Journalist. And nobody else would consider myself a journalist. I began to take on the life of being an interviewer even though i have a day job of running a private equity firm. How do you define leadership . What is it that makes somebody tick . David people say running an airline is not an easy thing to do. You have weather to deal with, energy prices, but you grew up in a family of nine children, so what is easier . [laughter] ed running an airline, certainly. Our family was great. I am the oldest of nine. When i was five years old, we had six kids in the house, nine kids sharing three bedrooms. 1. 5 baths. My dad was a dentist and had his practice inside our house. My mom works for him. David was he busy . Ed he must have had some gaps in his schedule. Growing up, i didnt get on airplane until i was 25. David really . Ed we could not afford it. Too many of us and it was not who we were. I always recall we went on one family trip a year. My dad would get us all in the Station Wagon. Apologies to the safety regulators in the audience, but no seat belts, no car seats. There were nine of us in a Station Wagon all piled in. We were allowed to put whatever we could fit in our pillowcase. We brought it for two weeks. That was our family trip. I mustve figured there has to be a better way to travel. [laughter] ed i am still pursuing that mission today. David your mother must be proud that her oldest son is the ceo of Delta Airlines, the largest u. S. Air carrier. Ed the largest in the world. David does she call you with ideas or complaints . Ed all the time. She gives me her ideas. I always ask her when she is traveling not to tell anybody who she is. That doesnt last. People have told me she applauds the end of the safety announcement. David you travel on delta yourself, so you fly coach . Ed often. I find it more interesting back there. David what about the legroom . Ed the legroom is fine. [laughter] ed what you find when youre flying coach is that its more entertaining, and you dont worry about legroom. That is where the real people are. That is where the party is. David lets talk about running an airline generally. To be honest, a lot of people say you want to run an airline or a good business, go to a Business School or work your way up to be a management expert, but you were trained as an accountant. Some people would say the best managers are not cpas. David one of the things about accountants that i think they get a bad rap is that they all about the numbers, introverted, into their analysis. What you learn as an accountant is the numbers are actually the language and vocabulary of business. David wall street does not Value Airline companies as you say they should. Why is it that wall street does not Value Airlines as much as you think they should . Ed we are moving in that direction. We are still not there. Our largest investor is warren buffett. He now owns 11 of delta. After years of swearing off the industry, he said you guys are the chicago cubs of the business world. You not only had a bad decade, you had a bad century. [laughter] ed we got our bad century out of the way. We are now in a place where we have really fixed the business. David he used to say if a capitalist had been at kitty hawk seeing the Wright Brothers take off, he wouldve shot them down. Because there were no profits made in the Airline Industry for 100 years versus the profits now. Ed it has changed. He wouldnt say that today. This year will be the fifth year in a row our profits have been in excess of 5 billion. David your revenues what percentage in the u. S. , outside . Ed two thirds u. S. , one third international. David international, is that more profitable than u. S. Because of all the flights . Ed it is the opposite. International is more difficult to get to. The fuel cost more, the Service Levels are higher. And ticket prices are more suppressed. We make 80 of our profits in the u. S. David you make a lot of profits by owning your own refinery. Why do you need your own refinery . You dont trust other people to get gasoline to you . Ed we do. We certainly use a lot of refineries. Six or seven years ago, as refineries up and down the east coast were being closed and crude prices were north of 100, we saw our cost of jet fuel was escalating. We were paying another 25 a barrel on top of the crude prices to get jet fuel. We are the most price insensitive consumers of that product. We dont decide each day whether we will fuel up planes or not. Any of the costs are being pushed onto the airlines, so we needed to get more supply in the market. We have a great refinery outside of philadelphia. We opened it. It was closed for about a year. We put a whole Community Back to work. It was a great story. To this day, it has been very profitable. We have earned our returns on that many fold. David in the 1970s, there was a big push for airline deregulation. Prices had been set by the icc. We then probably had 10 or 12 major domestic airlines. Now, we have three or four. Has deregulation really worked for the American People or not . Ed it has absolutely worked. One of the changes in the industry that caused problems was we were seen just as a commodity. Price was the sole determinant of what airline you took. We changed that paradigm where we are now competing on quality, service and people. David suppose i say i want a cheap price, but good food. Is food a big deal to people who fly these days . Ed food is important. The industry wound up getting rid of anything and charging fees galore. We have come full circle. We have reintroduced main cabin Food Services on our aircraft. And international improving the overall quality. David suppose i say i dont care about food. Can you bring your own food on . Ed you can bring your own food on. David i just want to make sure my luggage is not lost. What percentage of people actually lose their luggage . Ed we never lose. We call it mishandled. David mishandled. [laughter] ed we know where it is. It just takes a little longer to get to sometimes. David when you are an airline executive, you have two companies you can buy airplanes from. More or less. Ed two, not more or less. David you have boeing and you have airbus. You fly a lot of boeings. Your longest flight is from atlanta to johannesburg, 17 hours . Boeing 777 . Ed thats right. David you chose not to buy the 737 max. For reasons unrelated to what later became a problem. Is that an advantage because you have the airbus 321 and you have more capacity than your competitors, and do you take credit for that decision or was that luck . Ed i put that solely in the rather be lucky than smart category. We are hoping to see the max fly quickly into the skies, but safety was never a part of the consideration in making that decision. David while you are in bankruptcy, u. S. Air wanted to take you over. Was that a friendly offer . Ed everybody assumed that was going to be a foregone conclusion. The people of the company stood and said that is not going to happen. David you grew up in poughkeepsie . You went to college at . Ed Saint Bonaventure university. David you got your accounting degree . You are an accountant at price waterhouse. What were you doing at fritolay . Ed i was fortunate at waterhouse and i moved quickly through the ranks, made partner when i was already 32, 33 years old. That was the pinnacle of success. I said i need to go someplace to learn more and continue to develop. I got a call from a friend that said pepsi was hiring, and introduced me to a person in fritolay. Down in texas. I moved to dallas. I dont have a graduate degree. I went to an undergrad at Saint Bonaventure. I always consider my seven years at pepsico as my postgraduate, because it is a fascinating company. David you are at fritolay and then a headhunter called you and said how about Delta Airlines . Ed i was traveling 80 of my time, a lot of international. I already thought i knew how the airlines worked. I knew the things that needed to be fixed about the airlines to make it better. You get there and take a peek behind the curtain and see how complex it is. It was an industry that was fascinating to me because i was a big consumer of it. David so you became a Senior Vice President for finance, then you became the chief financial officer. Then you became the president , then the ceo in may 2016, right . Ed thats correct. David you had some problems before you became the ceo and ultimately delta filed for bankruptcy in 2005. Why did you have to file for bankruptcy . Ed it was the aftermath of a series of events which 9 11 triggered. We lost our business almost overnight. The business was so competitive, pushing prices lower and lower. Almost all the airlines wound up filing. David while you are in bankruptcy, usair said they want to take you over. Was that a friendly offer . Ed doug parker will never live that down. No, we had a pretty hostile takeover battle. We were bankrupt. We were not worth anything at the time. Usair offered 10 billion to buy delta for a company that is not worth anything. Everybody assumed that will be a foregone conclusion. The people of the company stood and said that is not going to happen. We have a Better Business plan. We convinced the creditors to stay with delta, and you see what we have been able to do. David you said to the employees and colleagues we will give you 10 of the profits, is that right . Ed when we went through the restructuring, people took a lot of pay cuts. Benefit losses, a lot of change. We made a commitment that once we became profitable, 15 of the profits would go back to the people, which we honor to this day. David how much did that produce last year for employees . Ed last year, we paid 1. 3 billion in profit sharing. David does that mean your stock price would be higher if you did not pay it to him, or you have happier employees . Ed i think our stock price would be lower. David is internet available on all your planes . Ed our smaller regional jets do not have them but wifi is on all of them. David you charge for it . Ed not for a good reason. I firmly believe we need to make wifi free. We are working towards that. [applause] david you are the ceo. You presumably have some influence. Ed i do have influence. Theyve heard me hundreds of times, including gogo which is our service provider. They made a lot of progress now. One of the reasons, you dont pay for internet practically anywhere else is that planes do not have the technical capacity and capability that we made it for free, the system would crash. So once we get about 10 tick rate, performance starts to erode. If you test it, it is still not at the level it needs to be. We are investing heavily in the technical capacity in terms of the satellite spectrum. David we can fly to the moon and back, and we cant have everybody using the internet on the plane at the same time . Ed i tell people we are closer to the satellites in the sky, but as they remind me, we are not traveling 500 Miles Per Hour as we are sitting at home with our wifi broadband. David there was a proposal to let people talk on their cell phones on airplanes, but that was voted down by the fcc. Ed that was voted down by me. I would never allow that. Whether they allow it or not, we will not allow it. [applause] david we havent built the new airport in this country of any size since denver. Now, laguardia is being redone and so forth. Why is the Airline Industry are you responsible for helping to build the airports . Ed we are actually building airports ourselves. We got tired of waiting for the government partnerships out there. Trying to crack that code. So we have massively improve the flight experience, the onboard experience. The next thing is the airports themselves. The airports of the country were built for the 1960s. David you are building airports where . Ed we are building airports everywhere. Airport construction is the most difficult construction because you have to build it, live it and operate it at the same time. We bought a new airport in salt lake city. We modernized atlanta. David you have been an advocate for not allowing airlines without government subsidies to compete against you. Is that a problem . Ed it is a big problem. I have to give the Trump Administration great credit for recognizing that and reaching agreements to try to draw attention to it and stop it. At least freezing where it is at. David are they doing anything about it . What will happen . Ed they are being responsive to the administration. Today in the persian gulf, 30 airplanes in day that fly between the persian gulf and the u. S. , not one of them is a u. S. Airline. They are all middle eastern airlines. If there was a fair playing field, there is no question that the u. S. Airlines would be operating but we cant because the fares are subsidized. David what about the air Traffic Control systems . Some people say it was invented in the 1950s and 1960s and they have not modernized much. Is it really out of date . Ed absolutely. It is absolutely safe, but unfortunately, it is radar based. Many cars have better gps than what we access in our airplanes. The opportunities to improve the air Traffic Control system are not only speed for the customers, but it is the efficiency, sustainability of the environment, the opportunity to make a difference. Government dysfunction has been one reason why, because you have the faa on a fiveyear leash. You cannot change out the air Traffic Control systems currently. That is why we have been advocating for different models. Most countries around the world have better air Traffic Control systems than the u. S. Does. David you have a pattern of meeting with employees fairly regularly called the velvet program. Ed when we went through hard times, we did not have a lot of cash. We decided the only way we would be successful again is we have to reconnect with our people. David so today, what do you do for outside activities . This is a fulltime job obviously but do you have time for anything else . Ed i love to golf. I dont get much time and i not very good at it but i do enjoy that. We do serious work. We do hard work. It is important to remind myself not to take myself too seriously. It is a reminder to stay light on my feet, the importance of human interaction. I did also run the new york marathon last year. David two hours and ed that was the first few miles. David but you finish. Ed i finished. I wore my delta colors loud and proud. Raised 2 million for cancer research. [applause] ed thank you. I dont think i would be doing another one of those. I am still feeling the effects. David i would fly a marathon. I would fly 26 miles. [laughter] david you have a pattern of meeting with employees regularly. You call it the velvet program. Can you explain what that is . Ed when we went through our hard times back in the bankruptcy era, we did not have a lot of cash. People were taking pay cuts. We decided the only way we would be successful again was that we would have to reconnect with our people and get something to catch their attention. Our people were downtrodden. Years of pay cuts, job losses, and all the difficult things we remember from almost 20 years ago. So in downtown atlanta, there was an abandoned macys building and we decided to take out a couple of floors. Im not sure we even paid for it. I think we just squatted. I dont even know if they knew we were in there. We brought all our employees, 600 to 700 at a time for a day, a day and half, an opportunity to talk about the airline. We had no powerpoints, no slides. We deliberately kept it from being uncorporate as possible. They would come into our room and see people dancing around. No wonder they are bankrupt, they probably thought. We have a crisis on our hands and these people are dancing in an abandoned macys building. What it it is that got their attention to focus on what was important. Our people wanted to know it wasnt their fault that we went through the hard times. So often when companies go through difficult times, employees are made to feel they are the reason. That they are too expensive, not productive enough. That they are the cost even though they are the asset. We do these meetings to this day. We can pay for our own space and do Hotel Lobbies and other venues, but we have a dozen of them a year all around the u. S. Where we bring people of different disciplines together and talk about the future. I still lead every one of those, as i did 15 years ago because that engagement is so critical in what we do. David how do you grow the value of your airline . You just make it more profitable by flying more miles, more acquisitions . Anything left to buy in this business . Ed the airlines are thought to be a mature industry. Not new places in the u. S. Left to fly to. We are building bigger airports, bigger airplanes, but not new destinations. Global expansion is important to us. We are doing that through our partnerships and delta flying many parts of the world. People are more aware of the world than ever before. People want to travel. They want to experience. We are living in as a divisive a time as we can recall for many years. You would think that would hurt airline travel, but technology and social media and instagram, people want to go and explore and see for themselves something they may have read about. Now they feel that is affordable. Opportunities not only for the millennials and young generation, but also baby boomers and others. David i would focus on the baby boomers bucket list because they will have to do those sooner than millennials, right . [laughter] ed we are investing in both. David suppose the president of United States said i watch this interview, you are an impressive person. Why dont you come in the government and help us in some way . What would you say . Ed i am happy to advise, but i got my work cut out for me. David suppose im a young graduate or a young Business School graduate, why what i want to work at an airline or delta . What is the advantage . Ed free travel. For not only themselves but their partner. If you love people, you are out in the public eye every single day. We do not have desk jobs. Our desk jobs in the sky. Every day, you have different people coming through and you have to adapt. You think about why people travel. People travel for all reasons. For happy reasons, sad reasons, for business, to explore, to meet their grandchild for the first time, and there is all this emotion in this tube, roughly 200 people sitting within 40 yards of one another, so it is a social experience as well. People that want to actually make the world better get into travel. Yousef they are the makers of the iconic timepiece that became a pilots best friend. A household name in the watch industry. The company is one of the last independent luxury watchmakers with a star power in aviation, it is pushing its lifestyle credentials through sports partnerships. The middle east is becoming more important. Saudi arabia ranking in the top 15 and 2018. Special editions for the region, the key location for the company in dubai. We sit down with the ceo georges kern in dubai. Thank you for joining us