Gerald Grinstein
Encyclopedia
Gerald Grinstein is the former CEO of Delta Air Lines
, Inc. of Atlanta, Georgia
. Grinstein came to the position in 2004, after CEO Leo F. Mullin stepped down amid a controversy over executive retirement and cash bonus plans that were deemed excessive. He is succeeded by Richard Anderson, a former Northwest Airlines executive, although Grinstein expected one of his two deputies for the top job. Grinstein and his wife Carolyn live in Seattle
, Washington.
Grinstein received a BA from Yale University
in 1954 and a JD from Harvard Law School
in 1957.
From 1985 to 1995 Mr. Grinstein was also CEO of Burlington Northern Railroad
(BN). In this position he helped form the corporate entity that resulted in BN's merger which formed the BNSF Railway
.
Previously, Grinstein served as CEO of Western Airlines
. When Western and Delta merged in 1987, he was appointed to Delta's Board of Directors and has remained on the board since then. He took over as CEO at a time when Delta was in a deep financial crisis. Grinstein embarked on a number of aggressive cost cutting measures, including a major out-of-court restructuring of the company's long term debt and outsourcing of some heavy aircraft maintenance and ramp handling operations. He successfully negotiated with ALPA
, the Delta pilots' union, for deep concessions in order to help the company stave off bankruptcy.
Grinstein also set about regaining the trust and confidence of Delta's rank and file employees, most of whom still harbored a great deal of resentment over the previous management's actions. He promised open, honest communications and granted himself an annual salary of $450,000 with no bonuses or stock options of any kind, well below the multimillion dollar compensation packages accepted by Mullin and his top executives at a time when Delta was losing billions of dollars. Mr. Grinstein's mix of almost grand-fatherly demeanor and his down-to-earth communication approach enabled him to be singularly able to restore the family atmosphere at Delta despite tremendous external pressures. Grinstein was successful in attracting several highly talented executives to Delta who played critical roles in the company's survival despite the airline's precarious financial position. And Mr. Grinstein actively sought the input of employees by maintaining consistent communication with the Delta Board Council, frontline employees, and the councils and forums assembled to represent them.
Although these initiatives were largely successful, upward pressure on fuel prices and fierce competition from low cost carriers continued to keep Delta perilously close to bankruptcy. Hurricane Katrina
resulted in a dramatic spike in jet fuel prices in Atlanta
, which houses Delta's largest hub operation. Delta, which had previously sold its fuel hedges
in a move to raise cash, was forced into an untenable cash position. On September 14, 2005, Delta and its subsidiaries filed a petition for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code. At the time of the bankruptcy filing, Delta's total debt was approximately $23.8 billion.
During Delta's bankruptcy, Grinstein and his management team accelerated the restructuring process that they had started in 2004. Delta aggressively shed non-performing assets, slashed the mainline fleet from nine models to five, and shed thousands of jobs. By 2007, Delta's mainline operation employed approximately 47,000, down from a high of 78,000 in 2001. Grinstein successfully negotiated a second concessionary agreement from ALPA, imposed a second round of paycuts on nonunion employees, and froze the nonunion employee pension plan. He reduced his own pay by 25%, to approximately $325,000 per year.
Grinstein also oversaw a massive restructuring of Delta's network footprint, shuttering the airline's Dallas-Fort Worth
hub and slashing domestic flight schedules across the remaining hubs in an effort to redeploy aircraft and personnel to more profitable international markets. Delta entered more than 50 new international markets between 2005 and 2007 and since its merger with Northwest Airlines in 2008 has become the world's largest carrier.
In November 2006, US Airways
launched an unsolicited hostile takeover bid for Delta which Grinstein and his executive team led by Jim Whitehurst and Edward Bastian successfully fended off by supporting the employee-led Keep Delta My Delta campaign. Grinstein retired in the Summer of 2007.
Unlike his predecessor Mullin who collected in excess of $13 million despite Delta's profuse bleeding upon his forced exit from Delta in 2003, Grinstein instead directed the company to use his allotted bankruptcy emergence stock grants to establish a scholarship fund for Delta employees and their children and a hardship fund for Delta families.
Delta Air Lines
Delta Air Lines, Inc. is a major airline based in the United States and headquartered in Atlanta, Georgia. The airline operates an extensive domestic and international network serving all continents except Antarctica. Delta and its subsidiaries operate over 4,000 flights every day...
, Inc. of Atlanta, Georgia
Georgia (U.S. state)
Georgia is a state located in the southeastern United States. It was established in 1732, the last of the original Thirteen Colonies. The state is named after King George II of Great Britain. Georgia was the fourth state to ratify the United States Constitution, on January 2, 1788...
. Grinstein came to the position in 2004, after CEO Leo F. Mullin stepped down amid a controversy over executive retirement and cash bonus plans that were deemed excessive. He is succeeded by Richard Anderson, a former Northwest Airlines executive, although Grinstein expected one of his two deputies for the top job. Grinstein and his wife Carolyn live in Seattle
Seattle, Washington
Seattle is the county seat of King County, Washington. With 608,660 residents as of the 2010 Census, Seattle is the largest city in the Northwestern United States. The Seattle metropolitan area of about 3.4 million inhabitants is the 15th largest metropolitan area in the country...
, Washington.
Grinstein received a BA from Yale University
Yale University
Yale University is a private, Ivy League university located in New Haven, Connecticut, United States. Founded in 1701 in the Colony of Connecticut, the university is the third-oldest institution of higher education in the United States...
in 1954 and a JD from Harvard Law School
Harvard Law School
Harvard Law School is one of the professional graduate schools of Harvard University. Located in Cambridge, Massachusetts, it is the oldest continually-operating law school in the United States and is home to the largest academic law library in the world. The school is routinely ranked by the U.S...
in 1957.
From 1985 to 1995 Mr. Grinstein was also CEO of Burlington Northern Railroad
Burlington Northern Railroad
The Burlington Northern Railroad was a United States-based railroad company formed from a merger of four major U.S. railroads. Burlington Northern operated between 1970 and 1996....
(BN). In this position he helped form the corporate entity that resulted in BN's merger which formed the BNSF Railway
BNSF Railway
The BNSF Railway is a wholly owned subsidiary of Berkshire Hathaway Inc., and is headquartered in Fort Worth, Texas. It is one of seven North American Class I railroads and the second largest freight railroad network in North America, second only to the Union Pacific Railroad, its primary...
.
Previously, Grinstein served as CEO of Western Airlines
Western Airlines
Western Airlines was a large airline based in California, with operations throughout the Western United States, and hubs at Los Angeles International Airport, Salt Lake City International Airport, and the former Stapleton International Airport in Denver...
. When Western and Delta merged in 1987, he was appointed to Delta's Board of Directors and has remained on the board since then. He took over as CEO at a time when Delta was in a deep financial crisis. Grinstein embarked on a number of aggressive cost cutting measures, including a major out-of-court restructuring of the company's long term debt and outsourcing of some heavy aircraft maintenance and ramp handling operations. He successfully negotiated with ALPA
Air Line Pilots Association, International
The Air Line Pilots Association, International , is the collective bargaining representative for over 59,000 pilots of 39 U.S. and Canadian airlines. ALPA was formed in 1931 and is a member of the AFL-CIO and the Canadian Labour Congress...
, the Delta pilots' union, for deep concessions in order to help the company stave off bankruptcy.
Grinstein also set about regaining the trust and confidence of Delta's rank and file employees, most of whom still harbored a great deal of resentment over the previous management's actions. He promised open, honest communications and granted himself an annual salary of $450,000 with no bonuses or stock options of any kind, well below the multimillion dollar compensation packages accepted by Mullin and his top executives at a time when Delta was losing billions of dollars. Mr. Grinstein's mix of almost grand-fatherly demeanor and his down-to-earth communication approach enabled him to be singularly able to restore the family atmosphere at Delta despite tremendous external pressures. Grinstein was successful in attracting several highly talented executives to Delta who played critical roles in the company's survival despite the airline's precarious financial position. And Mr. Grinstein actively sought the input of employees by maintaining consistent communication with the Delta Board Council, frontline employees, and the councils and forums assembled to represent them.
Although these initiatives were largely successful, upward pressure on fuel prices and fierce competition from low cost carriers continued to keep Delta perilously close to bankruptcy. Hurricane Katrina
Hurricane Katrina
Hurricane Katrina of the 2005 Atlantic hurricane season was a powerful Atlantic hurricane. It is the costliest natural disaster, as well as one of the five deadliest hurricanes, in the history of the United States. Among recorded Atlantic hurricanes, it was the sixth strongest overall...
resulted in a dramatic spike in jet fuel prices in Atlanta
Hartsfield-Jackson Atlanta International Airport
Hartsfield–Jackson Atlanta International Airport , known locally as Atlanta Airport, Hartsfield Airport, and Hartsfield–Jackson, is located seven miles south of the central business district of Atlanta, Georgia, United States...
, which houses Delta's largest hub operation. Delta, which had previously sold its fuel hedges
Hedge (finance)
A hedge is an investment position intended to offset potential losses that may be incurred by a companion investment.A hedge can be constructed from many types of financial instruments, including stocks, exchange-traded funds, insurance, forward contracts, swaps, options, many types of...
in a move to raise cash, was forced into an untenable cash position. On September 14, 2005, Delta and its subsidiaries filed a petition for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code. At the time of the bankruptcy filing, Delta's total debt was approximately $23.8 billion.
During Delta's bankruptcy, Grinstein and his management team accelerated the restructuring process that they had started in 2004. Delta aggressively shed non-performing assets, slashed the mainline fleet from nine models to five, and shed thousands of jobs. By 2007, Delta's mainline operation employed approximately 47,000, down from a high of 78,000 in 2001. Grinstein successfully negotiated a second concessionary agreement from ALPA, imposed a second round of paycuts on nonunion employees, and froze the nonunion employee pension plan. He reduced his own pay by 25%, to approximately $325,000 per year.
Grinstein also oversaw a massive restructuring of Delta's network footprint, shuttering the airline's Dallas-Fort Worth
Dallas-Fort Worth International Airport
Dallas/Fort Worth International Airport is located between the cities of Dallas and Fort Worth, Texas, and is the busiest airport in the U.S. state of Texas...
hub and slashing domestic flight schedules across the remaining hubs in an effort to redeploy aircraft and personnel to more profitable international markets. Delta entered more than 50 new international markets between 2005 and 2007 and since its merger with Northwest Airlines in 2008 has become the world's largest carrier.
In November 2006, US Airways
US Airways
US Airways, Inc. is a major airline based in the U.S. city of Tempe, Arizona. The airline is an operating unit of US Airways Group and is the sixth largest airline by traffic and eighth largest by market value in the country....
launched an unsolicited hostile takeover bid for Delta which Grinstein and his executive team led by Jim Whitehurst and Edward Bastian successfully fended off by supporting the employee-led Keep Delta My Delta campaign. Grinstein retired in the Summer of 2007.
Unlike his predecessor Mullin who collected in excess of $13 million despite Delta's profuse bleeding upon his forced exit from Delta in 2003, Grinstein instead directed the company to use his allotted bankruptcy emergence stock grants to establish a scholarship fund for Delta employees and their children and a hardship fund for Delta families.