-----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, K+B0X1zG5cQqIJC6TEEAxXitTfw5k8TRBUB7LTkWzRyrcbdO3ezd/j3o1bK0sAwZ VylqtCtXuva+42w7+5jCcA== 0001167966-04-000893.txt : 20041020 0001167966-04-000893.hdr.sgml : 20041020 20041020094937 ACCESSION NUMBER: 0001167966-04-000893 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20041020 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Regulation FD Disclosure ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20041020 DATE AS OF CHANGE: 20041020 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: 041086553 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 a1355_8k.txt 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): OCTOBER 20, 2004 ---------------- DELTA AIR LINES, INC. ------------------------------------------------------ (Exact name of registrant as specified in its charter) Delaware 001-05424 58-0218548 - ---------------------------- ---------------- ------------------- (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) 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): / / Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) / / Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) / / Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b) / / Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION. ITEM 7.01 REGULATION FD DISCLOSURE. Financial Results for the Quarter Ended September 30, 2004 - ---------------------------------------------------------- Delta Air Lines, Inc. (Delta) today issued a press release reporting financial results for the quarter ended September 30, 2004. The press release is furnished as Exhibit 99.1. Delta also will be providing supplemental data for the September 2004 quarter to certain analysts. The supplemental data is furnished as Exhibit 99.2. The information furnished in this Form 8-K shall not be deemed incorporated by reference into any other filing with the Securities and Exchange Commission. ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS. (c) Exhibits. Exhibit 99.1 Press Release dated October 20, 2004 Exhibit 99.2 Supplemental Information 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/ Edward H. Bastian ------------------------------- Edward H. Bastian Senior Vice President - Finance and Controller Date: October 20, 2004 EXHIBIT INDEX Exhibit Number Description - -------------- ----------- 99.1 Press Release dated October 20, 2004 99.2 Supplemental Information EX-99 2 ex99-1.txt EXHIBIT 99.1 FOR IMMEDIATE DISTRIBUTION CONTACT: Corporate Communications Investor Relations 404-715-2554 404-715-6679 DELTA AIR LINES REPORTS SEPTEMBER 2004 QUARTER RESULTS ATLANTA, Oct. 20, 2004 - Delta Air Lines (NYSE: DAL) today reported results for the quarter ended Sept. 30, 2004, and other significant news. The key points are, Delta: o REPORTS A THIRD QUARTER NET LOSS OF $646 MILLION, OR $5.16 LOSS PER SHARE. o EXCLUDING NON-CASH CHARGES DESCRIBED BELOW, REPORTS A THIRD QUARTER NET LOSS OF $592 MILLION, OR $4.73 LOSS PER SHARE. o ENDS QUARTER WITH $1.45 BILLION IN UNRESTRICTED CASH. Delta Air Lines reported a net loss of $646 million and a loss per share of $5.16 for the September 2004 quarter. For the September 2003 quarter, Delta reported a net loss of $164 million and a loss per share of $1.36. Excluding the non-cash charges described below, the September 2004 quarter net loss and loss per share were $592 million and $4.73, respectively.1 In the September 2003 quarter, Delta reported a net loss of $172 million and a loss per share of $1.43, excluding the unusual items described below. As announced previously, Delta no longer records income tax benefits related to current period operations. This change was effective in the June 2004 quarter and will continue for the foreseeable future. "Last month we outlined the key elements of Delta's transformation plan which targets $1 billion in annual pilot cost savings, as well as participation from Delta's other stakeholders," said Gerald Grinstein, Delta's chief executive officer. "As Delta's financial situation continues to deteriorate, time is of the essence." FINANCIAL PERFORMANCE September 2004 quarter operating revenues increased 5.9 percent, while passenger unit revenues decreased 3.7 percent, compared to the September 2003 quarter. Continued weak domestic yields, down 5.9 percent as compared to the prior-year quarter, drove the decline in passenger unit revenues. Four major hurricanes impacted a significant portion of Delta's Southeastern operations during the quarter, resulting in an estimated revenue loss of approximately $50 million. The load factor for the September 2004 quarter was 77.7 percent, a 1.0 point increase as compared to the September 2003 quarter. Consolidated system capacity was up 9.0 percent and Mainline capacity rose 8.7 percent from the prior-year quarter. These increases were primarily driven by the restoration of capacity that was reduced in 2003 as a result of the war in Iraq. Detailed traffic, capacity, load factor, yield and passenger unit revenue information is provided in Table 1 below. Operating expenses for the September 2004 quarter increased 14.9 percent from the September 2003 quarter and consolidated system unit costs increased 5.4 percent. Fuel expense was the primary driver of the increase, rising 63.1 percent, or $304 million, with over 88 percent of the increase resulting from higher fuel prices. For the full year 2004, Delta expects its fuel costs to exceed the prior year levels by $950 million with $820 million of the increase driven by higher fuel prices. Excluding the non-cash charges described below, operating expenses for the September 2004 quarter increased 13.4 percent, consolidated system unit costs increased 4.1 percent and Mainline unit costs increased 3.1 percent from the September 2003 quarter. Excluding these charges, fuel price neutralized unit costs2,3 for the consolidated system decreased 2.5 percent and Mainline fuel price neutralized unit costs decreased 3.7 percent. "A combination of record high fuel prices and the weak domestic yield environment has materially impacted our financial results," said Michael J. Palumbo, Delta's executive vice president and chief financial officer. "This further demonstrates the urgent need for us to achieve our targeted benefits through our transformation plan." As disclosed in the March 2004 quarter, Delta settled all of its fuel hedge contracts in February 2004, prior to their scheduled settlement dates, resulting in a deferred gain of $82 million. In the September 2004 quarter, Delta recognized a reduction in fuel expenses of $23.5 million, which represents a portion of this deferred gain. Giving effect to this deferred gain, Delta's average total fuel price for the quarter was $1.20 per gallon. At Sept. 30, 2004, Delta had $1.77 billion in cash, of which $1.45 billion was unrestricted. Capital expenditures for the quarter were approximately $270 million, including $155 million for aircraft. Subsequent to Sept. 30, Delta contributed its remaining 2004 funding obligation of $44 million to its defined benefit pension plan for pilots (Pilot Plan), and completed the sale of eight MD-11 aircraft and four spare engines for $227 million. TRANSFORMATION PLAN While Delta has continued to make progress on its Profit Improvement Initiatives begun in 2002, the company needs substantial further reductions to its cost structure in order to achieve viability. The company completed an extensive strategic review through which it derived its transformation plan, announced on Sept. 8, 2004. The transformation plan combined with the Profit Improvement Initiatives is intended to deliver approximately $5 billion in annual benefits by 2006, as compared to 2002, while at the same time improving the service offered to Delta's customers. The plan calls for participation from the company's key stakeholders, such as creditors, lessors, vendors, employees and shareowners. It should be noted that even if Delta is successful in achieving the targeted benefits from its transformation plan, the company will still have substantial liquidity needs in 2005. In connection with its transformation plan, Delta expects to record significant one-time adjustments in the December 2004 quarter. These adjustments relate to, among other things, (1) a gain from the elimination of the subsidy it offers for retiree and survivor healthcare coverage and (2) charges from voluntary and involuntary employee reduction programs. Delta cannot reasonably estimate the net impact of these adjustments at this time. For additional details about Delta's transformation plan and 2005 liquidity needs, please see the company's Form 8-K filed on Oct. 15, 2004. 2 EXPLANATION OF NON-CASH CHARGES AND UNUSUAL ITEMS September 2004 Quarter Non-cash Charges - --------------------------------------- In the September 2004 quarter, Delta recorded two non-cash charges totaling $54 million. These charges are described below: (1) A $40 million asset impairment charge associated with our agreement to sell eight MD-11 aircraft. This charge is recorded in accordance with Statement of Financial Accounting Standards (SFAS) No. 144. 4 (2) A $14 million settlement charge related to the company's Pilot Plan. This charge relates to the lump sum distributions under the Pilot Plan for 61 pilots who retired. As a result of the lump sum distributions, Delta must accelerate the recognition of actuarial losses in accordance with SFAS 88. 5 Delta expects to record a settlement charge in the December 2004 quarter that is greater than the settlement charge recorded in the September 2004 quarter. September 2003 Quarter Unusual Items - ------------------------------------ In the September 2003 quarter, Delta recorded a $9 million gain, net of tax, from the extinguishment of debt and a $1 million charge, net of tax, related to derivative and hedging activities accounted for under SFAS 133. Consolidated Statements of Operations - ------------------------------------- The attached Consolidated Statements of Operations for the three and nine month periods ended September 30, 2004 and 2003 show Delta's net loss as reported under Generally Accepted Accounting Principles in the United States (GAAP), as well as net loss excluding the items described above. Delta believes this information is helpful to investors to evaluate recurring operational performance because (1) the asset impairment and the pilot settlement charges are not representative of current period operations; (2) the extinguishment of debt in 2003 is not representative of core operations; and (3) the SFAS 133 charge in 2003 reflects volatility in earnings driven by changes in the market which are beyond the company's control (Delta no longer excludes SFAS 133 charges due to the reduction in our fuel hedge portfolio and other investments). For further information, please see Note 1 to the attached Consolidated Statements of Operations. OTHER MATTERS Attached to this earnings release are Delta's Consolidated Statements of Operations for the three and nine months ended Sept. 30, 2004, and 2003; a statistical summary for those periods; selected balance sheet data as of Sept. 30, 2004, and Dec. 31, 2003; and a reconciliation of certain GAAP to non-GAAP financial measures. 3 SEPTEMBER 2004 QUARTER TRAFFIC, CAPACITY, LOAD FACTOR, YIELD AND PASSENGER UNIT REVENUE VS. SEPTEMBER 2003 QUARTER
TABLE 1 Year-Over-Year Change - ------- North America Atlantic Latin America Pacific ------------- -------- ------------- ------- Traffic 8.7% 17.8% 16.6% 14.2% Capacity 7.2% 17.1% 16.9% 10.9% Load Factor 1.1 pts. 0.5 pts. (0.2) pts. 2.5 pts. Yield (5.9%) 1.4% (5.0%) 2.1% Passenger Unit Revenue (4.6%) 2.0% (5.2%) 5.2%
ENDNOTES 1 Note 1 to the attached Consolidated Statements of Operations shows a reconciliation of Delta's net loss reported under accounting principles generally accepted in the United States (GAAP) to the net loss excluding non-cash charges or unusual items, as well as reconciliations of other financial measures including and excluding non-cash charges or unusual items. 2 "Fuel price neutralized unit costs" means the amount of operating cost incurred per available seat mile during a reporting period, adjusting the average fuel price per gallon for that period to equal the average fuel price per gallon for the corresponding period in the prior year. 3 Delta believes discussion of fuel price neutralized unit costs assists investors in understanding the impact of changes in fuel costs on our operations. 4 SFAS 144, "Accounting for the Impairment of Long-Lived Assets" 5 SFAS 88, "Employers' Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefits" STATEMENTS IN THIS NEWS RELEASE THAT ARE NOT HISTORICAL FACTS, INCLUDING STATEMENTS REGARDING DELTA'S ESTIMATES, BELIEFS, EXPECTATIONS, INTENTIONS, STRATEGIES OR PROJECTIONS, 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, BELIEFS, EXPECTATIONS, INTENTIONS, STRATEGIES AND PROJECTIONS REFLECTED IN OR SUGGESTED BY THE FORWARD-LOOKING STATEMENTS. THESE RISKS AND UNCERTAINTIES INCLUDE, BUT ARE NOT LIMITED TO, OUR ABILITY TO REDUCE OPERATING EXPENSES, OUR ABILITY TO OBTAIN NECESSARY FINANCING OR DEBT PAYMENT DEFERRALS TO MEET OUR LIQUIDITY NEEDS, OUR PENSION PLAN FUNDING OBLIGATIONS, PILOT EARLY RETIREMENTS, THE COST OF AIRCRAFT FUEL, THE EFFECT OF CREDIT RATINGS DOWNGRADES, INTERRUPTIONS OR DISRUPTIONS IN SERVICE AT ONE OF OUR HUB AIRPORTS, OUR INCREASING DEPENDENCE ON TECHNOLOGY IN OUR OPERATIONS, THE OUTCOME OF NEGOTIATIONS ON COLLECTIVE BARGAINING AGREEMENTS AND OTHER LABOR ISSUES, THE EFFECTS OF TERRORIST ATTACKS, RESTRUCTURINGS BY COMPETITORS, AND COMPETITIVE CONDITIONS IN THE AIRLINE INDUSTRY. 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 FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 2004, FILED WITH THE COMMISSION ON AUGUST 9, 2004 AND ITS FORM 8-K FILED WITH THE COMMISSION ON OCTOBER 15, 2004. CAUTION SHOULD BE TAKEN NOT TO PLACE UNDUE RELIANCE ON DELTA'S FORWARD-LOOKING STATEMENTS, WHICH REPRESENT DELTA'S VIEWS ONLY AS OF OCTOBER 20, 2004, AND WHICH DELTA HAS NO CURRENT INTENTION TO UPDATE. 4 DELTA AIR LINES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited; in millions, except per share data)
Three Months Ended September 30, Percent 2004 2003 Change Operating Revenues: Passenger: Mainline $ 2,814 $ 2,699 4.3% Regional affiliates 750 694 8.1% Cargo 117 114 2.6% Other, net 190 150 26.7% Total operating revenues 3,871 3,657 5.9% Operating Expenses: Salaries and related costs 1,616 1,564 3.3% Aircraft fuel 786 482 63.1% Depreciation and amortization 311 305 2.0% Contracted services 249 208 19.7% Contract carrier arrangements 234 213 9.9% Landing fees and other rents 220 214 2.8% Aircraft maintenance materials and outside repairs 197 162 21.6% Aircraft rent 181 182 -0.5% Other selling expenses 125 128 -2.3% Passenger commissions 60 52 15.4% Passenger service 97 86 12.8% Pension settlements, asset writedowns, and related items, net 54 (7) -871.4% Other 164 149 10.1% Total operating expenses 4,294 3,738 14.9% Operating Loss (423) (81) 422.2% Other Income (Expense): Interest expense (210) (191) -9.9% Interest income 6 9 -33.3% Gain from sale of investments -- 1 -100.0% Gain on extinguishment of debt -- 15 -100.0% Fair value adjustments of SFAS 133 derivatives (26) (1) -2500.0% Miscellaneous income (expense), net 1 (6) 116.7% Total other income (expense) (229) (173) -32.4% Loss Before Income Taxes (652) (254) -156.7% Income Tax Benefit 6 90 -93.3% Net Loss (646) (164) -293.9% Preferred Stock Dividends (5) (4) -25.0% Net Loss Available To Common Shareowners $ (651) $ (168) -287.5% Basic and Diluted Loss Per Share $ (5.16) $(1.36) -279.4% Net Loss Excluding Unusual Items see Note 1 $ (592) $ (172) -244.2% Basic and Diluted Loss Per Share Excluding Unusual Items - see Note 1 $ (4.73) $(1.43) -230.8% Operating Margin -10.9% -2.2% -8.7 pts.
5 DELTA AIR LINES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited; in millions, except per share data)
Nine Months Ended September 30, Percent 2004 2003 Change Operating Revenues: Passenger: Mainline $ 8,269 $ 7,774 6.4% Regional affiliates 2,192 1,911 14.7% Cargo 364 342 6.4% Other, net 536 450 19.1% Total operating revenues 11,361 10,477 8.4% Operating Expenses: Salaries and related costs 4,809 4,790 0.4% Aircraft fuel 2,029 1,428 42.1% Depreciation and amortization 929 914 1.6% Contracted services 739 659 12.1% Contract carrier arrangements 708 572 23.8% Landing fees and other rents 657 644 2.0% Aircraft maintenance materials and outside repairs 518 465 11.4% Aircraft rent 544 544 0.0% Other selling expenses 396 367 7.9% Passenger commissions 165 157 5.1% Passenger service 260 242 7.4% Pension settlements, asset writedowns and related items, net 171 36 375.0% Appropriations Act reimbursements -- (398) -100.0% Other 488 477 2.3% Total operating expenses 12,413 10,897 13.9% Operating Loss (1,052) (420) -150.5% Other Income (Expense): Interest expense (601) (558) -7.7% Interest income 27 26 3.8% Gain from sale of investments -- 284 -100.0% Gain on extinguishment of debt 1 -- 100.0% Fair value adjustments of SFAS 133 derivatives (44) (16) -175.0% Miscellaneous income (expense), net (10) 7 -242.9% Total other income (expense) (627) (257) -144.0% Loss Before Income Taxes (1,679) (677) -148.0% Income Tax (Provision) Benefit (1,313) 231 -668.4% Net Loss (2,992) (446) -570.9% Preferred Stock Dividends (14) (12) -16.7% Net Loss Available To Common Shareowners $ (3,006) $ (458) -556.3% Basic and Diluted Loss Per Share $ (24.06) $ (3.71) -548.5% Net Loss Excluding Unusual Items See Note 1 $ (1,287) $ (835) -54.1% Basic and Diluted Loss Per Share Excluding Unusual Items See Note 1 $ (10.41) $ (6.87) -51.5% Operating Margin -9.3% -4.0% -5.3 pts.
6 DELTA AIR LINES, INC. STATISTICAL SUMMARY (unaudited)
Three Months Ended September 30, Percent 2004 2003 Change Consolidated: Revenue Psgr Miles (millions)1 30,418 27,546 10.4% Available Seat Miles (millions)1 39,167 35,923 9.0% Passenger Mile Yield (cents)1 11.72 12.32 -4.9% Operating Revenue Per Available Seat Mile (cents)1 9.88 10.18 -2.9% Passenger Revenue Per Available Seat Mile (cents)1 9.10 9.45 -3.7% Operating Cost per Available Seat Mile (cents)1 10.96 10.40 5.4% Operating Cost per Available Seat Mile - Excluding (cents)1 (Note 1) 10.83 10.40 4.1% Fuel Price Neutralized Operating Cost per Available Seat Mile - Excluding (cents)1 (Note 1) 10.14 10.40 -2.5% Passenger Load Factor (percent)1 77.66% 76.68% 0.98 pts. Breakeven Passenger Load Factor (percent)1 86.88% 78.50% 8.38 pts. Breakeven Passenger Load Factor1 - Excluding (percent)(Note 1) 85.70% 78.50% 7.20 pts. Passengers Enplaned (thousands) 28,247 27,059 4.4% Fuel Gallons Consumed (millions) 654 609 7.4% Average Price Per Fuel Gallon, net of hedging gains (cents) 120.27 79.15 52.0% Number of Aircraft in Fleet, End of Period 842 829 1.6% Full-Time Equivalent Employees, End of Period 69,700 70,100 -0.6% Mainline: Revenue Psgr Miles (millions) 26,438 24,088 9.8% Available Seat Miles (millions) 33,576 30,901 8.7% Operating Cost per Available Seat Mile (cents) 10.37 9.90 4.7% Operating Cost per Available Seat Mile - Excluding (cents)(Note 1) 10.21 9.90 3.1% Fuel Price Neutralized Operating Cost per Available Seat Mile - Excluding (cents) (Note 1) 9.53 9.90 -3.7% Number of Aircraft in Fleet, End of Period 542 551 -1.6%
(1) These statistics include our contract carrier arrangements with Independence Air, Chautauqua Airlines, Inc., and SkyWest Airlines, Inc., for the periods presented. 7 DELTA AIR LINES, INC. STATISTICAL SUMMARY (unaudited)
Nine Months Ended September 30, Percent 2004 2003 Change Consolidated: Revenue Psgr Miles (millions)1 85,201 76,111 11.9% Available Seat Miles (millions)1 113,536 103,442 9.8% Passenger Mile Yield (cents)1 12.28 12.73 -3.5% Operating Revenue Per Available Seat Mile (cents)1 10.01 10.13 -1.2% Passenger Revenue Per Available Seat Mile (cents)1 9.21 9.36 -1.6% Operating Cost per Available Seat Mile (cents)1 10.93 10.53 3.8% Operating Cost per Available Seat Mile - Excluding (cents)1 (Note 1) 10.78 10.88 -0.9% Fuel Price Neutralized Operating Cost per Available Seat Mile - Excluding (cents)1 (Note 1) 10.35 10.88 -4.9% Passenger Load Factor (percent)1 75.04% 73.58% 1.46 pts. Breakeven Passenger Load Factor (percent)1 82.59% 76.77% 5.82 pts. Breakeven Passenger Load Factor - excluding (percent)(Note 1)1 81.36% 79.46% 1.90 pts. Passengers Enplaned (thousands) 82,206 77,938 5.5% Fuel Gallons Consumed (millions) 1,896 1,768 7.2% Average Price Per Fuel Gallon, net of hedging gains (cents) 107.00 80.80 32.4% Number of Aircraft in Fleet, End of Period 842 829 1.6% Full-Time Equivalent Employees, End of Period 69,700 70,100 -0.6% Mainline: Revenue Psgr Miles (millions) 73,966 66,841 10.7% Available Seat Miles (millions) 97,260 89,662 8.5% Operating Cost per Available Seat Mile (cents) 10.36 10.07 2.9% Operating Cost per Available Seat Mile - Excluding (cents)(Note 1) 10.18 10.38 -1.9% Fuel Price Neutralized Operating Cost per Available Seat Mile - Excluding (cents) (Note 1) 9.75 10.38 -6.1% Number of Aircraft in Fleet, End of Period 542 551 -1.6%
(1) These statistics include our contract carrier arrangement with Independence Air, Chautauqua Airlines, Inc., and SkyWest Airlines, Inc., for the periods presented. 8 SELECTED BALANCE SHEET DATA: September 30, December 31, 2004 2003 (unaudited) (in millions) Unrestricted cash and cash equivalents $ 1,446 $ 2,710 Restricted cash, including noncurrent 323 236 Total assets 23,526 25,939 Total debt and capital leases 12,766 12,559 Total shareowners' deficit (3,577) (659) Note 1: The following tables show reconciliations of certain financial measures adjusted for the items shown below.
Three Months Ended Nine Months Ended September 30, September 30, 2004 2003 2004 2003 (in millions) Net loss $ (646) $ (164) $(2,992) $ (446) Items excluded (2003 items net of tax) Pension settlements 14 - 131 - Aircraft impairment 40 - 40 - Deferred income tax asset valuation allowance - - 1,534 - Pension benefits for workforce reductions - - - 27 Loss on extinguishment of ESOP Notes - - - 9 Gain on extinguishment of debt - (9) - (9) Appropriations Act reimbursements - - - (251) Sale of Worldspan investment - - - (176) Fair value adjustments of SFAS 133 derivatives - 1 - 11 Total items excluded (2003 items net of tax) 54 (8) 1,705 (389) Net loss - excluding $ (592) $ (172) $(1,287) $ (835) Basic and diluted loss per share $ (5.16) $(1.36) $(24.06) $(3.71) Items excluded (2003 items net of tax): Pension settlements 0.11 - 1.05 - Aircraft impairment 0.32 - 0.32 - Deferred income tax asset valuation allowance - - 12.28 - Pension benefits for workforce reductions - - - 0.22 Loss on extinguishment of ESOP Note - - - 0.07 Gain on extinguishment of debt - (0.08) - (0.08) Appropriations Act reimbursement - - - (2.03) Sale of Worldspan investment - - - (1.42) Fair value adjustments of SFAS 133 derivatives - 0.01 - 0.08 Total items excluded (2003 items net of tax) 0.43 (0.07) 13.65 (3.16) Basic and diluted loss per share - excluding $ (4.73) $(1.43) $ (10.41) $(6.87)
9 Note 1 (continued)
Three Months Ended Nine Months Ended September 30, September 30, 2004 2003 2004 2003 (in millions) Operating expenses $ 4,294 $3,738 $ 12,413 $10,897 Items excluded: Pension settlements (14) - (131) - Aircraft impairment (40) - (40) - Appropriations Act reimbursements - - - 398 Pension benefits for workforce reductions - - - (43) Total items excluded (54) - (171) 355 Operating expenses - excluding 4,240 3,738 12,242 11,252 Unit costs 10.96(cent) 10.40(cent) 10.93(cent) 10.53(cent) Items excluded: Pension settlements (0.03) - (0.12) - Aircraft impairment (0.10) - (0.03) - Appropriations Act reimbursements - - - 0.39 Pension benefits for workforce reductions - - - (0.04) Total items excluded (0.13) - (0.15) 0.35 Unit costs - excluding 10.83(cent) 10.40(cent) 10.78(cent) 10.88(cent) Mainline unit costs 10.37(cent) 9.90(cent) 10.36(cent) 10.07(cent) Items excluded: Pension settlements (0.04) - (0.14) - Aircraft impairment (0.12) - (0.04) - Appropriations Act reimbursements - - - 0.36 Pension benefits for workforce reductions - - - (0.05) Total items excluded (0.16) - (0.18) 0.31 Unit costs - excluding 10.21(cent) 9.90(cent) 10.18(cent) 10.38(cent) Breakeven load factor 86.88% 78.50% 82.59% 76.77% Items excluded: Pension settlements (0.31) - (0.94) - Aircraft impairment (0.87) - (0.29) - Appropriations Act reimbursements - - - 3.02 Pension benefits for workforce reductions - - - (0.33) Total items excluded (1.18) - (1.23) 2.69 Breakeven load factor - excluding 85.70% 78.50% 81.36% 79.46%
10 Note 1 (continued)
Three Months Ended Nine Months Ended Fuel price neutralized unit costs September 30, September 30, (in millions, except where noted) 2004 2004 Operating expenses - excluding $ 4,240 $ 12,242 Less fuel expense (786) (2,029) Plus current year fuel gallons x prior year fuel price(1)(2) 518 1,532 Fuel price neutralized operating expenses - excluding 3,972 11,745 ASMs 39,167 113,536 Fuel price neutralized unit costs - excluding (cents) 10.14 10.35 vs. September 2003 quarter unit costs - excluding (cents) 10.40 10.88 Change (2.5%) (4.9%) Mainline fuel price neutralized unit cost (in millions, except where noted) Operating expenses $ 3,481 $ 10,072 Items excluded: Pension settlements (14) (131) Aircraft impairment (40) (40) Operating expenses - excluding 3,427 9,901 Less fuel expense (648) (1,673) Plus current year fuel gallons X prior year fuel price (3)(4) 422 1,251 Fuel price neutralized operating expenses - excluding 3,201 9,479 ASMs 33,575 97,260 Fuel price neutralized unit costs - excluding (cents) 9.53 9.75 vs. September 2003 quarter unit costs - excluding (cents) 9.90 10.38 Change (3.7%) (6.1%)
Three Months Ended September 30, Capital Expenditures 2004 (in millions) Cash used by investing activities - GAAP Aircraft (including advanced deposits) $ (7) Aircraft modifications and parts (59) Flight equipment additions (66) Ground property and equipment additions (89) Add: Aircraft seller financing 147 Less: Boston airport terminal project expenditures 31 Capital Expenditures $(271) (1) 654 million gallons x 79.15 cents/gallon for the three months ended September 30, 2004. (2) 1.9 billion gallons x 80.80 cents/gallon for the nine months ended September 30, 2004. (3) 550 million gallon x 76.76 cents/gallons for the three months ended September 30, 2004. (4) 1.6 billion gallons x 78.28 cents/gallons for the nine month ended September 30, 2004. 11 EX-99 3 ex99-2.txt EXHIBIT 99.2 SUPPLEMENTAL SEPTEMBER 2004 QUARTER DATA September 2004 Quarter Vs. September 2003 Quarter - ------------------------------------------------- o Total operating expenses for the quarter increased $556 million to $4.3 billion due primarily to higher fuel costs in the current year period. Operating expenses, excluding a non-cash settlement charge related to our defined benefit pension plan for pilots and an aircraft impairment charge related to the sale of eight MD-11 aircraft in the September 2004 quarter, increased 13% to $4.2 billion on a 9% increase in capacity. o Delta's total unit costs increased 5.4% to 10.96 cents from 10.40 cents. Fuel price neutralized unit costs, excluding the settlement charge and aircraft impairment charge, decreased 2.5% to 10.14 cents from 10.40 cents. Mainline fuel price neutralized unit costs excluding the settlement charge and aircraft impairment charge, decreased 3.7% to 9.53 cents from 9.90 cents. o Salaries and related costs increased 3.3%. This increase is primarily due to higher pension expense, contractual increases for pilots and growth at ASA and Comair, offset by our cost savings initiatives and lower Mainline headcount. o Aircraft fuel expense increased 63% due primarily to higher fuel prices and increased capacity. Delta's average fuel price per gallon rose 52% to $1.20 driving $285 million of the increase. o Contracted services increased 20% due primarily to the suspension of the TSA security fee in the prior year period, technology projects and increased volume. o Contract carrier arrangements increased by 10%. This is primarily due to increased fuel price and higher capacity under certain of these arrangements. o Aircraft maintenance materials and outside repairs increased 22% mainly due to increased materials volume resulting from the return of grounded capacity and the initiation of heavy maintenance visits on regional aircraft. o Passenger commissions expense increased 15% primarily due to higher volume. o Passenger service increased 13% primarily due to increased costs from traffic partially offset by lower expenses from our cost savings initiatives. o Other expenses increased 10% primarily due to increased professional fees, additional capacity and higher miscellaneous taxes, partially offset by lower frequent flyer program, supplies, utilities and communications costs. Other Items - ----------- AIRCRAFT FLEET Our aircraft fleet, orders, options and rolling options at September 30, 2004 are summarized in the following table. Options have scheduled delivery slots. Rolling options replace options and are assigned delivery slots as options expire or are exercised.
CURRENT FLEET ----------------------------------------- ROLLING AIRCRAFT TYPE OWNED LEASED TOTAL ORDERS OPTIONS OPTIONS ------------------------------------------------------------------------------------------------------------ B-737-200 6 46 52 - - - B-737-300 - 26 26 - - - B-737-800 71 - 71 61 (1) 60 168 B-757-200 77 44 121 - - - B-767-200 15 - 15 - - - B-767-300 4 24 28 - - - B-767-300ER 51 8 59 - 10 6 B-767-400 21 - 21 - 22 - B-777-200 8 - 8 5 20 5 MD-11 - (2) 5 5 - - - MD-88 63 57 120 - - - MD-90 16 - 16 - - - ATR-72 4 15 19 - - - CRJ-100/200 106 123 229 32 130 - CRJ-700 52 - 52 6 131 - ---------------------------------------------------------------------------------- Total 494 348 842 104 373 179 ==================================================================================
(1) Includes 11 B-737-800 aircraft, which Delta has agreed to sell to a third party immediately after those aircraft are delivered to Delta by the manufacturer in 2005. (2) Reflects the sale of 8 owned MD-11 aircraft to FedEx during the September 2004 quarter. -----END PRIVACY-ENHANCED MESSAGE-----