EXHIBIT 99.1
FOR IMMEDIATE DISTRIBUTION
CONTACT: Corporate Communications Investor Relations
404-715-2554 404-715-6679
DELTA AIR LINES REPORTS SECOND QUARTER RESULTS
ATLANTA, July 18, 2002 - Delta Air Lines (NYSE:DAL) today reported results for
the quarter ending June 30, 2002. The key points are, Delta:
- - REPORTS A SECOND QUARTER NET LOSS, EXCLUDING UNUSUAL ITEMS, OF $162
MILLION, OR $1.34 LOSS PER COMMON SHARE.
- - REPORTS A SECOND QUARTER NET LOSS OF $186 MILLION, OR $1.54 LOSS PER
COMMON SHARE.
- - RECORDS AN OPERATING PROFIT FOR THE MONTH OF JUNE 2002.
- - CONTINUES TO FOCUS ON CONTROLLING COSTS, CAPACITY AND LIQUIDITY.
Delta today reported a net loss of $162 million and a loss per share of $1.34
for the June 2002 quarter versus a net loss of $123 million and loss per share
of $1.03 in the June 2001 quarter, excluding unusual items. Including unusual
items, the June 2002 quarter net loss and loss per share were $186 million and
$1.54, respectively, versus a net loss of $90 million and loss per share of
$0.76 in the June 2001 quarter. Note 2 to the attached consolidated statements
of operations shows a reconciliation of the net loss excluding unusual items to
the reported net loss.
FINANCIAL AND OPERATIONAL PERFORMANCE
"Delta's financial performance is recovering slowly as we work through
one of the most challenging times in the history of our company and our
industry," said Leo F. Mullin, chairman and chief executive officer. "While
these second quarter results are substantially better than those in the first
quarter and in line with expectations, they clearly show that difficult times
are not yet behind us.
"In light of these difficult financial conditions, Delta continues its
comprehensive review of the business. Our intent is to be an airline that will
thrive, not just survive, in today's fiercely competitive aviation world. While
that task will continue to require difficult choices, we strongly believe we
are the best positioned hub-and-spoke airline to reach that goal."
Second quarter operating revenues declined 8.0 percent, and passenger
unit revenues decreased 3.0 percent, compared to the June 2001 quarter.
Excluding unusual items, operating expenses for the June 2002 quarter decreased
6.5 percent, unit costs decreased 0.3 percent and unit costs on a fuel price
neutralized basis(1) increased 0.5 percent. The load factor for the quarter was
73.4 percent on a 6.2 percent reduction in capacity, compared to 72.8 percent
for the same period a year ago. For the June 2002 quarter, Delta's completion
factor was 99.2 percent versus 97.5 percent during the same period last year.
- ------------------------
(1) The amount of operating cost incurred per available seat mile during a
reported period, adjusting the average fuel price per gallon paid in the current
period to equal the average fuel price per gallon in the corresponding period in
the prior year.
Year-over-year comparisons are impacted by Comair's suspension of service
between March 26, 2001, and July 1, 2001, due to a strike by Comair pilots.
Delta had positive cash flow from operations for the June 2002 quarter
and also recorded an operating profit in the month of June as traffic and
revenue continued to improve slowly from the March 2002 quarter.
"Delta is committed to aggressively manage what we can control --
costs, capacity and liquidity -- as we continue to make disciplined financial
and operating decisions," said M. Michele Burns, executive vice president and
chief financial officer.
Delta's fuel hedging program saved $43 million pretax for the quarter.
Delta hedged 57 percent of its jet fuel requirements in the June 2002 quarter
at an average price of $0.59 per gallon. For the second half of the year, Delta
has hedged 49 percent of its expected jet fuel requirements at an average price
of $0.66 per gallon.
Delta's capacity remained under tight control in the second quarter
with year-over-year system and mainline capacity down 6.2 percent and 10.7
percent, respectively. For the third quarter of 2002, Delta's year-over-year
system capacity is expected to decline three to four percent and year-over-year
mainline capacity is expected to decline six to seven percent.
Delta's balance sheet remains one of the strongest in the industry.
During the quarter, Delta continued to access financing opportunities in the
capital markets. On April 30, 2002, Delta issued $1.1 billion of Enhanced
Equipment Trust Certificates. A portion of the proceeds from this offering was
used to repay a $625 million revolving credit agreement that matured on May 1,
2002. The remainder of the proceeds is available for general corporate
purposes. Delta ended the June 2002 quarter with total liquidity of $2.8
billion comprised of $1.8 billion in cash and cash equivalents and an
additional near term liquidity position of $1.0 billion.
UNUSUAL ITEMS
In the June 2002 quarter, Delta recorded $24 million of unusual costs,
net of taxes. As previously disclosed, Delta continues to incur costs that
represent the temporary carrying costs of grounded aircraft and surplus pilots
as well as re-qualification training and relocation costs for pilots resulting
from capacity reductions implemented in November 2001. These costs totaled $15
million, net of tax, for the June 2002 quarter and are expected to total $61
million, net of tax, for the 2002 calendar year; a total of $40 million of
costs, net of tax, have been incurred for the six months ending June 2002. Also
during the June 2002 quarter, Delta recorded a $9 million expense, net of tax,
for non-cash, fair value adjustments of certain equity rights in other
companies, primarily priceline.com, and fuel derivative instruments to comply
with Statement of Financial Accounting Standard (SFAS) 133. In the June 2001
quarter, Delta recognized a $69 million non-cash gain, net of tax, related to
SFAS 133 and a $36 million charge, net of tax, due to its decision to
accelerate the retirement of nine Boeing 737 aircraft.
NETWORK HIGHLIGHTS
As previously announced, Delta and its SkyTeam partner, Korean Air,
received final approval from the U.S. Department of Transportation for
antitrust immunity. Delta previously obtained antitrust immunity with its
European SkyTeam partners - Air France, Alitalia, and CSA Czech Airlines.
Antitrust immunity will permit Korean Air to more closely cooperate with Delta
and the European SkyTeam members in the operation of their global route systems
on a broad network-to-network basis, improving the quality and competitiveness
of the services they offer to customers, while retaining their separate
corporate and national identities. In continued support of our SkyTeam
alliance, Delta expanded its codeshare relationship with partners Air France
and Alitalia by offering codeshare service from the United States to India via
Paris-Charles de Gaulle and Milan-Malpensa, Italy. Delta will offer business
and leisure customers a total of 20 weekly flights to the two largest business
centers of India, Delhi and Mumbai, the fastest growing travel regions in the
world.
Delta also will offer customers a new daily, nonstop flight between
Atlanta and Montego Bay, Jamaica, beginning November 1, 2002, and it will
operate the service using the Boeing 737-800 aircraft. The new service is in
addition to three daily flights between Atlanta and Montego Bay that Delta now
offers with codeshare partner Air Jamaica.
During the June 2002 quarter, Delta strengthened its industry-leading
regional jet program with the addition of Chautauqua Airlines as the newest
Delta Connection carrier. Beginning in November 2002, Chautauqua will become
the fifth regional carrier participating in the Delta Connection system, and
will serve Florida markets with a total of 22 Embraer regional jets by the end
of 2003.
CUSTOMER SERVICE
As announced on July 1, 2002, Delta received its second consecutive
annual Brand Keys Customer Loyalty Award in the airline category for meeting or
exceeding customer expectations. Brand Keys, the world leader in customer
loyalty metrics, recognized Delta for performance in booking and boarding
efficiency, in-flight comfort and customer experience. "We are honored to once
again receive such a prestigious award," said Vicki Escarra, executive vice
president and chief marketing officer for Delta. "We thank our loyal customers
for their votes of confidence and for recognizing our efforts."
Delta also continues to roll out its self-service kiosks, which are
now available at 79 airports. So far this year, over two million Delta customers
have checked in for their flights using self-service kiosks. In June 2002,
Delta achieved a record month with more than 615,000 passengers checked in using
kiosks versus 20,136 passengers in June 2001. E-ticketed customers can use
kiosks to check in, check baggage, print boarding cards, select or change
seats, request to stand by for upgrades, change flights, and initiate
multi-party check-in.
Due to a positive response from customers in New York City, Boston and
Washington, D.C., the Delta Shuttle extended its exclusive "20 Minutes or
20,000 Miles" check-in to gate guarantee and triple-miles SkyMiles bonus until
August 31, 2002. Delta has successfully reduced wait time for customers of the
Delta Shuttle. Since the program began in April 2002, only five of the nearly
400,000 Delta Shuttle passengers have received the 20,000 SkyMiles guarantee
offered by the Delta Shuttle.
Delta also continues to be on the forefront of reducing the "hassle
factor" by expanding the number of frequent traveler security lines in three
new locations during the quarter: Seattle, Baltimore, and Pittsburgh. Delta now
offers frequent traveler security lines in a total of 23 cities.
Delta will host a webcast to discuss its quarterly earnings today,
July 18, at 10:00 a.m. Eastern Time. The webcast is available via the Internet
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
5,898 flights each day to 429 destinations in 76 countries on Delta, Delta
Express, Delta Shuttle, Delta Connection 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.
# # #
0402/169-TRD
02JUNQTR
DELTA AIR LINES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited; In Millions, Except Share Data)
Three Months Six Months
Ended Ended
June 30, June 30,
----------------------------- -----------------------------
2002 2001 2002 2001
--------- --------- --------- ---------
Operating Revenues:
Passenger $ 3,217 $ 3,537 $ 6,095 $ 7,135
Cargo 109 131 220 271
Other, net 148 108 262 212
Total operating revenues 3,474 3,776 6,577 7,618
Operating Expenses:
Salaries and related costs 1,563 1,560 3,064 3,167
Aircraft fuel 401 463 740 977
Depreciation and
amortization (Note 1) 291 331 572 655
Contracted services 241 253 504 510
Landing fees and other rents 211 192 414 390
Aircraft maintenance mat'ls
and outside repairs 181 193 366 380
Aircraft rent 179 186 357 374
Other selling expenses 140 165 285 344
Passenger commissions 89 144 196 285
Passenger service 98 127 192 241
Asset writedowns and other
nonrecurring items 23 60 63 60
Other 184 216 386 464
Total operating expenses 3,601 3,890 7,139 7,847
Operating Loss (127) (114) (562) (229)
Other Income (Expense):
Interest expense, net (155) (91) (296) (177)
Gain (loss) from sale
of investments -- 7 (3) 7
Fair value adjustments of
SFAS 133 derivatives (15) 112 (43) 95
Misc. income (expense), net 10 (13) 15 (17)
(160) 15 (327) (92)
Loss Before Income Taxes (287) (99) (889) (321)
Income Tax Benefit 101 9 306 98
Net Loss (186) (90) (583) (223)
Preferred Stock Dividends (3) (4) (7) (7)
Net Loss Available
To Common Shareowners $ (189) $ (94) $ (590) $ (230)
Diluted Loss Per Share $ (1.54) $ (0.76) $ (4.79) $ (1.87)
Net Loss Excluding
Unusual Items (Note 2) $ (162) $ (123) $ (516) $ (246)
Diluted Loss Per Share
Excluding Unusual Items
(Note 2) $ (1.34) $ (1.03) $ (4.25) $ (2.05)
Operating Margin -3.7% -3.0% -8.5% -3.0%
Weighted Average Shares Used
In Diluted Loss Per Share
Computation:(in thousands) 123,243 123,053 123,244 123,042
DELTA AIR LINES, INC.
STATISTICAL SUMMARY
(unaudited)
Three Months Six Months
Ended Ended
June 30, June 30,
------------------------- -------------------------
2002 2001 2002 2001
------ ------ ------ ------
Revenue Psgr Miles (millions) 26,319 27,828 49,549 53,113
Available Seat Miles
(millions)(Note 3) 35,859 38,239 69,599 75,966
Passenger Mile Yield (cents) 12.23 12.71 12.30 13.43
Operating Revenue Per
Available Seat Mile (cents) 9.69 9.88 9.45 10.03
Operating Cost per
Available Seat Mile (cents) 10.05 10.17 10.26 10.33
Operating Cost per Available
Seat Mile - Excluding (cents)
(Note 2) 9.98 10.02 10.17 10.25
Passenger Load Factor
(percent) 73.39 72.77 71.19 69.92
Breakeven Passenger Load
Factor (percent) 76.30 75.12 77.76 72.16
Breakeven Passenger Load
Factor - Excluding (percent)
(Note 2) 75.79 73.88 77.03 71.57
Psgrs Enplaned (thousands) 27,427 28,130 52,045 55,062
Revenue Ton Miles (millions) 3,018 3,190 5,691 6,167
Cargo Ton Miles (millions) 386 407 736 844
Cargo Ton Mile Yield (cents) 28.30 32.30 29.92 32.11
Fuel Gallons Consumed
(millions) 634 682 1,233 1,378
Average Price Per Fuel Gallon,
net of hedging gains (cents) 63.13 67.95 60.00 70.91
Number of Aircraft in Fleet,
End of Period 831 826 831 826
Full-Time Equivalent Employees,
End of Period 75,700 82,800 75,700 82,800
SELECTED BALANCE SHEET DATA:
June 30, December 31,
2002 2001
----------- ------------
(unaudited)
(in millions)
Cash and cash equivalents $ 1,841 $ 2,210
Total assets 24,065 23,605
Total debt, including current
maturities and short-term
obligations 9,939 9,304
Capital lease obligations,
short-term and long-term 91 99
Total shareowners' equity 3,179 3,769
Note 1. For comparative purposes, note that we adopted Statement of Financial
Accounting Standard (SFAS)142, "Goodwill and Other Intangible Assets" on
January 1, 2002. In accordance with that standard, we no longer amortize
goodwill and certain intangible assets. For more information about our adoption
of SFAS 142, please refer to our most recently filed Quarterly Report on Form
10-Q or our Annual Report on Form 10-K.
The following table shows a reconciliation of our reported net loss
and loss per share to pro forma net loss and loss per share as if the
non-amortization provisions of SFAS 142 had been applied in the prior periods:
Three Months Six Months
Ended Ended
June 30, June 30,
------------------------ -------------------------
2002 2001 2002 2001
------- ------ ------- -------
(in millions, except
per share data)
Net Loss $ (186) $ (90) $ (583) $ (223)
Add back: goodwill and
certain intangible assets
amortization, net of tax -- 15 -- 30
Pro forma net loss $ (186) $ (75) $ (583) $ (193)
Basic and diluted loss per share:
Net Loss $ (1.54) $ (.76) $ (4.79) $ (1.87)
Add back: goodwill and
certain intangible assets
amortization, net of tax -- .12 -- .24
Pro forma net loss $ (1.54) $ (.64) $ (4.79) $ (1.63)
Note 2. The following tables show reconciliations of our net loss and loss per
share excluding unusual items to reported net loss and loss per share:
Three Months Six Months
Ended Ended
June 30, June 30,
----------------------- -----------------------
2002 2001 2002 2001
----- ------- ------- -----
(in millions, except
per share data)
Net loss excluding
unusual items $ (162) $ (123) $ (516) $ (246)
Unusual items, net of tax:
Fair value adjustment
of SFAS 133 derivatives (9) 69 (27) 59
Surplus pilots and aircraft (15) -- (40) --
Accelerated retirement of
B-737 aircraft -- (36) -- (36)
Total unusual items,
net of tax (24) 33 (67) 23
Net loss $ (186) $ (90) $ (583) $(223)
Basic and diluted loss per share:
Net loss $(1.34) $(1.03) $(4.25) $(2.05)
Unusual items, net of tax:
Fair value adjustment
of SFAS 133 derivatives (0.08) 0.57 (0.22) 0.48
Surplus pilots and aircraft (0.12) -- (0.32) --
Accelerated retirement of
B-737 aircraft -- (0.30) -- (0.30)
Total unusual items,
net of tax (0.20) 0.27 (0.54) 0.18
Net loss $(1.54) $(0.76) $(4.79) $(1.87)
Note 3. 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.