In Business This Week: HEADLINER: RONALD ALLEN
BAILING OUT OF DELTA
Ronald Allen has been hailed for engineering the turnaround at Delta Air Lines. Now, it looks like he may have engineered his way out of a job. On May 12, after a rift with board members, Allen shook up the airline industry by announcing that he would retire this summer when his 10-year contract is up.
In his 34 years at the nation's third-largest airline, Allen, 55, piloted Delta through smooth air and turbulence. He put through the 1991 purchase of Pan Am's European routes, giving Delta global prominence, and the Northeast shuttle. Those deals were followed by four years of losses totaling almost $2 billion. Since then, Allen has launched a new regional service to compete with Southwest.
Sources close to Delta say Allen's latest maneuver--an attempt to replace CFO Thomas Roeck over the board's objections may have been the last straw for directors, particularly director Gerald Grinstein. The CEO isn't talking. His plans: to furnish his new Atlanta home and do some consulting.EDITED BY KELLEY HOLLAND By Nicole HarrisReturn to top
GRAND MET AND GUINNESS TIE ONE ON
MAKE THAT A DOUBLE. THE merger of Grand Metropolitan and Guinness is hitting the global liquor business like a stiff shot. The $20 billion deal, announced on May 12, creates a beverage powerhouse with $13.4 billion in sales and more than double the market share of its nearest rivals, Allied Domecq and Seagram. If the deal passes regulatory muster, the new company, to be called GMG Brands, would join the likes of McDonald's and Campbell in the ranks of the world's biggest food and beverage companies. The merger could also signal the start of the next wave of consolidation in the booze business. Allied, maker of Beefeater gin, just reported flat six-month profits and could be vulnerable. Seagram says the deal could help it scoop up smaller players or brands.EDITED BY KELLEY HOLLANDReturn to top
GM STAMPS OUT A SPARK
FOR ONCE, GENERAL MOTORS settled a strike before it got out of hand. A May 13 walkout by 8,200 unionized electrical workers at a group of parts plants in Warren, Ohio, could have crippled the carmaker. But a deal with the union was reached within 24 hours. Union leaders expect the agreement to limit the amount of work transferred to GM plants in Mexico. GM, however, isn't having the same success with the United Auto Workers. Lengthy UAW strikes at assembly plants in Oklahoma City and Pontiac, Mich., are costing GM an estimated $35 million a week.EDITED BY KELLEY HOLLANDReturn to top
CLIPPED WINGS AT US AIRWAYS
CAN US AIRWAYS CEO STEPHEN Wolf lay off pilots when the "no-furlough" clause in the group's contract comes up for renewal in June? That's the question now before a panel of arbitrators. On May 8, Wolf announced plans to furlough at least 103 pilots, end jet service to nine cities, ground aircraft, and consolidate some operations. But the Air Line Pilots Assn. filed a grievance almost immediately. The union says US Airways cannot furlough pilots while using its regional carrier network, and it's expected to argue that current work rules apply until a new agreement is reached.EDITED BY KELLEY HOLLANDReturn to top