EXHIBIT 99.1
FOR IMMEDIATE RELEASE
CONTACT: Corporate Communications Investor Relations
404/715-2554 404/715-6679
DELTA AIR LINES REPORTS SEPTEMBER QUARTER 2001 RESULTS
ATLANTA, Nov 1, 2001 -- Delta Air Lines (NYSE:DAL) today reported a net loss of
$295 million and a loss per share of $2.43 for the September 2001 quarter
versus net income of $273 million and diluted earnings per share of $2.08 in
the September 2000 quarter, excluding the unusual items described below.
Including unusual items, the September 2001 quarter net loss and loss per share
were $259 million and $2.13, respectively, versus net income of $133 million
and diluted earnings per share of $1.01 in the September 2000 quarter.
"The terrorist attacks against the United States on September 11, 2001
have had a severe impact on the airline industry," said Leo F. Mullin, Delta's
chairman and chief executive officer. "Due to the dramatic decrease in
passenger demand, Delta has taken several steps, including network changes and,
unfortunately, employee reductions, to respond to this difficult operating
environment."
Delta estimates that the tragic events of September 11 negatively
impacted revenues in the September 2001 quarter by approximately $400 million.
This is in addition to revenues that were already projected to be down due to a
weak economy and lingering effects of the 89-day Comair strike. In the
September 2001 quarter, Delta's unit costs increased 4.5 percent from the
September 2000 quarter, while non-fuel unit costs increased 6.4 percent,
excluding unusual items. Total operating expenses decreased 1.8 percent,
excluding unusual items, while available seat miles decreased 6.0 percent.
Delta's fuel hedging program saved Delta $69 million, pretax, in the quarter.
Delta is 67 percent hedged in the December 2001 quarter at approximately $0.59
per gallon.
On September 26, Delta announced that it will reduce staffing by up to
13,000 jobs across all major work groups over the next few months. "Delta's
people are Delta Air Lines," said Mullin. "This is the most difficult action I
have had to take since joining Delta."
Delta has offered its non-union employees in the United States and
Puerto Rico six voluntary job reduction programs. Over 11,000 Delta employees
elected to take the voluntary programs. "This extraordinary acceptance rate
affirms the attractiveness of these programs," said Frederick Reid, president
and chief operating officer of Delta. "Involuntary reductions are expected to
affect only 2,000 employees -- 1,700 pilots and 300 from the other work groups."
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In addition to the workforce reductions, Delta has instituted a
broad-based recovery plan that includes eliminating discretionary spending,
cutting capital expenditures, and reducing product and service offerings. In
October 2001, Delta announced the closing of 35 of 70 city ticket offices, 11
of 50 Crown Room clubs, and five of 23 reservations call centers. Delta expects
to record charges in the December 2001 quarter related to its early retirement
program and impairment of fleet and facilities.
UNUSUAL ITEMS
During the September 2001 quarter, Delta recorded several unusual
items, net of tax: a $33 million non-cash charge related to equity rights,
primarily in priceline.com, to comply with Statement of Financial Accounting
Standard (SFAS) 133; a $42 million charge related to severance costs associated
with the employee reduction programs; a $104 million gain for compensation
received under the Air Transportation Safety and System Stabilization Act; and
a $7 million gain on the sale of its investment in Equant, N.V.
In the September 2000 quarter, Delta recorded the following unusual
items, net of tax: a $141 million non-cash charge related to SFAS 133; a $13
million charge related to the decision to discontinue our Pacific gateway in
Portland, Ore.; and a one-time, non-cash gain of $10 million related to its
equity investment in Worldspan.
IMPACT OF UNUSUAL ITEMS
SEPTEMBER QUARTER 2001
NET OF TAX ($MM) EARNINGS PER SHARE
---------------- ------------------
Net Loss Excluding Unusual Items $(295) $(2.43)
Unusual Items:
Stabilization Act Compensation 104 0.85
Severance (42) (0.34)
SFAS 133 (33) (0.27)
Equant 7 0.06
Total Unusual Items -------- ------
$ 36 $ 0.30
----- -------
Net Loss Including Unusual Items $(259) $ (2.13)
===== =======
FINANCIAL POSITION
"An already challenging financial year for the airlines turned even
more difficult when terrorist attacks struck our nation," stated M. Michele
Burns, Delta's executive vice president and chief financial officer. "Delta
management's quick response to reduce capacity and cut costs, combined with the
assistance of government funds helped mitigate the financial pressures on our
company. Nevertheless, Delta and the industry continue to face serious
challenges ahead."
During the September 2001 quarter, Delta received $346 million from
the U.S. Government under the Air Transportation Safety and System
Stabilization Act to compensate Delta for a portion of its direct
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and incremental losses resulting from the September 11 terrorist attacks. Delta
expects to receive a total of approximately $690 million under this program.
For accounting purposes, Delta recognized $171 million, pretax, of the
Stabilization Act compensation payment during the September 2001 quarter.
Additionally, on September 17, Delta received $1.25 billion from a public sale
of Enhanced Equipment Trust Certificates. As of September 30, Delta's cash
balance was $2.8 billion.
On October 12, 2001, Delta received $125 million in cash from the sale
of its stake in SkyWest Airlines. "Delta is pleased with its relationship with
SkyWest," said Burns. "This transaction was part of our ongoing initiative to
monetize non-core assets and in no way signals a change in our operational
relationship."
OPERATIONS UPDATE
The terrorist attacks on September 11, 2001 have had a significant
impact on Delta's operations. From September 11 through September 13, Delta
canceled over 6,500 flights. By September 16, Delta was operating approximately
80 percent of its pre-September 11 schedule. "The employees of Delta Air Lines
worked extremely hard to get the operation up and running in a safe, secure,
and timely manner," said Reid. "Our employees went well above and beyond the
call of duty to make sure our passengers' needs were met."
Delta's load factor from September 11 through September 30, 2001 was
48.8 percent on Delta's reduced capacity. For the month of October 2001, Delta's
preliminary results indicate that load factor increased to 61 percent. "Although
there are encouraging signs as our operations improve and passengers begin to
return, business is still far from what it was before the attacks," said Reid.
Delta is working with the Federal Aviation Administration and the
Department of Transportation to enhance Delta's security measures. Delta has
completed installation of new security devices on all of the cockpit doors on
its mainline aircraft.
NETWORK HIGHLIGHTS
Effective November 1, 2001, Delta will reduce its capacity by
approximately 16 percent, as measured by available seat miles from the level of
service planned before September 11, 2001, due to the decline in passenger
demand stemming from the terrorist attacks. As part of these reductions, Delta
will suspend approximately 50 percent of its Delta Express capacity to Florida
and will suspend certain international flights from John F. Kennedy Airport in
New York including flights to Tokyo, Tel Aviv, Munich, Dublin, Shannon, Cairo,
Dubai, Zurich, Brussels and Stockholm.
On October 5, Delta announced a realignment of some of its Delta
Connection carriers' regional jet operations to support Delta Air Lines'
network adjustments. The adjustments will maintain Delta network access for all
domestic markets currently served by Delta.
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"In making these changes, Delta considered current and anticipated
passenger demand, route profitability, and the ability to accommodate customers
conveniently on other Delta flights," said Reid. "As demand returns, we will
look to re-instate mainline service to cities where it can be done profitably."
As a result of the capacity reduction, Delta is grounding 50 aircraft
for the remainder of 2001. Delta is currently in negotiations with Boeing and
Bombardier to defer certain new aircraft deliveries and will continually review
its fleet plan based on demand and operational needs.
On October 19, the U.S. and France announced an open skies air
transport agreement. Delta, along with its European SkyTeam partners Air France,
Alitalia and CSA Czech Airlines, filed an application for antitrust immunity
with the U.S. Department of Transportation (DOT) earlier this year. This new
open skies agreement will enable the U.S. Government to complete its review and
consideration of the application. "We are hopeful that the DOT will now move
swiftly to approve the application so passengers can begin to realize the
benefits that will come from open skies and closer coordination among SkyTeam
partners," said Mullin.
Delta will host a webcast to discuss its quarterly earnings today,
November 1, at 11:00 a.m. Eastern Standard Time. The webcast is available via
the Internet at www.delta.com/inside/investors/index.jsp.
Delta's goal is to become the No. 1 airline in the eyes of its
customers, flying passengers and cargo from anywhere to everywhere. People
choose to fly Delta more often than any other airline in the world on 4,813
flights each day to 370 cities in 64 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 gives customers
extensive worldwide destinations, flights and services. In addition to safely
and securely making reservations and purchasing tickets at delta.com, Delta
customers can select seats, upgrade, get up-to-date flight information, make
accommodations reservations, and more. U.S.-based travel agencies also can
access Delta Web fares for their customers via delta.com's Online Agency
Service Center. For more information, go to delta.com.
Statements in this press release (or otherwise made by Delta or on
Delta's behalf) which are not historical facts, including statements about 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. Forward-looking statements involve
risks and uncertainties that could cause actual results to differ materially
from historical experience or our present expectations. Factors that could
cause these differences include those listed in the Report on Form 8-K dated
November 1, 2001 filed with the Securities and Exchange Commission.
# # #
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DELTA AIR LINES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited; In Millions, Except Share Data)
Three Months Nine Months
Ended Ended
September 30, September 30,
2001 2000 2001 2000
Operating Revenues:
Passenger $3,190 $4,050 $10,325 $11,906
Cargo 116 141 387 427
Other, net 92 154 304 392
Total operating revenues 3,398 4,345 11,016 12,725
Operating Expenses:
Salaries and related costs 1,540 1,514 4,721 4,456
Aircraft fuel 472 533 1,449 1,428
Depreciation and amortization 318 281 973 880
Contracted services 249 239 761 703
Landing fees and other rents 203 199 601 582
Aircraft maintenance mat'ls
and outside repairs 216 184 596 550
Aircraft rent 183 183 557 554
Other selling expenses 153 190 497 523
Passenger commissions 137 164 422 509
Passenger service 125 134 368 350
Other special charges 68 22 128 108
Stabilization Act
compensation (171) -- (171) --
Other 156 192 594 623
Total operating expenses 3,649 3,835 11,496 11,266
Operating Income (Loss) (251) 510 (480) 1,459
Other Income (Expense):
Interest expense, net (105) (58) (282) (194)
Gains from sales of investments 12 -- 19 301
Fair value adjustments of
SFAS 133 derivatives (51) (66) 44 (66)
Misc. income(expense), net (13) 6 (30) 31
(157) (118) (249) 72
Income (Loss) Before Income Taxes (408) 392 (729) 1,531
Income Tax Benefit(Provision), Net 149 (159) 247 (621)
Net Income (Loss) Before
Cumulative Effect of Change
In Accounting Principle (259) 233 (482) 910
Cumulative Effect of Change in
Accounting Principle -- (100) -- (100)
Net Income (Loss) (259) 133 (482) 810
Preferred Stock Dividends (3) (4) (10) (10)
Net Income (Loss) Available
To Common Shareowners $ (262) $ 129 $ (492) $ 800
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Diluted Earnings (Loss)Per
Share Before Cumulative
Effect of Change in Acctg
Principle $ (2.13) $ 1.77 $ (4.00) $ 6.90
Diluted Earnings (Loss)
Per Share $ (2.13) $ 1.01 $ (4.00) $ 6.14
Net Income (Loss) Excluding
Unusual Items* $ (295) $ 273 $ (541) $ 819
Diluted Earnings (Loss) Per
Share Excluding Unusual Items* $ (2.43) $ 2.08 $ (4.48) $ 6.20
Operating Margin -7.4% 11.7% -4.4% 11.5%
Weighted Average Shares Used
In Diluted Income (Loss)
Per Share Computation (000) 123,145 130,532 123,077 131,454
STATISTICAL SUMMARY:
Revenue Psgr Miles (millions) 26,881 30,643 79,994 86,468
Available Seat Miles
(millions)** 37,730 40,156 113,695 116,450
Passenger Mile Yield (cents) 11.87 13.22 12.91 13.77
Operating Revenue Per
Available Seat Mile (cents) 9.00 10.82 9.69 10.93
Operating Cost per
Available Seat Mile (cents) 9.67 9.55 10.11 9.67
Operating Cost Per Available
Seat Mile - Excluding* 9.94 9.51 10.15 9.59
Passenger Load Factor
(percent) 71.25 76.31 70.36 74.25
Breakeven Passenger Load
Factor 76.86 66.70 73.63 65.15
Breakeven Passenger Load
Factor - Excluding* 79.16 66.42 73.92 64.52
Psgrs Enplaned (thousands) 26,441 31,144 81,503 91,438
Revenue Ton Miles (millions) 3,065 3,516 9,218 9,915
Cargo Ton Miles (millions) 377 454 1,221 1,359
Cargo Ton Mile Yield (cents) 30.85 31.09 31.72 31.44
Fuel Gallons Consumed
(millions) 678 757 2,056 2,201
Average Price Per Fuel Gallon,
net of hedging gains (cents) 69.63 70.41 70.49 64.90
Number of Aircraft in Fleet at
End of Period 826 821 826 821
Average Full-Time Equivalent
Employees 83,500 82,800 83,300 81,700
* Statistics presented exclude unusual items discussed below.
Unusual Items for 2001 include:
Three months ended September 2001 - fair value adjustments related to
SFAS 133 equity derivatives; a gain on the sale of our investment in
Equant; a charge related to our announcement to eliminate up to 13,000
jobs; and Stabilization Act compensation related to the September 11,
2001 terrorist attacks
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Nine months ended September 2001 - items discussed above for the
September 2001 quarter; fair value adjustments related to SFAS 133
derivatives for the March and June 2001 quarters; and a charge related
to Delta's decision to accelerate the retirement of nine Boeing 737
aircraft
Unusual Items in 2000 include:
Three months ended September 2000 - 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 adjustments
related to FAS 133 for the September 2000 quarter; and a one-time,
non-cash gain from our investment in Worldspan
Nine months ended September 2000 - items discussed above for the
September 2000 quarter; a special charge related to Delta's early
retirement medical option; and gains on Delta's equity investments in
priceline.com
** 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.
SELECTED BALANCE SHEET DATA:
September 30, December 31,
2001 2000
(unaudited)
Cash and cash equivalents $ 2,786 $ 1,364
Total Assets 24,377 21,931
Long-term debt, including
current maturities 8,953 5,859
Capital lease obligations,
short-term and long-term 116 139
Total shareowners' equity 4,635 5,343
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