Product quality, consumer relations, and product safety are all key components to a successful airline carrier. In the past, Delta has demonstrated strong customer safety initiatives, thus contributing to their success. In contrary, Delta has been faced complainants from customers related to lost luggage, poor performance, and poor operations.
Merging airlines is often complex can sometimes backfire. Much of Deltas growth in the last 10 years is attributed to the Northwest Airlines acquisition in 2008. When the two airlines merged, revenue increased and net income grew substantially, despite other costly economic factors. In order to successfully execute this merge, the management executives at Delta carefully planned the various stages of this risky move. Before merging, Delta faced issues with customer service, labor, and internal operations; they even filed bankruptcy in 2005. The company experienced several years of mismanagement complimented with weak economic factors. Delta displayed a sense of impeccability, which resulted in different stages of undesirable results and detrimental issues. Because of the mismanagement of the company, Delta was forced to fly large aircrafts on short one-hour flights. Among high costs and tough competition, Former Chief Executive Leo F Mullin launched a Song discount airline, which plummeted and left the company with millions in losses. In 2001, Mullin even negotiated a deal to pay Deltas top pilots an astonishing $300,000 yearly salary, making them the highest paid pilots in the industry. This approach left the airline carrier with billions of dollars in losses, and there were periods of time where Delta was on the threshold of disappearing for good.
Nearly five years later, Delta went from being at an all time low to one of the most profitable airline carriers. On May 30, 2007, the company emerged from bankruptcy as an independent airline. Delta completely transformed their business both operationally and financially. The decision to merge with Northwest turned Delta into a powerhouse. Airline analysts declared the move as a great milestone. In the matter of 12 months, Delta rebranded 95% of its 250 airport stations both domestically and globally, and repainted Northwest’s jets with the red, white, and blue Delta signature.
After coming out of debt, Delta offered stock incentives and raises to more than 39,000 nonexecutive employees. Delta had a reconstituted its management, lowered labor costs, and expanded its international network.
One of the most difficult things for the airline industry is the unpredictable nature of many conditions. The industry often faces circumstances that are beyond their control. Things such as war, threatened danger, terrorists attacks, political instability, economic instability, government regulations, spending patterns, weather, and natural disasters are factors that affect the industry quite often.
Because an aircrafts operation depends entirely on fuel, increasing fuel prices have had an enormous impact on the business. Fuel is Delta’s largest expense, costing the company about $1 billion each quarter. From 2010 to 2011, Delta’s fuel cost per gallon increased by 31% despite airline traffic increasing 4.5% and a revenue growth of 12%. In order to offset the cost, Delta is forced…