July 31 -  Ed Bastian of Delta Air Lines and his $1,500 sneakers


INDUSTRY ANALYSIS

By Kevin Mitchell

 

Walking Ed conspicuously absent from Oval Office meeting on Open Skies

It is widely agreed that Ed Bastian, the CEO of Delta Air Lines, is a very capable executive who runs a fine airline. However, it also is stunningly apparent that Walking Ed, as he deserves to be known going forward, has a tin ear of epic magnitude.

What CEO would have the poor judgment to wear a $1,500 pair of Berluti sneakers to meet with his rank and file employees and, worse yet, admit that to a Forbes reporter who was writing a profile about him, including covering that employee meeting in Salt Lake City? (see profile at https://btcnews.co/FORTUNE)

Yet, even given that lapse, Mr. Bastian’s decision to skip an Oval Office meeting on July 18 on the Open Skies and Gulf Carrier competition issue is significantly more incomprehensible. After all, Delta has been the ringleader of the over four-year-old anti-Open Skies protectionist lobbying campaign having spent tens of millions of dollars of shareholder money on it. Yet, at the penultimate moment when Mr. Bastian had the chance to make his and Delta’s case directly to the President of the United States, it wasn’t sufficiently important to attend?

Mindboggling!

Akbar Al Baker, the CEO of Qatar Airways, traveled over 7,000 miles one-way from Doha to attend. Rumor is other CEOs who attended shortened holidays and traveled thousands of miles. That’s what CEOs do when the President invites them to an Oval Office meeting on a policy issue important to their company and employees. Well, virtually all CEOs.

Disrespectful. Arrogant. Foolish. There are many other potential adjectives for Mr. Bastian’s decision. You choose.

By skipping the Oval Office meeting, who did Mr. Bastian take a walk on in his $1,500 sneakers:

- the President of the United States, Donald Trump;

- Vice President Pence, White House Chief of Staff Mick Mulvaney, National Security Advisor John Bolton, National Economic Council Director Larry Kudlow and Director of Trade and Manufacturing Policy Peter Navarro (Delta’s most important Trump Administration ally);

- Doug Parker, the CEO of American Airlines and Oscar Munoz, the CEO of United Airlines, who have long been seen as Mr. Bastian’s lapdogs in the Open Skies fight;

- Delta’s nearly 90,000 employees who, in a slick 15-minute “education” video, Mr. Bastian ominously warned that Gulf Carrier competition was an existential threat to their jobs and their family’s well-being (see video at https://btcnews.co/VIDEO); and

- every US Senator and Member of Congress who has signed an anti-Open Skies letter at the behest of Delta based on its false claim that Gulf Carrier competition is an existential threat to Delta’s continued success.

So where was Mr. Bastian? What priority did Walking Ed regard to be paramount to an Oval Office meeting on what Delta has for years described to be its number one legislative and regulatory priority? We don’t know. All Delta has said is that Mr. Bastian had a prior commitment. News flash: each of the six CEOs who attended had prior commitments but all of them changed their plans, no doubt at great inconvenience, to accept the President’s invitation.

What do we know?

President Trump was justifiably furious. It is rumored that Mr. Bastian, and Delta, now are persona non grata at the White House. This should be of concern to Frank Blake, the non-executive Chairman of Delta’s Board of Directors. It also should be worrisome to Delta shareholders. President Trump has shown he has a long and unforgiving memory when he believes he has been slighted.

The meeting was a disaster for Delta, American and United (Big 3). The President instructed the Big 3 to either file an International Air Transportation Fair Competitive Practices Act of 1974 (IATFCPA) complaint with the Department of Transportation or stop bothering his Administration. The Big 3 could have filed such a complaint in January 2015 when they officially launched their anti-competitive lobbying campaign but they chose not to do so then, or at any time since. Why? With more than $40 billion in tax-free profits over the last four years, they know they cannot prove commercial harm as required by the IATFCPA statute. Thus, the only road the President has made available to them is a losing one. As a source told Josh Lederman of NBC News after the meeting, “They’re going to lose the complaint,” one Trump administration official said. “And everybody knows that.”

Mr. Parker and Mr. Munoz, as well as the Boards of American and United, need to seriously reevaluate their lemming-like behavior obediently following Delta’s lead on the costly and failed anti-Open Skies campaign. Mr. Parker apparently told President Trump an IATFCPA complaint would take too long only to be corrected by the clear words of the statute that it is a 180-day process, and reminded the Big 3 have now been prosecuting their lobbying campaign for more than 1,600 days. That’s embarrassing. Similarly, it was embarrassing for Mr. Munoz to come to the Oval Office and whine about competition when, two days earlier, United reported an all-time record second quarter with $1.4 billion in pre-tax earnings.

If an Oval Office meeting on Open Skies isn’t important enough to Walking Ed and Delta, why should American and United continue to spend their time, political capital and shareholders’ money appearing to be nothing more than lackeys for Delta on an issue it apparently doesn’t really care that much about?

Next time you hear Mr. Bastian, Mr. Parker and Mr. Munoz whine incessantly about Open Skies policy and Gulf Carrier competition, ask them pointed questions. For Walking Ed, ask him exactly where he and his $1,500 sneakers were when he had the opportunity to make Delta’s case directly to the President. For Mr. Parker and Mr. Munoz, given that they obviously realize an IATFCPA complaint filed by the Big 3 would fail, ask them if it isn’t time for them to snap-out of Delta’s apparent spell and, finally, to exercise independent judgment to end American and United’s “me too” participation in this fiasco lobbying campaign.

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Mitchell is the founder of the Business Travel Coalition and OpenSkies.travel.

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