Delta CEO Ed Bastian spent much of the first quarter of 2021 talking about the coming “year of recovery”.
With hopes that the vaccinations will restore consumer confidence in aviation and fuel the fire of pent-up demand, he is preparing to turn a profit by the middle of the year – which is badly needed after record losses of $ 12.39 billion in 2020.
The company saw an improvement at the end of last year: It halved its third-to-fourth-quarter cash drain, and fourth-quarter net losses of $ 755 million paled compared to those of American and United, both around $ 2 billion.
But Delta and its competitors still expect a bumpy road. “It’s always darker before dawn, and that’s exactly where we are,” Bastian says.
He expects the United States to reach an initial stage of herd immunity in early summer, barring the emergence of vaccine-resistant mutations from Covid-19.
“This will be the key to starting the journey, even if it will only be a step, a significant step, as we return to a new normal.”
The same milestone, he says, may be the trigger that allows Delta to reopen reservations for the middle seats, which it has blocked to keep away from social throughout the pandemic.
Another significant step, he said, will be the reopening of international borders. “Specifically in Asia, they will be very conservative (about this),” Bastian says. “But in 12 to 18 months, I think international travel will be back.”
It is a moment to wait. But the upside, he explains, is that travelers will come back to see that the aviation industry has improved in many ways.
The pandemic and the events of 2020 have led businesses and their leaders to reinvent themselves for sustainability, resilience and inclusiveness – industry-wide improvements that will far outlast Covid-19.
Last February, Delta pledged to spend $ 1 billion to green its operations over the next decade, with the goal of becoming the world’s first carbon-neutral airline through the use of alternative fuels, carbon offsets and improved recycling and waste reduction efforts. .
“We need to prepare the ground for the next generations that will follow and follow us,” says Bastian, presenting sustainability efforts as both moral and economic imperatives. “You can’t have a business opportunity and a platform for growth if the world doesn’t see your products and services contributing to society.”
It would certainly be easier for many to accept the socio-economic benefits of the $ 1.7 trillion travel industry if massive amounts of jet fuels were not needed.
“We know that in our industry, the footprint we create represents between 2% and 3% of the global carbon footprint,” says Bastian. “Left unattended, that number will double over the next 10 to 20 years, so the more people who join us on this mission the better.”
Counterintuitively, sustainability is also a cornerstone of restoring business travel after the pandemic.
With ESG (environment, social and corporate governance) investments taking on a more important role than ever, many companies that use Delta for their business trips are reassessing their carbon footprint, especially in the technology sector.
“We don’t want them to go net zero by eliminating air travel,” says Bastian, “so we have to make sure that the work Delta is doing to save its own footprint can be linked. [their] strategies. “
The same can be said of the company’s efforts at diversity and inclusiveness, which have been of personal concern to Bastian since the 2020 protests surrounding the death of George Floyd.
Delta is committed to doubling black leadership roles within the company by 2025, doubling spending with black-owned businesses, and reviewing its talent acquisition strategies to create a better pipeline for the professional development of blacks. (The company also tracks its progress against these goals publicly, out of accountability.)
Like the greening games, these inclusiveness goals are also good for Delta’s bottom line. “We will best serve our customers and connect the world if we reflect the world,” says Bastian.
“We are stronger when we have more views expressed around the table, and we can better anticipate the needs of our customers – better understand them when they board our planes – if they are served by people who look like them. “
In an environment where traditional loyalty – the type of points and miles – has been increasingly devalued, these efforts can also be an important means of attracting and retaining customers.
“Today’s younger generations demand it,” explains Bastian. “Consumers demand it more and more and are loyal to companies that reflect their own values.”
The Changing Definition of Leadership
Waiting for the government to fix the big problems of our time is also not an option, says Bastian, especially since many are so politically fractured. With topics such as sustainability and diversity having a global impact, it is important that global companies take some responsibility in designing solutions.
“We all have our part to play. In such a divided time as I can remember, we cannot leave everything to the government. The business world must step up its efforts and be held to account, ”he said.
This emphasis on sustainability and diversity has earned Bastian plenty of praise, as well as critics who say he has become too political.
But Bastian thinks 2020 has rewritten the rulebook for a lot of things, including how to be a good leader.
“As a corporate CEO, you are trained to stay out of the line of sight of any subject that is generally not specific to your business mission and precise objective,” he says.
“But it is perhaps more broadly defined than ever these days – and I believe our customers, our company and our leaders around the world have a voice when they see inequalities. Or else, silence also speaks.
The future of middle seats
Delta’s pledge to block out the middle seats during the pandemic was a public relations triumph for the company, which is expected to last until April.
Pressed to find out if that expiration date would stay, Bastian admits popular policy will likely be extended until the summer.
“We know it’s safe to just sit there,” Bastian says, “but we’ll follow the confidence and comfort of our customers.
When we see the demand for these middle seats start to increase, that will be the signal for us to start selling them.
While Bastian is bearish on international travel in 2021, he is convinced that domestic air travel will make a comeback this summer, in line with the US vaccination program.
If that prediction comes to fruition, so will its current plan to start reserving middle seats at the same time.
What will not change are all the new protocols put in place around cleanliness and safety. TSA’s antimicrobial tubs, mask-wearing rules, and state-of-the-art air filtration systems are here to stay.
Business travel is reborn
Bastian also sees a new take on business travel supplanting the traditional two-meeting, round-trip road warrior style of years past.
It is a country in which a new generation of digital nomads will benefit from cultural exchange wherever they can connect to the Internet. “People will travel because they can work remotely, and businesses will find that this helps with retention and costs,” he says.
This version of the business trip, says Bastian, “will have a similar scale to what we know, but the purpose and form will be different.”
This, along with the emphasis on private space for leisure travelers, will keep demand high for seats in the front of the plane, he expects, which will result in a model of more resilient business that does not depend so heavily on the stable business of large companies.
Ultimately, Bastian says, once the pandemic is over, “the real value of travel will be clear – and people will put a higher premium on it.”
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