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Clash with board prompts Delta chief to retire Allen sought to demote CFO and failed in attempt to purchase Continental; Airline industry


ATLANTA -- Delta Air Lines Inc. Chairman and Chief Executive Ronald Allen announced unexpectedly yesterday that he will retire July 31, after clashing with board members over a bid to demote the airline's chief financial officer and leading a failed pursuit of Continental Airlines Inc.

A career-long Delta employee, Allen's combative personality put him at odds with his board and made it impossible for him to get support for his vision for the airline.

Though the airline has posted $550 million in profits over the last two years, Allen butted heads with directors over his plans to demote Chief Financial Officer Thomas Roeck Jr., and negotiations in December to acquire Continental Airlines, analysts and investors said.

"Allen was acting too independently of the board and not keeping them informed," said Scott Hamilton, a Dallas airline industry consultant and editor of the Commercial Aviation Report.

Roeck went to a board member in a successful bid to save his job, Hamilton said. The talks with Continental fell apart earlier this year.

Delta, the third-largest U.S. carrier, said in a statement yesterday that it will maintain a strategy of "disciplined internal growth." The Atlanta-based airline named Maurice Worth, 56, head of Delta's customer service unit, as acting chief operating officer and has begun a search for a successor to the 55-year-old Allen.

Allen's abrupt exit surprised some analysts because he survived tougher times during his 33 years at Delta.

The 1991 acquisition of Pan Am's New York-Boston shuttle and European routes for $1.3 billion, which he oversaw, contributed to $2 billion in losses from 1992 to 1994.

The airline saw its sterling credit rating fall to junk-bond status. "If he was going to be fired, he would have been fired two years ago," said Raymond Neidl, an analyst at Fruman Selz. "Delta has made a very strong turnaround" since the Pan Am route acquisitions.

Allen's biggest problem was that he is "tone-deaf with personal relationships," Hamilton said.

The board rejected Allen's plans for personnel changes, as well as his dreams for a Continental merger.

Pub Date: 5/13/97

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