from $165 a month to about $380.

"For anyone on a set income, any increase hurts, but not having anything is much worse," said Podett, 58, who is on the board of the DALRC, one of the retiree groups that organized the meeting.

DALRC and a group of Delta's retired pilots, DP3, organized as Delta's finances worsened. Both groups have hired attorneys to represent them if Delta files bankruptcy and moves to terminate its pension plans.

Delta retirees' biggest fear is that if Delta seeks a so-called distress termination in bankruptcy, the quasi-federal Pension Benefit Guaranty Corp. would take over the funds, reducing many paying retirees' benefits.

Separately Monday, another Delta executive, operations chief Joe Kolshak, said pilot concessions are necessary to avoid bankruptcy. But also he added there are "no guarantees" the company can avoid a Chapter 11 case even after a pilot deal.

Kolshak, who spoke to a gathering of business journalists Monday in Atlanta, reiterated several goals laid out by the ailing airline's leadership, including the need to shave costs while improving customer service.

"We intend to be a simpler, more cost-efficient airline," he said.

He said many of the latest changes "had been discussed for years," but Delta didn't move in part because executives thought some problems would simply fade away, like competition from low-cost carriers.

Kolshak said Delta doesn't want to face a trip to bankruptcy court to handle serious issues like pilot pay. "It would be better for everyone," he said, "if we avoided bankruptcy."