I’m shocked, shocked! Delta’s planning a layoff to stave off bankruptcy? Who would have predicted it?
Delta and the other major airlines have held a one-way ticket to bankruptcy court for years. The major airlines’ Success Formula became obsolete decades ago when Southwest Airlines was able to prove the effectiveness of their unique approach. The majors didn’t heed the warning signs then and they haven’t heeded them since.
The airlines like to blame the 9-11 tragedy for their troubles, but their problems were in place years earlier. The 9-11 challenge merely revealed how fragile the Success Formulas for the majors truly is. As soon as they hit a big pothole (or should we say “patch of rough air”), every major airline almost went under. If it weren’t for the federal bailout they would have, and some still did. But did that lead them to change? NO. Why? Lock-in to their historical Success Formulas.
And they’ve responded with Defend & Extend actions par excellence: create (or beef up) their low-cost carrier, drive for efficiencies, and today’s favorite—layoff employees. Have these worked? NO. And they won’t, because pruning actions such as these don’t address the real problem—their business model is broken and can’t be improved enough to create a positive future. It has to be disrupted and new, breakthrough strategies put in its place.
Across-the-board layoffs and salary cuts are sure signs that a company has lost the ability to deliver differentiated value to its customers. With no hope to raise prices and grow revenue, they look for cost reductions the only place they can get them — from their own employees. Seriously, what kind of future does that forebode for the company taking this approach? Its corporate anorexia.
These are the clear signs of a company—actually a whole industry—in the Whirlpool. If you have Delta frequent flier miles (or American, or United…) you’d best use them or lose them, the clock is ticking…
