Delta Air Lines: High Performance Through Financial Outsourcing

To help it overcome the challenges facing the airline industry, Delta Air Lines outsourced its European finance and accounting functions to Accenture. The 10-year agreement goes beyond cost saving; improved business processes now allow Delta to manage its finances better and develop insights that will contribute to high performance.

Client Background
Delta Air Lines is the world's second-largest airline in terms of passengers carried, offering daily flights to 503 destinations in 94 countries on Delta, Song, Delta Shuttle, the Delta Connection carriers and its worldwide partners. In summer 2006, Delta became the world's leading carrier across the Atlantic as it launched flights to 11 new European destinations from its Atlanta and New York-JFK hubs. Delta also is a major carrier to Mexico, South and Central America and the Caribbean, with more than 35 routes announced, added or applied to serve since Jan. 1, 2005.

Like its competitors in the airline industry, Delta Air Lines has faced a number of significant challenges, including escalating fuel costs, a decline in passenger traffic since September 11, 2001, and mounting competition from low-cost carriers. In response, Delta has taken aggressive actions to reduce costs, while maintaining the level of service its customers have come to expect.

One of the airline's cost-saving initiatives involved outsourcing its European finance and accounting functions to a third-party supplier. Accenture quickly teamed with Delta to execute an efficient transition of the carrier's European finance and accounting functions related to accounts payable, financial accounting, billing and reconciliation and, to a lesser degree, accounts receivable.

The goal of the 10-year outsourcing arrangement is to help Delta continually improve service levels and reduce the costs associated with managing its current European finance and accounting operations. The cornerstone of the transition effort involved moving the company's finance and accounting services to the Accenture Delivery Center in Prague, Czech Republic.

In addition to providing general back-office services—ranging from accounting to collections—the Accenture Delivery Center in Prague is deploying Accenture Vendor Payment Services to increase visibility, cost effectiveness and control of the accounts payable process. The team has also deployed a Service Management Reporting portal that provides executive summaries and detailed performance reports on how Delta's finance processes are being managed.

While the outsourcing relationship is still in its infancy, Accenture has already identified initiatives that will potentially exceed Delta's ambitious cost-reduction goals. Accenture's willingness to share value from the outsourcing deal with Delta is contributing to these cost-reduction benefits. Specifically, this benefit-sharing arrangement, which provides Accenture with a financial incentive for delivering additional savings, is expected to generate an additional two to three percent cost savings on Accenture's price.

In addition to cost-saving solutions, Accenture has implemented a set of tools, processes and technologies that have improved visibility, service levels and overall control of Delta's finance processes. Additionally, the Accenture Service Management Reporting portal is enabling Delta's leadership team to proactively monitor its finance and accounting functions and develop insights that will continually position the company for higher finance performance.