Richard Anderson, formerly of Northwest (NWA) and Continental (CAL), is returning to the airline industry to succeed retiring Gerald Grinstein as Delta’s (DAL) chief executive officer. At the same time, Chief Financial Officer Ed Bastian was promoted to president and chief financial officer. Currently executive vice president for UnitedHealth Group, Anderson once was CEO of Northwest and staff vice president and deputy general counsel at continental. The appointments are effective September 1. Anderson becomes the eighth CEO in Delta’s 78-year history.
Calyon Securities Ray Niedl, in briefing investors, suggested the appointments might be a precursor for further consolidation since Anderson has voiced support for it in the past.
“We believe that the naming of Mr. Anderson to the post and the elevation of the CFO, Ed Bastian, to president mean that Delta is seriously preparing for industry consolidation and this should excite the markets over the coming days,” said Niedl. “We do not believe, however, that there will be any immediate deal. Nonetheless, this move should make the industry exciting this fall. Going forward, Mr. Anderson, along with Mr. Tilden (UAL CEO), is expected to be strong industry voices for consolidation.”
Niedl also indicated that Delta would likely be a seller in any consolidation. “Delta's system would fit very well with network carriers such as NWA, United (UAUA), particularly due to their strong Pacific operations,” he concluded, recommending investors add Delta to their portfolios, despite a weakening of industry stocks since spring. He predicted industry stocks would be fairly flat unless capacity is dropped in favor of ticket increases, a decline in oil prices or market consolidation. “Although we do not believe any deals are imminent, we believe the market may start to put merger considerations into its valuation of the carriers,” he said.