In an earlier life, Delta Air Lines CEO Ed Bastian was an auditor and reportedly a very good one, having uncovered massive fraud at the ad giant J. Walter Thompson that triggered an SEC investigation and garnered him a Price Waterhouse partnership when he was only 31 years old. One would be hard pressed to find a CEO more adept at compliance and government reporting.
Delta President Glen Hauenstein also boasts serious financial chops, holding a finance degree and having served as international controller for Continental Airlines. I’d expect he, too, would be intimately familiar with government reporting standards.
The U.S. Department of Justice disclosed on Tuesday that Delta agreed to pay $8.1 million to settle allegations it violated the False Claims Act by awarding executive compensation that exceeded limits established under the Payroll Support Program (PSP)—the nearly $12 billion in pandemic relief funds Delta received from the federal government.
Those funds came with a clear condition: no executive compensation over $425,000. Delta not only certified that it was complying—it filed multiple reports reaffirming the claim. And when the airline discovered it had violated those limits? It didn’t disclose the breach to the government, as required under the law. Instead, the violation came to light thanks to a whistleblower who will receive $850,000 for alerting the feds.
Delta claims the DOJ settlement was about a “technical matter” and that it only paid up to avoid the “expense and distraction” of litigation. Sorry, I’m not buying that story, as the facts paint a very different picture.
Airline blogger Gary Leff reported that Ed Bastian himself was among the executives who received compensation in excess of the $425,000 cap. This wasn’t some back-office accounting oversight. It involved a company run by two financial experts that repeatedly submitted false reports to the federal government.
Let’s be clear: violating the False Claims Act is serious business. It’s the federal government’s go-to statute for prosecuting fraud involving taxpayer funds. And in a functioning justice system, there would be accountability—not just for corporations, but for the executives at the top.
Delta got off with a fine that amounts to petty cash—a rounding error on its quarterly earnings. But what happens when someone without a corporate lobbying team and PR machine commits the same offense? Individuals have been prosecuted, convicted, and imprisoned for one-tenth—or even one-hundredth—of what Delta did.
Consider these DOJ cases:
Shahied Golden from Maine was sentenced to 12 months in prison for falsely obtaining $20,000 in PPP funds.
Marcelo Torre, a Utah entrepreneur, received 18 months for misrepresenting payroll data on a $628,000 loan application.
Omar Rajeh, a Connecticut restaurant owner, is serving 15 months after misusing $750,000 in relief funds.
Delta’s DOJ settlement would be newsworthy on its own. But it’s especially remarkable given the media’s long-running campaign to lionize Ed Bastian as a paragon of superior ethical leadership. Over the years, Bastian has been showered with awards and glowing profiles extolling his supposedly values-based decision-making and employee-first philosophy.
Bastian’s supposedly vaunted ethics especially don’t hold up well when compared to some of his predecessors.
In 2002, then Delta CEO Leo Mullin agreed to forgo millions in compensation after Congress approved billions in financial assistance to the airline industry due to hardships stemming from the war in Iraq. Mullin voluntarily slashed his 2003 salary by 25% to $596,250, declined a potential bonus of about $1 million, and rescinded stock-based awards valued at $5.5 million tied to the renewal of his contract.
In 2007, then CEO Gerald Grinstein forfeited cash and stock options after successfully leading Delta through bankruptcy. Typically, executives receive massive payouts after such restructurings as a reward for “sticking around.”
Grinstein’s $1 million in Delta shares were canceled as part of the bankruptcy proceeding. He didn’t whine, lawyer up, or look for a loophole—he walked away from millions of dollars for himself and rewarded his nonunionized underlings, which included Bastian, with an estimated $995 million.
Taking Care of Our People?
When asked to sum up his job in five words, Ed Bastian – who received $27 million in 2024 compensation — replied: “Taking care of our people.” He touted a “virtuous circle”—if you take care of your employees, they’ll take care of your customers, whose loyalty in turn rewards investors.
The unions representing Delta’s pilots and crew schedulers tell a sharply different story.
In a rare show of solidarity, the heads of Delta’s Air Line Pilots Association (ALPA) and the Professional Airline Flight Control Association (PAFCA) recently sent a blistering joint letter to their members. It marked the first time in recent memory that Delta’s pilots and dispatchers have publicly aligned against company leadership.
The catalyst: widespread delays and cancellations triggered by hail, high winds, and slow-moving thunderstorms that effectively shut down Delta’s hub at Hartsfield-Jackson Atlanta International Airport for several hours. Additional storms the following day compounded the chaos.
While weather-related disruptions are typically seen as outside an airline’s control, the unions argued that summer storms are predictable—and that Delta’s management operates under the delusion that it’s always sunny in Atlanta and its other major hubs.
“Delta has made the decision to staff the airline for blue-sky days, leaving minimal buffers in the system for operational disruptions,” wrote Captain Eric Criswell, Chair of the ALPA Delta Master Executive Council, and Jeff Donaldson, President of PAFCA-Delta—leaders of the only two unionized groups at the airline.
As a result, they warned, frontline employees “often feel pressured to continue their duty day when they are fatigued.”
ALPA-DAL spokesperson Karen Miller told the Atlanta Journal-Constitution that Delta’s pilot scheduling system dates back to the 1980s. When the system malfunctions—which she said it frequently does—pilots can wait hours to reach scheduling support. Plans to modernize the system, Miller added, are “nowhere near completion.”
The staffing and IT situation has been further strained by Delta’s long-term effort to streamline operations and reduce scheduling buffers. Since 2018, the company has cut margins that previously allowed for inevitable disruptions like weather or crew delays.
“We have urged Delta to invest in its people and IT infrastructure rather than continuing to rely on antiquated systems and processes,” Criswell and Donaldson wrote.
They aren’t the only ones calling out Delta’s rinky dink technology. Delta last year experienced a catastrophic IT failure that resulted in the cancellation of 7,000 flights over five days, disrupting travel for 1.3 million passengers. Analysts from Microsoft and a major cybersecurity firm attributed the outage to Delta’s outdated technology stack.
Decades-old Aircraft
Unappreciated by much of the traveling public is that a significant chunk of Delta’s fleet consists of Boeing 757s, an aircraft first manufactured in 1982. Delta was the launch customer, and the 757 entered service with the airline in 1984. At the time, the aircraft was considered advanced—especially its engines and wings, which improved fuel efficiency over the Boeing 727.
Four decades later, the 757 is still widely used by Delta for both short- and medium-haul routes. But aging aircraft raise very real safety and reliability concerns.
The Federal Aviation Administration (FAA) recently amplified those concerns, announcing plans to require Boeing 757 operators to review maintenance records or conduct inspections to ensure landing gear components have been properly maintained.
The warning was triggered in the wake of a Boeing 767’s landing gear collapsing after workers improperly used a grinder to “machine the inner diameter” of the landing gear’s outer cylinders, resulting in heat damage. The FAA subsequently discovered that the same maintenance facility used the same grinder on the landing gear cylinders of 166 Boeing 737s and 20 757s.
“This condition… could cause failure of a principal structural element to sustain its limit load, which could result in loss of control of the airplane,” the FAA warned. It further cautioned that the heat damage could cause the landing gear to fail in a way that might puncture the aircraft’s fuel tanks.
The FAA last fall ordered heightened inspections of 757s, citing structural integrity risks.
Delta—like other major U.S. carriers—outsources heavy aircraft maintenance to a low cost facility in El Salvador ultimately controlled by private equity. The FAA does not require the same level of on-site oversight for foreign repair stations as it does for domestic ones, raising further questions about transparency and quality control.
Rolling the Dice at 35,000 Feet?
While Bastian publicly brands himself as a steward of values and ethics, he’s also shown a willingness to dabble in casino capitalism at cruising altitude. In early 2020, Bastian told analysts he was exploring in-flight gambling as a potential revenue stream, suggesting passengers could someday place bets from their seatback screens—turning Delta aircraft into flying gaming lounges.
“That’s an idea we’ve had,” Bastian said, describing the concept as part of a push to transform Delta into more than just an airline but rather an experience company.
Bastian announced a partnership with gambling company DraftKings in January at a conference in Las Vegas. Delta surveyed customers last month, asking whether they’d want “exclusive access to sports gambling (sportsbook) opportunities” as something to “trial or explore on your personal device through Delta’s Wi-Fi portal?”
Delta also plans to use AI to determine how desperate a customer is to book a seat—and charge them accordingly. Delta president Glen Hauenstein trumpeted the plan to investors last week, noting that initial results have shown “amazingly favorable unit revenues.”
Senator Ruben Gallego (D-Ariz.) called Delta’s practice “predatory pricing,” saying, “I won’t let them get away with this.”
Bastian is yet another validation of the Starkman Approved Theory, which holds that companies and executives who most loudly profess their moral superiority invariably prove to be among the most ethically compromised.
In fact, I just might rename the theory “The Ed Bastian Maxim.”