Release Date: Thursday, November 15, 2001

STRONG BALANCE SHEET HELPED DELTA APPROACH JOB CUTS THOUGHTFULLY, SAYS CHIEF FINANCIAL OFFICER

ATHENS, Ga. — Despite the uncertainty swirling around the U.S. airline industry and layoffs involving thousands of workers, employee attitudes at Atlanta-based Delta Air Lines are probably the best they've been in years, Delta chief financial officer Michele Burns said Thursday.

"The morale at Delta today is probably higher than it's been since 1989," said Burns, speaking at a breakfast program sponsored by the University of Georgia's Terry College of Business at the UGA Alumni Club in Atlanta.

Burns, who committed to speaking at the breakfast months ago, shed light on some of the behind-the-scenes management decisions made by Delta and the nation's other airlines in the days and weeks following the terrorist attacks of September 11.

Even as the nation's airports were being shutdown, Burns said, Delta was taking advantage of its established lines of credit to ensure short-term availability of funds to keep its operations going.

As it became apparent that consumer confidence in air travel would have to be re-established once normal operations resumed, Burns said it was also immediately clear the airlines would need financial assistance from the federal government if the nation's "fundamentally important" infrastructure of commercial aviation was to stay intact.

Within days of the terrorist attacks, Burns entered into discussions with her counterparts at competing airlines to discuss what federal assistance the industry should request to weather the crisis.

"How do we go and actually seek aid? That's nothing any company ever wants to do. But it was obvious to us it would be necessary and it wasn't something that could wait a long time, because the cash flows change immediately. And as they change, you've got to begin to get that thing fixed to the point where you can stem the bleeding," said Burns.

In addition to a federal bailout, however, the financial hemorrhaging at Delta also required cutting an additional $400 million from the company's operating budget, which had already been slashed by $425 million prior to the September 11 attacks to deal with rising fuel costs and an oncoming recession, she said.

Chief among the cost-cutting measures was eliminating 13,000 of Delta's 80,000 employees, Burns said. About 11,000 of the job losses were made voluntarily by employees choosing to take advantage of incentives like early retirements and benefit extensions.

Delta's slower approach differed from some of the knee-jerk layoff announcements made at other airlines, which acted hastily as cash flows dried up, she said.

"We run ourselves in such a way as to be able to be thoughtful," said Burns. "Because we do have significant balance-sheet strength and financial strength, we were able to take a few extra days."

As other airlines immediately issued statements about plans to cut service and layoff large numbers of employees, Delta took that extra time to plan how to reduce service without eliminating any of its destinations.

Delta also had time to craft a range of programs for work-force reductions, so the 11,000 employees who left voluntarily had choices.

"Those people have gone out of Delta happy about Delta, feeling like they were given a choice, feeling like they chose something that was good for them," she said. "The packages were really good things ... good for Delta and good for our people."

As a result, Burns said, Delta's careful handling of personnel reductions and other obstacles has helped restore employee loyalty and healed some old wounds caused a decade ago by cost-cutting programs "gone awry."

"Somehow this has ended up being the thing that really brought it together. I think you'll see it in the faces of the people in the planes that you're on. They're proud to work for Delta Air Lines, as am I," said Burns. "Delta has gotten itself around this crisis, and I think Atlanta should be proud of this company. They're quick to move and tough. They're bulldogs through and through."

Burns, a graduate of UGA's Terry College of Business with two degrees, spoke at the college's Terry Third Thursday speaker series, held on the third Thursday of the month at the Atlanta Financial Center in Buckhead.

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