Ed Bastian was reeling from his mother’s death when the Covid-19 pandemic plunged the airline industry into turmoil.
The Delta Air Lines chief executive describes his mother as his “hero”. His father, a dentist, died young, leaving her to raise nine children. The family took one holiday in Florida a year, to which they would drive from Poughkeepsie, New York. Bastian was 25 when he took his first flight.
His mother died unexpectedly on February 26 2020, three weeks before government travel restrictions and fear of the virus choked off air travel in the US. Bastian does not know if her death was related to Covid-19.
“It left me pretty shaken up, and going from that environment right into our business completely being decimated . . . was a shock,” he says.
Yet given his personal loss, the industry shock “didn’t register at the same level”, and caused him to “just move right into action”.
Bastian, like airline executives worldwide, fought for the survival of his company for much of 2020 as the industry faced its worst crisis. Delta was burning $100m a day at the end of March. It flew largely empty aircraft in the spring as would-be travellers stayed at home, and second-quarter operating revenue tumbled nearly 90 per cent from the previous year. By the end of 2020 Delta would report a $12.4bn net loss, the worst in its 96-year history.
Bastian was a senior vice-president at Delta during the September 11 terrorist attacks, which devastated demand for air travel and triggered high-profile airline bankruptcies. The experience taught him to move fast during a crisis and to focus on protecting the company’s workforce and liquidity.
He made his first decision about the pandemic before the extent of the crisis was widely recognised. Bastian was in Chile in January 2020 on business related to Delta’s investment in Latam Airlines when the outbreak in China began to make headlines. He called the team together and, over their initial qualms, halted all Delta flights to China. It was the first US airline to do so.
“As the word was starting to get out as to how contagious this illness was, I asked each one of them would they feel comfortable . . . being a flight attendant, being a captain, spending 14 hours in the tube,” he recalls. “Every single one of them said, ‘No, I wouldn’t,’ and I said, ‘Well, if you’re not, we’re not either,’ and shut it down.”
The next blow came when he received a call in March from former Treasury secretary Steven Mnuchin on behalf of former president Donald Trump. It was advance warning that the US government planned to shut down flights between the US and Europe. At that point, Bastian said, he knew things were going to be bad.
Delta and other US airlines rushed into negotiations with Congress and the White House. Bastian convened a meeting with American Airlines chief executive Doug Parker and former United Airlines chief executive Oscar Munoz. They told Mnuchin they would not fight the government’s decision to suspend transatlantic travel, but the airline industry needed aid. One of them, Bastian recalls, picked the figure $50bn: “There really was no math against it. It was just a big number.”
For four weeks, Bastian was on the phone “around the clock” with lawmakers, the vice-president and president, as the airlines backed the drive for aid led by aviation unions. On March 27 Trump signed the US Cares Act, which included $50bn in aid for airlines, about half of it in the form of grants, rather than loans. The airlines agreed they would not furlough staff until October 1. At the time, executives and lawmakers believed the industry would bounce back within six months.
Government funding secured, Bastian and his team turned to the capital markets to fortify Delta’s balance sheet. The airline raised $25bn in 2020, including a $9bn deal with its lucrative frequent-flyer programme as collateral, the largest debt financing in aviation history.
In June, the company began testing its workforce for the virus — a decision Bastian called “the most important” he made during the crisis. Delta saved lives last year by identifying “thousands” of infected employees who showed no symptoms, he says.
Bastian says his focus “is on taking really good care of our 75,000 employees”. Take care of them, and they take care of customers, who then generate the profits to satisfy shareholders. After the airline filed for bankruptcy in 2005, Bastian championed a plan to reward employees, whose pay had been cut relentlessly, with an annual 15 per cent share of the company’s profits. Delta paid employees a company record of $1.6bn in February 2020 — a month before the chaos hit — and unveiled a jet with all 90,000 of their names printed inside with the words, “THANK YOU”.
That care is why, Bastian said, “when the time came to ask them to sacrifice, they understood”. About 45 per cent of Delta’s workforce volunteered for unpaid leave to help the airline preserve liquidity. About 17,000 employees took early retirement. So far, unlike competitors, Delta has not involuntarily furloughed any employees.
The pandemic was not the sole crisis Bastian faced in 2020. When police killed George Floyd, a black Minneapolis resident, in May, it triggered nationwide protests and forced corporate America to examine its own lack of racial diversity.
Delta is headquartered in Atlanta, which has a large black professional class, but the airline’s highest ranks are mostly white. Bastian says he was guided by conversations with Kenneth Frazier, retiring chief executive at pharmaceutical group Merck. Frazier, who is black and a leading corporate advocate for racial justice, told him to “unapologetically get into the numbers”. Delta found that 21 per cent of its employees are black, but only 7 per cent of the top 100 executives.
“That’s not right,” he says. “I wish I’d been paying attention to this one point more,” he adds.
Bastian has engaged with social issues before. In 2018, he cancelled a fare discount for members of the National Rifle Association after receiving emails from students who survived a high school mass shooting in Parkland, Florida.
The chief executive now is committed to doubling the company’s percentage of black officers and directors by 2025, and says the next addition to its board will be a black person.
Bastian says his generation of chief executives is unused to tackling these problems publicly. “We’d been trained to keep your heads low. We don’t want to upset anyone . . . but in this role that’s just not possible.”
The pandemic has reached its “most difficult phase”, Bastian says, with the virus still rife and society in “a holding pattern”, as the public waits for the vaccine to be distributed widely enough for demand for air travel to rebound.
“This year has been the biggest challenge of our careers,” Bastian says. “It’s been really, really hard. Brutal. But for myself personally, I look at it as a real honour to be in the position of leading this company through it.”
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Delta's Ed Bastian: building staff loyalty to survive a crisis - Financial Times
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