New Delta Directors Must Choose CEO
The board of directors that will govern Delta Air Lines after it exits bankruptcy in two weeks faces a big decision right out of the gate -- who to pick to be the company's next chief executive officer.
An insider or an outsider? If someone from inside, which leading candidate -- Chief Financial Officer Ed Bastian or Chief Operating Officer James Whitehurst?
Industry observers say the board should take its time finding a CEO who has a strong grasp of the airline industry and who will be proactive in moving the nation's third-largest carrier forward by anticipating changes in the marketplace.
"You have to make sure the person has the mental bandwidth to handle those complexities," said Gerald Kraines, head of Jaffrey, N.H.-based executive development firm The Levinson Institute.
Outgoing CEO Gerald Grinstein, who plans to step down once the board chooses his replacement, told The Associated Press in an exclusive interview last week that he wouldn't give a timetable for a decision on his successor.
"It's better to be right than to be fast," said Grinstein, who has made no secret of his desire that the next CEO come from inside Delta.
Whitehurst, a 39-year-old Columbus, Ga., native, is a former industry consultant who took a finance job with Delta more than five years ago, later moving up to planning and network positions before being named COO. As a consultant for airlines before joining Delta, Whitehurst did some work on international alliance issues and general strategy and spent a year working in a hangar helping cut maintenance costs and improve efficiency.
Bastian, 49, has held a variety of finance-related jobs at Delta, first joining the company in 1998. Bastian left in early 2005 to take a CFO job at Acuity Brands, but returned later that year to take Delta's CFO job. He also has worked for Purchase, N.Y.-based PepsiCo's Frito Lay unit and has previous strategic planning experience.
Efforts to reach Whitehurst and Bastian through a company spokeswoman for comment were unsuccessful. In the past, they have been hesitant to publicly discuss who should be the next CEO.
Philip Baggaley, an airline analyst with Standard & Poor's in New York, said an outside candidate for the CEO job at Delta could bring a broader perspective. He said that if an outsider is chosen, that could lead to Bastian and Whitehurst leaving the company.
While the board would be aware of the risks, "When they decide on a candidate, I doubt they would let that stand in the way of choosing the best person in their view," Baggaley said.
At the same time, Baggaley said, Delta has spent a lot of time restructuring its business and laying the groundwork for its current strategy, and current management has had a lot to do with that.
"I would think they'd be cautions about a new executive who would come in and turn everything upside down and remake everything with a view to drastic changes after having just gone through pretty substantial changes," he said.
Last month, a new 11-member board of directors was chosen at Atlanta-based Delta, and it will take over when Delta emerges from bankruptcy April 30.
Members include the former head of Eastman Kodak and the former head of rival Northwest Airlines .
Four of the 11 members, including Grinstein, are current Delta directors. The other seven are new.
If the board did opt to choose someone from outside Delta as CEO, it likely would choose someone from inside the industry, observers say.
Terry Trippler, an airline expert in Minneapolis, said he's impressed with Richard Anderson, former CEO at Eagan, Minn.-based Northwest, and Doug Parker, the CEO at Tempe, Ariz.-based US Airways Group .
But Anderson will be on Delta's new board, and Parker oversaw US Airways' hostile takeover bid of Delta that ultimately failed.
"I don't think Doug Parker would be the one they'd bring in," Trippler said with a laugh.
Who then from the outside could lead Delta?
"Maybe raid Continental," Trippler said of the Houston-based carrier. "It's a successful airline. They've got the formula figured out."
Grinstein, who also will step down from the Delta board when he leaves his CEO post, said he hasn't spoken to the board yet about its feelings for who should replace him.
"They may have totally different views from any views that I have," Grinstein said.
But Grinstein said he will tell the board he thinks it should select an internal candidate, and he noted Bastian and Whitehurst are the obvious two to choose from.
"They're both very talented, very able, very competent and ready to take on the leadership of the company," Grinstein said.