Nonprofit, nonpartisan journalism. Supported by readers.

Donate

Former Northwest CEO leading the way in Delta deal

Delta Air Lines CEO Richard Anderson
REUTERS/Benoit Tessier
Delta Air Lines chief executive Richard H. Anderson at a news conference in France last year. Anderson is believed to be playing the lead role in shaping a Northwest Airlines-Delta merger. He worked at Northwest for 14 years.

A familiar face in the Twin Cities, Richard H. Anderson, is on course to become chief executive officer at a merged Northwest Airlines and Delta Airlines. That is expected to happen if a plan jells to combine the two companies into the world’s largest air passenger carrier.

Anderson has been chief executive at Atlanta-based Delta since Sept. 1. He was at Northwest for 14 years, spending the last fourth of his tenure there as CEO.

Michael Boyd, who heads an airline consulting firm in Evergreen, Colo., says that but for Anderson and his successor as CEO at Northwest, Doug Steenland, a merger between the two carriers “wouldn’t be on the table at all.”

It may seem as though the proposed deal might never have gotten so far so fast but for the pressures uncorked by an activist hedge fund. The fund, Pardus Capital Management, began pushing openly last November for Delta to merge with either United or Northwest. Serious merger talks apparently began only after that.

But the rationale for a merger between the two airlines existed long before Pardus appeared. Northwest’s strong Pacific routes and northern domestic system fit well with Delta’s transatlantic and southern routes. Together the combination would form a global system about as good as it gets.

Anderson, who did not respond to requests for an interview for this story, is a longtime advocate of airline consolidation and is widely believed to be playing the lead role now in shaping the deal. If an agreement can be designed to placate uneasy pilots, clear regulatory approvals and get past other uncertainties, he is expected to emerge as CEO of the combined operations.

A deal might not come together, given the difficulties of merging the pilots’ seniority lists. But if not, again, Anderson will be the ultimate decider in calling it off.

“I don’t think there’s anything he couldn’t do,” John B. Holmes Jr., the retired district attorney for Harris County (Houston) in Texas, says of Anderson.

When Anderson was working his way through law school, Holmes hired him to a $16,000-a-year internship. Anderson served as Holmes’ administrative assistant, then went on to become a prosecutor for the county. When he was still in his early 30s, he was named chief counsel to the criminal court for Harris County, the nation’s third most populous county.

A survivor
Friends describe Anderson as a straight-shooter, more connected with his employees than most CEOs and above all, a stickler for details. He is an avid reader whose bookish tastes range from “Beowulf” to “Cannery Row.”

Unlike many CEOs, he does not back away from appearing before often-critical legislative committees to advocate for his company or industry. Boyd, who has done consulting work for Anderson, notes that the industry turned to him to be its spokesman when it sought government assistance after the 9/11 terrorist attacks.

During the air-traffic plunges in the years after 9/11, airline chief executives were dropping like flies. Anderson survived. By mid-2004, he was the industry’s second longest-tenured chief executive, even though he had led Northwest for just three-and-a-half years.

Then, when he left Northwest to take a top post at UnitedHealth Group in Minnetonka, U.S. Rep. James Oberstar, D-Minn., praised him for helping to craft the restructuring plan that kept Northwest out of bankruptcy in the 1990s. The Duluth congressman called Anderson’s departure “a serious loss” for Northwest. “He’s just about got jet fuel in his veins.”

In a recent profile, Anderson told USA Today that he takes pride in calling himself “B.O.I.,” a term Texans apply largely to the year-round working-class residents who were “Born on the Island” of Galveston.

That story told of how his father, an office worker for the Atchison Topeka and Santa Fe Railway, and his mother, a medical receptionist and typist, both died of cancer when he was in college. Anderson, then 19, took on the responsibility for raising his two younger sisters while attending law school and working as a part-time plumber’s assistant for one uncle and on a construction job for another.

“I admired the hell out of him for what he did for his family,” says Holmes.

Anderson graduated from the University of Houston in 1977. Four years later, he earned a law degree from the South Texas College of Law.

He got into the airline business in 1987, when he left the public sector for a higher-paying job in the legal department at Continental Airlines in Houston. In 1990, he moved to the Twin Cities to take a job as deputy general counsel at Northwest.

Focus on customer service
Anderson was known for his successes in improving customer service at the airline. He oversaw union negotiations, government relations, maintenance, technology initiatives and many other operations as he climbed up the management ladder at Northwest. Early in 2001, he succeeded John Dasburg as CEO.

In an extensive interview a few months after he took charge at Northwest, Anderson acknowledged that many Northwest employees are not enamored of mergers and talked up alliances as a preferable option in certain circumstances. He said Northwest introduced alliances to the airline industry in 1991, when it inaugurated its first joint flights with KLM at the Minneapolis-St. Paul Airport.

Anderson said then that he wanted to spend half of his time acting as the airline’s chief strategist, 20 percent on employee concerns and the rest dealing with Wall Street, customers, sales issues and charitable activities. He said he made a practice of dealing personally with four customer complaints a week, and frequently visiting employees at their work sites. 

Three months later, Anderson had to reinvent his job to cope with the industry-wide trauma induced by the 9/11 attacks. The turmoil led Anderson and top managers at other big legacy carriers to seek and win givebacks from their unions, slash payrolls and execute other deep cost cuts.

In August of 2004, Anderson left for a better-paying job at UnitedHealth. He ran that company’s specialty healthcare and information businesses.

“He’s diligent. He’s funny. People like working with him,” says Lois Quam, who was a high-ranking officer at UnitedHealth when Anderson was there. Quam remembers Anderson as highly organized, always with a clean desk and orderly office. She adds that he is extremely skilled at engaging in friendly conversation, then quickly cutting to the chase. “He’ll give you a big smile and a lot of laughs, say ‘I just wonder …’ and then, boom.”

On Sept. 14, 2005, 13 months after Anderson left Northwest, both that airline and Delta filed for bankruptcy.

Last April, Anderson became a director at Delta. At the end of the month, the company moved out of bankruptcy. Northwest came out of bankruptcy a month later. Both companies emerged with boards largely hand-picked by creditors and particularly sensitive to shareholder concerns.

On Aug. 21, Delta directors named Anderson CEO, succeeding 75-year-old Gerald Grinstein. Anderson parachuted in over two internal candidates: chief financial officer Ed Bastian and chief operating officer Jim Whitehurst. Bastian was named president. A week later, Whitehurst left the company.

Merger speculation

News of Anderson’s new job at Delta triggered much speculation about a Delta-Northwest merger. Anderson flatly denied then that any such plan was in the works. But by mid-October, Anderson had changed his tune. In his first earnings conference call, he told securities analysts that consolidation could make sense for Delta if it were an acquirer and not a target.

A month later, Pardus went public with a call for airline-industry consolidation in a meeting with about 75 investors in New York, according to the Wall Street Journal. Pardus, which held stakes in Delta and United as of then, mentioned both United and Northwest as logical targets for Delta, but initially pushed harder for United.

Then Delta announced it had formed a committee of its directors to evaluate strategic options, including mergers. Last week, directors at both companies met separately to discuss the proposed deal. Apparently, the carriers have put off an announcement of a deal because of difficulties in crafting seniority provisions satisfactory to their pilots’ unions.
 
Earlier this month, a Delta spokesperson said airline directors have accepted Anderson’s offer to waive any additional compensation he would be entitled to in the event of a merger.

Anderson maintains ties here. He continues to serve as a director at Cargill and Medtronic. He and his wife, Susan, have a son and a daughter, both now in college. The Andersons have been active in numerous charitable causes here.

Susan Haigh, president of Twin Cities Habitat for Humanities, says Anderson volunteered on site several times to help build homes for that nonprofit. “He and his wife have been significant donors and sponsors,” Haigh says.

Such continuing ties and his experiences here likely make him sensitive to the concerns of many in Minnesota that any Northwest/Delta deal could cost the state good jobs and lead to diminished service here. Oberstar, who heads the House Transportation Committee, has come out against such a merger.

The devil is in the details. That’s one more reason why all eyes will be on Richard Anderson, the master of details, as this merger plan plays out.

Dave Beal, a former business editor and columnist for the Pioneer Press, writes about business and the economy. He can be reached at dbeal[at]minnpost[dot]com.

No comments yet

Leave a Reply