Delta Air Lines new chief executive Ed Bastian has plenty of work ahead of him, with numerous projects from customer-facing product improvements to fleet renewal underway.
“This airline has never performed better in its history,” he said at a media event at the carrier’s Atlanta headquarters on 29 April.
Delta reported the best first quarter results of the US mainline carriers with an operating profit of $1.54 billion on operating revenues of $9.25 billion. Its operating margin was 18.5%.
“We have much more to do ahead,” says Bastian, citing the many product, aircraft, airport and other improvements that Delta is making. He took over as chief executive from retiring Richard Anderson today.
On-going projects at Delta include a new premium economy cabin and a 5% stake in expedited security provider CLEAR, as well as new orders for up to 162 mainline aircraft during just the past week.
“When you look at the international space, the international competition has moved to premium economy as a cabin and a service itself,” says Bastian on plans for a premium economy cabin. “We believe, while we have made substantial enhancements to the front of the airplane, we’ve actually created a greater divide between business and the main cabin.”
He cites experience working with joint venture partners Air France and Virgin Atlantic Airways in the decision to debut the cabin, which will have new seats with 38in pitch and legrests, in 2017.
The Airbus A350-900 will be the first aircraft in Delta’s fleet with premium economy, followed by the Boeing 777-200, Airbus A330-200 and then the Boeing 767-400ER, said its new president Glen Hauenstein at the media event.
Aircraft configured with premium economy will not have Delta’s extra-legroom comfort plus economy product, he adds.
Delta will be the second US carrier offering premium economy. American plans to debut its own premium economy product on new Boeing 787-9 aircraft from the fourth quarter.
Delta’s investment and partnership with CLEAR is in response to longer security waits and passenger dissatisfaction with US Transportation Security Administration (TSA), says Bastian.
“I think it’s much more important to be doing something about it rather than just complaining about it,” he says. “That’s exactly what we’re doing.”
Passengers with CLEAR are able to jump to the front of the TSA PreCheck queue, says Bastian. Premier members in Delta’s frequent flier programme will receive discounted or complimentary memberships.
CLEAR will expand to all of Delta’s eight domestic hubs – none of which are among its 13 existing locations – and other key airports under the agreement.
Bastian does not comment on the value of the investment.
The product investments join orders for 37 Airbus A321s and up to 125 Bombardier CS100s that Delta announced on 28 and 29 April. The 192-seat A321s will be used to replace ageing Boeing MD-88s in the carrier’s mainline fleet and the 110-seat CS100s to replace 50-seat regional jets in its feeder fleet.
“Upgauging has been a big part of the success of Delta over the past five years, not just from the regionals to the mainline but within the mainline as well,” says Bastian on the fleet moves. He also cites very attractive pricing for both deals.
Bastian is no stranger to developing and implementing large investments and programmes. As president under Anderson, he is credited with its investments in Aeromexico, China Eastern Airlines, Gol and Virgin Atlantic Airways, as well as the success of its New York City hub at both John F Kennedy International and LaGuardia airports.
However, his move into the corner office comes as the economic environment - especially abroad - faces numerous negative pressures. These range from economic weakness in Asia and South America to security concerns in Europe and the Middle East, and a strong US dollar.
These external economic forces have been cited for the multiple quarters of declining passenger unit revenues, even as profits have risen due to the significant savings from low fuel prices.
“It’s an interesting time for Richard to hand off the keys to me,” says Bastian. “He said ‘don’t screw it up’ and we’re working really hard not to.”