Fireside Chat with Ed Bastian, CEO, Delta Air Lines

Yeah. Well, first of all, thank you for having me. And Hill, thank you for the invitation. We're close friends with Georgia Tech and the higher ed community. So, it was a pleasure to come and speak to this group. Delta, if you're from the local area, you don't need much explanation. We're the largest employer in the city of Atlanta, largest employer in the state of Georgia. The largest airport in the world is right here at Hartsfield-Jackson Airport. Many of you flew in through there. Thankful. Hopefully if you were smart, you flew on Delta. I'm sure most of you are a really smart crowd, so I'm sure we have many customers in the room today and I appreciate that business. The airline business has been interesting. We started a hundred years ago with one crop duster that was spraying fields in Monroe, Georgia and that turned us into the largest airline in the world with over a thousand planes and 100,000 employees. There's a lot of turbulence not just in the sky but in the industry itself in terms of the ups and downs from 9/11 to the pandemic that we've needed to overcome. And the reason why Delta got here first, I'm convinced, is the people of the company. We can talk about a lot of technologies and aircraft and airports and we have a lot of shiny objects in our industry. That's the problem. People focus on the shiny objects and forget the fact that this is a people business. This is a service business and we're here to serve and keeping the main thing the main thing, focus on taking good care of first of all our employees. Our founder, Mr. Woolman, 100 years ago said, I thought was just so prescient, I use this all the time. He told us, take care of your people who will then take care of your customers. We're in a world where it's focused always on customer obsession and how do you send that next message or how do you get that next deal done? You got to remember the people that are actually out there making it happen. And that's my job and my leadership team to obsess on our people who can then obsess on the customers. And that's how we've been able to not just get to 100 but we're the largest airline in the world. We have the greatest revenue base in the world. We're the most profitable airline in the world. We're the best paid employees in the world. And I'd like to think the happiest customers.

Yeah. Well, the company, the crop duster was there to kill some bugs. The boll weevil and trying to stamp it out and started in Macon, Georgia wasn't that successful. So he moved his little plane to Monroe, Louisiana where the Delta Mississippi Delta region became the name of Delta. That's where Delta came from.

I never thought I'd be here, that's for sure. I think that's one of the keys to learning. I've had the opportunity to do a number of college commencements. An Hill invited me twice, I think. I've had a chance to do it here at Georgia Tech and it's a huge honor. And one of the points I always make with the students is to be thinking about your opportunities far broader than what you could ever appreciate. Certainly when they're sitting in their chair having graduated, they're just starting. Many of them think they've crossed the line somehow and actually they're just starting. They're at the starting line rather than the finish line. And when I graduated myself from university, I never even stepped foot in an airplane. I was 25 years old before I took my first airplane trip. So, how in the world could I ever imagined back then that I was going to be trained to be the CEO of the largest airline in the world? I would have told you, you're crazy. So in that respect, I've had opportunities. I started my career in the financial world. I was an accountant with Price Waterhouse. I went to school in upstate New York, small school St. Bonaventure University. One of nine kids. I went to my dad when I was thinking about college and I asked him what he thought I should major in and he said, 'You know, you're pretty good at math and numbers. You're not so good with people.' So maybe you should be a tax accountant. And he said, 'Plus, if you're a tax accountant, you'll never worry about work because there's always going to be a need for people to collect taxes.' And so that's why I started. And I realized it's a lot more fun dealing with people than math.

Certainly. Well, we have a 100,000 people worldwide. The majority of which reside in the US. Our planes generally go out to international markets around the world and come back, kind of big hub and spoke network that we operate. Our people have tremendous technical depth. 15,000 pilots, 25,000 flight attendants. By the way, flight attendants are incredibly skilled. It takes us six weeks of seven days a week training to become a qualified flight attendant. There's a test they have to pass. They have to get at least a 90 or else at the end of that program, they fail. They don't go in. So, they're not there for your convenience. They're there for your safety. And then, by the way, they'll get you a Coke every now and then. You got to respect that. We run the largest MRO, which is a maintenance repair operation in North America here in Atlanta. So all of that technical depth requires a lot of advanced skills and advanced training far beyond what you get in a typical classroom setting. And so we have a big training and a big footprint ourselves around education and development. As we follow where technology is leading and I'm sure you can ask me questions about AI and digital and that world, obviously those skill sets are moving around and whether it's data scientists or people with much better predictive engineering and analytic capabilities so that we can actually deploy the tools and understand what they're intended to solve. It is important but I'll tell you for us it's very much about service. There's so many people that want to apply at Delta. It's a sexy business. It's a fun business. I believe myself I've never come to work a day. I enjoy what I do. And I think the majority of our people enjoy what they do. You take planes all around the world and interact in all types of settings and you're very much a citizen of the globe when you work at an airline. But at the end of the day, it's about do you have a heart for service? That's what we're training for and looking for most when we talk about workforce.

Well, we're fortunate we have a great partner here with Georgia Tech and An Hill. We try to take his very best talent as they train and they come through and many of them do come to Delta. We work in apprenticeships and internships and not just in the engineering discipline but in technology and in business as well and other skills. We work with the University of Georgia obviously a very large supporter of the University of Georgia, Emory here in town, Georgia State. We have great skills and one of the things that we have in addition to just finding the new technology and the new talents that are going to be required in the world that we come to universities to source for us. When you've got a 100,000 people we have many employees who've come to us over time working not had the opportunity to get a four-year degree. They come from different backgrounds and opportunities, but they have immense amount of real world experience, immense amount of passion, service capability. How do we work with the university system? We work with Georgia State, for example, here to bring some of those folks in and train them as to learning some of the analytic skills and some of the financial metrics and modeling skills that they can take and move from the ramp into a position of leadership above a large department. And so continuing not just to bring new in, how do you cultivate talent from within? We look at historically a four-year degree has been the entry point for almost any job in the company. We've asked the question why. I'd rather have talent that is hungry, that is smart, that's capable, that found a way not through a traditional program setting and build those skills into who that person is. Certainly one great way to build diversity, a great way to build a broader experience set. You think about our jobs, probably the least diverse category of employee in the US industry is an airline pilot. 95% of them were white males. Almost all of them came up through military training or similar background. So many people want to learn how they could get in there. And we're reaching out to a lot of smaller schools. We got a program called Compel, a lot of aviation community schools, working with larger colleges as well as to how to train and start working with people from the ground up and help them get to where they'd like to be. It's the only way we're going to change the model here and have actually a richer, broader, more diverse group of talent to spread.

No, I think the four-year model is the model, but it's not the only model. And so we're always looking to supplement it because I'm always looking to hire talent, but I'm looking to upskill what I already have. And again in this world of technology which is constantly changing, you hear a lot of companies talking about they're going to use AI and other tools to drive more efficiency which means less people. That's not who we are. Technology for us is the tool, but the people are the center. And making certain that the people get the tools and the technologies to do their job better, whether it's AI or other technologies, that's going to be the core. And I think it's the reason why we got to number one. It's our people and it's our culture that I do believe is the best in the industry. And if you talk to our customers, I think they'll tell you that.

Well, I look for a university partner that we share a common vision of the future. I think there's a lot of universities that are on their pathways and we come and we have a hard time maybe connecting. And again we're blessed here at Georgia Tech that this is we've had former CEOs of Delta come from Georgia Tech. So this is kind of fabric here. So, it's really easy for our partnerships and many of our leaders within the company. I was a lonely accountant in upstate New York and didn't have any advanced degrees or anything. I made my way, but we have such depth of talent. So, leaning on your existing partners to help you actually then expand to other universities has been the key. But for me, those upskilling capabilities as well as people that are willing to invest behind what your business objective is. And I know there's always a push and pull between a for-profit's goals and the university's agenda. But, I think there's a lot of common ground in there.

Well, we prefer not to force it. I think we certainly have spent time with An Hill's team and looked at the areas where we have common ground and investment in and so we'll come in and we'll sit alongside them and we'll work and find ways. We'll Brian Blake from Georgia State. I'm not sure if Brian's here or not, but we have a great analytic training ground in the city here that we work with. These are relational. You know, you don't just show up and say, 'I'm from Delta. I want this.' These are relationships that require trust, that require co-investment, that require somebody to believe something different than what they're doing today on both sides. And how do we get to a different end? Certainly, the world is different. You look at the face of the student population is very different. One of the fun things I've had when I've been here doing the commencements at Georgia Tech is sitting there watching An Hill shake hands and give out all the diplomas and looking at just the face of the student population from the world. I mean it's fascinating understanding that the diversity of talent that you have capabilities of. We're a big international player as well. So we love the fact that we can continue to grow internationally that attracts talent as well. And I tell people one of the great reasons why people want to work for Delta is we have the best benefit in the world. Our people can travel for free. Tell me the price tag on that. It's hard to put a number on that.

Well I think anyone that thinks they've solved or figured out AI I wouldn't believe them. I don't think any of us know where this is headed. Yes we have a whole team dedicated looking at deploying AI capabilities across our operational or commercial teams or knowledge management teams training. Everywhere you touch deals with how to do things more efficiently more effectively. There's someone out there that's got a solution. I think that while the promise is significant, I think the hype is significant too. And let's not all forget there's a race going on here. It's not just a race to try to beat China, there's a race amongst six, seven, eight big companies trying to get there first. And far beyond the deployment of technology that's on the back end of this, when you think about the arms race to build out the electric capabilities, the grid, the energy sources, now nuclear is back in it's a thing which is crazy. Not that it's anything plus or minus, it's just these things are hard to do and they take decades, not years. And it costs far more than anyone that tells you what the cost of any of these projects going to be. It's going to be substantial. Just ask the people here at Southern Company how much it took to build the last nuclear reactor that was just opened here in South Carolina. First one built, I think, in over 50 years in our country. It was 3x the cost they thought it was going to be and took incremental five years to deploy. That's just one. It's just that across so many different spectrums. And then the hyperscalers and the data centers, this thing is bigger than life. And at the end of the day I just want to make certain someone's connecting the dots on this entire big AI complex that's coming at us. And do people want it? Who's willing to pay for all this? As a company am I willing to pay for it? To me it's kind of an interesting tool and idea. Is it going to help me grow my business? Probably not. Is it going to help my people be smarter? I by the way I don't call it artificial intelligence, I'd like to refer to it as augmented intelligence. So people kind of have tools to do the job. And I think the core source of opportunity for companies and I put venture universities as well is getting your people to embrace it. And trust is the big question of the day. Do you trust the technology? Do you trust these companies? Do you trust big tech? Do you trust big industry to do the right thing with these tools? And how in the world could you ever build trust if you're telling that this technology is going to be used to eliminate your job or whatnot? So I've made a commitment at Delta that yes jobs will change. We're going to commit to reskilling and upskilling because keeping the people the center and trying to find ways that people can embrace it. Because trust is going to be the core currency for any of this stuff to really come out and people trust it and they're willing to deploy it and utilize it. I think there's a lot of hope there, but I'm a skeptic as to the ultimate objective of many of these companies is to make money off of somebody and to beat each other. And I think if someone isn't connecting the dots along the way, hopefully none of us are left holding the bag three or five years from now when the next dot com bubble which burst 25 years ago, this one could potentially look like a speed bump compared to what we're potentially setting up here. Anyway, words of caution.

So anywhere that you have a skilled worker trying to as a company that's a hundred years old, you could imagine we have a lot of legacy infrastructure, legacy technology. Any of you sure many seasoned travelers in this room. How many hours have you spent at an airline counter seeing somebody punch buttons into a screen heads down trying to figure out an answer to a complicated question or how to get them on a flight or how to work with a partner reservation or use frequent flyer miles. All that stuff will be a lot more effective and efficient. And that's where we're investing our time is to help our people get to answers for our customers sooner, faster, more easy. Our app, the Fly Delta app, we now have 60% of our revenues come through the app. So for people wondering whether we're already using this stuff, we're already using the stuff, right? The technology and we haven't done it at the expense of people. We've actually freed up our agents to be able to then go serve customers whether it's in airports or other parts of the business. I had the good fortune of being one doing the opening keynote for the Consumer Electronic Show in Vegas this year and it was amazing. Judson Wong from the video was doing the beginning keynote and I was doing the ending keynote and so the juxtaposition was interesting. I had this fear he had a little bulb. So we like to do things big in the airline space and I talked about Delta Concierge and all the things the future can hold for customers to take control of the app and all the things that you can enable to find better destinations, better serve up better opportunities within the ecosystem. The partners we've brought in from Uber to YouTube and others to make whether it's entertainment or ride share or other things in the midst of the travel ecosystem core because travel is really at the core of a large much larger ecosystem there. The airport experiences, how do we get through security more seamless using facial and other biometric tools? There's a tremendous amount that we're working there and we do see a great future that makes life more efficient. But at the end of the day, I'm always going to make sure I have two pilots on my planes. I'm always going to make sure I've got Delta service at my gate and I always want to have an option I can talk to a real person, not just to a bot. And I think those that lose sight of that are going to have a really tough time.

Well, we turned 100. So, you think you're kind of mature industry. You've seen everything, done everything at that point. And I think of Delta as we're just leaping into our second century of flight. And that's why we did the keynote at the Consumer Electronic Show where you don't see airlines typically presenting its gigs and gadgets as compared to an airline a big service company. People ask me when you look around the United States you see the congestion in the skies certainly a lot of work being done on air traffic control modernization and all the technologies and the tools that need to be deployed there. They say how can you grow? It seems like certainly here in Atlanta we have a thousand flights a day. How much more can you squeeze into that? And I acknowledge that in the US, travel is a fairly mature industry, but when you think about the fact that only one in five people in the world have ever stepped foot on an airplane. Wow. Right. Only one in five people in the world have ever stepped foot on an airplane. I think we're a growth industry.

And that's the opportunity. It means we have to find ways to make it affordable, to make it accessible, to make it sustainable and available. And whether it's in I was in Saudi Arabia last week in Riyadh at the PIF conference and it was amazing and they're trying to get between Atlanta and Riyadh is really difficult and we're launching direct service starting next year between Atlanta and Riyadh. And you think about what the opportunities you unlock and that's what we get to do in our business, create opportunities and development and experience and make the world a better place. COVID changed a lot of things, but the one thing it highlighted was all the people that said that COVID was going to be the death nail to travel could not be more wrong. COVID actually unlocked the experience economy and people now have bought everything they need to buy and they're investing in themselves. They're investing in their experience. They're investing in their family. They're investing in their friends, in their learning, their education, their opportunity. It runs true whether you're a baby boomer, when you sat home for a couple of years, say, 'I'll never get to so and so.' Well, they're going there. Then they haven't stopped going. They're going to keep going all the way down to our youngest consumers, Gen Z, millennials, where they are traveling particularly internationally at a level we've never seen. And to me, that's the real basis for belief that the world we're going to get through all the geopolitics is the human spirit is connecting. And the more we can continue to connect countries, connect people, connect learnings, it's really hard to hate someone that you know, right? And getting to know and build those knowledge set and all the places in the world that feel disconnected are the places that we're trying to create opportunity for.

Well, it's a really important relationship here in Atlanta and we operate the largest airport in the world. So you can imagine that relationship is really important and we sit side by side with the community. The airport here locally is run by it's owned by the city and so that means the mayor of Atlanta, Mayor Dickens, who's a great leader, great friend, is my landlord. So I got to take really good care to be a good occupant of his airport and allowing them to grow. Annually we generate over $50 billion of economic opportunity and GDP for the region here coming just out of Hartsfield-Jackson airport. Airlines have an outsized multiplier in terms of what they do. Recognize why people want air service, they want connectivity and jobs and growth and tourism and all the reasons that you could imagine. And so as a result of that you've got to work very closely and we're a large occupant we have 80% of the service here and you've got to be a responsible steward of that. And one of the things I'm constantly telling Mayor Dickens is the best way to keep our fares continuing to be affordable and even more affordable is growth. Growth allows that affordability to continue to come down. And so being a responsible steward requires a lot of investment. We've invested $15 billion of our own capital in our airports over the last decade. And we've built LaGuardia up in New York or JFK or LAX or Salt Lake City and Seattle doing a lot of work here in Atlanta. One of the things that travelers of the future want is a higher-end experience and a premium experience. And when I started my career almost 30 years ago in this business, the number one reason why people chose an airline was whoever had the lowest cost. I'd argue most of the people in this room that's no longer the number one reason you choose. You have an identity. You have a relationship with an airline. Hopefully Delta, but I understand we don't fly everywhere. And having that relationship with that airline is really important. And so having that commitment that we have to build out also goes to the ground experience because people many times spend as much time on the ground as they do in the air. And we want that ground experience to be high-end. The lounges we've built, the Delta One experiences that we've created, the premium opportunities. So, it's not just speed through the airport, also comfort when you're there.

Since I was a tax accountant, I guess it wasn't really relevant and everything I learned now joking. One thing I tell young people and I have to remind myself at times too. Something that Colin Powell taught me many years ago. Leadership is not a popularity contest. Leadership's about making hard decisions, building followership of course, but understanding that we all want to be liked, we all want to be loved. I do. We all appreciate that. But, there's a lot of hard decisions that come from leadership. And you can't always put what you want people think of you ahead of what is important for the company and the constituents and the stakeholders that you're constantly managing.

There's one thing that I think we've all recognized how technology has changed our world and our kids and our students and beyond that. We've lost a lot of connective tissue in terms of core ability to build relationships to create understanding. We're in a send world now more than ever. It's not just in terms of business and leadership. It's the world and there's not enough people listening. And I've always found and one of the things that's gotten me where I am is I want to make sure I spend as much time understanding where my partner is, what I can do to make my partner successful. And we have partners from all types of backgrounds. And I'm always asking what do we need to do to make someone else successful? And that then builds that relationship back and really understanding that people are too fast to want quick answers. They want to send their messages and direct and particularly as a leader of a big company, people are looking for me for direction. I get it. But if I'm not spending more time listening than I am leading, I'm missing out.

Yes.

Well, thank you for that question. Patience. I'm probably not the right person to ask on that question. Listen, we appreciate our customers and we know our customers depend on us and we also know in our industry that things don't always go perfect. You got weather, you got an outdated air traffic control system, you've got mechanical challenges. And when it's a clear blue sky day, which are the majority of the time, things go perfectly. We have the best reliability record in the industry and that's where I spend my time focused. How do we continue to make the core operations the very best it can be and continue to be. But it's when times of stress or times when something isn't going right that we need to reach out. That's where we spend so much of our time on service training and understanding. And I wouldn't say we have therapists necessarily, but we certainly have a lot of people that help with conflict resolution to be able to understand to take temperatures down and whatnot to create an environment where people understand we're all just trying to get you where you need to be and patience is part of it. I think another big part of it candidly is the collaboration within our company. Our pilots and our flight attendants, our ground crews, our maintenance team, our reservations. So many people go into building that connective experience and the consistency across large employee groups is really key to people all feeling trust and support from that. So this morning I spent an hour and a half just down the street in the Signia Hotel with one of our we call our velvet sessions. I do 15 of these. I lead each one of them around the country where we bring in six, seven, 800 frontline employees for a day and a half just talking about how the company's doing, talking from all different backgrounds, all different parts of the world, what we need to do to be successful. And people just really appreciate what we've built and they want to find ways. There's a hunger for learning how we can do better. We are on top for a reason. It's because of our people. The most important thing our people know is it's not getting there, it's staying there now. And getting your customers to love you is a big part of that.

Thank you.

Yeah. Well, I think one thing that's changed in my 10 years as CEO, it's become more important than ever is stakeholder management. We have a lot of stakeholders as you say whether it's the government at ATC, your TSA, whether it's your investors, whether it's your community, your institutions, your customer base, your employee base. There's so many different people, the OEMs and the technology companies that we partner with. Keeping that ecosystem strong and vibrant and what we like to do is not just I can't do it by myself but our leadership team spends a lot of time with partners as a result and relational skills and understanding. And we hold summits, we hold opportunities for people to get together to learn more about us. The beautiful thing about air travel is everyone many people do it and they use it and they understand it and they want to be part of it and there's always a lot of interest in there. So we're always continuing to build that larger ecosystem that you're talking about. Boy, I can't tell you how we're going to get the skies less congested or TSA running smoother, but I have tremendous respect for the people that are doing it, particularly now with the government shutdown, doing it and not getting paid. I mean, you talk about commitment. These are not high-paying jobs, particularly the TSA and people are coming to work. And so what we do is that we're in there, we're feeding them, bringing all different airports. We're bringing them whatever they need. We're supplementing. There's things in security that we're allowed to do as a company. We're in there, we put hundreds and hundreds of our employees into the operation and whatnot. And it's the old lesson. It's not what you say, it's what you do that people are going to remember. It's how you made them feel. And we want all of these stakeholders important to recognize that we value their experience. So while we're on the user side of that, the more we can understand them and see how we can continue to help them, it's going to make things work better. But stakeholder management is the key, one of the keys to the success of running a large organization of any sort.

Well we are doing a lot in various parts of our system to build what we refer to as sustainable aviation fuel. We're working here in Georgia I know we're doing a little bit of work with Georgia Tech. To that end, we're working up in Minneapolis. We got a SAF hub that we're working within the community to find the new fuels that are required to create the sustainable future that we all aspire to. Our footprint 95% of it is caused by emissions caused by jet fuel. We do not have a substitute in the world of biofuels today. They're not economic. They're not produced at scale. The energy companies don't want to produce them because it costs anywhere between three to four times the cost of a gallon of jet fuel to have biofuel. We know technically they work. So it's how do you build it into production and how do you get communities organized? So it's not a state issue. It's not an airline issue because the customers need it because if we cut off air travel it's not going to help them do their business. Consumers need it and finding ways to understand the bear you ESG. We don't talk a lot about ESG these days as much. It's an acronym that has grown a little bit out of favor. But the societal impact of what we do in air travel is incredibly important and we lose sight of that. And if S is only about sustainability and not societal impact finding better balance also when you do that you bring stakeholders to the table. But I think one of the things we've learned early on from just trying to drive the engineering the technology the resources for the energy companies just making it only about the fuels then you lose people along the way. We got to get communities involved. We got to get businesses involved. We need government involved. We don't need mandates. We need incentives to help create a better environment. It's going to take years to get there. Every year that goes by though, our footprint improves somewhere between 1 and 2% per year. The best way we can do it is building new engine technologies and every new plane we take is 25% more fuel efficient than the planes we retire. So having the capital to continue to innovate there as well. But it's a larger than any of us issue. And there's no one silver bullet. You got to do everything and more. But understanding that we're all in this together. This is not states trying to regulate or trying to punish or consumers saying that I'm not going to fly. Those are not long-term answers.

Well, we have training is part of what we do. We've got our own campus center for training and all of our employees come through regularly, whether it's pilots with their recurrent training or flight attendants or mechanics. So we embed within those opportunities the skills that we talked about whether it's communications, whether it's relations, whether it's trying to diffuse difficult consumer experiences. We do work with universities as in partnership but it's not something that we would ever outsource to a university for example. I mean we have to own that, we have to believe in that from the leadership side. So we work with institutions that want to come and work with us rather than we go and you go build something and try to market to us. So again having depth of relationship I think is the most important thing you can have as an education university system and building it from within and then you figure out the times. But our teams don't quite know what's necessarily going to make universities create that push and pull that we need, that investment that we need back. It's only through years of experience and cultivating that really strong partnership that make that happen. And partnerships are the key. And that's why I think what you're doing here is really important. Congrats to both of you. I know you both been part of building this forum and it's really important.

Our industry shares many of the same things. We all get our planes from the same two sources. We fly to many of the same destinations. The airports, the technologies, we all buy jet fuel from some of the same places. The only thing that distinguishes an airline and I'd argue there's a lot more companies and industries and institutions that should follow this is the people. It's the only thing that our competitors who are always looking to copy Delta can't because it's the culture and the culture of care and the culture of service that we cultivate. The old saying that culture eats strategy for breakfast is true and I can tell you it's true. And that's why I was up at 7 o'clock this morning speaking to a large group of people and I do it every single day in different forums spending time with your own people with the culture ensuring that they understand not just their importance but the value that they create and the value that you place in them and the confidence and the courage that they have to go out and do a great job. Our company doesn't come to a fancy campus and everybody comes in and leaves and goes. Our people go all around the world. So trust and culture are so important because these people are making decisions against conditions maybe that change and they don't know what's going to happen and make decisions and they can't call the CEO and say we got a storm heading and where are we going to divert to and how are we going to take you. We are trained for all that and the people, the care, the culture that you have to have is one of having served. And that's the unifying theme about running a people centric organization. And airlines have as many complicated things as almost any industry out there. I don't talk about those things. I talk about my people because that's the most important thing to you as customers is the most important thing to me in terms of doing that.

Thank you. Appreciate you having me. Thank you.

Thank you.