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-----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, MLxbtvzdI8dmklzTCt1WQjPZcOKQlADUx2KgKRiWiMPcXln5eTGYhHxnHkeZVWGS UAgnRa5tQocjDy/GWW7hXA== 0000950144-02-007466.txt : 20020719 0000950144-02-007466.hdr.sgml : 20020719 20020718081954 ACCESSION NUMBER: 0000950144-02-007466 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20020718 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20020718 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: 02705144 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 g77285e8vk.htm DELTA AIR LINES, INC. e8vk

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): July 18, 2002

DELTA AIR LINES, INC.

(Exact name of registrant as specified in its charter)


Delaware	1-5424	58-0218548

(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer 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)

TABLE OF CONTENTS


SIGNATURE
EXHIBIT INDEX
PRESS RELEASE
SUPPLEMENTAL JUNE 2002 QUARTER DATA

Item 5. Other Events and Regulation FD Disclosure

Financial Results for the June 2002 Quarter

Delta Air Lines, Inc. (Delta) today issued a press release reporting financial results for the June 2002 quarter. The press release is attached as Exhibit 99.1. Delta also will be providing supplemental data for the June 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 July 18, 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 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;

e. 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 US 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 July 18, 2002, and which we have no current intention to update

Item 7. Financial Statements and Exhibits.

(c) Exhibits


Exhibit 99.1		Press Release dated July 18, 2002 titled “Delta Air Lines Reports Second Quarter Results”
Exhibit 99.2		Supplemental Data sheet dated July 18, 2002 titled “Supplemental June 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: July 18, 2002

EXHIBIT INDEX


Exhibit Number		Description

Exhibit 99.1		Press Release dated July 18, 2002 titled “Delta Air Lines Reports Second Quarter Results”

Exhibit 99.2		Data sheet dated July 18, 2002 titled “Supplemental June 2002 Quarter Data”

EX-99.1 3 g77285exv99w1.txt PRESS RELEASE EXHIBIT 99.1 FOR IMMEDIATE DISTRIBUTION CONTACT: Corporate Communications Investor Relations 404-715-2554 404-715-6679 DELTA AIR LINES REPORTS SECOND QUARTER RESULTS ATLANTA, July 18, 2002 - Delta Air Lines (NYSE:DAL) today reported results for the quarter ending June 30, 2002. The key points are, Delta: - - REPORTS A SECOND QUARTER NET LOSS, EXCLUDING UNUSUAL ITEMS, OF $162 MILLION, OR $1.34 LOSS PER COMMON SHARE. - - REPORTS A SECOND QUARTER NET LOSS OF $186 MILLION, OR $1.54 LOSS PER COMMON SHARE. - - RECORDS AN OPERATING PROFIT FOR THE MONTH OF JUNE 2002. - - CONTINUES TO FOCUS ON CONTROLLING COSTS, CAPACITY AND LIQUIDITY. Delta today reported a net loss of $162 million and a loss per share of $1.34 for the June 2002 quarter versus a net loss of $123 million and loss per share of $1.03 in the June 2001 quarter, excluding unusual items. Including unusual items, the June 2002 quarter net loss and loss per share were $186 million and $1.54, respectively, versus a net loss of $90 million and loss per share of $0.76 in the June 2001 quarter. Note 2 to the attached consolidated statements of operations shows a reconciliation of the net loss excluding unusual items to the reported net loss. FINANCIAL AND OPERATIONAL PERFORMANCE "Delta's financial performance is recovering slowly as we work through one of the most challenging times in the history of our company and our industry," said Leo F. Mullin, chairman and chief executive officer. "While these second quarter results are substantially better than those in the first quarter and in line with expectations, they clearly show that difficult times are not yet behind us. "In light of these difficult financial conditions, Delta continues its comprehensive review of the business. Our intent is to be an airline that will thrive, not just survive, in today's fiercely competitive aviation world. While that task will continue to require difficult choices, we strongly believe we are the best positioned hub-and-spoke airline to reach that goal." Second quarter operating revenues declined 8.0 percent, and passenger unit revenues decreased 3.0 percent, compared to the June 2001 quarter. Excluding unusual items, operating expenses for the June 2002 quarter decreased 6.5 percent, unit costs decreased 0.3 percent and unit costs on a fuel price neutralized basis(1) increased 0.5 percent. The load factor for the quarter was 73.4 percent on a 6.2 percent reduction in capacity, compared to 72.8 percent for the same period a year ago. For the June 2002 quarter, Delta's completion factor was 99.2 percent versus 97.5 percent during the same period last year. - ------------------------ (1) The amount of operating cost incurred per available seat mile during a reported period, adjusting the average fuel price per gallon paid in the current period to equal the average fuel price per gallon in the corresponding period in the prior year. Year-over-year comparisons are impacted by Comair's suspension of service between March 26, 2001, and July 1, 2001, due to a strike by Comair pilots. Delta had positive cash flow from operations for the June 2002 quarter and also recorded an operating profit in the month of June as traffic and revenue continued to improve slowly from the March 2002 quarter. "Delta is committed to aggressively manage what we can control -- costs, capacity and liquidity -- as we continue to make disciplined financial and operating decisions," said M. Michele Burns, executive vice president and chief financial officer. Delta's fuel hedging program saved $43 million pretax for the quarter. Delta hedged 57 percent of its jet fuel requirements in the June 2002 quarter at an average price of $0.59 per gallon. For the second half of the year, Delta has hedged 49 percent of its expected jet fuel requirements at an average price of $0.66 per gallon. Delta's capacity remained under tight control in the second quarter with year-over-year system and mainline capacity down 6.2 percent and 10.7 percent, respectively. For the third quarter of 2002, Delta's year-over-year system capacity is expected to decline three to four percent and year-over-year mainline capacity is expected to decline six to seven percent. Delta's balance sheet remains one of the strongest in the industry. During the quarter, Delta continued to access financing opportunities in the capital markets. On April 30, 2002, Delta issued $1.1 billion of Enhanced Equipment Trust Certificates. A portion of the proceeds from this offering was used to repay a $625 million revolving credit agreement that matured on May 1, 2002. The remainder of the proceeds is available for general corporate purposes. Delta ended the June 2002 quarter with total liquidity of $2.8 billion comprised of $1.8 billion in cash and cash equivalents and an additional near term liquidity position of $1.0 billion. UNUSUAL ITEMS In the June 2002 quarter, Delta recorded $24 million of unusual costs, net of taxes. As previously disclosed, Delta continues to incur costs that represent the temporary carrying costs of grounded aircraft and surplus pilots as well as re-qualification training and relocation costs for pilots resulting from capacity reductions implemented in November 2001. These costs totaled $15 million, net of tax, for the June 2002 quarter and are expected to total $61 million, net of tax, for the 2002 calendar year; a total of $40 million of costs, net of tax, have been incurred for the six months ending June 2002. Also during the June 2002 quarter, Delta recorded a $9 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 June 2001 quarter, Delta recognized a $69 million non-cash gain, net of tax, related to SFAS 133 and a $36 million charge, net of tax, due to its decision to accelerate the retirement of nine Boeing 737 aircraft. NETWORK HIGHLIGHTS As previously announced, Delta and its SkyTeam partner, Korean Air, received final approval from the U.S. Department of Transportation for antitrust immunity. Delta previously obtained antitrust immunity with its European SkyTeam partners - Air France, Alitalia, and CSA Czech Airlines. Antitrust immunity will permit Korean Air to more closely cooperate with Delta and the European SkyTeam members in the operation of their global route systems on a broad network-to-network basis, improving the quality and competitiveness of the services they offer to customers, while retaining their separate corporate and national identities. In continued support of our SkyTeam alliance, Delta expanded its codeshare relationship with partners Air France and Alitalia by offering codeshare service from the United States to India via Paris-Charles de Gaulle and Milan-Malpensa, Italy. Delta will offer business and leisure customers a total of 20 weekly flights to the two largest business centers of India, Delhi and Mumbai, the fastest growing travel regions in the world. Delta also will offer customers a new daily, nonstop flight between Atlanta and Montego Bay, Jamaica, beginning November 1, 2002, and it will operate the service using the Boeing 737-800 aircraft. The new service is in addition to three daily flights between Atlanta and Montego Bay that Delta now offers with codeshare partner Air Jamaica. During the June 2002 quarter, Delta strengthened its industry-leading regional jet program with the addition of Chautauqua Airlines as the newest Delta Connection carrier. Beginning in November 2002, Chautauqua will become the fifth regional carrier participating in the Delta Connection system, and will serve Florida markets with a total of 22 Embraer regional jets by the end of 2003. CUSTOMER SERVICE As announced on July 1, 2002, Delta received its second consecutive annual Brand Keys Customer Loyalty Award in the airline category for meeting or exceeding customer expectations. Brand Keys, the world leader in customer loyalty metrics, recognized Delta for performance in booking and boarding efficiency, in-flight comfort and customer experience. "We are honored to once again receive such a prestigious award," said Vicki Escarra, executive vice president and chief marketing officer for Delta. "We thank our loyal customers for their votes of confidence and for recognizing our efforts." Delta also continues to roll out its self-service kiosks, which are now available at 79 airports. So far this year, over two million Delta customers have checked in for their flights using self-service kiosks. In June 2002, Delta achieved a record month with more than 615,000 passengers checked in using kiosks versus 20,136 passengers in June 2001. E-ticketed customers can use kiosks to check in, check baggage, print boarding cards, select or change seats, request to stand by for upgrades, change flights, and initiate multi-party check-in. Due to a positive response from customers in New York City, Boston and Washington, D.C., the Delta Shuttle extended its exclusive "20 Minutes or 20,000 Miles" check-in to gate guarantee and triple-miles SkyMiles bonus until August 31, 2002. Delta has successfully reduced wait time for customers of the Delta Shuttle. Since the program began in April 2002, only five of the nearly 400,000 Delta Shuttle passengers have received the 20,000 SkyMiles guarantee offered by the Delta Shuttle. Delta also continues to be on the forefront of reducing the "hassle factor" by expanding the number of frequent traveler security lines in three new locations during the quarter: Seattle, Baltimore, and Pittsburgh. Delta now offers frequent traveler security lines in a total of 23 cities. Delta will host a webcast to discuss its quarterly earnings today, July 18, at 10:00 a.m. Eastern 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 5,898 flights each day to 429 destinations in 76 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, please go to 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. # # # 0402/169-TRD 02JUNQTR DELTA AIR LINES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited; In Millions, Except Share Data)
Three Months Six Months Ended Ended June 30, June 30, ----------------------------- ----------------------------- 2002 2001 2002 2001 --------- --------- --------- --------- Operating Revenues: Passenger $ 3,217 $ 3,537 $ 6,095 $ 7,135 Cargo 109 131 220 271 Other, net 148 108 262 212 Total operating revenues 3,474 3,776 6,577 7,618 Operating Expenses: Salaries and related costs 1,563 1,560 3,064 3,167 Aircraft fuel 401 463 740 977 Depreciation and amortization (Note 1) 291 331 572 655 Contracted services 241 253 504 510 Landing fees and other rents 211 192 414 390 Aircraft maintenance mat'ls and outside repairs 181 193 366 380 Aircraft rent 179 186 357 374 Other selling expenses 140 165 285 344 Passenger commissions 89 144 196 285 Passenger service 98 127 192 241 Asset writedowns and other nonrecurring items 23 60 63 60 Other 184 216 386 464 Total operating expenses 3,601 3,890 7,139 7,847 Operating Loss (127) (114) (562) (229) Other Income (Expense): Interest expense, net (155) (91) (296) (177) Gain (loss) from sale of investments -- 7 (3) 7 Fair value adjustments of SFAS 133 derivatives (15) 112 (43) 95 Misc. income (expense), net 10 (13) 15 (17) (160) 15 (327) (92) Loss Before Income Taxes (287) (99) (889) (321) Income Tax Benefit 101 9 306 98 Net Loss (186) (90) (583) (223) Preferred Stock Dividends (3) (4) (7) (7) Net Loss Available To Common Shareowners $ (189) $ (94) $ (590) $ (230) Diluted Loss Per Share $ (1.54) $ (0.76) $ (4.79) $ (1.87) Net Loss Excluding Unusual Items (Note 2) $ (162) $ (123) $ (516) $ (246) Diluted Loss Per Share Excluding Unusual Items (Note 2) $ (1.34) $ (1.03) $ (4.25) $ (2.05) Operating Margin -3.7% -3.0% -8.5% -3.0% Weighted Average Shares Used In Diluted Loss Per Share Computation:(in thousands) 123,243 123,053 123,244 123,042
DELTA AIR LINES, INC. STATISTICAL SUMMARY (unaudited)
Three Months Six Months Ended Ended June 30, June 30, ------------------------- ------------------------- 2002 2001 2002 2001 ------ ------ ------ ------ Revenue Psgr Miles (millions) 26,319 27,828 49,549 53,113 Available Seat Miles (millions)(Note 3) 35,859 38,239 69,599 75,966 Passenger Mile Yield (cents) 12.23 12.71 12.30 13.43 Operating Revenue Per Available Seat Mile (cents) 9.69 9.88 9.45 10.03 Operating Cost per Available Seat Mile (cents) 10.05 10.17 10.26 10.33 Operating Cost per Available Seat Mile - Excluding (cents) (Note 2) 9.98 10.02 10.17 10.25 Passenger Load Factor (percent) 73.39 72.77 71.19 69.92 Breakeven Passenger Load Factor (percent) 76.30 75.12 77.76 72.16 Breakeven Passenger Load Factor - Excluding (percent) (Note 2) 75.79 73.88 77.03 71.57 Psgrs Enplaned (thousands) 27,427 28,130 52,045 55,062 Revenue Ton Miles (millions) 3,018 3,190 5,691 6,167 Cargo Ton Miles (millions) 386 407 736 844 Cargo Ton Mile Yield (cents) 28.30 32.30 29.92 32.11 Fuel Gallons Consumed (millions) 634 682 1,233 1,378 Average Price Per Fuel Gallon, net of hedging gains (cents) 63.13 67.95 60.00 70.91 Number of Aircraft in Fleet, End of Period 831 826 831 826 Full-Time Equivalent Employees, End of Period 75,700 82,800 75,700 82,800
SELECTED BALANCE SHEET DATA:
June 30, December 31, 2002 2001 ----------- ------------ (unaudited) (in millions) Cash and cash equivalents $ 1,841 $ 2,210 Total assets 24,065 23,605 Total debt, including current maturities and short-term obligations 9,939 9,304 Capital lease obligations, short-term and long-term 91 99 Total shareowners' equity 3,179 3,769
Note 1. For comparative purposes, note that we adopted Statement of Financial Accounting Standard (SFAS)142, "Goodwill and Other Intangible Assets" on January 1, 2002. In accordance with that standard, we no longer amortize goodwill and certain intangible assets. For more information about our adoption of SFAS 142, please refer to our most recently filed Quarterly Report on Form 10-Q or our Annual Report on Form 10-K. The following table shows a reconciliation of our reported net loss and loss per share to pro forma net loss and loss per share as if the non-amortization provisions of SFAS 142 had been applied in the prior periods:
Three Months Six Months Ended Ended June 30, June 30, ------------------------ ------------------------- 2002 2001 2002 2001 ------- ------ ------- ------- (in millions, except per share data) Net Loss $ (186) $ (90) $ (583) $ (223) Add back: goodwill and certain intangible assets amortization, net of tax -- 15 -- 30 Pro forma net loss $ (186) $ (75) $ (583) $ (193) Basic and diluted loss per share: Net Loss $ (1.54) $ (.76) $ (4.79) $ (1.87) Add back: goodwill and certain intangible assets amortization, net of tax -- .12 -- .24 Pro forma net loss $ (1.54) $ (.64) $ (4.79) $ (1.63)
Note 2. The following tables show reconciliations of our net loss and loss per share excluding unusual items to reported net loss and loss per share:
Three Months Six Months Ended Ended June 30, June 30, ----------------------- ----------------------- 2002 2001 2002 2001 ----- ------- ------- ----- (in millions, except per share data) Net loss excluding unusual items $ (162) $ (123) $ (516) $ (246) Unusual items, net of tax: Fair value adjustment of SFAS 133 derivatives (9) 69 (27) 59 Surplus pilots and aircraft (15) -- (40) -- Accelerated retirement of B-737 aircraft -- (36) -- (36) Total unusual items, net of tax (24) 33 (67) 23 Net loss $ (186) $ (90) $ (583) $(223) Basic and diluted loss per share: Net loss $(1.34) $(1.03) $(4.25) $(2.05) Unusual items, net of tax: Fair value adjustment of SFAS 133 derivatives (0.08) 0.57 (0.22) 0.48 Surplus pilots and aircraft (0.12) -- (0.32) -- Accelerated retirement of B-737 aircraft -- (0.30) -- (0.30) Total unusual items, net of tax (0.20) 0.27 (0.54) 0.18 Net loss $(1.54) $(0.76) $(4.79) $(1.87)
Note 3. 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 (ASMs) during this period. EX-99.2 4 g77285exv99w2.txt SUPPLEMENTAL JUNE 2002 QUARTER DATA EXHIBIT 99.2 July 18, 2002 SUPPLEMENTAL JUNE 2002 QUARTER DATA To make more efficient use of the time allocated for this morning's conference call, we are providing detailed variance information on our operating and non-operating expenses to assist you in analyzing Delta's June 2002 quarterly results. This information is intended to supplement that provided in the conference call (scheduled for 10:00 a.m. ET today) and in the earnings release. June quarter revenue performance will be discussed in the conference call. JUNE 2002 QUARTER VS. JUNE 2001 QUARTER - - Operating expenses, excluding unusual items, decreased 7% to $3.58 billion on a 6% decrease in capacity. Total operating expenses for the quarter decreased 7% to $3.60 billion. - - Excluding unusual items, Delta's total unit cost decreased 0.3% to 9.98 cents from 10.02 cents. Fuel price neutralized unit costs increased 0.5% to 10.07 cents from 10.02 cents. - - Salaries and related expense was flat year over year reflecting staffing reductions implemented in the December 2001 quarter which was offset by both increased pension expense, as well as decreased costs during the June 2001 quarter resulting from the Comair pilot strike. - - Aircraft fuel expense decreased 13% due primarily to a decrease in fuel prices and total consumption. Delta's average fuel price per gallon, including hedge proceeds, fell 7% to 63.13 cents from 67.95 cents. Total gallons consumed fell 6% primarily due to capacity reductions. - - Depreciation and amortization decreased 12% due to a lower asset base in the current year and the effects of a new accounting pronouncement requiring no amortization to be recorded for goodwill. - - Contracted services expense decreased 5% due to capacity decreases, partially offset by an increase in security costs. - - Landing fees and other rents increased 10% due primarily to increased airport and landing fee rates as well as the impact of the Comair strike in 2001. - - Aircraft maintenance materials and outside repairs decreased 6% due primarily to reduced maintenance volume and materials consumption, partially offset by the impact of the Comair strike during 2001. - - Aircraft rent decreased 4% due mainly to a decrease in the number of leased aircraft resulting from our fleet simplification efforts. - - Other selling expenses decreased 15% due primarily to lower credit card and booking fee costs resulting from lower revenue volume, as well as reduced advertising and promotion spending, partially offset by effects of the Comair strike during 2001. - - Passenger commissions declined by 38% primarily due to the change in our commission rate structure, as well as lower revenue volume. - - Passenger service expense decreased 23% due primarily to meal service changes and lower traffic volumes. - - Other expense decreased 15% primarily due to decreases in interrupted trip expenses, professional fees and general supply and utility costs, partially offset by an increase in war risk insurance. - - Interest expense, net increased $64 million as a result of higher levels of debt outstanding. - - Miscellaneous income increased $23 million primarily due to lower losses this year from equity investments. 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-----

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	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 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;

	e.		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 US 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.