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tv   Charlie Rose  PBS  May 23, 2013 12:00pm-1:00pm EDT

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>> rose: welcome to the program. we begin with the legendary coach of the chicago bulls and l.a. lakers, phil jackson. his new memoir is called "eleve rings: the soul of success." >> basketball has-- i compare it a lot to jazz when i talk about it in those esoteric terms. you know, there's a lot of freelance stuff that's going on, but you're all kind of in thing rhythm it together over here, and you're anticipating what's going to go on, and you're ready to pick up the beat if things come your way, and you might have a little bit of a solo act, and, you know, it's a real combination of a group of people playing together in sync. and it has to be done in a way in which it's a very supportive thing. like you said, it's not a
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superstar that's going to get you there. the lakers had three or four, four terrific players. they had howard, kobe bryant, steve nash this year. >> rose: we conclude with the c.e.o. of delta airlines. >> it's a great american story. i mean, we basically, without any government help or intervention and a lot of hard work, now turn delta into one of the most profitable airlines in the world. and we'll be on our fourth year of really strong profitability. >> rose: phil jackson and richard anderson when we continue.
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captioning sponsored by rose communications from our studios in new york city, this is charlie rose. >> rose: phil jackson is here. he is one of the winningest coaches in basketball history. he oversaw two n.b.a. dynasties, won six titles with the chicago bulls and five with the los angeles lakers.
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those teams were led by two of the all-time great players. since leaving the lakers in 2011, he's taken time to reflect on his coaching journey and what might be next. the story is cold in "eleve rings: the soul of success." i am very pleased to have phil jackson back at this table. welcome. >> thank you very much. it's nice to be sitting around this table again. >> let's talk about the title "11 rings." clearly there are 11 rings you have won. it has to do with the concept of rings of why you've won. >> the first chapter talks about the rings, and the fact that that team was-- they got in the middle of the semicircle, and they put their hand in and they said, "1, two, three, ring," the symbol of what they were after and how they came together to become a championship team. >> rose: where does it come from in terms of your philosophy? >> well, the circle is the
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ultimate thing that's the uniifying circ nel all kind of spiritual endeavors. the native americans use it. they live in it, the circle. and their tepees and circles of houses of rings of tepees that they kept. we don't have it that much in our western civilization. you don't use it that often -- >> native americans. >> that's right, the native americans are the only ones, really. but the ring is-- you know, it's what we wear bands of gold to symbolize our devotion to our mate, and that's kind of what the ring is about. >> rose: when you think about basketball and philosophy, is jur core competence xs and os or is it some sense of what winning is about. >> i failed to get a job one time because i supposedly didn't
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know enough about xs and os, and it was my first time in chicago as a candidate for an assistant coaching job. when gine riens dorph and jerry krause teamed together to be the owners and general managers of that team. and, you know, i never really got into the technical aspect of basketball until after that time and then i really got serious about it. fortunately for me i had two assistant coaches that i joined ranks with in chicago, when doug collins of the the coach, and that was tex winter and johnny balk. >> tex winter stayed with you for a while. >> and johnny balk grew up in eastern basketball. tex grew up in western basketball. the jump shot was developed out in the west and brought to the
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east, and all of a sudden, these guys were shooting a jump shot and a variety of things that changed basketball. these guys started giving me books about basketball. one was written by the 40s, dean, the university of wisconsin in the 50s,. and these writers about basketball, up to john wooden where it really was a game that was taught and a technical skill with a lot of xes and os. so i had a background in basketball and second ear education, basically. i went to graduate school in basketball when i first started coaching with the bull. >> rose: the triangle came out of that? >> it did. , you know, when i was with the knicks we ran three out or two out offensive system in which we ran a lot of things that were similar to triangle but we didn't load up the corner. when i say that, it means you put an overload on the basketball court. you place three guys on one side of the court, which makes an overload. we didn't put that guard in the
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corner. we ran a lot of things that were similar. and it was comfortable for me because it was a similar system in which id played in when i was a knickerbocker, so i braced it a lot. but the details that tex winter had inside this offense were all-encompasing. he wasn't the only one that taught or coached this. bill sharman did with the lakers in the 70s. it came out of the west, and it was an offense i thought would give good balance and order and give good shots. >> rose: explain it to me more than that. >> the idea is you have a two-guard front. everything was point guards, one guard distribute the ball. four guys down underneath, and sometimes one, three out, two in. and tex came back to me with the fact if you use a two-guard front, you have now changed the
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dimensions the court. now you have all these other options that you can use. you can use automatics with high post. you can use guard-to-guard leg passes which you can't do. you can break down pressure by having your forwards step into a backdoor area. which comes away from the defense. so there was a lot of concepts that i thought were important because every time you get into critical situations, especially in play-offs, when you're playing multiple games against teams, the pressure builds. and then who can handle the ball against the pressure? is the team going to start trapping the guard? then who is the guard who is going to handle the ball? it's going to be someone comfortable. ultimately, when i was with the bulls in our second run against the detroit pistons my second year there as assistant coach, we had to bring michael jordan out to play point guard because nobody could advance the ball against the pistons. it was a good team. >> rose: was this chuck daly's
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team. >> it was chuck daly's team. michael was terrific at it but it wore him out. bringing the ball up and trying to score 35 points a night just didn't work for him. the conversation was how could we do this better as a basketball team. we started-- doug collins left, and i became the coach, the hadd coach, and we started operating out of a system that was different and unique. >> rose: you had a system that you you needed a superstar to win but a superstar was not enough. what do you need beyond a superstar? >> well, you need everybody to feel their role has an opportunity to be display pd upon they are playing the best of their ability, or to their ability. so this system has opportunities for guys that can rebound only like a dennis rodman, not a scorer but a rebounder. it has opportunities for shooters like steve kerr, a great three-point shooter and still has the record in
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three-point shooting. you have to have drivers. pippin was a driver, ronnie happenner on our team was a driver. all those things operate out of everybody becoming a playmaker or having an opportunity to be a playmaker. so, you know, it means that everyone gets to touch the ball, and when i first came to the bulls team, michael was averaging 37, 38 points a game. and incredible scoring barrages he went on, but it was too much. he was too much a big part of the offense of teams that had great defense like detroit, could key off him. >> rose: in this book you have ventured fourth to talk about the greatness of michael and kobe. >> yes. >> rose: you resisted that for a long time. >> it's really hard to compare the great players. the empty you say someone is better you are diminishing the other person so i have trouble doing that. >> rose: but you do. >> yeah, i do make that
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adjustment. i was through coaching and it was time to make that. there are things different between the two players. characteristics -- they're very similar in a lot of their personality-- blood in the water, sharks attack. if you show weakness, i'm coming after you, and i'm going to score on you, and it might beue know, you might be out of the game in a minute or two. the other thing is a characteristic is that they believe in themselves, strongly believe in their capabilities. and that's a tremendous thing. when you believe in yourself, you can miss the last four shots but the next one is going in, guaranteed. but the physical characteristics are much different. michael had the hands where he could pick the ball up. >> he had huge hands. >> show the ball, make a guy get off his feet, not have to pick it up with two hands to deliver it. there were all kinds of things
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that michael could do that gave him advantage. coab sea better three-point shooter, maybe a better outside shooter. kobe also, maybe to his detriment had to run more guard, more setup, let's get this organized offense going, and get the ball to shaq because that's-- michael was always in attack position. he had more of attack opportunities. >> rose: you also said michael was a better leader. >> he was. >> rose: that was at the beginning of kobey's career. he got better at it. >> he got very good at it. to win championships you have to have a leader. michael grew up in north carolina. one of his items in his hall of fame speech that he was like asked what motivated him, what motivated him, one of the things were i wasn't involved in the picture in "sports illustrated" that said this is the best team in college basketball. and it didn't show me. and i knew i should be there.
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well, he was a freshman. he wasn't going to be on that picture. he was just a kid. and they had worthy and perkins and great teammates. he's the one that made the final shot for him to win that championship game against georgetown. however, he had a couple of years, learned the system. the big joke was who can hold michael jordan down. it was dean smith. >> rose: that's right. and always will. but he loved dean smith. >> he had to pay allegiance to the system and the organization they were under. so he came with the knowledge in hand that i have to be, you know, in a system. it's okay. even though we had some contested opening times when i said, you know, this has got to be more equal opportunity offense. more guys have to be involved. you're going to have to cut back on your scoring. he took that -- >> what did he say to that? >> you know, i still think i can lead the league in scoring with 32 points a game. that's eight points a quarter. that's a doable thing for me.
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i said never was for me. that was a big deal for me to score eight points in a game. but try to score, you know, 16 points in the final quarter, and maybe those first 16 points in the first three quarters, save the best for last. so we had some fun times while we went through this. but his big thing was, what's going to happen when the time clock, 24-second clock is running down. the ball's in the center's hands. woe said we'll teach how to pass to you. we'll figure out how to get the ball to you at the right time. so there were some light moments but there was an overtone that this is going to change. one guy has to be involved with the ball than just you and the point guard or whatever. and so we had a great relationship. with kobe, he was a very willing student. when i got there, he was very interested. he was there the day i signed with the lakers as a coach. my opening salvo in the los
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angeles area. unfortunately for him, he was injured in training camp the very first exhibition game, missed the first six weeks of the season, but he got a chance to sit and watch. when he came back, he moved into guard role, and he had to learn in the process which was, you know, a good thing for him but not for his scoring average. so there's a story that, you know, i tell i think in the book about jerry west calling me up and saying-- general manager-- i got a call from kobe prient. he's concerned. he doesn't know how he's going to be a hall of fame guy if he's only scoring 16 or 18 points a game, which he was at that time. shaq was averaging 30. and he wanted to know how did elgin barely and i score that many points in a game in an average. i had to go to coaby and say, "look, you're going to score points. you're natural. that's what you're going to do.
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don't worry about how you're going to score. that will come to you. you're go to be here for a long time "t" sm i think he's fourth or something ridiculous like that on the list and chasing michael jordan as the next guy. >> rose: will he beat jordan? >> he will if he comes back from the operation. >> rose: in the end you come down to michael's side. >> michael, i say michael was maybe a little more consistent and a little better percentage shooter and maybe took a better percentage-type shot. >> rose: the interesting thing about coab nethe beginning, for example, he was not doing a hangout with the players. i once interviewed him for "60 minutes," and magic told me that he would go back to the hotel room every night after a game and watch the game tape. >> yup. >> rose: that's when he did. everybody else was out having a good time. >> right. and i took it up with him because i had players -- >> you needed him to hang out
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with the guys. >> i said, "do you want to be a leader? do you want to be the captain of this team?" he said i should be the captain. i said, "kobe, you're 21 years of age. you need to go with the guys so they'll follow you." he said, "they're interested in cars and tbirlz. i'm not interested in that. this is a business for me. i want to make a mark for myself in basketball." i said you're going to do that but you need to accommodate your teammates. you need to find common ground with them. and he did it. >> rose: put lebron james into this mix. >> wow, he's a freight train. he's not even that. he's a speed bullet train down the league with these guys. who wants to step in front of him. who wants to stop that charge. that's the challenge teams have to face and he's got a great basketball knowledge. the big thing he's improved consistently from year to year. we don't know where it's going to stop right now. >> rose: it's unimaginable.
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>> as he does that, how many championships is he going to get? that's what will be the measure of his success. >> rose: that's what he cares about. >> that's what all players care about, is the championship. >> rose: that defines great of the. >> it does. >> rose: when you talk about michael, you knew he won six championships, right? >> that's right. >> rose: leaving l.a., this is what surprise me. they asked you to leave. they came to you on a friday night phone call, and you were thinking of whether you wanted to re-sign and they said we've signed someone else. you had five championships. you were the coach's coach, and they say adios. >> well, ultimately, i left in their hands, even though i said -- >> they said go away for the weekend and become it.
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it was in your hands. >> it was. they says you know we have to talk to other people. we have to make this change. and i knew they were going to talk to mike dun leafy and other people. i the said, of course, that is r job. my job is to figure out if i could still do this job. >> rose: was it that or were you tired of it, and didn't know if you wanted to do it again or a guy who liked to move from opportunity to opportunity? >> i had to assess what's in this? how difficult is this going to be from me? i'm recovering from knee replacement, achille's tendon problem. >> rose: was this preprostate-- >> no, i had a prostate operation. there were a variety of things i had gone through that-- i was still coming back through those operative sequences. and, you know, i felt like, you know, i can coach this team. i don't know if i can go on the road and do the job night after night in this kind of a situation. couch that with the
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understanding that i had gone out to lunch with mitch cupcheck a month before and he pointblank asked me, "are you going to go back to coaching." i had no intention of going back to coaching again. when i sat down with those two on saturday morning, the question-- one question mitch asked me was, we just talked a month ago and you said you had no intention of coming back to coach. what's changed? >> i said, what's changed is it's the los angeles lakers. this is the bus family. this is my fiance -- >> daughter of. >> jerry bus. and these are players that i've coached before and have won a championship. that's the reason i'm intrigued by it. i'm not saying i'm going to do this, but that's the reason it was intriguing. >> rose: and that was saturday morning, and sunday night mitch called up and said-- what did you think? did you simply say in some great philosophical understanding of humanity i understand and walked
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away with no great emotion or did you say, "you s.o.b.?" >> no, i asked him what their decision was and he told me. and i said, you know, well, you know, mike dantony was a good coach for steve gnash. >> rose: in phoenix. >> but i don't know about howard. he said we'll have to live with that decision. >> rose: you know what surprised me is they didn't consult with you? >> no. >> rose: that's what i don't understand. what you meant to that family. that is what didn't make sense to me. >> there was some sense of whether power, position, the newness of bus being the head of the organization. >> rose: jerry was still alive. >> jerry was still alive. and jerry may very well have had a hand in the decision.
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>> rose: his daughter's fiance. and i'm told he doats on his daughter. >> he did. >> rose: it's hard for me to figure out. >> it was strange. it was a strange night. >> rose: so you get that. did you call her up? did she know? >> no, i went and told her. she called thep r guy and they had, "this isn't true, is it?" and he said, "i just got the call from the los angeles times reporter and he has it from a reliable source that it was true." it was hard for her to digest. that was the hardest thing. she always said, "i want no part of the basketball. i'm not getting involved with the basketball." so when her brother come and said, "will phil talk to me?" and she said, "you know, i'm not going to get involved in it but talk to him. i'll go home to him and say 'have an open heart and listen to what jimmy has to say'." and i did. that was part of it.
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>> rose: so now, the nets come along. got a new team, a new owner, new york. see, i've always believed-- this is me-- you wanted to come back to new york. you want to be in new york. i know you love that lake in montana. >> yeah. >> rose: and i know you love the west coast. but this is new york. and this is where jackson belongs. >> well, i had a great experience playing with new york knicks and it will always be a part of my history and my life and bus always said you have to think about new york -- >> so she agrees with me. >> yes, she does. i think basketball really the essence of basketball is here, new york, new york city
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basketball, you know, that whole thing. so there's a whole bit about basketball that's wonderful about this city and about their devotion to it. philadelphia, boston, there's going to be a lot of cities that want to step in there and contest. but i think, you know, the knicks have turned a corner and i think they were getting going in the right direction. >> rose: where? >> they didn't get too far in the play-offs but they got better. they got into the second round. >> rose: but they have an owner who has more money than god. >> he does. and, you know, they came to me the same year i came back from my hiatus, and they approached me, and isaiah was serious about it, and we sat down and it just wasn't the right time. and make amends with kobe after a tough situation when we lost to detroit in the finals. >> rose: you love the game. what i understand from you is that it is science, what you just explained to me, but it's also art, yes? >> the biggest thing about it,
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charlie, is that it's a connection of human beings about which no other sport has. you don't -- >> why not in any other team sport? >> there's not that knowledge, that understanding of where everybody is on the-- you know, baseball has situational stuff when you play defensive baseball, you're out in the field. you know the pitcher's got a backup third base on a double or triple. and, you know, that the cutoff man has got to be here. but there's just not that-- you know, you're going up there to bat alone. it's not a team situation. basketball has a-- i compare it a lot to jazz when i talk about it in those esoteric terms. it's-- you know, there's a lot of freelance stuff that's going on, but you're all kind of in the rhythm together over here and you're anticipating what's going to go on and you're ready to pick up the beat if things come your way, and you might have a bit of a solo act, and
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it's a real combination of a group of people playing together in sync. and it has to be done in a way in which it's a very supportive thing. like you said, it's not-- it's not a superstorr that's going to get you there. the lakers had four, four terrific players. they had howard, they had gasaul, kobe briept, steve nash this year. >> rose: why didn't they? they didn't have enough role players? >> age, injuries, the style of ball they played. >> rose: tease me-- do you know what you would do with the knicks if you were the head coach and had authority with the team in the same way that o'reilly has authority with the heat? >> yeah, i know what i'd do, but i'm not going to tell you. >> rose: why not? >> it's not fair to those people. they have two things. they've got a point guard and a
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center that are solid players. that's an ingredient for a championship, a very good contending team. and you build from there. you start putting role players together from there. but this league has been dominated by points and centers. or lead guards and your big men since the history of the n.b.a., since it began. so when they have that ingredient covered, they're on their way. >> rose: what's likely to happen to you? >> well, i'm not going to fade away and go ginto the sunset but i don't know what the next chapter is going to be. there's an opportunity, when the seattle-sacramento thing was going on that i was going to go to celtics and be with this young man that was going to start this team over in seattle. kevin johnson, the mayor of stack ramento, rallied his town together and they put -- >> he's a good mayor. >> yes, he did a job for them, and they got the team and interest back in the kings.
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so that's going to have to take another step back. i was looking forward to having an opportunity to work with a franchise that was kind of a clean sheet, starting all over, moving to a new place, and a place where basketball has been really great in celtics. they a good franchise. >> rose: they did, indeed. good town. is it possible you're just too much "hamlet--" to be or not to be? >> wow, that's a transition if i don't know i can even come back at that charlie. you know, i'm a person that opportunity has come my way in every situation that i can look back in my life. and, you know, it's like well why don't you do this? it hasn't come to me yet. why don't you do that? i'm still waiting for the intuition or the inner voice that says this is the right thing to do. when it happens, it will happen. i'm not worried about it at all.
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>> rose: and you know? >> yes. >> rose: that's an interesting concept, and maybe you get that from your zen philosophy. it is-- you know, the ability to wait for it to come to you, the wisest generals and some say the wisest people understand that there's an ebb and flow in a game or in life. and they know when their moment is right and they know when to hang back and let it happen. because they understand the flow of things. >> the chinese go to astrology and do it all the time. sodo bermese. their belief in astrology. i don't use the stars but i think there's an intuitive nature to life. >> rose: i think you're right. i'm not sure i practice it, but i think you're right. the book is called "eleaven rings: the soul of success." it's more than basketball, but basketball as i believe is art and science and is human and phil jackson has done it as well
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as anyone. and he has 11 rings as evidence of that. back in a moment. stay with us. richard anderson is here. he is the c.e.o. of delta airlines. this week they will unveil their brand new terminal 4 signifying delta's place as one of the country's premiere airlines and represents a changing in the industry as carriers invest in better amenities and infrastructure. in 2008 he oversaw the merger with northwest airlines where he formerly served as c.e.o. i am pleased to have him here at this table. welcome. >> thank you for having me. >> rose: first the industry. it seems like they're merging four. >> in the long run it's good for the country and good for the industry to have a strong and stable set of global airlines. >> rose: but does it reduce
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competition because those four, in a sense, have their own areas that are staked out for them. >> well, the industry is incredibly competitive, probably one of the most competitive industries in our country or in the world, and consumers have good transparency through the internet on fares and offerings, so there's plenty of contestability in the marketplace with four big carriers. >> rose: somebody once said to me-- i don't know that much about this-- someone once said to me it used to be that if there was a carrier that lowered prices it forced others to lower prices and that's no longer true. >> that's not exactly correct. if you analyze the dot-db-1 data and you analyze airfares since deregulation. airfare is down on an inflation-adjusted basis, including fees are probably down a third from where they were at deregulation and down 10% from where they would have been right before 9/11. so we still offer tremendous
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value, and there's still good contestability in the marketplace. >> rose: yet, at the same time you seem to be searching for ways to add fees. >> well, we aren't searching for ways to add fees. we're trying to give consumer choice about what they want and what they don't want. the most recent -- >> you have to pay for paggage. >> when you think about baggage, for instance, the cot of transportation and handling of baggage is very significant. i mean, we just made an invest of $150 million in the atlanta baggage system so we can sort and move people's baggage. we move 15 million pieces of baggage a month and it takes an army of people and a massive set of systems and computer systems to be able to do that. >> rose: when a piece of baggage is lost, what happens? some handler puts it on the wrong truck and it gets sent the wrong place? >> what we've done is put scanning technology in place so
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when the tag is applied to your bag, it has a barcode on it. and our baggage system resident the barcode and when it gets to the airplane, the handheld device, if you look out your window, there's a baggage handler clicking on that barcode before it goes on the airplane. then when it comes off it gets read. stow we have traceability now on the system. the most common thing is in irregular operations where we have weather events and you connect through a hub, sometimes the baggage doesn't make it with the passenger because of the weather. otherwise, delta under d.o.t. regulations, we deliver about 99.8% of all bags without a claim. >> rose: you have to be in the business of ascertaining what your customers want. tell me what they want. >> well i think first and foremost the customer-- delta customer today wants a safe, clean, on-time, with bags, with
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courteous service from our passengers and a selection of amenities and the flexibility of a good schedule i and a strong t flyer program. so it's a whole series of choices that consumers make. we've got to have a competitive price in the marketplace. but we also have to to do an absolutely superior job of running a pristine operation on the airline with friendly employees. >> rose: do you think ammenities are as good as they use to be? i mean by that food. i mean by that leg room. i mean by that service. >> i think on dealta we've gone through a real renaissance. delta always had the reputation-- and you know that from deeg a duke grad-- delta was always known as the j.d. power winning airline what had hospitality, and what we've really worked to do is revise that. as the industry does consolidate, the good thing about the consolidation for consumers is now we compete on the quality of our product and the service that our employees
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render to our customers. and we think that's a very important part of the efresolution of the industry. >> rose: are you interested in buying dreamliners? >> when i was c.e.o. of northwest in 2003 shook hands with malali to buy the first 18 of them. and we made a decision in 2009 to defer that. they will get it right. it is a good technology to take that much weight off the airplane. >> rose: they will get it right. why is it taking them so long? boeing is supposed to be a great company. >> boeing is a agreed company. >> rose: a lot of it was subcontracted. >> what you also can't forget about it is they're really innovating way ahead of the rest of the world in this airplane. >> rose: it's lighter than you might expect for a plane that size? it's more fuel efficient than you expect for a plane that size.
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>> correct. >> rose: it can go further. >> it's the first airplane that doesn't take air off of motors to power other systems and heat and cool the airplane. so it's got a lot of efficiencies, a lot of innovation, and both's a great company. >> rose: having said, that you have no order for dreamliners? >> we have an order but it's out in 2022. we want to see the stretch version and see it operate efficiently. >> rose: the delta terminal at j.f.k., is that a big deal for delta? >> very big deal. >> rose: because new york is a big market. >> new york is the number one market in the united states. 22 million, 23 million passengers a year. delta is the largest carrier at j.f.k. and now we'll have 17 international gates with our new partner, virgin atlantic, in the the same terminal. we'll be kicking off phase two and build an additional nine gates after we dedicated the
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facility this friday. >> rose: do people go to-- do people sign up for a particular airline because of a particular terminal? nrksdz am i going to buy delta because i like the terminal? >> it's the amalgamation of all the pieces of the product. the terminal facility, the web site, the ease of booking tickets, the convenience of the schedule, the brand recognition, the reliability of the airline. the product we offer-- and we offer three-class product, business class, economy-comfort, coach. and we have a lot of amenities on our airplanes. wifi, as we talked about earlier. individual videos. power, and we will be bringing storied content to our airplanes to be delivered over wifi. it's an amalgamation of all the pieces that go-- that's really how the industry and delta will evolve. we want to be an iconic consumer
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brand and provide the kind of service expruct that will give us the reputation with our customers that we're the superior brand in the marketplace. >> rose: does the merger between american and u.s. air provide tougher competition? >> it provides good competition. you'll have four large carriers in the u.s. when you think about fowrp large carers in the u.s., they'll be a formidable competitor but delta will remain number one. >> rose: what's the most innovative airline in the world, besides delta. when you look around, who is someone you look to with great admiration. >> virginiain atlantic -- >> oh, come on. you have a relationship with them. >> we just bought into them but when you think about what virginia is able to do because of the brand. it is the number one brand across the transatlantic -- >> why does the c.e.o. of delta think that, that it's been the number one brand crossing the
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atlantic? >> of. >> it's a survey of passengers s that ranks the. >> rose: people have been saying the quality of travel on virgin atlantic from the east coastef america to europe is the best. >> has been the best, correct, correct. so -- >> but what made them say that is what i'm asking? >> i think it's a combination of the product on board, the service by the people, and the brand promise and the delivery of the brand promise by the virgin people. it's pretty remarkable that you could be that small an airline if that big a market and operate with 40, fritsch airplanes and be the number one rated prand in the market. >> rose: speaking of oil, which is a big factor in your cost, in your cost structure, did you buy a refinery? >> we did. we bought the trainer refinery from conocophillips just south of philadelphia on the delaware
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river. >> rose: will that provide all the gasoline you need for all the planes you have? >> it won't because we buy-- delta buys $12 billion of jet fuel a year. >> rose: and what will they produce at the refinery? >> the refinery refines 185,000 barrel a day and out of that produce about 40,000 barrels of jet fuel. >> rose: what percent annual of your usage does it provide? >> it provide-- it will provide about 25% of our domestic usage, but we have offtake agreements for the nonjet product-- diesel and gas-- that we have in exchange agreements. so it affects price on about 80% of our domestic consumption. >> rose: why did do you it? >> we did it because crack spread, which is what you see at the pump for unleaded gas. when you see the prices of oil
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going down and the prices at the pump goes up, that's the crack spread. it's been the fastestest growing cost at delta airline oamps the past four years. and the refinery-- refining industry was in the process of shutting down a number of refineries on the east coast which was really going to drive our jet fuel prices sky high. when you think about being in a commodity swensive business with the volatility and commodities, we thought we needed to control our supply chain. it's between quite will successful in terms of even though we bought 25% of all the jet fuel in the u.s., we did not participate in the pricing function in the jet fuel market. and now we do. and as a result, jet fuel has consistently been bilow diesel for the first time in years with
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our production asking online. >> rose: i'm asking all these questions that travelers ask. smartphones, do they really do anything that affects the cockpit? >> we are leading the effort by the industry and the f.a.a. called "the arc" the head of engineering at delta is running the effort to do want-- to do science. our position is we should do the science and allow people to use their portable electronic device through taxi, takeoff, and landing. and we're going to go down the process together with the f.a.a. to put the testing protocols in place to allow airlines to do that. we think it's feasible. >> rose: and how long will this take? >> we tonight think it's-- the arc, the cooperative group of airlines in the f.a.a., the arc some complete the work some time mid-summer.
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michael huerta is doing a great job leading the effort. and we're going to work on the engineering necessary by each airplane type to be able to prove that they do not provide interference. if you think about it practically, charlie, how many times have you been on an airplane and you didn't realize your device was in your pocket. >> rose: most of the time. >> and that's probably true of all consumers. consumers. >> rose: why does it take us so long to get to the right conclusion? >> the great thing about aviation state of, which you should wants to do, we always err-- >> erro the side of caution. people talk about six sigma quality. we are way past that. i also auldz tell people if we had run oil platforms in the gulf of mexico with our safety
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systems the results would have been different because we operate at a level of safety and a level of compliance that is far and above i think any other industry. so we awms err on theide of scawgz. and in some instance, the industries erred on the side of caution. >> rose: with all the consolidation taking place is the economic future of airlinegood? >> the economic future of the u.s. airlines are good. we went through a really difficult time. 9/11 was incredibly difficult on this industry, and we went through a whole series of restructurings, that included fuel prietses will. the last time delta had a profit in the first quarter, the last time we were profitable of the in the year 2000 -- >> the last time you were profitable? >> in the first quarter, january, sphb, march. >> rosejanuary.
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s so the cost fuel has, you know, gone up significantly over that period of time. we went through a engine meltdown. and when you take the amagmation of all that, it'seral a great american story i mean, we've basically, without any government help or intervention and a lot of hard work, now turned delta into one of the most profitable airlines in the world and we'll be on our fourth year of really strong profitability. >> rose: are airlines in the united states compared to europe, latin america, asia, or the middle east? >> we are the most profitable as a group in the worldwide industry. it's often hard to measure carriers in other locale because
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they're state oabd and state operated. >> rose: singapore-- >> those cariers, government and the airline are one and the same. they don't have transparency that u.s. companies have. >> rose: there are twhave. >> we have the best labor relations in the world. delta airlines has the best labor relations. we i have a really egalitarian society at delta. so our executive compensation is tied to our employees receiving profit sharing. so 15 -- >> explain that. your executive compensation. >> correct. >> rose: is tied to employees receiving profit sharing, meaning before there can be a dramatic rise in executives there has to be an equivalent rise in profit sharing for
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employees? >> well first of all, what we do on base pay is we're right around the top of the industry on wais pay because we think it's important, if we take care of our employees, our employees will take care of our customers, and we will be the most successful airline in the industry. but the way our compensation systems are set up is, first, we all have the same benefit plans. there are no separate retirement or benefit plans or anything else from me all the way through the organization. the second thing is our bonuses, the executive bonuses are only paid in cash in the event employees receive profit sharing. and the employees receive 10% of the pretax profits of the enterprise and add back the executive compensation. so this past year-- we always of always pay it out on valentine's. we paid $378 million to our employees which say significant
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payout. 15% of our scusm is owned by our employees and every month when he hit the customer metrics that make you want to come black and book with the company, every employee gets $100. we call it shared reviews. we are a nonunion carriers, except for our pilots, we are a nonunion carrier, but we use that as an opportunity to make it a good place to start. >> rose: do you like labor unions? >> you know, i have worked at carriers with labor unions, and i think we are more effective with a direct relationship with our employees >> rose: when you look at items that affect the future of the airlines, what's the-- what's the frontier? i mean, what will delta do or
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american do or united do in order to gain a competitive advantage? >> well, i can tell you what delta will do. we think that the competitive advantage comes in a number of places. one is we've got to have both organic growth and inorganic growth and what i mean by that is if you lookality what we've done at delta, we're going to have to continue to grow our business through transactions, like the virginiain atlantic transaction where we bought 49% of virgin atlantic from singapore airlines. like the slot swap we did to build a hub at laguardia. the merger with northwest. we have to continue that kind of innovation. the second thing is we've got to continue to evolve the business model in very creative ways, like buying a refinery, like investing in aero mexico and becoming a member of the board
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of directors and establishing a relationship between mexico and the u.s. or winning two of the three major flying airlines. it's what ilcall having good organic growth, and having good inorganic growth. we have to provide a superior product, stellar separations with flight employees everyone day. third, we've got to gone continue to vest in technologies. whether those technologies are decision technologies or new aircraft technologies, we've got to continue investment because ours is a very tech noamg driven business. we have to make sure the investments have sheer payback for us. >> is size changed. and you look at regional routes from new york to north carolina,
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for example, you get to the plane, is there is thought much seat room. and that's because of two reasons. number one, you don't, and when i ask my friend about that, there's even less service to regional airports. >> that is in part true. one you zseen a real demographic change in our country which more and more people are moving from rural america into large cities. we have real urbanization going on. the second thing is when the rarely industry was deregulated we had the official air evidences is program where the government was going to provide certain subsidies to small communities and that program hasn't been successful or properly funded since 1978. but third -- and this is one i believe the industries caused -- we have far too many 50-seat
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regional jets at delta. when you're flying from new york, laguardia airport, to rdu in the next 24-36 months it will be an all three class airplanes. one of the innovations delta sick taking we are going to go from sixth 50 seat regional jets to 100. the only place you and i want to fly a feat 50 seat regional jet is from atlanta to georgia. if it's 300 miles, you don't mind quieting on that. we're wee hear you loud and clear as a customer, which gets back to the tonight-- delta will
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note be a commodity. we want to identify ourselves with the passengers. that's the biggest threat tow deatha's success. >> i think we're always concerned any whether the u.s. government has a strong national airline policy. >> rose: did it? >> no we don't have a small driver. and feeble-- we had commissions over the past 30 years, that came up with sets of recommendations on developing a national policy. we've been the world leaders in aviation for 80 years. we represent 30% of the global aviation market and we believe it's imperative for owrp
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government to adopt a national ordinarily we have to have a modernized air traffic control system. number two, we are the highest taxed industry in the united states. if you look at the detail billion your ticket where probably one p2% sold to every ticked sold in theus. number thee, we need to they can mure the exphecial rig may goes to our industry is not burdensome. if you look at countries like china, and the middle east and latin america, they view aviation as one of the most important strategic assets for
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their country in terms of economic development. in the united states i think we may take that a bit for granted. >> rose: you think some conservatives when they hear you say that think that's a big too much government for me? >> well, we aren't asking for subsidies. we're just asking for a prof lairline policy that allows us to compete. >> rose: great to see you here. >> great to see you here. you're very kind to ask me to be here. >> rose: richard anderson, c.e.o. of delta airlines. thur for joining us. soo you next time.
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