<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>3
<FILENAME>g74008ex99-1.txt
<DESCRIPTION>PRESS RELEASE, DATED JANUARY 31, 2002
<TEXT>
<PAGE>
EXHIBIT 99.1
CONTACT: Corporate Communications Investor Relations
404/715-2554 404/715-6679
DELTA REPORTS FOURTH QUARTER, FULL YEAR 2001 RESULTS
ATLANTA, Jan. 31, 2002 -- Delta Air Lines (NYSE:DAL) today reported
fourth quarter and full year 2001 results. The highlights are listed below:
- DELTA REPORTS FOURTH QUARTER LOSS OF $486 MILLION, OR $3.97 LOSS PER
SHARE, EXCLUDING UNUSUAL ITEMS. ON THE SAME BASIS, FULL YEAR 2001 NET
LOSS IS $1.0 BILLION, OR $8.46 LOSS PER SHARE.
- DELTA REPORTS FOURTH QUARTER LOSS OF $734 MILLION, OR $5.98 LOSS PER
SHARE, INCLUDING UNUSUAL ITEMS. ON THE SAME BASIS, FULL YEAR 2001 NET
LOSS IS $1.2 BILLION, OR $9.99 LOSS PER SHARE.
- DELTA MAINTAINS ONE OF THE INDUSTRY'S STRONGEST BALANCE SHEETS, ENDING
2001 WITH A CASH BALANCE OF $2.2 BILLION.
- DELTA TAKES AGGRESSIVE STEPS TO CONTROL CAPACITY, MANAGE LIQUIDITY AND
REDUCE COSTS TO POSITION ITSELF AS AN INDUSTRY LEADER.
Delta Air Lines reported a net loss of $486 million and a loss per
share of $3.97 for the December 2001 quarter, excluding unusual items, as
described below. This compares to net income of $79 million and diluted earnings
per share of $0.60 for the December 2000 quarter. Including unusual items, the
December 2001 quarter net loss and loss per share were $734 million and $5.98,
respectively, compared to net income of $18 million and diluted earnings per
share of $0.12 in the December 2000 quarter. The results are in line with
previous announcements concerning fourth quarter expectations.
"These results clearly reflect a year of challenges unlike any we've
seen in the history of aviation," said Leo F. Mullin, chairman and chief
executive officer. "Throughout these difficult times, Delta's team responded
quickly, aggressively and strategically. As a result of our consistent focus on
disciplined capacity control, a competitive network, strong capital
infrastructure, and a motivated, primarily non-union employee base, Delta is
extremely well-positioned to respond quickly and fully to the coming economic
recovery."
December 2001 quarter operating revenues declined 28.7 percent.
Excluding unusual items, unit costs increased 1.6 percent, or 3.9 percent on a
fuel price neutralized basis. Total operating expenses for the December 2001
quarter, excluding unusual items, decreased 10.0 percent. System available seat
miles decreased 11.4 percent. However, after adjusting for reduced flying by
some Delta pilots in December 2000, mainline capacity was down 15.0 percent for
the quarter. Load factor for the quarter was 63.6 percent compared to 68.9
percent for the same period a year ago. Delta ended the quarter with a
completion factor of 98.8 percent versus 95.4 percent during the same period
last year. Delta's fuel hedging program saved Delta $22 million, pretax for the
quarter. Delta has hedged 73 percent of its expected jet fuel requirements in
the March 2002 quarter at an average price of $0.61 per gallon.
<PAGE>
For the full year 2001, Delta reported a net loss of $1.0 billion and
loss per share of $8.46, excluding unusual items. Including unusual items, Delta
reported a net loss of $1.2 billion and loss per share of $9.99. Delta's
operating revenues declined 17.1 percent from calendar year 2000. Delta's unit
cost, excluding unusual items, increased 4.8 percent, or 4.6 percent on a fuel
price neutralized basis from the same period last year. "We managed through this
most challenging period responsibly and aggressively," said M. Michele Burns,
executive vice president and chief financial officer. "In this environment, our
financial strategy continues to focus on capacity discipline, cost control and
cash preservation."
UNUSUAL ITEMS
During the December 2001 quarter, unusual items, net of tax, totaled a
$248 million charge compared to a charge of $61 million for the same period last
year. For calendar year 2001, unusual items, net of tax, totaled a $189 million
charge compared to a charge of $69 million for the full year 2000. See below for
a detailed listing of unusual items for the December 2001 quarter and calendar
year 2001.
<TABLE>
<CAPTION>
IMPACT OF UNUSUAL ITEMS DECEMBER QUARTER 2001
NET OF TAX ($MM) EARNINGS PER SHARE
--------------- ------------------
<S> <C> <C>
Net Loss Excluding Unusual Items $(486) $(3.97)
Unusual Items:
Stabilization Act compensation 288 2.34
Gain on sale of SkyWest 66 0.53
SFAS 133 15 0.12
Severance and early retirement (309) (2.51)
Fleet impairment (188) (1.53)
Discontinued capital projects and (90) (0.73)
contracts
Surplus pilots and grounded aircraft (19) (0.15)
Other (11) (0.08)
---- -----
Total Unusual Items $(248) $(2.01)
----- ------
Net Loss Including Unusual Items $(734) $(5.98)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IMPACT OF UNUSUAL ITEMS CALENDAR YEAR 2001
NET OF TAX ($MM) EARNINGS PER SHARE
--------------- ------------------
<S> <C> <C>
Net Loss Excluding Unusual Items $(1,027) $(8.46)
Unusual Items:
Stabilization Act compensation 392 3.18
Net gain on sale of investments 73 0.59
SFAS 133 41 0.33
Severance and early retirement (351) (2.85)
Fleet impairment (225) (1.83)
Discontinued capital projects and (90) (0.73)
contracts
Surplus pilots and grounded aircraft (19) (0.15)
Other (10) (0.07)
---- -----
Total Unusual Items
$ (189) $(1.53)
------- ------
Net Loss Including Unusual Items $(1,216) $(9.99)
</TABLE>
FINANCIAL POSITION
During the December 2001 quarter, excluding unusual items, net income
fell by $565 million resulting from a 28.7 percent drop in revenue. This decline
in revenue was mitigated by a 10.0 percent reduction in operating expense,
excluding unusual items, achieved through headcount reductions, disciplined
capacity reductions and discretionary spending reductions.
In the non-unionized workforce, more than 95 percent of Delta's
targeted headcount reductions were achieved through voluntary programs.
Furthermore, Delta was able to react to the change in the demand environment by
cutting scheduled capacity while maintaining the overall strategic value of the
network. These efforts and reductions in discretionary spending enabled Delta to
decrease operating expenses for the quarter.
During the quarter, Delta recognized $288 million, net of tax from the
U.S. Government under the Air Transportation Safety and System Stabilization Act
that compensated Delta for a portion of its direct and incremental losses
resulting from the Sept. 11 terrorist attacks. "The U.S. Government quickly
recognized the immediate impact of Sept. 11 on the industry; we are extremely
grateful for the prompt implementation of the Stabilization Act," said Mullin.
Delta expects to receive up to $412 million, net of tax under this program.
Delta also took actions during the December 2001 quarter to increase
its liquidity. These actions included entering into a new short term $625
million secured credit facility. In addition, Delta sold a private placement of
$730 million of European Enhanced Equipment Trust Certificates. As of Dec. 31,
Delta's cash balance was $2.2 billion. "Facing a serious decrease in cash flow,
we preserved liquidity through resourceful financing efforts in what is an
extremely difficult capital markets environment," said Burns.
SECURITY AND SAFETY
During the December quarter, Delta worked with the Federal Government
to create a balanced security program that will enhance the level of safety and
security for the traveling public, while restoring the convenience of travel.
<PAGE>
"Providing safe, secure air travel is Delta's most important
responsibility to our customers, family members, friends, and employees. We are
constantly assessing ways that safety and security can be enhanced through
methods that will also minimize the hassle-factor for our customers," said
Mullin.
Delta is firmly committed to implementing its security obligations and
has worked diligently with the Federal Government to undertake the following
security procedures: carrying Federal Air Marshals on an increased number of
flights, fortifying cockpit doors, conducting random physical searches,
restricting carry-on baggage allowances, conducting comprehensive aircraft
searches, and using advanced technology and explosive detection systems (EDS).
Delta also supports the development of Trusted Passenger Programs and United
States Senator Max Cleland's proposed legislation to make willful violations of
airport security a federal criminal offense.
During 2001, Delta excelled in its corporate safety performance. For
the first time in three years, Delta improved every safety metric in 2001, most
by a wide margin. "The dedication and professionalism that Delta employees bring
to this commitment is clearly reflected in Delta's excellent record for safety
and compliance in 2001," said Frederick W. Reid, Delta's president and chief
operating officer.
NETWORK HIGHLIGHTS
As a result of the events of Sept. 11, Delta announced a reduction
in its mainline scheduled capacity, effective Nov. 1, 2001. These capacity
reductions will remain in force into the first quarter of 2002. The pace of
passenger revenue recovery will determine Delta's mainline capacity plans for
the remainder of the year.
Delta's commitment to its regional jet strategy has not wavered.
Through the fourth quarter, Delta continued to rebuild from the effects of the
Comair strike. Comair's service was fully restored to its pre-strike levels
during January 2002. Delta's industry-leading regional jet program provides the
opportunity to supplement frequencies and service to key cities. The regional
jets also provide the flexibility of adjusting for demand changes within the
marketplace.
While focused on responding and recovering from the crisis of Sept.
11, Delta never lost sight of its strategic alliance goals. During the December
2001 quarter, Delta welcomed Alitalia as its newest SkyTeam partner. Delta also
increased its network by adding two new codesharing partners: Aeroliteral, to
strengthen Delta's service between the United States and Mexico; and SNCF-French
Rail to provide rail service from Charles de Gaulle International Airport to
eight destinations in France. Codesharing service with SkyTeam partner, Air
France, was expanded to include eight new destinations in Europe, Africa and
Asia, and with British European from the United Kingdom to several destinations
in Europe.
<PAGE>
On Jan. 18, 2002, Delta and its European SkyTeam partners Air
France, Alitalia, and CSA Czech Airlines received final approval from the U.S.
Department of Transportation for antitrust immunity that will permit the
carriers to implement a more integrated airline alliance. "DOT's approval
significantly increases the strength of Delta's international network and the
level of service and choice we bring to our customers," said Mullin. "In
addition, the new opportunities open to SkyTeam as a result of the approval
greatly enhance our competitive position among the world's international
alliances, especially in light of the decision by American Airlines/British
Airways to abandon their quest for antitrust immunity as part of oneworld."
FLEET
Delta's mainline fleet plan is now complete for 2002 and 2003. The
changes, previously announced, embodied in this plan deliver both operational
and cost efficiencies. The new 2002 and 2003 plan accelerates the retirement of
Delta's entire Boeing 727 fleet by two years, defers delivery of 39 aircraft
and commits to only 13 aircraft deliveries.
Delta's regional jet fleet plan for 2002 has not changed. Delta will
take delivery of 58 regional jets for ASA and Comair in 2002. Details of Delta's
new fleet plan are attached.
CUSTOMER SERVICE
During the quarter, Delta leveraged its technology strengths and
continued its focus on customer service. With heightened security measures and
the resulting longer wait times, Delta took action to provide its customers with
up-to-the-minute flight schedule information and gate assignments by out-bound
paging, e-mail and telephone.
Delta led the industry in providing a customer wait time feature on its
Web site, delta.com. Passengers can check estimated peak and non-peak wait
times for curbside check-in, ticket counters and security check points at
approximately 140 airports. Customer feedback for these features has been
highly positive. Delta.com recently ranked No. 1 in online customer approval in
the Airline Web Site Tracking Study conducted by the NPD Group, Inc.
Delta also increased the number of security lanes at Boston, New York
La Guardia and Newark airports. Expedited service lanes have been added for
Delta's SkyMiles Medallion passengers and virtual check-in is available via
delta.com. In addition, Delta plans to install 300 additional kiosks during
2002, bringing the total number of kiosks to 400 systemwide.
BUILDING FOR THE FUTURE
The year 2002 will be a year of recovery for the industry. Delta will
continue its aggressive management approach in assessing the revenue
environment, implementing cost management practices and preserving its liquidity
position. The company's financial structure, flexible balance sheet and strong
employee base will enable Delta to invest appropriately in the business, thus
solidifying Delta's ability to emerge as an industry leader.
<PAGE>
Delta will host a webcast to discuss its quarterly earnings today, Jan.
31, at 10:00 a.m. Eastern Standard Time. The webcast is available via the World
Wide Web at www.delta.com/inside/investors/index.jsp.
Delta Air Lines, the world's second largest carrier in terms of
passengers carried and the leading U.S. airline across the Atlantic, offers more
than 5,350 flights each day to 414 destinations in 73 countries on Delta, Delta
Express, Delta Shuttle, Delta Connection carriers and Delta's worldwide
partners. Delta is a founding member of SkyTeam, a global airline alliance that
provides customers with extensive worldwide destinations, flights and services.
For more information, please go to delta.com.
Statements in this news release which are not historical facts, including
statements regarding our beliefs, expectations, estimates, intentions or
strategies for the future, may be "forward-looking statements" under the Private
Securities Litigation Reform Act of 1995. All forward-looking statements involve
a number of risks and uncertainties that could cause actual results to differ
materially from the plans, intentions, and expectations reflected in or
suggested by the forward-looking statements. For a list of factors that could
cause these differences, see the Form 8-K that we filed today. We have no
current intention to update our forward-looking statements.
###
<PAGE>
DELTA AIR LINES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited; In Millions, Except Share Data)
<TABLE>
<CAPTION>
Three Months Twelve Months
Ended Ended
December 31, December 31,
2001 2000 2001 2000
(unaudited) (unaudited) (audited)
<S> <C> <C> <C> <C>
Operating Revenues:
Passenger $ 2,639 $ 3,751 $ 12,964 $ 15,657
Cargo 119 156 506 583
Other, net 105 109 409 501
Total operating revenues 2,863 4,016 13,879 16,741
Operating Expenses:
Salaries and related costs 1,422 1,515 6,124 5,971
Aircraft fuel 368 540 1,817 1,969
Depreciation and amortization 310 307 1,283 1,187
Contracted services 258 263 1,016 966
Landing fees and other rents 192 188 780 771
Aircraft maintenance mat'ls
and outside repairs 205 173 801 723
Aircraft rent 180 187 737 741
Other selling expenses 120 166 616 688
Passenger commissions 118 152 540 661
Passenger service 101 121 466 470
Asset writedowns and other
non-recurring items 991 -- 1,119 108
Stabilization Act
compensation (463) -- (634) --
Other 183 226 816 849
Total operating expenses 3,985 3,838 15,481 15,104
Operating Income (Loss) (1,122) 178 (1,602) 1,637
Other Income (Expense):
Interest expense, net (128) (63) (410) (257)
Net gains from sale of
investments 108 -- 127 301
Fair value adjustments of
SFAS 133 derivatives 24 (92) 68 (159)
Misc. income(expense), net (17) (5) (47) 27
(13) (160) (262) (88)
Income (Loss) Before Income Taxes (1,135) 18 (1,864) 1,549
Income Tax Benefit (Provision) 401 -- 648 (621)
Net Income (Loss) Before
Cumulative Effect of Change
In Accounting Principle (734) 18 (1,216) 928
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
Cumulative Effect of Change in
Accounting Principle -- -- -- (100)
Net Income (Loss) (734) 18 (1,216) 828
Preferred Stock Dividends (4) (3) (14) (13)
Net Income (Loss) Available
To Common Shareowners $ (738) $ 15 $ (1,230) $ 815
Diluted Earnings (Loss) Per
Share Before Cumulative
Effect of Change in Acctg
Principle $ (5.98) $ 0.12 $ (9.99) $ 7.05
Diluted Earnings (Loss)
Per Share $ (5.98) $ 0.12 $ (9.99) $ 6.28
Net Income (Loss) Excluding
Unusual Items* $ (486) $ 79 $ (1,027) $ 897
Diluted Earnings (Loss) Per
Share Excluding Unusual Items* $ (3.97) $ 0.60 $ (8.46) $ 6.81
Operating Margin -39.2% 4.4% -11.5% 9.8%
Weighted Average Shares Used
In Diluted Income (Loss)
Per Share Computation (000) 123,247 124,364 123,119 131,002
STATISTICAL SUMMARY:
Revenue Psgr Miles (millions) 21,723 26,530 101,717 112,998
Available Seat Miles
(millions)(1) 34,141 38,523 147,837 154,974
Passenger Mile Yield (cents) 12.14 14.14 12.74 13.86
Operating Revenue Per
Available Seat Mile (cents) 8.38 10.43 9.39 10.80
Operating Cost per
Available Seat Mile (cents) 11.67 9.96 10.47 9.75
Operating Cost Per Available
Seat Mile - Excluding (2) 10.12 9.96 10.14 9.68
Passenger Load Factor
(percent) 63.63 68.87 68.80 72.91
Breakeven Passenger Load
Factor 90.69 65.60 77.31 65.29
Breakeven Passenger Load
Factor - Excluding (2) 77.96 65.61 74.73 64.82
Psgrs Enplaned (thousands) 23,440 28,492 104,943 119,930
Revenue Ton Miles (millions) 2,520 3,142 11,752 13,058
Cargo Ton Miles (millions) 362 496 1,583 1,855
Cargo Ton Mile Yield (cents) 32.71 31.53 31.95 31.46
Fuel Gallons Consumed
(millions) 593 721 2,649 2,922
Average Price Per Fuel Gallon,
net of hedging gains (cents) 62.04 74.99 68.60 67.38
Number of Aircraft in Fleet at
End of Period 814 831 814 831
Average Full-Time Equivalent
Employees 78,700 83,500 82,200 82,100
</TABLE>
<PAGE>
(1) As a result of a pilot strike, Comair suspended its operations between
March 26, 2001 and July 1, 2001. Accordingly, Comair had no Available
Seat Miles (ASMs)during this period. Also, immediately following the
September 11 terrorist attacks, the FAA closed U.S. airspace for
several days. As a result, Delta, Comair and ASA had no ASMs during
this period.
(2) Statistics presented exclude unusual items discussed below.
Unusual Items for 2001 include:
Three months ended December 2001 - fair value adjustments
related to SFAS 133 derivatives; a net gain on the sale of
investments; charges resulting from the September 11, 2001
terrorist attacks including: fleet impairments, severance and
early retirement, discontinued capital projects and contracts;
current costs of surplus pilots and grounded aircraft, and
Stabilization Act compensation related to the September 11,
2001 terrorist attacks.
Twelve months ended December 2001 - items discussed above for
the December 2001 quarter; fair value adjustments related to
SFAS 133 derivatives for the March, June and September, 2001
quarters; a charge related to Delta's decision to accelerate
the retirement of nine Boeing 737 aircraft; a gain on the sale
of our investment in Equant, N.V.; an estimated charge for
severance costs related to our announcement to reduce
staffing; and Stabilization Act compensation related to the
September 11, 2001 terrorist attacks.
Unusual Items in 2000 include:
Three months ended December 2000 - fair value adjustments
related to SFAS 133 derivatives.
Twelve months ended December 2000 - items discussed above for
the December 2000 quarter; a special charge related to Delta's
early retirement medical option; gains on Delta's equity
investments in priceline.com; costs related to our decision to
close our Pacific gateway in Portland, Oregon; the cumulative
effect of the adoption of SFAS 133, as well as the fair value
adjustment related to SFAS 133 for the September 2000 quarter;
and a one-time, non-cash gain from our investment in
Worldspan.
<PAGE>
SELECTED BALANCE SHEET DATA:
<TABLE>
<CAPTION>
December 31, December 31,
2001 2000
(unaudited) (audited)
<S> <C> <C>
Cash and cash equivalents $ 2,210 $ 1,364
Total Assets 23,603 21,931
Total debt, including current
maturities and short-term
obligations 9,304 5,859
Capital lease obligations,
short-term and long-term 99 139
Total shareowners' equity 3,769 5,343
</TABLE>
<PAGE>
AIRCRAFT FLEET
Our aircraft fleet, orders, options and rolling options at
December 31, 2001 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.
<TABLE>
<CAPTION>
CURRENT FLEET
----------------------------------------------------- ----------------
AIRCRAFT TYPE OWNED CAPITAL OPERATING TOTAL AVERAGE AGE
------------- LEASE LEASE
----------------------------------------------------- ----------------
<S> <C> <C> <C> <C> <C>
B-727-200 40 -- 7 47 22.5
B-737-200 4 42 6 52 16.8
B-737-300 3 -- 20 23 15.3
B-737-800 67 -- -- 67 1.3
B-757-200 80 -- 41 121 10.3
B-767-200 15 -- -- 15 18.6
B-767-300 4 -- 24 28 11.9
B-767-300ER 51 -- 8 59 5.9
B-767-400 18 -- -- 18 1.0
B-777-200 7 -- -- 7 2.3
MD-11 8 -- 7 15 7.9
MD-88 63 -- 57 120 11.5
MD-90 16 -- -- 16 6.1
EMB-120 41 -- 7 48 11.3
ATR-72 4 -- 15 19 7.5
CRJ-100/200 38 -- 121 159 3.3
TOTAL 459 42 313 814 9.1
===================================================== ================
</TABLE>
<TABLE>
<CAPTION>
DELIVERY IN CALENDAR
YEAR ENDING
--------------------------
AIRCRAFT ON FIRM ORDER 2002 2003
---------------------- --------------------------
<S> <C> <C>
B-737-600/700/800 4 5
B-757-200 0 0
B-767-300/300ER 0 0
B-767-400 3 0
B-777-200 1 0
CRJ-100/200 40 20
CRJ-700 20 14
TOTAL 68 39
==========================
</TABLE>
<TABLE>
<CAPTION>
DELIVERY IN CALENDAR
YEAR ENDING
---------------------------
ROLLING
AIRCRAFT ON OPTION 2002 2003 OPTIONS
------------------ --------------------------- ------------
<S> <C> <C> <C>
B-737-600/700/800 0 0 263
B-757-200 0 8 60
B-767-300/300ER 0 0 10
B-767-400 0 2 8
B-777-200 0 2 19
CRJ-100/200 0 24 0
CRJ-700 0 0 0
TOTAL 0 36 360
=========================== ============
</TABLE>
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</DOCUMENT>