Case Study : Delta Air Lines Essay
Delta Air Lines had a great reputation in the 1980s as the one of the leading U.S. airlines known for its outstanding service to its broad base of customers, served with a home grown culture of “southern hospitality” and a loyal workforce that consistently went above and beyond the expected call of duty. (Brannigan & Lisser, 1996) However, by the 1990s, major business developments changed the competitive climate, and HR strategy had to change also. Delta initiated a new strategy, that ultimately set the company into a downward spiral that Delta would be hard pressed to pull out of. (Brannigan & White, 1997) We will take a brief look at the Delta strategy and identify the issues, analyze the issues, recommend a solution, and identify potential limitations to the solution.
In 1994, after two back-to-back years of epic financial losses, the CEO of Delta Airlines, Ron Allen, introduced a surprising, and not so popular new business strategy cleverly named “Leadership 7.5.” Allen sought to drastically reduce Delta’s “cost per available seat mile (CASM)” from more than $0.10 all the way down to $0.075, which, by then, would be very comparable to Delta’s largest competitor, Southwest Airlines. The plan that Delta put forward was designed to diminish their workforce from approximately 11.5K employees, down to 7.5K people (hence, the name “Leadership 7.5”) in the short time span of 3 years from their initial execution. (Noe, 2015) Experienced…