Delta operating chief departs abruptly

Delta Air Lines' operating chief, Jim Whitehurst, is stepping down immediately after being passed over for chief executive and president.

The departure of Whitehurst, 39, who has played a prominent part in Delta's reorganization efforts, came as Delta's CEO-elect, Richard Anderson, began making the rounds Wednesday in Atlanta to meet with politicians and other community leaders.

"After careful thought, I have decided it is time for me to move on to the next chapter of my career," Whitehurst said Wednesday in a memorandum to employees. "After talking with Richard, I'm convinced the company is in good hands."

Without elaborating, Anderson said Delta tried to persuade Whitehurst to remain, but "we respect his desire to pursue other opportunities."

"We're going to miss him. He's been an important part of the team," said Ed Bastian, Delta's president and chief financial officer.

The comments by Anderson and Bastian came during an interview Wednesday with a group of reporters and editors from The Atlanta Journal-Constitution.

In a surprise move last week, Delta's board of directors chose former Northwest Airlines CEO Anderson to be the top executive at Delta. Anderson, 52, was one of seven new directors that Delta's creditors named to its 11-member board as it emerged from bankruptcy this spring.

Bastian or Whitehurst had been widely considered the likely candidates to replace Delta's 75-year-old CEO, Gerald Grinstein, who retires Friday.

However, Whitehurst was noticeably absent from Delta's announcement of the new executive lineup. Bastian was named president last week at the same time Anderson was named CEO.

Grinstein will continue to serve as an adviser to Anderson and other executives under a one-year consulting contract for $1, the company said.

Whitehurst will depart with much of a stock and option package he was granted when Delta emerged from Chapter 11 in April. Delta estimated at the time that the incentive package, which vested over several years and depended on Delta's financial performance, was worth about $8 million.

Bastian said Delta is removing some of the restrictions on Whitehurst's incentive awards, allowing him to take immediate ownership of certain stock and stock options, "in recognition of the incredible work he did."

Meanwhile, Delta will begin searching for an executive to assume Bastian's duties as chief financial officer. The company expects to announce additional changes in executives' duties next week.

Anderson said a new chief operating officer is not likely to be part of that lineup.

"My background is very deep in operations," he said, adding that his previous jobs at Northwest and Continental included overseeing maintenance and airport customer service operations.

Anderson, who assumes his duties Saturday, indicated that he will take a cautious approach to piloting Delta in coming months as he looks for ways to improve the carrier's restructuring efforts, partly by shoring up its finances and improving its customer service.

"We're not backing off on growth. We have a solid plan that is judicious," Anderson said.

Anderson said he will take a hard look before making any big aircraft orders or other big purchases that would load Delta with debt.

"You just don't want to be in the position where you have so much leverage in the balance sheet," he said.

He also disagreed with some industry analysts' suggestions that he was hired to clear the path toward a merger between Delta and Northwest or another carrier.

More consolidation in the industry is likely "over time," he said, but Delta's plan is to remain independent and to be a buyer rather than a buyout target.

"Delta's plan is a stand-alone plan," he said.

While Anderson also vowed to continue with Delta's wholesale expansion of its overseas route network, such comments could indicate that the carrier also wants to prepare for a possible industry downturn or recession by building up its cash reserves.

Anderson and Bastian said the airline will have about 30 planes that it can put on planned new routes to China and other locations in Asia, Africa and Latin America over the next two years without buying more aircraft beyond its current orders.

Anderson said Delta will also concentrate over the next 90 days on "tactical" moves such as improving commuter carrier service and its international business-class product by sprucing up its seats, cabins and airport lounges.

Another key task facing Anderson and Bastian will be meeting employees in coming weeks to keep up morale. Many employees rallied around Delta and Grinstein last winter when US Airways made a hostile takeover bid. Whitehurst also was credited with helping boost morale by leading dozens of sessions to explain the carrier's goals during the 19-month bankruptcy reorganization.

Bastian said maintaining employee morale is "a fair concern," but one that he and Anderson will quickly address. "I think once the employees get the chance to meet Richard ... the concerns will be put to bed," he said. "We've got a great leader here."


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