8-K

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): January 3, 2014

DELTA AIR LINES, INC.

(Exact name of registrant as specified in its charter)

Delaware	001-05424	58-0218548
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

P.O. Box 20706, Atlanta, Georgia 30320-6001

(Address of principal executive offices)

Registrant’s telephone number, including area code: (404) 715-2600

Registrant’s Web site address: www.delta.com

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 7.01       Regulation FD Disclosure.

Delta Air Lines, Inc. (“Delta”) issued today a press release reporting December 2013 financial and operating results. The press release is attached as Exhibit 99.1 to this Form 8-K.

Delta also issued an Investor Update today, which is furnished as Exhibit 99.2 to this Form 8-K.

In accordance with general instruction B.2 of Form 8−K, the information in this report (including the exhibit) that is being furnished pursuant to Item 7.01 of Form 8−K shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act, as amended, or otherwise subject to liabilities of that section, nor shall they be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as expressly set forth in such filing. This report will not be deemed an admission as to the materiality of any information in the report that is required to be disclosed solely by Regulation FD.

Statements in this Form 8-K and the attached exhibit that are not historical facts, including statements regarding our 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.  All forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from the estimates, expectations, beliefs, intentions, projections and strategies reflected in or suggested by the forward-looking statements.  These risks and uncertainties include, but are not limited to, the cost of aircraft fuel; the availability of aircraft fuel; the impact of posting collateral in connection with our fuel hedge contracts; the impact of significant funding obligations with respect to defined benefit pension plans; the impact that our indebtedness may have on our financial and operating activities and our ability to incur additional debt; the restrictions that financial covenants in our financing agreements will have on our financial and business operations; labor issues; interruptions or disruptions in service at one of our hub airports; our dependence on technology in our operations; disruptions or security breaches of our information technology infrastructure; the ability of our credit card processors to take significant holdbacks in certain circumstances; the possible effects of accidents involving our aircraft; the effects of weather, natural disasters and seasonality on our business; the effects of an extended disruption in services provided by third party regional carriers; failure or inability of insurance to cover a significant liability at the Trainer refinery; the impact of environmental regulation on the Trainer refinery, including costs related to renewable fuel standard regulations; our ability to retain management and key employees; our ability to use net operating losses to offset future taxable income; competitive conditions in the airline industry; the effects of extensive government regulation on our business; the effects of terrorist attacks; the effects of the rapid spread of contagious illnesses; and the costs associated with insurance.

Additional information concerning risks and uncertainties that could cause differences between actual results and forward-looking statements is contained in Delta’s Securities and Exchange Commission filings, including its Annual Report on Form 10-K for the fiscal year ended December 31, 2012 and its Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2013. Caution should be taken not to place undue reliance on Delta’s forward-looking statements, which represent Delta’s views only as of January 3, 2014, and which Delta has no current intention to update.

Item 9.01       Financial Statements and Exhibits.

(d)  Exhibits.

Exhibit 99.1	Press Release dated January 3, 2014 titled “Delta Reports Financial and Operating Performance for December 2013”
Exhibit 99.2	Investor Update

2

SIGNATURES

          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/ Paul A. Jacobson
Date:  January 3, 2014	Paul A. Jacobson Executive Vice President and Chief Financial Officer

3

EXHIBIT INDEX

Exhibit Number		Description
	Exhibit 99.1	Press Release dated January 3, 2014 titled “Delta Reports Financial and Operating Performance for December 2013”
	Exhibit 99.2	Investor Update

4

EX-99.1

Exhibit 99.1

CONTACT: Corporate Communications
404-715-2554 news archive at news.delta.com   Investor Relations 404-715-2170

Delta Reports Financial and Operating Performance for December 2013

ATLANTA, Jan. 3, 2014 – Delta Air Lines (NYSE: DAL) today reported financial and operating performance for December 2013.

Consolidated passenger unit revenue (PRASM) for the month of December increased 10.0% year over year driven by continuing strong demand and benefits from the timing of the Thanksgiving holiday.  

Delta completed 99.6 percent of its flights in December and ran an on-time arrival rate of 79.5 percent.

The company’s financial and operating performance is detailed below.

Preliminary Financial and Operating Results
December consolidated PRASM change year over year	10.0%
Projected December quarter fuel price per gallon, adjusted	$3.00 - $3.05
December mainline completion factor	99.6%
December on-time performance (preliminary DOT A14)	79.5%

Note: Fuel price includes taxes, transportation, settled hedges, hedge premiums and refinery impact, but excludes mark to market adjustments on open hedges.

Delta Air Lines serves nearly 165 million customers each year. Delta was named by Fortune magazine as the most admired airline worldwide in its 2013 World’s Most Admired Companies airline industry list, topping the list for the second time in three years. With an industry-leading global network, Delta and the Delta Connection carriers offer service to 322 destinations in 59 countries on six continents. Headquartered in Atlanta, Delta employs nearly 80,000 employees worldwide and operates a mainline fleet of more than 700 aircraft. The airline is a founding member of the SkyTeam global alliance and participates in the industry’s leading trans-Atlantic joint venture with Air France-KLM and Alitalia. Including its worldwide alliance partners, Delta offers customers more than 15,000 daily flights, with hubs in Amsterdam, Atlanta, Cincinnati, Detroit, Minneapolis-St. Paul, New York-LaGuardia, New York-JFK, Paris-Charles de Gaulle, Salt Lake City and Tokyo-Narita. Delta is investing more than $3 billion in airport facilities and global products, services and technology to enhance the customer experience in the air and on the ground. Additional information is available on delta.com, Twitter @Delta, Google.com/+Delta, Facebook.com/delta and Delta’s blog takingoff.delta.com.

Forward Looking Statements

Statements in this press release that are not historical facts, including statements regarding our 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. All forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from the estimates, expectations, beliefs, intentions, projections and strategies reflected in or suggested by the forward-looking statements.  These risks and uncertainties include, but are not limited to, the cost of aircraft fuel; the availability of aircraft fuel; the impact of posting collateral in connection with our fuel hedge contracts; the impact of significant funding obligations with respect to defined benefit pension plans; the impact that our indebtedness may have on our financial and operating activities and our ability to incur additional debt; the restrictions that financial covenants in our financing agreements will have on our financial and business operations; labor issues; interruptions or disruptions in service at one of our hub airports; our dependence on technology in our operations; disruptions or security breaches of our information technology infrastructure; the ability of our credit card processors to take significant holdbacks in certain circumstances; the possible effects of accidents involving our aircraft; the effects of weather, natural disasters and seasonality on our business; the effects of an extended disruption in services provided by third party regional carriers; failure or inability of insurance to cover a significant liability at the Trainer refinery; the impact of environmental regulation on the Trainer refinery, including costs related to renewable fuel standard regulations; our ability to retain management and key employees; our ability to use net operating losses to offset future taxable income; competitive conditions in the airline industry; the effects of extensive government regulation on our business; the effects of terrorist attacks; the effects of the rapid spread of contagious illnesses; and the costs associated with insurance.  

Additional information concerning risks and uncertainties that could cause differences between actual results and forward-looking statements is contained in our Securities and Exchange Commission filings, including our Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2012 and our quarterly report on Form 10-Q for the quarterly period ended September 30, 2013.  Caution should be taken not to place undue reliance on our forward-looking statements, which represent our views only as of January 3, 2014, and which we have no current intention to update.

1

	Monthly Traffic Results (a)								Year to Date Traffic Results (a)
	Dec 2013		Dec 2012		Change				Dec 2013		Dec 2012		Change
RPMs (000):
Domestic		9,434,131		8,745,715		7.9%				114,652,740		114,692,138		(0.0%	)
Delta Mainline		7,673,560		7,043,866		8.9%				92,789,089		91,468,660		1.4%
Regional		1,760,571		1,701,849		3.5%				21,863,651		23,223,478		(5.9%	)
International		6,353,075		6,016,864		5.6%				80,317,771		78,281,985		2.6%
Latin America		1,483,980		1,276,849		16.2%				15,351,889		13,778,843		11.4%
Delta Mainline		1,458,639		1,260,747		15.7%				15,148,208		13,611,910		11.3%
Regional		25,341		16,102		57.4%				203,681		166,933		22.0%
Atlantic		2,840,965		2,750,470		3.3%				40,233,076		39,920,372		0.8%
Pacific		2,028,130		1,989,545		1.9%				24,732,806		24,582,770		0.6%
Total System		15,787,206		14,762,579		6.9%				194,970,511		192,974,123		1.0%
ASMs (000):
Domestic		11,113,796		10,733,406		3.5%				137,989,838		136,485,550		1.1%
Delta Mainline		8,912,988		8,544,611		4.3%				109,718,045		107,184,875		2.4%
Regional		2,200,808		2,188,795		0.5%				28,271,793		29,300,675		(3.5%	)
International		7,406,168		7,107,183		4.2%				94,745,955		93,929,889		0.9%
Latin America		1,740,271		1,537,193		13.2%				18,279,674		16,883,549		8.3%
Delta Mainline		1,709,566		1,516,779		12.7%				18,019,064		16,641,107		8.3%
Regional		30,705		20,414		50.4%				260,610		242,442		7.5%
Atlantic		3,314,170		3,240,902		2.3%				47,167,218		47,485,424		(0.7%	)
Pacific		2,351,727		2,329,088		1.0%				29,299,063		29,560,916		(0.9%	)
Total System		18,519,964		17,840,589		3.8%				232,735,793		230,415,439		1.0%
Load Factor:
Domestic		84.9%		81.5%		3.4		pts		83.1%		84.0%		(0.9	)	pts
Delta Mainline		86.1%		82.4%		3.7		pts		84.6%		85.3%		(0.7	)	pts
Regional		80.0%		77.8%		2.2		pts		77.3%		79.3%		(2.0	)	pts
International		85.8%		84.7%		1.1		pts		84.8%		83.3%		1.5		pts
Latin America		85.3%		83.1%		2.2		pts		84.0%		81.6%		2.4		pts
Delta Mainline		85.3%		83.1%		2.2		pts		84.1%		81.8%		2.3		pts
Regional		82.5%		78.9%		3.6		pts		78.2%		68.9%		9.3		pts
Atlantic		85.7%		84.9%		0.8		pts		85.3%		84.1%		1.2		pts
Pacific		86.2%		85.4%		0.8		pts		84.4%		83.2%		1.2		pts
Total System		85.2%		82.7%		2.5		pts		83.8%		83.8%		0.0		pts
Mainline Completion Factor		99.6%		99.7%		(0.1	)	pts
Passengers Boarded		13,360,396		12,469,381		7.1%				164,656,327		164,591,330		0.0%
Cargo Ton Miles (000):		189,230		192,697		(1.8%	)			2,350,971		2,385,084		(1.4%	)

^a  Results include flights operated under contract carrier arrangements                  

2

Non-GAAP Reconciliation

Delta sometimes uses information ("non-GAAP financial measures") that is derived from our Consolidated Financial Statements, but that is not presented in accordance with accounting principles generally accepted in the U.S. (“GAAP”). Under the U.S. Securities and Exchange Commission rules, non-GAAP financial measures may be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for or superior to GAAP results.

Delta excludes mark-to-market adjustments for fuel hedges recorded in periods other than the settlement period ("MTM adjustments") from average price per fuel gallon because excluding these adjustments allows investors to better understand and analyze Delta’s costs for the periods reported. MTM adjustments are based on market prices as of the end of the reporting period for contracts settling in future periods. Such market prices are not necessarily indicative of the actual future value of the underlying hedge in the contract settlement period.

Average Fuel Price Per Gallon

Consolidated	(Projected) Three Months Ended, December 31, 2013
Average price per fuel gallon	$2.89 to $2.94
MTM adjustments	0.11
Average price per fuel gallon, adjusted	$3.00 to $3.05

3

EX-99.2

Exhibit 99.2

 

Note: Guidance for the December quarter 2013 in this investor update excludes special items and mark to market adjustments on out of period fuel hedges unless noted.

Overall Commentary

· Delta expects a December quarter operating margin of 8 – 9%, an improvement over the 5.5% operating margin for the December 2012 quarter.

· Unit revenues for the month of December increased 10% year over year, driven by continuing strong demand and benefits from the timing of the Thanksgiving holiday.

· Delta expects to generate more than $1.0 billion of operating cash flow for the December quarter. This strong cash flow allowed the company to reinvest in the business during the quarter while also reducing adjusted net debt to approximately $9.4 billion, contributing an additional $250 million to its defined benefit pension plan, and returning $200 million to shareholders through $50 million of dividends and $150 million of share repurchases.

Guidance

	December Quarter 2013
Operating margin	8% – 9%
Cargo and other revenue	$1.2 billion
Average fuel price per gallon, including taxes, settled hedges and refinery impact	$3.00 - $3.05
Profit sharing expense	$120 million
Non-operating expense	$235 – 250 million
	December Quarter 2013 vs. December Quarter 2012
Passenger unit revenue	Up  ~3%
Consolidated CASM, excluding fuel and profit sharing expense	Up ~2%
System capacity	Up ~3%

Ancillary Business Expense

· Delta excludes expenses related to its ancillary businesses from its unit cost guidance. Ancillary businesses include third-party Maintenance Repair and Overhaul, Delta Global Services, MLT Vacations and Delta Private Jets. Delta expects to record approximately $185 million of ancillary business expense in the December quarter. The revenue associated with these ancillary businesses is included in Delta’s guidance for cargo and other revenue.

Profit Sharing

· Delta’s broad based employee profit sharing program pays 10% of the company’s adjusted annual profit up to $2.5 billion and 20% above that amount. Adjusted annual profit is calculated as the company’s annual pre-tax income before profit sharing expense, special items and certain other items.

Taxes

· Projections for sustainable future expected profitability combined with consistent and strong profitability over the past four years will result in the reversal of Delta’s tax valuation allowance in the December quarter. With the reversal of the tax valuation allowance, the company expects to record a non-cash net gain of approximately $8.5 billion in the December quarter, which will be treated as a special item. Net income will be reduced to reflect a 38-39% tax rate beginning in 2014; however, there will be no impact to cash as Delta’s net operating loss carryforwards will offset cash taxes on more than $14 billion of future taxable income.

Share count

· Delta expects approximately 858 million weighted average diluted shares and approximately 846 million weighted average basic shares outstanding.

1

 

Forward Looking Statements

Statements in this investor update that are not historical facts, including statements regarding our 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. All forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from the estimates, expectations, beliefs, intentions, projections and strategies reflected in or suggested by the forward-looking statements.  These risks and uncertainties include, but are not limited to, the cost of aircraft fuel; the availability of aircraft fuel; the impact of posting collateral in connection with our fuel hedge contracts; the impact of significant funding obligations with respect to defined benefit pension plans; the impact that our indebtedness may have on our financial and operating activities and our ability to incur additional debt; the restrictions that financial covenants in our financing agreements will have on our financial and business operations; labor issues; interruptions or disruptions in service at one of our hub airports; our dependence on technology in our operations; disruptions or security breaches of our information technology infrastructure; the ability of our credit card processors to take significant holdbacks in certain circumstances; the possible effects of accidents involving our aircraft; the effects of weather, natural disasters and seasonality on our business; the effects of an extended disruption in services provided by third party regional carriers; failure or inability of insurance to cover a significant liability at the Trainer refinery; the impact of environmental regulation on the Trainer refinery, including costs related to renewable fuel standard regulations; our ability to retain management and key employees; our ability to use net operating losses to offset future taxable income; competitive conditions in the airline industry; the effects of extensive government regulation on our business; the effects of terrorist attacks; the effects of the rapid spread of contagious illnesses; and the costs associated with insurance.  

Additional information concerning risks and uncertainties that could cause differences between actual results and forward-looking statements is contained in our Securities and Exchange Commission filings, including our Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2012 and our quarterly report on Form 10-Q for the quarterly period ended September 30, 2013.  Caution should be taken not to place undue reliance on our forward-looking statements, which represent our views only as of January 3, 2014, and which we have no current intention to update.

2

 

Non-GAAP Reconciliations

Delta sometimes uses information ("non-GAAP financial measures") that is derived from our Consolidated Financial Statements, but that is not presented in accordance with accounting principles generally accepted in the U.S. (“GAAP”). Under the U.S. Securities and Exchange Commission rules, non-GAAP financial measures may be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for or superior to GAAP results. The tables below show reconciliations of non-GAAP financial measures to the most directly comparable GAAP financial measures.

Operating Margin

Delta excludes the following special items from operating margin and other measures because management believes the exclusion of these items is helpful to investors to evaluate the company’s recurring core operational performance in the period shown. Therefore, we adjust for these amounts to arrive at more meaningful financial measures. Special items excluded in the table below showing the reconciliation of operating margin are:

· MTM adjustments. MTM adjustments are based on market prices as of the end of the reporting period for contracts settling in future periods. Such market prices are not necessarily indicative of the actual future value of the underlying hedge in the contract settlement period. Therefore, excluding these adjustments allows investors to better understand and analyze Delta’s core operational performance for the periods reported.

· Restructuring and other items. Because of the variability in restructuring and other items, the exclusion of restructuring and other items from this measure is helpful to investors to analyze Delta’s core operational costs in the periods shown.

	Three Months Ended December 31,
	2013	2012
	(Projected)
Operating margin	7 to 8%	4.1%
Items excluded:
MTM adjustments	(1)%	–
Restructuring and other items	2%	1.4%
Operating margin excluding special items	8% to 9%	5.5%

3

 

CASM-Ex

In addition to excluding the special items described above, Delta excludes the following items from consolidated cost per available seat mile or unit cost ("CASM") to evaluate the company’s non-fuel cost performance:

· Profit sharing. Delta excludes profit sharing because this exclusion allows investors to better understand and analyze Delta’s recurring cost performance and provides a more meaningful comparison of Delta’s core operating costs to the airline industry.

· Aircraft fuel and related taxes. The volatility in fuel prices impacts the comparability of year-over-year financial performance. The exclusion of aircraft fuel and related taxes from this measure (including Delta’s regional carriers under capacity purchase arrangements) allows investors to better understand and analyze Delta’s non-fuel costs and its year-over-year financial performance.

	(Projected)
	% Change
	Three Months Ended
	December 31, 2013
CASM	1.0%
Items excluded:
Profit sharing	(0.5)%
Restructuring and other items	(0.5)%
MTM Adjustments	1.0%
Aircraft fuel and related taxes	1.0%
CASM-Ex	2.0%

Average Fuel Price Per Gallon

Delta excludes MTM adjustments from average price per fuel gallon because, as described above, excluding these adjustments allows investors to better understand and analyze Delta’s costs for the periods reported.

	(Projected)
	Three Months Ended
Consolidated	December 31, 2013
Average price per fuel gallon	$2.89 to $2.94
MTM adjustments	0.11
Average price per fuel gallon, adjusted	$3.00 to $3.05

4

 

Operating Cash Flow (Net cash provided by operating activities, adjusted)

Delta presents net cash provided by operating activities because management believes this metric is helpful to investors to evaluate the company’s operating activities and cash flows.

	(Projected)
	Three Months Ended
(in billions)	December 31, 2013
Delta operating cash flow	$0.9
Adjustment:
SkyMiles used pursuant to advance purchase under AMEX agreements	0.1
Net cash provided by operating activities, adjusted	$1.0

Adjusted Net Debt

Delta uses adjusted total debt, including aircraft rent, in addition to long-term adjusted debt and capital leases, to present estimated financial obligations. Delta reduces adjusted total debt by cash, cash equivalents and short-term investments, resulting in adjusted net debt, to present the amount of assets needed to satisfy the debt. Management believes this metric is helpful to investors in assessing the company’s overall debt profile.

	(Projected)
(in billions)	December 31, 2013
Debt and capital lease obligations	$11.3
Plus: unamortized discount, net from purchase accounting and fresh start reporting	0.4
Adjusted debt and capital lease obligations		$11.7
Plus: 7x last twelve months' aircraft rent		1.5
Adjusted total debt		13.2
Less: cash, cash equivalents and short-term investments		(3.8)
Adjusted net debt		$9.4

5