Questions Case A and Case B

Case: Delta Airlines

Case A:

Q1. During the 1990’s, none of the five largest air carriers in the United States earned its cost of capital. Why do such low returns on investment persist in the airline industry?

Q2. Despite the challenging industry environment, airlines like the Southwest Airlines and JetBlue earned enviable returns. How?

Q3. Why have all of the low-cost subsidiaries of legacy airlines, including Delta Express, failed?

Q4. What will happen to Delta Air Lines if it continues to respond to low cost airlines in the way it has in the past? Can you size up, roughly, the financial consequences of continuing with the status quo?

Q5. What are the strategic options available to the cross-functional team that Mark Balloun co-leads? What steps should the team take to choose among the options and make a recommendation to Delta’s board?

Q6.Based on the information available to you, what course of action would you recommend to Delta’s board?

Case B:

Q1. What is the logic of Delta’s Song initiative?

Q2. What is your assessment of Song? Will it succeed?

Q3. What must John Selvaggio, the President of Song, do in order to make song as successful as possible?