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Mr. Smith Goes to Atlanta Jack Smith tried to retire, but Delta required his gift for extreme makeovers

—Carol Cambo

After four decades at General Motors, Jack Smith ’60 is hardly retired, serving on the board of directors for Delta Airlines, Swiss Reinsurance Company, and Proctor & Gamble Company, among others. He was the featured speaker at a Boston alumni breakfast in March. JOHN F. "JACK" SMITH THOUGHT he had it all worked out. After retiring from the chairmanship of General Motors in 2003—his career at the automotive giant spanned four decades—he planned on golfing and dabbling in the wine business. “Instead I’m still working three and four days a week,” Smith told fellow UMass Amherst alumni in March during a breakfast meeting in Boston. “Somehow I didn’t line things up right.” The problem was that Smith likes a good challenge. So when Delta Airlines hit some of the most severe turbulence in the company’s 77-year history, Smith, already a board member, took the pilot’s seat. As nonexecutive chairman of the board of directors, he strapped in for what turned out to be a bumpy yearlong ride. The airline business is horrible, said Smith. “It makes the auto industry look good.” In early 2004, the smart money was on Delta joining USAir and United Airlines in Chapter 11 bankruptcy. Smith, known for his stunning corporate turnaround of GM, was called on to help lead a restructuring. Just as Smith studied then borrowed manufacturing practices from Japanese auto makers like Toyota, Delta needed to look at what was working in the airline industry and restructure to compete on the same level. He and CEO Gerald Grinstein first replaced Delta’s aging senior management with 30-somethings from the company’s own ranks to get a fresh perspective. Delta modeled its Song airline after runaway success Jet Blue, adopting its attractive pricing and instilling a similar lighthearted personality. The company dropped airfares, introducing new “Simplifares.” It changed flight scheduling from hub-and-spoke to continuous flow, freeing up 19 planes and increasing the number of flights. It was a new way of doing business, of no longer operating from a mindset that people would pay a premium to fly Delta. Instead they recognized that customers were choosing flights based on price alone and changed to meet the market reality. “The biggest bugaboo was the pilots,” said Smith. “They were the highest paid in the industry. We had been trying to get them to come to the party with little success.” In a scene out of a John Grisham novel, Delta execs were on the courtroom steps ready to file paperwork when, on the stroke of five o’clock, the pilots agreed to negotiate salary reductions. “Morale is sky-high,” said Smith of the current atmosphere at Delta. This he attributes to the management’s honesty with employees about the company’s dire straits. “We’re all happy that the airline has survived.” Still there are challenges, said Smith. Fuel cost is at an all-time high; there are serious problems with passenger flow due to post-9/11 security measures. But the pressure has definitely eased, enough so that Smith is getting back to his original plan. His next appointment after the alumni breakfast was a wine tasting for Charles River Wine Company, his startup small distributorship based in Boston.

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