Mullin said yesterday his decision to resign, which caught Wall Street and employees off guard, was not influenced by the company's simmering controversy over executive pay.

"Obviously, the job is not done," Mullin said. "I wish we were in better financial shape. I wish the pilot contract was done. Having said that, I would say there has been a tremendous amount accomplished. There's never a perfect break point. This is the right break point."

After its worst-ever downturn, the airline industry is in the early stages of what analysts expect to be a long recovery. With passenger demand and ticket prices low, traditional hub-and-spoke carriers such as Delta need to reduce operating expenses dramatically to reverse years of massive losses.

Mullin, 60, will step down as CEO on Jan. 1 and as chairman in late April. He will be replaced as CEO by board member Gerald Grinstein, 71, who ran Western Air Lines from 1985 until 1987 — when it was acquired by Delta — and recruited Mullin as CEO in 1997.

John F. Smith Jr., a former chairman and CEO of General Motors Corp., will take over as chairman.

Grinstein, who said he tried to dissuade Mullin from resigning, has a good track record for getting wage concessions from employees and reducing operating costs.

"He saved Western Airlines," said Blaylock & Partners airline analyst Ray Neidl. "They would have gone bankrupt if not for him."

Investors seemed happy with Delta's choice for a successor. Shares of Atlanta-based Delta rose 82 cents, more than 7 percent, to close at $12.25 on the New York Stock Exchange.

Perhaps the most difficult task Mullin faced in recent months was persuading pilots to agree to deep wage cuts — concessions he has said the airline needs to survive.

Delta, which lost $168 million in the third quarter, has said it wants to cut pilots' wages by 22 percent, cancel pay raises due in the next year and reduce some benefits. The airline also wants to rescind a 4.5 percent raise the pilots received May 1 and a similar raise due next May.

Otherwise, Delta, which has laid off 16,000 workers since the 2001 terrorist attacks, has said it might have to lay off more workers.

Delta's pilots union, which was to meet with company executives today, issued a statement saying it "looks forward to a productive working relationship with new CEO Gerald Grinstein."

But the relationship has been strained in recent months by revelations the company spent millions of dollars to protect the pensions of a select group of executives, even as it sought concessions from rank-and-file employees.

After the uproar, Delta canceled the final payment to participants of its supplemental executive retirement plan and discontinued the program. Mullin has said the payments were needed to retain key managers after the 2001 terrorist attacks.

Earlier this year, Delta launched a low-fare subsidiary, Song, in an effort to stay competitive with low-cost carriers such as JetBlue and AirTran, which have grown rapidly at the expense of their larger rivals.