-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, N2Gm46Qt/Mafel6cObanD/lw0MaGfOnNNYZLNlrJOvxEsqP+Fb40GLhZc/UxBqS6 SH8StUV6DgRNQtlCw1xM5A== 0000950144-02-003929.txt : 20020416 0000950144-02-003929.hdr.sgml : 20020416 ACCESSION NUMBER: 0000950144-02-003929 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20020416 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20020416 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DELTA AIR LINES INC /DE/ CENTRAL INDEX KEY: 0000027904 STANDARD INDUSTRIAL CLASSIFICATION: AIR TRANSPORTATION, SCHEDULED [4512] IRS NUMBER: 580218548 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-05424 FILM NUMBER: 02611722 BUSINESS ADDRESS: STREET 1: HARTSFIELD ATLANTA INTL AIRPORT STREET 2: 1030 DELTA BLVD CITY: ATLANTA STATE: GA ZIP: 30354-1989 BUSINESS PHONE: 4047152600 MAIL ADDRESS: STREET 1: P.O. BOX 20706 STREET 2: DEPT 981 CITY: ATLANTA STATE: GA ZIP: 30320-6001 FORMER COMPANY: FORMER CONFORMED NAME: DELTA AIR CORP DATE OF NAME CHANGE: 19660908 8-K 1 g75596e8-k.txt DELTA AIR LINES, INC. UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): April 16, 2002 DELTA AIR LINES, INC. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 1-5424 58-0218548 - ------------------------------------- ----------------------------------- ----------------------------------- (State or other jurisdiction (Commission File Number) (IRS Employer of incorporation) Identification No.)
Hartsfield Atlanta International Airport, Atlanta, Georgia 30320 ---------------------------------------------------------------- (Address of principal executive offices) Registrant's telephone number, including area code: (404) 715-2600 -------------- Not Applicable -------------- (Former name or former address, if changed since last report) ITEM 5. OTHER EVENTS AND REGULATION FD DISCLOSURE Financial Results for the March 2002 Quarter Delta Air Lines, Inc. (Delta) will today issue a press release reporting financial results for the March 2002 quarter. The press release is attached as Exhibit 99.1. Delta also will be providing supplemental data for the March 2002 quarter to certain analysts. The supplemental data is attached as Exhibit 99.2. Forward Looking Statements Statements in this Form 8-K including exhibits, oral statements made during Delta's webcast conference call on April 16, 2002, and statements otherwise made by Delta or on Delta's behalf which are not historical facts, including statements about Delta's estimates, expectations, beliefs, intentions, projections or strategies for the future, may be "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from historical experience or Delta's present expectations. Factors that could cause these differences include, but are not limited to: 1. the many effects on Delta and the airline industry from the terrorist attacks on the United States on September 11, 2001, including the following: a. the adverse impact of the terrorist attacks on the demand for air travel; b. the change in Delta's operations and higher costs resulting from, and customer reaction to, new airline security directives, including the Aviation and Transportation Security Act; c. the availability and cost of war risk and other insurance for Delta; d. the extent to which Delta receives additional financial assistance under the Air Transportation Safety and System Stabilization Act; e. the credit downgrades of Delta and other airlines by Moody's Investors Service and Standard & Poor's, and the possibility of additional downgrades, to the extent it makes it more difficult and/or more costly for us to obtain financing; f. potential declines in the values of the aircraft in Delta's fleet or Delta's facilities and related assets impairment charges; g. additional terrorist activity and/or war; 2. general economic conditions, both in the United States and in our markets outside the United States, including the extent of the weakening in the U.S. economy and the related decline in business and leisure travel; 3. competitive factors in our industry, such as mergers and acquisitions, the airline pricing environment, international alliances, codesharing programs, and capacity decisions by competitors; 4. outcomes of negotiations on collective bargaining agreements and other labor issues; 5. changes in the availability or cost of aircraft fuel or fuel hedges; 6. disruptions to operations due to adverse weather conditions and air traffic control-related constraints; 7. fluctuations in foreign currency exchange rates; 8. actions by the United States or foreign governments, including the Federal Aviation Administration and other regulatory agencies; 9. the willingness of customers to travel generally, and with us specifically, which could be affected by factors such as Delta's and the industry's safety record; and 10. the outcome of our litigation. Caution should be taken not to place undue reliance on our forward-looking statements, which represent our views only as of April 16, 2002, and which we have no current intention to update ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. (C) EXHIBITS Exhibit 99.1 Press Release dated April 16, 2002 titled "Delta Air Lines Reports First Quarter Results" Exhibit 99.2 Supplemental Data sheet dated April 16, 2002 titled "Supplemental March 2002 Quarter Data" SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. DELTA AIR LINES, INC. BY: /s/ Edward H. Bastian ------------------------------------ Edward H. Bastian Senior Vice President - Finance and Controller Date: April 16, 2002 EXHIBIT INDEX Exhibit Number Description - -------------- ----------- Exhibit 99.1 Press Release dated April 16, 2002 titled "Delta Air Lines Reports First Quarter Results" Exhibit 99.2 Data sheet dated April 16, 2002 titled "Supplemental March 2002 Quarter Data" EX-99.1 3 g75596ex99-1.txt PRESS RELEASE DATED APRIL 16, 2002 EXHIBIT 99.1 FOR IMMEDIATE DISTRIBUTION CONTACT: Corporate Communications Investor Relations 404/715-2554 404/715-6679 DELTA AIR LINES REPORTS FIRST QUARTER RESULTS ATLANTA, April 16, 2002 - Delta Air Lines (NYSE:DAL) today reported results for the March 2002 quarter. The key points are: - - DELTA REPORTS FIRST QUARTER LOSS OF $354 MILLION, OR $2.90 LOSS PER SHARE, EXCLUDING UNUSUAL ITEMS. - - DELTA REPORTS FIRST QUARTER LOSS OF $397 MILLION, OR $3.25 LOSS PER SHARE, INCLUDING UNUSUAL ITEMS. - - DELTA RECORDED AN OPERATING PROFIT IN MARCH 2002, EXCLUDING UNUSUAL ITEMS. - - DELTA CONTINUES TO FOCUS ON COST CONTAINMENT THROUGH INNOVATION AND DISCIPLINE. Delta Air Lines (NYSE:DAL) today reported a net loss of $354 million and a loss per share of $2.90 for the March 2002 quarter versus a net loss of $122 million and loss per share of $1.02 in the March 2001 quarter, excluding unusual items. Including unusual items, the March 2002 quarter net loss and loss per share were $397 million and $3.25, respectively, versus a net loss of $133 million and loss per share of $1.11 in the March 2001 quarter. The results are in line with previous announcements concerning first quarter expectations. "We continue to notice signs of gradual recovery," said Leo F. Mullin, Delta's chairman and chief executive officer. "We are focused on our recovery efforts and creating a more promising year in 2002. In the first three months of this year, we saw our customers and revenue returning, though revenues are recovering at a slower pace. There is still a long road ahead of us, but Delta has the financial and operational strength to emerge from these tough times as a winner." FINANCIAL AND OPERATIONAL PERFORMANCE March 2002 quarter operating revenues declined 19.3 percent from the March 2001 quarter. Excluding unusual items, operating expenses for the March 2002 quarter decreased 11.6 percent, unit costs decreased 1.2 percent and unit costs on a fuel price neutralized basis(1) increased 1.7 percent. Load factor for the quarter was 68.9 percent, on a 10.6 percent reduction in capacity, compared to 67.0 percent for the same period a year ago. Delta ended the quarter with a completion factor of 98.3 percent versus 96.1 percent during the same period last year. "Delta's recovery is on track and we are making progress," said M. Michele Burns, executive vice president and chief financial officer. "In fact, in the month of March, Delta had positive cash flow from - --------------------- (1) The amount of operating cost incurred per available seat mile during a reported period, adjusting fuel price to equal the prior year. operations and we recorded an operating profit. Our financial strategy remains consistent and focused on capacity discipline, cost containment and cash preservation." In the March quarter, Delta filed its 2001 tax return eight months early on February 6, 2002 and received a $160 million refund the following day. Subsequently, Congress passed the economic stimulus package, extending the net operating loss carry back period to five years. Delta again expedited the filing of its refund claim and received an incremental tax refund of $300 million on March 22, 2002. Delta ended the March 2002 quarter with total liquidity of $3.1 billion comprised of a $1.5 billion cash balance and an additional near term liquidity position of $1.6 billion. In a continuous effort to manage costs and preserve liquidity, Delta announced on March 14, 2002 that "base" commissions will no longer be paid to travel agents for tickets sold in the United States (including Puerto Rico and the U.S. Virgin Islands) and Canada, effective immediately. While Delta is eliminating published base commissions, individually negotiated incentive commissions will continue to be paid to select agents. Delta expects the restructuring to reduce passenger commission expenses by approximately $100 - $150 million in 2002. Delta's fuel hedging program saved $21 million, pretax for the quarter. Moreover, Delta has hedged 57 percent of its expected jet fuel requirements in the June 2002 quarter at an average price of $0.58 per gallon. UNUSUAL ITEMS In the March 2002 quarter, Delta recorded $43 million of unusual costs, net of taxes. Of this amount, $25 million, net of tax, represents the temporary carrying cost of grounded aircraft and surplus pilots, as well as re-qualification training and relocation costs resulting from the capacity reductions implemented in November 2001. As discussed in the December 2001 quarter, Delta expects to record a total of $82 million, net of tax, for these costs during 2002. Also during the March 2002 quarter, Delta recorded an $18 million expense, net of tax, for non-cash, fair value adjustments of certain equity rights in other companies, primarily priceline.com, and fuel derivative instruments to comply with Statement of Financial Accounting Standard (SFAS) 133. In the March 2001 quarter, Delta recognized an $11 million, non-cash expense, net of tax, related to SFAS 133. NETWORK HIGHLIGHTS Delta is encouraged by its transatlantic, leisure and regional jet market performance. However, weakness in high-yield business travel will continue to affect the pace of Delta's recovery. As previously announced on January 18, 2002, Delta and its European SkyTeam partners, Air France, Alitalia and CSA Czech Airlines received final approval from the U.S. Department of Transportation for antitrust immunity. The grant of antitrust immunity enables Delta and its European partners to offer a more integrated route network, and develop common sales, marketing and discount programs for customers. In continued support of our SkyTeam Alliance, Delta inaugurated nonstop service between Atlanta and Milan-Malpensa on April 1, 2002 and began a second nonstop flight between New York John F. Kennedy International (JFK) and Paris on March 15, 2002. Delta also announced plans to reinstate codesharing on Korean Air flights, beginning May 1, 2002. Delta Express, Delta's low-fare airline, announced expansion of flights from New York to Florida this spring in response to improved leisure demand for travel to Florida. Beginning June 1, 2002, two new flights will be added from JFK to Ft. Lauderdale for a new total of six round-trip flights daily. Delta Express also will add one new flight from JFK to both Orlando and Tampa, for a new total of four round-trip flights daily to Orlando and three round-trip flights daily to Tampa. Delta Express has now returned to 64% of its pre-September 11 capacity. Delta continued to leverage its industry-leading regional jet program to provide superior network feed and flexibility. Delta's connection carriers remain an essential piece of its plan to grow Atlanta, strengthen its presence on the East Coast and feed transatlantic and Latin America gateways. CUSTOMER SERVICE In March 2002, Delta announced plans to expedite the passenger check-in process by enhancing its self-service check-in kiosks. E-ticketed customers will be able to use kiosks to check-in, check baggage, print boarding cards, select or change seats, request to standby for upgrades, change flights and initiate multi-party check-in. Delta also plans to install 300 additional kiosks throughout its domestic operation during 2002, more than tripling the number of kiosks available to Delta customers. This will make Delta an industry leader in kiosk check-in technology. Delta is pleased that the average security and check-in wait times, in many of its largest markets, are approaching pre-September 11 levels. As a result, Delta reduced the recommended airport arrival time for passengers on domestic flights from two hours to at least one hour prior to flight departure to reduce the amount of time customers must spend in the airport. Also, to help reduce the "hassle factor" Delta is now offering customers the convenience of checking-in and printing boarding passes from their personal computer or Web-enabled personal digital assistant. Delta will host a webcast to discuss its quarterly earnings today, April 16, at 10:00 a.m. Eastern Daylight Time. The webcast is available via the Internet at www.delta.com/inside/investors/index.jsp. Delta Air Lines, the world's second largest carrier in terms of passengers carried and the leading U.S. airline across the Atlantic, offers 5,581 flights each day to 410 destinations in 72 countries on Delta, Delta Express, Delta Shuttle, Delta Connection and Delta's worldwide partners. Delta is a founding member of SkyTeam, a global airline alliance that provides customers with extensive worldwide destinations, flights and services. For more information, visit Delta at delta.com. Statements in this news release which are not historical facts, including statements regarding our beliefs, expectations, estimates, intentions or strategies for the future, may be "forward-looking statements" under the Private Securities Litigation Reform Act of 1995. All forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from the plans, intentions, and expectations reflected in or suggested by the forward-looking statements. For a list of factors that could cause these differences, see the Form 8-K that we filed today. We have no current intention to update our forward-looking statements. # # # 0401/138-AW 02MARQTR DELTA AIR LINES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In Millions, Except Share Data)
Three Months Ended March 31, 2002 2001 (unaudited) (unaudited) Operating Revenues: Passenger $ 2,878 $ 3,598 Cargo 111 140 Other, net 114 104 Total operating revenues 3,103 3,842 Operating Expenses: Salaries and related costs 1,501 1,607 Aircraft fuel 339 514 Depreciation and amortization 281 324 Contracted services 263 257 Landing fees and other rents 203 198 Aircraft maintenance mat'ls and outside repairs 185 187 Aircraft rent 178 188 Other selling expenses 145 179 Passenger commissions 107 141 Passenger service 94 114 Asset writedowns and other non recurring items 40 -- Other 202 248 Total operating expenses 3,538 3,957 Operating Loss (435) (115) Other Income (Expense): Interest expense, net (141) (86) Loss from sale of investments (3) -- Fair value adjustments of SFAS 133 derivatives (28) (17) Miscellaneous income (expense), net 5 (4) (167) (107) Loss Before Income Taxes (602) (222) Income Tax Benefit, Net 205 89 Net Loss (397) (133) Preferred Stock Dividends (4) (3) Net Loss Available To Common Shareowners $ (401) $ (136) Diluted Loss Per Common Share: $ (3.25) $ (1.11) Net Loss - Excluding Unusual Items * $ (354) $ (122) Diluted Loss Per Common Share - Excluding Unusual Items * $ (2.90) $ (1.02) Operating Margin -14.0% -3.0% Weighted Average Shares Used In Diluted Loss Per Common Share Computation 123,244 123,031 (in thousands)
STATISTICAL SUMMARY Revenue Psgr Miles (millions) 23,230 25,285 Available Seat Miles (millions) ** 33,740 37,727 Passenger Mile Yield (cents) 12.39 14.23 Operating Revenue Per Available Seat Mile (cents) 9.20 10.18 Operating Cost Per Available Seat Mile (cents) 10.49 10.49 Operating Cost Per Available Seat Mile (cents) Excluding * 10.37 10.49 Passenger Load Factor (percent) 68.85 67.02 Breakeven Passenger Load Factor (percent) 79.26 69.16 Breakeven Passenger Load Factor (percent) Excluding * 78.30 69.16 Passengers Enplaned (thousands) 24,618 26,932 Revenue Ton Miles (millions) 2,673 2,977 Cargo Ton Miles (millions) 350 437 Cargo Ton Mile Yield (cents) 31.70 31.93 Fuel Gallons Consumed (millions) 599 696 Average Price Per Fuel Gallon (cents) 56.68 73.81 Number of Aircraft in Fleet, End of Period 832 829 Full-Time Equivalent Employees, End of Period 74,300 84,100
* Unusual Items for the periods presented are described below: Three months ending March 2002 - temporary carrying costs related to surplus pilots and grounded aircraft and fair value adjustments related to SFAS 133 derivatives. Three months ending March 2001 - fair value adjustments related to SFAS 133 derivatives. ** As a result of a pilot strike, Comair suspended its operations between March 26, 2001 and July 1, 2001. Accordingly, Comair had no Available Seat Miles during the period. SELECTED BALANCE SHEET DATA
March 31, December 31, 2002 2001 (unaudited) Cash and cash equivalents $ 1,513 $ 2,210 Total assets 23,705 23,605 Total debt, including current maturities and short-term obligations 9,336 9,304 Capital lease obligations, short-term and long-term 95 99 Total shareowners' equity 3,411 3,769
EX-99.2 4 g75596ex99-2.txt SUPPLEMENTAL DATA SHEET DATED APRIL 16, 2002 EXHIBIT 99.2 April 16, 2002 SUPPLEMENTAL MARCH 2002 QUARTER DATA In an effort to make more efficient use of the time allocated for this morning's conference call, we are providing detailed variance information on major expense items to assist you in analyzing Delta's March 2002 quarterly results. This information is intended to supplement that provided in the conference call (scheduled for 10:00 a.m. EST today) and in the earnings release. March quarter revenue performance will be discussed in the conference call. MARCH 2002 QUARTER VS. MARCH 2001 QUARTER OPERATING EXPENSES - - Operating expenses, excluding unusual items, decreased 12% to $3.50 billion on an 11% decrease in capacity. Total operating expenses for the quarter decreased 11% to $3.54 billion. - - Excluding unusual items, Delta's total unit cost decreased 1.2% to 10.37 cents from 10.49 cents. Fuel price neutralized unit costs increased 1.7% to 10.67 cents from 10.49 cents. - - Salaries and related expense decreased 7% primarily as a result of staffing reductions across all work groups, partially offset by increased pension expense resulting mainly from market deterioration and the pilot contract that was ratified in June 2001. - - Aircraft fuel expense decreased 34% due primarily to a decrease in fuel prices and total consumption. Total gallons consumed fell 14% primarily due to capacity reductions. Delta's average fuel price per gallon, including hedge proceeds, fell 23% to 56.68 cents from 73.81 cents. - - Depreciation and amortization decreased 13% due to the retirement of aircraft and the effects of a new accounting pronouncement requiring no amortization to be recorded for goodwill. - - Contracted services expense increased 2% due to an increase in security costs offset by decreases in contract work in other areas. - - Aircraft rent decreased 5% due mainly to a decrease in the number of leased aircraft. - - Other selling expenses decreased 19% due primarily to lower volumes of credit card and booking transactions resulting from capacity reductions. - - Passenger commissions declined by 24% due to lower passenger demand and the continued development of lower cost distribution channels such as delta.com. - - Passenger service decreased 18% due primarily to meal service changes and lower volumes. - - Other expense decreased 19% primarily due to decreases in interrupted trip expenses, professional fees, fuel-related taxes and a company-wide rollout of new uniforms in 2001, partially offset by an increase in war and terrorism risk insurance. - - Interest expense, net increased $55 million as a result of higher levels of debt outstanding. - - Miscellaneous income increased $9 million primarily due to higher income from our equity investment in Worldspan. Please feel free to call me at 404-715-6679 if you have any questions. Thank you for your continued support of Delta Air Lines. Gail Grimmett -----END PRIVACY-ENHANCED MESSAGE-----