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Delta Air Lines Chooses an Outsider as President, CEO

August 16, 1997|From Times Wire Services

Delta Air Lines on Friday stepped outside its own family to name Midwest utility executive Leo F. Mullin as its new president and chief executive.

Mullin, 54, was introduced at a news conference in Atlanta along with Gerald Grinstein, a Delta director and former Western Airlines chief executive who was named non-executive chairman of the board, and Maurice Worth, a longtime Delta executive who was named chief operating officer.

Mullin and Grinstein will succeed Ronald W. Allen, Delta's longtime chairman and CEO, who retired July 31 after the board refused to renew his contract. Allen had worked at Delta for 34 years.

Mullin's hiring marks the first time Delta has named a CEO from outside the company. Mullin had been vice chairman of Chicago-based Unicom Corp., the parent of Commonwealth Edison Co., the Chicago electric utility.

Grinstein, who led the search for Allen's replacement, said he will help Mullin get his feet on the ground. "My role is to be a bridge, a transition," he said.

"There will be a learning curve, but I do not think it will be steep," Mullin said.

He said it was too early to know what changes he will make in the Atlanta-based airline, which has suffered poor employee morale and customer service problems. But he said Delta is "bent and not broken."

Mullin, who has extensive experience in service industries, was brought in to help improve Delta's battered service image and boost employee morale, analysts said. Although Allen oversaw a financial turnaround that led to record profit, critics said he went too far in his penny-pinching and wound up hurting customer service, once a Delta hallmark.

"Most of the heavy lifting at Delta has been done," said Raymond Neidl, an airline analyst at Furman Selz. "Now they need someone to smooth over their relationship with employees and win back some of the customers they may have lost."

Delta shares fell 69 cents to close at $87.06 on the New York Stock Exchange.

Before joining Unicom, Mullin was president and chief operating officer of First Chicago Corp. He also worked for Conrail.

He holds undergraduate degrees in engineering and applied physics, a graduate degree in applied math and an MBA, all from Harvard.

Delta has weathered turbulence since 1991, when its costly purchase of most of Pan Am's European operations plunged it into years of financial losses. Employees took salary cuts and many were laid off as part of a cost-cutting program that Allen had instituted.

Although Delta returned to profitability in 1995, many employees felt betrayed.

"It's a tough, tough row to hoe when you're facing those financial conditions, and perhaps the organization did go too far," Mullin said Friday.

He said he will emphasize customer service while keeping an eye on the bottom line. The best way to restore employee morale is to develop a winning company, he said.

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