By Ed Brock
In fiscal year 1989, the last year of Hollis Harris' presidency of Delta Air Lines, the company made over $500 million.
At that time it never occurred to him that the company would one day be forced to file for Chapter 11 bankruptcy protection as it did on Wednesday. But that doesn't mean he was surprised when the news reached him as he was on a trip to Chesapeake Bay.
"I think that at this time in history, this week, they had to file," said 73-year-old Harris.
Harris started working for Delta in 1954 as a ticket agent. Having been born in the Georgia mill town of Carrollton, Harris said he hardly expected that he would one day run the company from 1987 to 1990.
When he left Delta, Harris went on to head several other airlines before his retirement. Now he is like thousands of other Delta retirees, waiting to see exactly how the bankruptcy will affect him.
That's something else that most Delta employees and executives didn't expect 10 years ago.
"That never crossed their minds that their retirement would be in jeopardy," said Harris.
In announcing the bankruptcy, Delta CEO Gerald Grinstein said the company would continue to provide service to its customers, that it would still honor its SkyMiles frequent flyer program, and it would do what it could to protect Delta employees. But Grinstein also said there were no guarantees about how it would provide retirement benefits.
Harris was quick to defend Grinstein.
"Everybody's pulling for Gerry. I think he's done an outstanding job," Harris said.
However, the airline industry has been struggling since the terrorist attacks of Sept. 11, 2001. Delta initiated a restructuring plan last year that might have made the Chapter 11 filing unnecessary, but Harris said the sudden increase in fuel costs that followed the devastation of Hurricane Katrina was "the straw that broke the camel's back."
"They almost had to file," Harris said. "That put a lot of pressure on Delta."
Still, that's not to say that there haven't been things that, had they been prevented, could've saved the airline from bankruptcy, Harris said.
For example, about two years ago the company, under then CEO Leo Mullin, was in tight negotiations with its pilots over the company's desire to cut their salaries.
Trust between the parties began breaking down, Harris said.
"The pilots didn't believe a lot of the things management would say," Harris said.
It didn't help that Mullin and his management team then put together a package that essentially assured that, if the company did go bankrupt, they would be taken care of.
"If that hadn't happened, in my opinion, they might have been able to make a deal with the pilots sooner and they would have gotten more savings," Harris said.
Still, Harris said he's optimistic about the company's future.
"Delta's going to survive," Harris said. "The thing that worries me the most is all the retirees, those already retired and those retiring in the future."
It's his understanding that the company won't protect the "non-qualified" retirement plans, which are held by a fairly small group of executives. However, he thinks they may begin to institute a "contributory" retirement plan for existing employees, like a 401K.
What really happens will have to be worked out in the courts during the restructuring period that Harris said could be less than two years.
"I think they're shooting for 18 months," Harris said.
While other airlines have been in Chapter 11 for longer (United Airlines has been in for three years, Harris said), Delta is smaller and has had an entire year to come up with its bankruptcy plan.
And Harris said it's not impossible that the company may end up under new ownership.
"Somebody will (buy it)," Harris said.