Does anyone still work at Delta? This is one of the most unprecedented management exoduses I have ever seen. President of Delta's Song Unit Announces His Retirement By EVAN PEREZ Staff Reporter of THE WALL STREET JOURNAL October 1, 2004 5:30 p.m. Another week, another member of Delta Air Lines' executive ranks departs. John Selvaggio, president of Song, Delta's leisure-market unit, announced his retirement Friday, effective immediately. Mr. Selvaggio led the creation of Delta's latest airline-within-an-airline experiment in April, 2003, when it was a pet project of former chief executive Leo Mullin. And he helped fight to keep Song alive after Gerald Grinstein, took over as CEO in January, and made it clear he thought it was a bad idea. Delta is the third-largest U.S. airline and is struggling to pull out of a three-year financial tailspin. Mr. Selvaggio is the latest in a series of departures by executives at the beleaguered airline. Last week Vicki Escarra, executive vice president and chief customer service officer, announced her retirement. Mr. Mullin announced his retirement last fall, and was followed this spring by Frederick Reid, former chief operating officer, who left to become head of Virgin Group's effort to launch a new low-fare U.S. airline. Former chief financial officer, Michelle Burns, also resigned this spring, taking the same position at energy concern Mirant Corp. Several other middle- and upper-level executives have also departed. Song is Delta's answer to low-cost carrier JetBlue Airways, going toe-to-toe on leisure routes, particularly between Florida and the northeast. The lime-green paint scheme, simplified fares, one-class service, leather seats and in-flight entertainment units at every seat, all are intended to compete with JetBlue's cheap chic image. Regular Delta pilots, with their industry leading wages, fly the planes, but other employees were lured from Delta's ranks using "casting calls." Delta aimed to achieve lower costs by flying the Song planes more. Mr. Grinstein initially wasn't so impressed. He halted a previously planned expansion of Song and made blunt comments about the concept, such as saying he wished he could put the word "swan" before the Song name, fueling speculation that Song's days were numbered. But earlier this month, Mr. Grinstein reversed course and announced that the unit would add 12 planes to the 36 it already flies, adding that he was hasty in his remarks dismissing the Song concept. He said Delta had found Song to be an effective tool to blunt low-cost carrier competition, and a good laboratory to try out improvements for its mainline carrier. Song even had been profitable for a period, he said. And he credited Mr. Selvaggio for changing his mind. "I leave here knowing Song is well-positioned and fully supported as a strategic and vital part of Delta's transformation and future," Mr. Selvaggio said in a memorandum to employees on Friday. Paul Matsen, Delta's chief marketing officer, said in a memo that Mr. Selvaggio was leaving "to pursue personal interests." Joanne Smith, Song's vice president of marketing, will lead the unit until a permanent replacement is named. Mr. Selvaggio came to Delta in 1998 from US Airways Group Inc. to head up airport customer service. Later, Mr. Mullin tapped him to lead Delta's latest try at building a low-cost carrier as a secondary brand, an effort at which Delta and other major carriers have repeatedly failed. Just months after Song's $65 million launch, Mr. Mullin left, after failing to get a new lower-cost pilots union contract, which Delta has said is crucial to cutting its high costs and turning around three years of massive losses. Delta has lost more than $5.6 billion since 2001 and has warned it may have to file for bankruptcy court protection if its restructuring efforts don't succeed soon.