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Delta Air Lines Reports 2009 Financial Results

January 26, 2010

ATLANTA, Jan. 26 /PRNewswire-FirstCall/ — Delta Air Lines (NYSE: DAL) today reported financial results for the December quarter and full year 2009. Key points include:

  • Delta’s net loss excluding special items(1) for the December 2009 quarter was $225 million, or $0.27 per share. This result is $285 million better than the prior year quarter on a combined basis(2) excluding special items.
  • Delta’s net loss was $25 million, or $0.03 per share, for the December 2009 quarter.
  • Delta’s net loss for 2009 was $1.2 billion, including $169 million in special items. Excluding special items and $1.4 billion of fuel hedge losses, Delta’s net profit for 2009 was $291 million.
  • Delta ended 2009 with $5.4 billion in unrestricted liquidity, a $400 million increase year over year.
  • Delta continued its successful integration of Northwest Airlines and received approval from the Federal Aviation Administration for a single operating certificate at year end.

(Logo: http://www.newscom.com/cgi-bin/prnh/20090202/DELTALOGO )

“2009 was a difficult year by any measure and my thanks go out to the Delta people for their hard work through this challenging time,” said Richard Anderson, Delta’s chief executive officer. “As a result of the strategic pieces we put in place in 2009 and the strong momentum of our merger integration, Delta is now positioned to capitalize on the economic recovery under way and expects to generate positive RASM improvements each month of this year.”

Revenue Environment

Delta’s operating revenue on a GAAP basis grew 1% to $6.8 billion in the December 2009 quarter compared to the prior year period as a result of its merger with Northwest. On a combined basis, total operating revenue declined nearly $1 billion, or 12%, and total unit revenue (RASM) declined 5% in the December 2009 quarter compared to the 2008 quarter.


    (in millions)   4Q09   4Q08   Incr    4Q09       4Q08   Incr
                    GAAP   GAAP   (Decr)  GAAP    Combined  (Decr)
                    ----   ----   ------  ----    --------  ------
    Passenger       $5,779 $5,735      1%  $5,779    $6,657   (13)%
    Cargo              253    230     10%     253       285   (11)%
    Other, net         773    748      3%     773       826    (6)%

    Total Operating
     Revenue        $6,805 $6,713      1%  $6,805    $7,768   (12)%

On a combined basis:

  • Total operating revenue declined 12% in the December 2009 quarter versus the prior year quarter due to the global economic recession.
  • Passenger revenue decreased 13%, or $878 million, compared to the prior year period on an 8% capacity reduction. Passenger unit revenue (PRASM) declined 5%, driven by a 7% decline in yield and a 1 point improvement in load factor.
  • Cargo revenue declined 11%, or $32 million, reflecting lower yields. Freighter capacity was 19% lower year over year due to Delta’s decision to end all dedicated freighter flying by the end of 2009.
  • Other, net revenue declined 6%, or $53 million, primarily due to declines in administrative service charges which were partially offset by increased baggage fees.

Comparisons of revenue-related statistics are as follows:


                                               Increase (Decrease)
                                             4Q09 (GAAP) versus 4Q08
                                                    (Combined)
                                               -----------------------
                      4Q09 ($M)       Change     Unit
    Passenger
     Revenue             GAAP           YOY    Revenue   Yield    Capacity
                         ----           ---    -------   -----    --------
      Domestic           $2,670        (12.7)%   (8.0)%   (6.6)%     (5.1)%
      Atlantic            1,014        (19.7)%     0.2%   (7.2)%    (19.8)%
      Latin America         294         (5.4)%   (8.4)%  (11.8)%       3.6%
      Pacific               491        (22.9)%  (14.6)%  (14.4)%     (9.8)%

      Total mainline      4,469        (15.2)%   (6.6)%   (7.8)%     (9.2)%
      Regional            1,310         (5.6)%   (3.7)%   (5.4)%     (2.0)%

      Consolidated       $5,779        (13.2)%   (5.4)%   (6.6)%     (8.2)%

“Our revenue performance this quarter showed indications of economic recovery with increased corporate travel demand, strong load factors and sequential RASM improvement each month,” said Ed Bastian, Delta’s president. “With initiatives in place to broaden our network through new alliances, invest $1 billion in our fleet and product and reallocate our global fleet under our single operating certificate, we have built the foundation for further RASM improvement this year.”

Cost Performance

In the December 2009 quarter, Delta’s operating expense on a GAAP basis decreased approximately $1 billion year over year primarily due to lower restructuring and merger-related items. Excluding special items, operating expense decreased $1.2 billion due to lower fuel expense, reduced capacity, productivity improvements and merger benefits in the December 2009 quarter compared to the prior year period on a combined basis. These cost reductions were partially offset by investments in Delta’s product, increased employee wages and higher pension expense.

On a combined basis:

  • Consolidated unit cost (CASM(3)), excluding fuel expense and special items, increased 7% year over year in the December 2009 quarter as the pace of capacity reductions exceeded the benefits from cost reduction initiatives and merger synergies.
  • Non-operating expense excluding special items decreased $55 million, or 15%, in the December 2009 quarter primarily due to lower foreign exchange losses.

“Delta’s strong financial foundation and unmatched merger benefits allowed us to keep our full year unit costs contained and grow our unrestricted liquidity to $5.4 billion,” said Hank Halter, chief financial officer. “We are well positioned for 2010 with more than 50% of our debt maturities already addressed and plans to keep our non-fuel unit costs flat to 2009.”

Fuel Price and Related Hedges

Delta hedged 40% of its fuel consumption for the December 2009 quarter, for an average fuel price(4) of $2.17 per gallon. The table below represents the fuel hedges Delta had in place as of Jan. 22, 2010:


                                1Q10      2Q10      3Q10      4Q10
                                ----      ----      ----      ----
    Call options                  23%       17%        6%        3%
    Collars                        6%        5%        3%        0%
    Swaps                         18%        9%        2%        0%
                                 ---       ---       ---       ---
    Total                         47%       31%       11%        3%
                                 ---       ---       ---       ---

    Average crude call
     strike                      $67       $72       $87       $91
    Average crude collar
     cap                          75        83        83         -
    Average crude collar
     floor                        64        72        73         -
    Average crude swap            77        79        80         -

Liquidity Position

As of Dec. 31, 2009, Delta had $5.4 billion in unrestricted liquidity, including $4.7 billion in cash and short-term investments and $685 million in undrawn revolving credit facilities. Operating cash flow during the December 2009 quarter was negative $75 million, reflecting the pre-tax loss and the seasonal declines in air traffic liability.

During the quarter, the company completed a total of $1.1 billion in financing transactions, including $689 million from the 2009-1 EETC offering to refinance 27 aircraft (of which $347 million remains in escrow), $150 million from the issuance of unsecured municipal bonds and $250 million in new revolving credit facilities. Northwest’s $300 million undrawn revolving credit facility terminated on its scheduled maturity date. Debt and capital lease payments for the December 2009 quarter totaled $628 million, which included repaying the original financing for five aircraft in the 2009-1 EETC.

Capital expenditures during the quarter were approximately $175 million, which included $136 million for investments in aircraft, parts and modifications.

Company Highlights

In 2009, Delta continued to position itself as the world’s No. 1 airline, with an ongoing commitment to employees, customers and communities. Key accomplishments include:

  • Paying more than $65 million in 2009 in employee Shared Rewards for achieving operational performance goals;
  • Achieving more than $700 million in synergy benefits in 2009 from its merger with Northwest, with an incremental $600 million expected in 2010;
  • Receiving final authorization from the Federal Aviation Administration for Delta and Northwest to fly under a single operating certificate and merging Delta and Northwest into a single legal entity;
  • Resolving union representation and seniority integration for aircraft maintenance technicians, other Technical Operations employee groups, dispatchers and meteorologists and scheduling an election for simulator technicians to vote on IAM representation;
  • Implementing an expanded trans-Atlantic alliance with Air France-KLM, which will result in more flight choices, frequencies, convenient flight schedules, competitive fares and harmonized services for customers;
  • Completing the integration and re-branding of 247 airport facilities worldwide;
  • Improving the quality and consistency of Delta’s product by painting more than 300 pre-merger Northwest aircraft in the Delta livery, installing Wi-Fi on more than 346 aircraft, refurbishing the interiors of approximately 90 percent of the pre-merger Northwest mainline fleet and harmonizing onboard products and services worldwide;
  • Announcing plans to invest $1 billion through mid-2013 to enhance the customer experience and improve fleet efficiency with installation of flat-bed BusinessElite seats, expanded in-flight entertainment, additional First Class service on regional jets and new Sky Club lounges;
  • Creating the world’s largest airline loyalty program by merging the Northwest WorldPerks program into Delta SkyMiles and announcing the 2010 SkyMiles Medallion program offering frequent flyers new, industry-leading benefits, including a Diamond level status and rollover Medallion Qualification Miles;
  • Reaching a definitive agreement with US Airways to exchange slots and airport facilities at New York’s LaGuardia and Washington’s Reagan National airports, subject to regulatory approval, which will enable Delta to serve an additional two million customers at LaGuardia annually without added congestion;
  • Partnering with the City of Atlanta to reach an agreement to extend Delta’s lease at Hartsfield-Jackson Atlanta International Airport through 2017 to maintain the airport’s position as the leading airport in the world;
  • Receiving recognition for industry-leading products and services, including “Best Frequent Flyer Program,” “Best Airline Web Site” and “Best Airport Lounge” from Business Traveler magazine and receiving the “Extra Mile Award” from Budget Travel magazine for the re-launch of Delta’s Red Coat program; and
  • Contributing cash and in-kind donations to charities around the globe, including sponsoring Habitat for Humanity builds in six U.S. cities and Thailand, partnering with the American Red Cross for Haiti relief and continuing a long-standing partnership with the Breast Cancer Research Foundation.

Special Items

Delta recorded special items totaling a net $200 million credit in the December 2009 quarter, including:

  • $121 million in merger-related expenses; and
  • a $321 million non-cash tax benefit related to the impact of fuel hedges in other comprehensive income.

Delta recorded special items totaling $1 billion in charges in the December 2008 quarter, including:

  • $970 million in merger-related items;
  • a $20 million write-down in the value of auction rate securities; and
  • an $18 million charge related to facilities closure.

March 2010 Quarter Guidance

Delta’s projections for the March 2010 quarter are below.


                                     1Q 2010 Forecast
                                     ----------------

    Fuel price, including taxes
     and hedges                                  $2.22
    Operating margin                     Breakeven
    Capital expenditures                  $400 million
    Total liquidity as of Mar. 31,
     2010                                 $5.6 billion

                                     1Q 2010 Forecast
                                      (compared to 1Q
                                           2009)
                                    -----------------

    Consolidated unit costs -
     excluding fuel expense              Flat to up 2%
    Mainline unit costs -
     excluding fuel expense              Flat to up 2%

    System capacity                       Down 3 - 5 %
         Domestic                         Down 1 - 3 %
         International                    Down 5 - 7 %

    Mainline capacity                     Down 3 - 5 %
         Domestic                         Down 2 - 4 %
         International                    Down 5 - 7 %

Other Matters

Included with this press release are Delta’s unaudited Consolidated Statements of Operations for the three and twelve months ended Dec. 31, 2009 and 2008; a statistical summary for those periods; selected balance sheet data as of Dec. 31, 2009 and Dec. 31, 2008; and a reconciliation of certain non-GAAP financial measures.

About Delta

Delta Air Lines, the world’s No. 1 airline, serves more than 160 million passengers each year. With its unsurpassed global network, Delta and the Delta Connection carriers offer service to 368 destinations in 66 countries on six continents. Delta employs more than 70,000 employees worldwide and operates a mainline fleet of nearly 800 aircraft. A founding member of the SkyTeam global alliance, Delta participates in the industry’s leading trans-Atlantic joint venture with Air France KLM. Including its worldwide alliance partners, Delta offers customers more than 16,000 daily flights, with hubs in Amsterdam, Atlanta, Cincinnati, Detroit, Memphis, Minneapolis-St. Paul, New York-JFK, Paris-Charles de Gaulle, Salt Lake City and Tokyo-Narita. The airline’s service includes the SkyMiles frequent flier program, the world’s largest airline loyalty program; the award-winning BusinessElite service; and more than 50 Delta Sky Clubs in airports worldwide. Customers can check in for flights, print boarding passes, check bags and flight status at delta.com.

Endnotes

(1) Note A to the attached Consolidated Statements of Operations provides a reconciliation of non-GAAP financial measures used in this release and provides the reasons management uses those measures.

(2) Delta’s financial results under generally accepted accounting principles (GAAP) include the results of Northwest Airlines for the periods following the completion of the merger, which occurred on Oct. 29, 2008. Unless otherwise indicated, Delta presents financial results on a GAAP basis, which reflects both Delta and Northwest financial results for the December 2009 quarter. Under GAAP, Delta does not include in its financial results the results of Northwest prior to the completion of the merger. This impacts the comparability of Delta’s financial statements under GAAP for the December 2009 and 2008 quarters. In this press release, Delta presents its financial results for the December 2008 quarter under GAAP as well as on a “combined basis”. “Combined basis” means the company combines the financial results of Delta and Northwest as if the merger had occurred prior to the beginning of the applicable period. Delta’s financial results on a combined basis for the December 2008 quarter include the financial results of Northwest for the period Oct. 1, 2008 through Dec. 31, 2008. Delta believes presenting this financial information on a combined basis provides a more meaningful basis for comparing Delta’s year-over-year financial performance than the GAAP financial information.

(3) Delta excludes from consolidated unit cost ancillary businesses which are not related to the generation of a seat mile, including aircraft maintenance and staffing services which Delta provides to third parties, Delta’s dedicated freighter operations and Delta’s vacation wholesale operations (MLT). Similarly, Delta excludes from passenger unit revenues, and includes in other revenue, revenues Delta received for providing aircraft maintenance and staffing services to third parties, freighter operations and MLT. Management believes these classifications provide a more consistent and comparable reflection of Delta’s consolidated operations.

(4) Delta’s December 2009 quarter average fuel price of $2.17 per gallon reflects the consolidated cost per gallon for mainline and regional operations, including contract carrier operations, net of fuel hedge impact.

Forward-looking Statements

Statements in this news 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 effects of the global recession; the effects of the global financial crisis; the impact of posting collateral in connection with our fuel hedge contracts; the impact that our indebtedness will 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; the ability to realize the anticipated benefits of our merger with Northwest; the integration of the Delta and Northwest workforces; interruptions or disruptions in service at one of our hub airports; our increasing dependence on technology in its operations; our ability to retain management and key employees; the ability of our credit card processors to take significant holdbacks in certain circumstances; the effects of terrorist attacks; 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 our Securities and Exchange Commission filings, including our Quarterly Report on Form 10-Q for the period ended September 30, 2009. Caution should be taken not to place undue reliance on our forward-looking statements, which represent our views only as of January 26, 2010, and which we have no current intention to update.


                                     DELTA AIR LINES, INC.
                             Consolidated Statements of Operations
                                          (Unaudited)
                                             Three Months Ended Dec. 31,
                                             ---------------------------
    (in millions, except per share data)           2009           2008(1)
                                                   ----            ------

    Operating Revenue:
      Passenger:
          Mainline                               $4,469            $4,528
          Regional carriers                       1,310             1,207

        Total passenger revenue                   5,779             5,735
      Cargo                                         253               230
      Other, net                                    773               748

        Total operating revenue                   6,805             6,713

    Operating Expense:
      Aircraft fuel and related taxes             1,706             2,294
      Salaries and related costs                  1,687             1,391
      Contract carrier arrangements(2)              941               930
      Contracted services                           419               346
      Depreciation and amortization                 384               374
      Aircraft maintenance materials and
       outside repairs                              284               333
      Passenger commissions and other
       selling expenses                             336               298
      Landing fees and other rents                  318               268
      Passenger service                             161               129
      Aircraft rent                                 117               106
      Restructuring and merger-related
       items                                        121               987
      Other                                         377               354

        Total operating expense                   6,851             7,810

    Operating Loss                                  (46)           (1,097)

    Other (Expense) Income:
      Interest expense                             (327)             (277)
      Interest income                                 4                19
      Miscellaneous, net                             14               (83)
                                                                      ---
        Total other expense, net                   (309)             (341)
                                                   ----              ----

    Loss Before Income Taxes                       (355)           (1,438)

    Income Tax Benefit                              330                 -

    Net Loss                                       $(25)          $(1,438)
                                                   ====           =======

    Basic and Diluted Loss per Share             $(0.03)           $(2.11)
                                                 ======            ======

    Basic and Diluted Weighted Average
      Shares Outstanding                            830               682


                                                $Change     % Change
    (in millions, except per share data)         H(L)         H(L)
                                                 ----         ----

    Operating Revenue:
      Passenger:
          Mainline                                 $(59)         (1)%
          Regional carriers                         103            9%

        Total passenger revenue                      44            1%
      Cargo                                          23           10%
      Other, net                                     25            3%

        Total operating revenue                      92            1%

    Operating Expense:
      Aircraft fuel and related taxes              (588)        (26)%
      Salaries and related costs                    296           21%
      Contract carrier arrangements(2)               11            1%
      Contracted services                            73           21%
      Depreciation and amortization                  10            3%
      Aircraft maintenance materials and
       outside repairs                              (49)        (15)%
      Passenger commissions and other
       selling expenses                              38           13%
      Landing fees and other rents                   50           19%
      Passenger service                              32           25%
      Aircraft rent                                  11           10%
      Restructuring and merger-related
       items                                       (866)        (88)%
      Other                                          23            6%

        Total operating expense                    (959)        (12)%
                                                   ----

    Operating Loss                                1,051         (96)%

    Other (Expense) Income:
      Interest expense                              (50)          18%
      Interest income                               (15)        (79)%
      Miscellaneous, net                             97        NM

        Total other expense, net                     32          (9)%

    Loss Before Income Taxes                      1,083         (75)%

    Income Tax Benefit                              330        NM

    Net Loss                                     $1,413         (98)%
                                                 ======

    Basic and Diluted Loss per Share

    Basic and Diluted Weighted Average
      Shares Outstanding

    (1) Pursuant to GAAP, results for the December 2008 quarter presented
    in this table reflect Delta standalone and Northwest from Oct. 30,
    2008  through Dec. 31, 2008. See Note A for a representation of
    "Combined" results for the three months ended Dec. 31, 2008, which
    includes Northwest results for that period.
    (2) Contract carrier arrangements expense includes $249 million and
    $301 million for the three months ended Dec. 31, 2009 and 2008,
    respectively, for aircraft fuel and related taxes.


                                     DELTA AIR LINES, INC.
                             Consolidated Statements of Operations
                                          (Unaudited)
                                                    Year Ended Dec. 31,
                                                    -------------------
    (in millions, except per share data)             2009         2008(1)
                                                     ----          ------

    Operating Revenue:
      Passenger:
          Mainline                                $18,522         $15,137
          Regional carriers                         5,285           4,446
                                                    -----           -----
        Total passenger revenue                    23,807          19,583
      Cargo                                           788             686
      Other, net                                    3,468           2,428
                                                    -----           -----
        Total operating revenue                    28,063          22,697

    Operating Expense:
      Aircraft fuel and related taxes               7,384           7,346
      Salaries and related costs                    6,838           4,329
      Contract carrier arrangements(2)              3,823           3,766
      Contracted services                           1,595           1,062
      Depreciation and amortization                 1,536           1,266
      Aircraft maintenance materials and
       outside repairs                              1,434           1,169
      Passenger commissions and other selling
       expenses                                     1,405           1,030
      Landing fees and other rents                  1,289             787
      Passenger service                               638             440
      Aircraft rent                                   480             307
      Impairment of goodwill and other
       intangible assets                                -           7,296
      Restructuring and merger-related items          407           1,131
      Other                                         1,558           1,082
                                                    -----           -----
        Total operating expense                    28,387          31,011
                                                   ------          ------

    Operating Loss                                   (324)         (8,314)

    Other (Expense) Income:
      Interest expense                             (1,278)           (705)
      Interest income                                  27              92
      Loss on extinguishment of debt                  (83)              -
      Miscellaneous, net                               77            (114)
                                                      ---            ----
        Total other expense, net                   (1,257)           (727)
                                                   ------            ----

    Loss Before Income Taxes                       (1,581)         (9,041)

    Income Tax Benefit                                344             119
                                                      ---             ---

    Net Loss                                      $(1,237)        $(8,922)
                                                  =======         =======

    Basic and Diluted Loss per Share               $(1.50)        $(19.08)
                                                   ======         =======

    Basic and Diluted Weighted Average
      Shares Outstanding                              827             468
                                                      ===             ===


                                                  $Change     % Change
    (in millions, except per share data)           H(L)         H(L)
                                                   ----         ----

    Operating Revenue:
      Passenger:
          Mainline                                 $3,385           22%
          Regional carriers                           839           19%
                                                      ---
        Total passenger revenue                     4,224           22%
      Cargo                                           102           15%
      Other, net                                    1,040           43%
                                                    -----
        Total operating revenue                     5,366           24%

    Operating Expense:
      Aircraft fuel and related taxes                  38            1%
      Salaries and related costs                    2,509           58%
      Contract carrier arrangements(2)                 57            2%
      Contracted services                             533           50%
      Depreciation and amortization                   270           21%
      Aircraft maintenance materials and
       outside repairs                                265           23%
      Passenger commissions and other selling
       expenses                                       375           36%
      Landing fees and other rents                    502           64%
      Passenger service                               198           45%
      Aircraft rent                                   173           56%
      Impairment of goodwill and other
       intangible assets                           (7,296)       NM
      Restructuring and merger-related items         (724)        (64)%
      Other                                           476           44%
                                                      ---
        Total operating expense                    (2,624)         (8)%
                                                   ------

    Operating Loss                                  7,990         (96)%

    Other (Expense) Income:
      Interest expense                               (573)          81%
      Interest income                                 (65)        (71)%
      Loss on extinguishment of debt                  (83)       NM
      Miscellaneous, net                              191        NM
                                                      ---
        Total other expense, net                     (530)          73%
                                                     ----

    Loss Before Income Taxes                        7,460         (83)%

    Income Tax Benefit                                225        NM
                                                      ---

    Net Loss                                       $7,685         (86)%
                                                   ======

    Basic and Diluted Loss per Share

    Basic and Diluted Weighted Average
      Shares Outstanding
    (1) Pursuant to GAAP, results for the year ended December 2008
    presented in this table reflect Delta standalone for the year ended
    Dec. 31, 2008 and Northwest from Oct. 30, 2008 through Dec. 31,
    2008.
    (2) Contract carrier arrangements expense includes $907 million and
    $1.7 billion for the years ended Dec. 31, 2009 and 2008,
    respectively, for aircraft fuel and related taxes.


                              DELTA AIR LINES, INC.
                           Selected Balance Sheet Data

                                                                         Dec.
                                                         Dec. 31,         31,
    (in millions)                                             2009        2008
                                                              ----        ----
                                                       (Unaudited)
    Cash and cash equivalents                               $4,607      $4,255
    Short-term investments                                      71         212
    Restricted cash and cash equivalents (short-
     term and long-term)                                       444         453
    Total assets                                            43,581      45,084
    Total debt and capital leases, including
     current maturities                                     17,198      16,571
    Total stockholders' equity                                 274         874


                               DELTA AIR LINES, INC.
                            Combined Statistical Summary (1)
                                     (Unaudited)

                                  Three Months Ended
                                       Dec. 31,
                                                     2008
                                 2009             Combined(1)   Change

    Consolidated:
      Revenue Passenger Miles
       (millions)(2)             43,559              46,848      (7.0)%

      Available Seat Miles
       (millions)(2)             53,324              58,098      (8.2)%

      Passenger Mile Yield(2)
       (cents)                    13.27               14.21      (6.6)%

      Passenger Revenue per
       Available Seat Mile
       (PRASM)(2) (cents)         10.84               11.46      (5.4)%

      Operating Cost Per
       Available Seat Mile
       (CASM)(2) (cents)          12.52               15.89     (21.2)%

        CASM excluding
        Special Items(2)
        -See Note A (cents)       12.29               13.24      (7.2)%

       CASM excluding Special
        Items and
        Fuel Expense and
        Related Taxes(2)(3) -
        See Note A (cents)         8.68                8.11       7.0%

      Passenger Load Factor(2)     81.7   %            80.6   %   1.1  pts

      Fuel Gallons Consumed
       (millions)(2)                902                 976      (7.6)%

      Average Price Per Fuel
       Gallon, Net of Hedging
       Activity (2)               $2.17               $3.12     (30.4)%
      Number of Aircraft
      in Fleet, End of Period       983               1,023    (40) Aircraft

      Full-Time Equivalent
       Employees, End of Period  81,106              84,306       (3.8)%

    Mainline:

      Revenue Passenger Miles
       (millions)                37,537              40,810      (8.0)%

      Available Seat Miles
       (millions)                45,582              50,194      (9.2)%

      Operating Cost Per
       Available Seat Mile
       (CASM) (cents)             11.44               15.25     (25.0)%

        CASM excluding Special
         Items - See
         Note A (cents)           11.18               12.22      (8.5)%

         CASM excluding Special
          Items and Fuel Expense
          and Related Taxes -
          See Note A (cents)       7.80                7.20        8.3%

      Fuel Gallons Consumed
      (millions)                    728                 789       (7.7)%

      Average Price Per Fuel
       Gallon, Net of Hedging
       Activity                   $2.17               $3.67      (40.9)%

      Number of Aircraft in Fleet,
       End of Period                740                 767    (27) Aircraft

    1 Data presented reflects operations for both Delta and Northwest for the
      December 2008 quarter.
    2 Data presented includes operations under our contract carrier
      arrangements.
    3 Excludes $249 million and $301 million for the three months ended Dec.
      31, 2009 and 2008, respectively, for fuel expense incurred under
      contract carrier arrangements.


                              DELTA AIR LINES, INC.
                         Combined Statistical Summary (1)
                                  (Unaudited)

                                  Year Ended Dec. 31,
                                 -------------------
                                             2008
                            2009             Combined(1)       Change
                            ----           ------------        ------

    Consolidated:
      Revenue Passenger
       Miles (millions)(2) 188,943             202,726         (6.8)%

      Available
       Seat Miles
       (millions)(2)       230,331             246,164         (6.4)%

      Passenger Mile
       Yield(2) (cents)      12.60               14.65        (14.0)%

      Passenger Revenue
       per Available
       Seat Mile
       (PRASM)(2) (cents)    10.34               12.07        (14.3)%

      Operating Cost Per
       Available Seat Mile
       (CASM)(2) (cents)     12.01               18.92        (36.5)%

         CASM excluding
          Special Items(2) -
          See Note A (cents) 11.83               13.37        (11.5)%

         CASM excluding
          Special Items and
          Fuel Expense
          and Related
          Taxes(2)(3) -
          See Note A (cents)  8.28                7.98          3.8%

      Passenger Load
       Factor(2)              82.0   %            82.4   %     (0.4)  pts

      Fuel Gallons
       Consumed
       (millions)(2)         3,853               4,158         (7.3)%

      Average
       Price Per
       Fuel Gallon,
       Net of Hedging
       Activity (2)          $2.15               $3.29        (34.7)%

      Number of Aircraft
       in Fleet, End
       of Period               983               1,023       (40) Aircraft

      Full-Time
       Equivalent
       Employees, End of
       Period               81,106              84,306         (3.8)%

    Mainline:

      Revenue
       Passenger Miles
       (millions)          163,706             177,361         (7.7)%

      Available
       Seat Miles
       (millions)          197,723             213,447         (7.4)%

      Operating Cost Per
       Available Seat Mile
       (cents)               11.04               18.52        (40.4)%

         (CASM) (cents)
          CASM excluding
            Special Items -
            See Note A
            (cents)          10.84               12.15        (10.8)%

          CASM excluding
           Special Items and
           Fuel Expense
           and Related
           Taxes - See
           Note A (cents)     7.40                7.11         4.1%

      Fuel Gallons
       Consumed (millions)   3,106               3,393        (8.5)%

      Average Price Per
       Fuel Gallon, Net
       of Hedging Activity   $2.23               $3.40       (34.4)%

      Number of Aircraft
       in Fleet, End of
       Period                  740                 767       (27) Aircraft

    1 Data presented reflects operations for both Delta and Northwest for the
    year ended Dec. 31, 2008.
    2 Data presented includes operations under our contract carrier
    arrangements.
    3 Excludes $907 million and $1.7 billion for the years ended Dec. 31, 2009
    and 2008, respectively, for fuel expense incurred under contract carrier
    arrangements.

Operating Expense Reclassifications

Delta reclassified certain prior period operating expense amounts to conform to our current period presentation. These reclassifications do not impact total operating expense, net income, or other key financial metrics in any period. We reclassified travel and incidental expenses, primarily crew meals and lodging expenses, from salaries and related costs to other operating expenses. This reclassification more closely aligns the statements of operations to that of the airline industry. We also reclassified expenses associated with the cost incurred to provide services to third-party connection carriers.


                               4Q08     1Q09    2Q09     3Q09
                               ----     ----    ----     ----

    (in millions)
    OPERATING EXPENSE:

    Salaries and related
     costs                       $(164)  $(161)   $(168)   $(172)
    Contracted services            (24)    (26)     (22)     (25)
    Other                          188     187      190      197
                                   ---     ---      ---      ---
       Total operating expense       -       -        -        -

Note A: The following tables show reconciliations of non-GAAP financial measures. The reasons Delta uses these measures are described below.


    -- Delta completed its merger with Northwest Airlines on Oct. 29, 2008.
       Accordingly, Delta's financial results under GAAP for 2009 include
       the results of Northwest Airlines for the period Jan. 1, 2009
       through Dec. 31, 2009.

       Under GAAP, Delta does not include in its financial results the
       results of Northwest Airlines prior to the merger.  Accordingly,
       Delta's financial results under GAAP for the December 2008 quarter
       include the results of Northwest Airlines from Oct. 30, 2008 through
       Dec. 31, 2008.  This impacts the comparability of Delta's financial
       statements under GAAP for the December 2009 and 2008 quarters.

       Delta presents its financial results for the December 2008 quarter
       under GAAP as well as on a "combined basis."   "Combined basis"
       means the company combines the financial results of Delta and
       Northwest as if the merger had occurred prior to the beginning of
       the applicable period.  Delta believes presenting this financial
       information on a combined basis provides a more meaningful basis for
       comparing Delta's year-over-year financial performance than the GAAP
       financial information.

       This press release also includes guidance for the March 2010 quarter.
       Delta is unable to reconcile certain forward-looking projections to
       GAAP, including projected consolidated cost per available seat mile
       (CASM) and Mainline non-fuel CASM, as the nature or amount of
       special items cannot be estimated at this time.

    -- Delta excludes special items and fuel hedge losses because
       management believes the exclusion of these items is helpful to
       investors to evaluate the company's recurring operational
       performance.

    -- Delta excludes non-cash mark-to-market (MTM) adjustments related to
       fuel hedges settling in future periods in order to present financial
       results related to operations in the period shown.

    -- Delta presents consolidated and Mainline CASM excluding fuel expense
       and related taxes because management believes the volatility in fuel
       prices impacts the comparability of year-over-year financial
       performance.

    -- Consolidated and Mainline CASM excludes ancillary businesses not
       associated with the generation of a seat mile.  These businesses
       include expenses related to Delta's providing maintenance and
       staffing services to third parties, dedicated freighter operations
       and Delta's vacation wholesale operations.

    -- Delta presents net capital expenditures because management believes
       this metric is helpful to investors to evaluate the company's
       investing activities.

    -- Delta presents total debt and capital lease payments because
       management believes this metric is helpful to investors to evaluate
       the company's debt-related activities.

    DELTA AIR LINES, INC.
    Unaudited Combined Statements of Operations
                                           Three Months       Oct. 1, 2008
                                               Ended             through
                                           ------------       ------------
                                          Dec. 31, 2008      Oct. 29, 2008
                                          -------------      -------------
    (in millions)                            Delta(1)        Northwest(1)
                                             --------        ------------

    OPERATING REVENUE:
      Passenger:
        Mainline                                 $4,528               $741
        Regional carriers                         1,207                181
                                                  -----                ---
      Total passenger revenue                     5,735                922
      Cargo                                         230                 55
      Other, net                                    748                 78
                                                    ---                ---
        Total operating revenue                   6,713              1,055
    OPERATING EXPENSE:
      Aircraft fuel and related taxes             2,294                750
      Salaries and related costs                  1,391                223
      Contract carrier arrangements                 930                 81
      Aircraft maintenance materials and
       outside repairs                              333                 49
      Contracted services                           346                 65
      Passenger commissions and other
       selling expenses                             298                 72
      Depreciation and amortization                 374                 39
      Landing fees and other rents                  268                 40
      Aircraft rent                                 106                 17
      Passenger service                             129                 20
      Restructuring and merger-related
       items                                        987                224
      Other                                         354                 61
                                                    ---                ---
        Total operating expense                   7,810              1,641
                                                  -----              -----

    OPERATING (LOSS) INCOME                      (1,097)              (586)
    OTHER (EXPENSE) INCOME:
      Interest expense                             (277)               (39)
      Interest income                                19                  5
      Miscellaneous, net                            (83)                (9)
                                                    ---                ---
        Total other expense, net                   (341)               (43)
                                                   ----                ---

    LOSS BEFORE INCOME TAXES                     (1,438)              (629)
    INCOME TAX PROVISION                              -                  -
                                                    ---                ---
    NET LOSS                                    $(1,438)             $(629)


                                                  Three Months Ended
                                                    Dec. 31, 2008
                                                    ------------------
                                               Special
    (in millions)                                Items         Combined
                                               --------        --------

    OPERATING REVENUE:
      Passenger:
        Mainline                                     $-           $5,269
        Regional carriers                             -            1,388
                                                    ---            -----
      Total passenger revenue                         -            6,657
      Cargo                                           -              285
      Other, net                                      -              826
                                                    ---              ---
        Total operating revenue                       -            7,768
    OPERATING EXPENSE:
      Aircraft fuel and related taxes              (301)   (2)     2,743
      Salaries and related costs                    (25)   (3)     1,589
      Contract carrier arrangements                   -            1,011
      Aircraft maintenance materials and
       outside repairs                                -              382
      Contracted services                             -              411
      Passenger commissions and other
       selling expenses                               -              370
      Depreciation and amortization                   -              413
      Landing fees and other rents                    -              308
      Aircraft rent                                   -              123
      Passenger service                               -              149
      Restructuring and merger-related
       items                                     (1,211)   (4)         -
      Other                                           -              415
                                                    ---              ---
        Total operating expense                  (1,537)           7,914
                                                 ------            -----

    OPERATING (LOSS) INCOME                       1,537             (146)
    OTHER (EXPENSE) INCOME:
      Interest expense                                -             (316)
      Interest income                                 -               24
      Miscellaneous, net                             20    (5)       (72)
                                                    ---              ---
        Total other expense, net                     20             (364)
                                                    ---             ----

    LOSS BEFORE INCOME TAXES                      1,557             (510)
    INCOME TAX PROVISION                              -                -
                                                    ---              ---
    NET LOSS                                     $1,557            $(510)

    Notes:
    Combined Contract carrier arrangements expense includes $301 million
    for fuel expense incurred under these arrangements.
    1  We reclassified prior period amounts to conform to current
    presentations
    2  $301 million in out-of-period fuel hedges
    3  $25 million of merger-related expenses
    4  $1.2 billion in merger-related charges and $18 million in
    facilities restructuring
    5  $20 million write-down in value of auction rate securities


                                            Three Months        Year
                                               Ended           Ended
                                           Dec. 31, 2009   Dec. 31, 2009
                                           -------------   -------------
    (in millions)
    Net loss                                         $(25)        $(1,237)
    Items excluded:
    Restructuring and merger-related items            121             407
    Loss on extinguishment of debt                      -              83
    Income tax benefit related to other
     comprehensive income                            (321)           (321)
                                                     ----            ----
                                                    $(225)        $(1,068)
    Net loss excluding special items                =====         =======
    Weighted average shares outstanding               830             827
                                                      ---             ---
    Loss per share excluding special items         $(0.27)         $(1.29)
                                                   ======          ======


                                               Year Ended
                                               ----------
                                               Dec. 31,
    (in millions)                              2009
                                              ---------
    Net loss excluding special items               $(1,068)
    Item excluded:
    Fuel hedge losses                                1,359
                                                     -----
    Net income excluding special items and
     fuel hedge losses                                $291
                                                      ====


                                                   GAAP
                                                   ----
                                               Three Months
    (in millions)                                  Ended
                                               -------------
                                                  Dec. 31,
                                                    2009
                                                 ---------
    Operating expense                                 $6,851
    Items excluded:
    MTM adjustments to fuel hedges settling
     in future periods                                     -
    Restructuring and merger-related items              (121)
                                                        ----
     Operating expense excluding special
      items                                           $6,730
                                                      ======


                                                Combined
                                                --------
                                              Three Months
                                                  Ended
                                                 Dec. 31,
    (in millions)                                  2008
                                                ---------
    Non-operating expense                             $341
    Northwest results for the period Oct. 1
     to Oct. 29, 2008                                   43
    Item excluded:
    Write-down in value of auction rate
     securities                                        (20)
                                                       ---
    Non-operating expense excluding special
     items                                            $364
                                                      ====


                                                Three Months
                                                   Ended
    (in millions)                              Dec. 31, 2009
                                               -------------
    Payment on long-term debt and capital
     lease obligations                                  $(835)
    Adjustments:
    Aircraft purchases under seller
     financing                                           (293)
    Paydown on credit facility                            500
                                                          ---
    Total debt and capital lease payments               $(628)
                                                        =====


                                                Three Months
                                                   Ended
    (in millions)                              Dec. 31, 2009
                                               -------------
    Property and equipment additions (GAAP)             $(470)
    Adjustments:
    Proceeds from sales of investments                     11
    Proceeds from sales of flight equipment                14
    Aircraft purchases under seller
     financing                                            268
                                                          ---
    Total capital expenditures                          $(177)
                                                        =====


                                                Three Months
                                                   Ended
    (in millions)                              Dec. 31, 2009
                                               -------------
    Property and equipment additions, flight
     equipment (GAAP)                                   $(404)
    Adjustment:
    Aircraft purchases under seller
     financing                                            268
                                                          ---
    Total investments in aircraft, parts and
     modifications                                      $(136)
                                                        =====


                       Delta      Northwest    Combined
                      --------   ------------  ---------
                     Three Months             Three Months
                        Ended    Oct. 1, 2008    Ended     Passenger
    (in millions,     Dec. 31,        to         Dec. 31,     Mile
    except unit         2008     Oct. 29, 2008    2008       Yield     PRASM
      data)           ---------  -------------  ---------  ----------  -----

    Passenger and
     operating revenue
    Domestic           $2,639        $420      $3,059        13.53    11.31
                                                              (cents)  (cents)
    Atlantic            1,129         134       1,263        12.02     9.26
    Latin America         308           2         310        13.67    10.10
    Pacific               452         185         637        11.71     9.90
                          ---         ---         ---
    Total mainline      4,528         741       5,269        12.91    10.50
      Regional carriers 1,207         181       1,388        22.99    17.56
                        -----         ---       -----
    Total passenger
     revenue            5,735         922       6,657        14.21    11.46
    Cargo                 230          55         285
    Other, net            748          78         826
                          ---         ---         ---
      Total operating
       revenue         $6,713      $1,055      $7,768
                       ======      ======      ======

                        Delta      Northwest      Combined
                       -------   -------------    --------
                      Year Ended  Jan. 1, 2008  Year Ended  Passenger
     (in millions,     Dec. 31,       to          Dec. 31,     Mile
     except unit data)  2008     Oct. 29, 2008      2008      Yield    PRASM
                       -------   -------------    -------    --------  -----
    Passenger
     Revenue          $19,583     $10,125       $29,708      14.65    12.07
                      =======     =======       =======      (cents)  (cents)


                                  Three Months Ended Dec. 31,
                                  --------------------------
                                            2009          2008
                                            ----          ----
                                            GAAP        Combined
                                            ----        --------
    (in millions, except
     per cent data)
    CASM (cents)                           12.85         16.27
    Ancillary businesses                   (0.33)        (0.38)
                                           -----         -----
    CASM excluding items
     not related to
     generation of a seat mile (cents)     12.52         15.89
    Items excluded:
    Restructuring and
     merger-related items                  (0.23)        (2.13)
    MTM adjustments to fuel
     hedges settling in
     future periods                            -         (0.52)
                                             ---         -----
    CASM excluding special
     items (cents)                         12.29         13.24
    Fuel expense and
     related taxes                         (3.61)        (5.13)
                                           -----         -----
    CASM excluding fuel
     expense and related taxes and
     special items (cents)                  8.68          8.11
                                            ====          ====
    ASMs                                  53,324        58,098
                                          ======        ======


                                  Three Months Ended Dec. 31,
                                  ---------------------------
                                                  2009       2008
                                                  ----       ----
                                                  GAAP      Combined
                                                  ----      --------
    (in millions, except per cent data)
    Consolidated operating expense              $6,851       $9,451
    Less regional carriers
     operating expense                          (1,460)      (1,551)
                                                ------       ------
    Mainline operating expense                  $5,391       $7,900
                                                ======       ======
    Mainline CASM (cents)                        11.83        15.74
    Ancillary businesses                         (0.39)       (0.49)
                                                 -----        -----
    Mainline CASM excluding
     items not related to generation
     of a seat mile (cents)                      11.44        15.25
    Items excluded:
    Restructuring and merger-
     related items                               (0.26)       (2.43)
    MTM adjustments to fuel
     hedges settling in
     future periods                                  -        (0.60)
                                                   ---        -----
    Mainline CASM excluding
     special items (cents)                       11.18        12.22
    Fuel expense and related taxes               (3.38)       (5.02)
                                                 -----        -----
    Mainline CASM excluding
     fuel expense and related taxes and
     special items (cents)                        7.80         7.20
                                                  ====         ====
    ASMs                                        45,582       50,194
                                                ======       ======


                                                 Year Ended Dec. 31,
                                                 -------------------
                                                 2009             2008
                                                 ----             ----
                                                 GAAP           Combined
                                                 ----           --------
    (in millions, except per cent data)
    CASM (cents)                                 12.32            19.40
    Ancillary businesses                         (0.31)           (0.48)
                                                 -----            -----
    CASM excluding items not related
     to generation of a seat mile (cents)        12.01            18.92
    Items excluded:
    Impairment of goodwill and other assets          -            (4.79)
    Restructuring and merger-related
     items                                       (0.18)           (0.59)
    MTM adjustments to fuel hedges
     settling in future periods                      -            (0.17)
                                                   ---            -----
    CASM excluding special items (cents)         11.83           13.37
    Fuel expense and related taxes               (3.55)           (5.39)
                                                 -----            -----
    CASM excluding fuel expense
     and related taxes and special
     items (cents)                                8.28             7.98
                                                  ====             ====
    ASMs                                       230,331          246,164
                                               =======          =======


                                                 Year Ended Dec. 31,
                                                 -------------------
                                                2009              2008
                                                ----              ----
                                                GAAP           Combined
                                                ----           --------
    (in millions, except per cent data)
    Consolidated operating expense             $28,387          $47,758
    Less regional carriers operating
     expense                                    (5,807)          (6,993)
                                                ------           ------
    Mainline operating expense                 $22,580          $40,765
                                               =======          =======
    Mainline CASM (cents)                        11.42            19.10
    Ancillary businesses                         (0.38)           (0.58)
                                                 -----            -----
    Mainline CASM excluding items not
     related to generation of a seat mile
     (cents)                                     11.04           18.52
    Items excluded:
    Impairment of goodwill and other
     assets                                          -           (5.52)
    Restructuring and merger-related
     items                                       (0.20)          (0.66)
    MTM adjustments to fuel hedges
     settling in future periods                      -            (0.19)
                                                   ---            -----
    Mainline CASM excluding special items
     (cents)                                     10.84           12.15
    Fuel expense and related taxes               (3.44)           (5.04)
                                                 -----            -----
    Mainline CASM excluding fuel expense
     and related taxes and special
     items (cents)                                7.40             7.11
                                                  ====             ====
    ASMs                                       197,723          213,447
                                               =======          =======

SOURCE Delta Air Lines


Source: newswire



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