ATLANTA — Delta Air Lines CEO Richard Anderson leans back in his chair, smiles and explains why he’s so happy.
His airline — the top carrier at Charleston International by passenger volume — cancels fewer flights than the competition. Also, complaints are down. And Delta is making record profits — despite a bad bet on oil prices.
In an industry that, until recently, was famous for its losses, it’s rare to hear a CEO speaking so optimistically about the future. But mergers have left four big U.S. airlines controlling the majority of flights and stopped the frequent fare wars that benefited fliers but devastated the airlines’ profitability.
With a healthy balance sheet, Anderson, 60, is now focusing on building long-term partnerships with other international carriers and improving the onboard experience for passengers. That starts with making sure flights get where they need to. Anderson boasts that last year, Delta saw 95 days without a single cancellation in its mainline fleet; other carriers only had a handful.
“We’re ready for the summer,” Anderson says. “Our reliability’s going to be off-the-charts good.”
Anderson spoke with The Associated Press on several topics such as Cuba and the best jets for his fleet. Here are highlights:
Anderson is confident that lower oil prices are here to stay. He’s basing business decisions on oil costing $50 to $100 a barrel and a prediction that the U.S. will be able to supply all of its petroleum domestically by 2020 thanks to advances in drilling technology.
Delta paid $2.29 a gallon during the first three months of this year, down from $3.06 during the same period last year. That 25 percent savings adds up fast; Delta burns through 3.9 billion gallons of fuel a year.
When fuel cost more, most airlines rushed to order new planes from Airbus and Boeing, aircraft that are more efficient but carry a larger price tag. Over time, the fuel savings offset the higher upfront cost. But with fuel prices now 39 percent lower than just three years ago, the payback takes longer.
Delta took a different approach, refurbishing its aging fleet, buying some used jets and purchasing new planes to fill the gaps. Anderson has no plans to change that strategy. United Airlines has followed, obtaining some used jets.
Anderson is eyeballing the 787-10, which isn’t yet in production. Delta is under contract for 18 Boeing 787-8s, the smallest Dreamliner variant, but Anderson prefers the stretched version. Granted, he isn’t willing to commit — at least publicly — just yet.
“As always, we would see what Airbus is offering ... but I do think (the 787-10) should be an airplane that is one day in the Delta fleet.”
Delta will fly to Cuba — someday.
“Everyone believes that Cuba is this panacea and I don’t see it,” Anderson says. “It’s the result of central planning gone awry. I mean, Cuba has no infrastructure. It doesn’t have a real economy. How do we think this suddenly is going to support dozens and dozens of nonstop flights a day?”
Additionally, Cuba will compete with Jamaica, the Cayman Islands, Mexico and dozens of other beach destinations.
“If I were them, I would ... quickly put together a legal and banking system that would respect private property and private capital. Number two: I would adopt the U.S. dollar as my currency.”
Anderson is focused on other international markets, primarily Mexico. A liberalization of flight rules with the U.S. expected next year could help Delta expand in Mexico.
He wants to expand Delta’s international reach but diversify routes to protect against regional economic difficulties.
As Anderson looks to Asia, he wants to expand Delta’s partnerships with China.
Anderson doesn’t see Delta competing with other airlines.
“I don’t as much focus on the airline business as I focus on the high-quality industrial transports like Burlington Northern, CSX, Norfolk Southern, UPS, Federal Express, J.B. Hunt,” he says.