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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
<Table>
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
</Table>
COMMISSION FILE NUMBER 1-5424
DELTA AIR LINES, INC.
(Exact name of registrant as specified in its charter)
<Table>
DELAWARE 58-0218548
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
POST OFFICE BOX 20706 30320-6001
ATLANTA, GEORGIA (Zip Code)
(Address of principal executive offices)
</Table>
Registrant's telephone number (including area code):
(404) 715-2600
Securities registered pursuant to Section 12(b) of the Act:
<Table>
<Caption>
NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
Common Stock, par value $1.50 per share..................... New York Stock Exchange
Preferred Stock Purchase Rights............................. New York Stock Exchange
8 1/8% Notes Due July 1, 2039............................... New York Stock Exchange
</Table>
Securities registered pursuant to Section 12(g) of the Act:
NONE
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). Yes [X] No [ ]
The aggregate market value of the voting and non-voting common equity held
by non-affiliates of the registrant as of June 28, 2002, was approximately $2.46
billion.
On February 28, 2003, there were outstanding 123,416,897 shares of the
registrant's common stock.
DOCUMENTS INCORPORATED BY REFERENCE
Parts I, II and IV of this Form 10-K incorporate by reference certain
information from the registrant's 2002 Annual Report to Shareowners. Parts II
and III of this Form 10-K incorporate by reference certain information from the
registrant's definitive Proxy Statement dated March 25, 2003, for its Annual
Meeting of Shareowners to be held on April 25, 2003.
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DELTA AIR LINES, INC.
Forward-Looking Information
Statements in this Form 10-K (or otherwise made by Delta or on Delta's behalf)
which are not historical facts, including statements about Delta's 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 Delta's present expectations. Factors that could cause these differences
include, but are not limited to:
1. The many effects on Delta and the airline industry from the terrorist
attacks on the United States on September 11, 2001, including the
following:
- The adverse impact of the terrorist attacks on the demand for
air travel;
- The change in Delta's operations and higher costs resulting
from, and customer reaction to, new airline and airport
security directives;
- The availability and cost of war and terrorism risk and other
insurance for Delta;
- Potential declines in the values of the aircraft in Delta's
fleet or facilities and any related asset impairment charges;
2. The availability to Delta of financing on commercially reasonable
terms, which may be influenced by, among other things, airline
bankruptcies, the creditworthiness of the airline industry in general
and Delta in particular, and actions by credit rating agencies;
3. Continued geopolitical uncertainty, including additional terrorist
activity and/or war with Iraq;
4. General economic conditions, both in the United States and in our
markets outside the United States;
5. The willingness of customers to travel generally, and with Delta
specifically, which could be affected by factors such as Delta's and
the industry's safety record and geopolitical uncertainty;
6. Competitive factors in our industry, such as airline bankruptcies, the
airline pricing environment, the growth of low-cost carriers,
international alliances, codesharing programs, capacity decisions by
competitors and mergers and acquisitions;
7. Outcomes of negotiations on collective bargaining agreements and other
labor issues;
8. Changes in the availability or cost of aircraft fuel or fuel hedges;
9. Disruptions to operations due to adverse weather conditions and air
traffic control-related constraints;
10. Actions by the United States or foreign governments, including the
Federal Aviation Administration and other regulatory agencies; and
11. The outcome of Delta's litigation.
Caution should be taken not to place undue reliance on Delta's forward-looking
statements, which represent Delta's views only as of the date of this Form 10-K,
and which Delta has no current intention to update.
2
PART I
ITEM 1. BUSINESS
General Description
Delta Air Lines, Inc. ("Delta" or the "Company") is a major air carrier
that provides scheduled air transportation for passengers and cargo throughout
the United States and around the world. As of February 1, 2003, Delta (including
its wholly owned subsidiaries Atlantic Southeast Airlines, Inc. ("ASA") and
Comair, Inc. ("Comair")) served 219 domestic cities in 47 states, the District
of Columbia, Puerto Rico and the U.S. Virgin Islands, as well as 48 cities in 32
countries. Delta is managed as a single business unit.
Based on calendar 2002 data, Delta is the second-largest airline in
terms of passengers carried, and third-largest as measured by operating revenues
and revenue passenger miles flown. Delta is the largest U.S. airline across the
transatlantic, offering the most daily flight departures, serving the largest
number of nonstop markets and carrying more passengers than any other U.S.
airline.
For the year ended December 31, 2002, passenger revenues accounted for
93% of Delta's consolidated operating revenues. Cargo revenues and other sources
accounted for 7% of the Company's consolidated operating revenues for that
period. In 2002, Delta's operations in North America, the Atlantic, Latin
America and the Pacific accounted for 81%, 14%, 4% and 1%, respectively, of its
consolidated operating revenues.
Delta is incorporated under the laws of the State of Delaware. Its
principal executive offices are located at Hartsfield Atlanta International
Airport in Atlanta, Georgia. Delta's telephone number is (404) 715-2600, and its
Internet address is "www.delta.com".
Delta makes available free of charge on its website its Annual Report
on Form 10-K, its Quarterly Reports on Form 10-Q, its Current Reports on Form
8-K and amendments to those reports as soon as reasonably practicable after they
are filed with the Securities and Exchange Commission.
Business Environment
Since the terrorist attacks on September 11, 2001, Delta and the
airline industry have faced unprecedented challenges. The industry has
experienced substantial revenue declines and cost increases, creating
industry-wide liquidity issues which have resulted in two major airlines filing
for bankruptcy. Information on these subjects is set forth under "Business
Environment" on pages 13-15 of Delta's 2002 Annual Report to Shareowners, and is
incorporated by reference.
3
Airline Operations
An important characteristic of Delta's route network is its four hub
airports in Atlanta, Cincinnati, Dallas/Ft. Worth and Salt Lake City. Each of
these hub operations includes Delta flights that gather and distribute traffic
from markets in the geographic region surrounding the hub to other major cities
and to other Delta hubs. Delta's hub and spoke system also provides passengers
with access to Delta's principal international gateways in Atlanta and New York
- - John F. Kennedy International Airport ("JFK"). As briefly discussed below,
other key characteristics of Delta's route network include its alliances with
foreign airlines; the Delta Connection Program; the Delta Shuttle; Song(TM),
Delta's new low-fare service which will begin operations in April 2003; and
Delta's proposed marketing alliance with Continental Airlines and Northwest
Airlines.
International Alliances. Delta has formed bilateral and multilateral
marketing alliances with foreign airlines to improve Delta's access to
international markets. These arrangements can include codesharing, frequent
flyer benefits, shared or reciprocal access to passenger lounges, joint
advertising and other marketing agreements.
Delta's international codesharing agreements enable Delta to market and
sell seats to an expanded number of international destinations. Under
codesharing arrangements, Delta and the foreign carriers publish their
respective airline designator codes on a single flight operation, thereby
allowing Delta and the foreign carrier to offer joint service with one aircraft
rather than operating separate services with two aircraft. These arrangements
typically allow Delta to sell seats on the foreign carrier's aircraft that are
marketed under Delta's "DL" designator code and permit the foreign airline to
sell seats on Delta's aircraft that are marketed under the foreign carrier's
two-letter designator code. As of March 1, 2003, Delta has codeshare
arrangements in effect with Aerolitoral, Aeromexico, Air France (and certain of
Air France's affiliated carriers operating flights beyond Paris), Air Jamaica,
Alitalia, British European, China Southern, CSA Czech Airlines, El Al Israel
Airlines, Korean Air, Royal Air Maroc and South African Airways.
Delta, Aeromexico, Air France, Alitalia, CSA Czech Airlines and Korean
Air are members of the SkyTeam international airline alliance. SkyTeam links the
route networks of the member airlines, providing opportunities for increased
connecting traffic while offering enhanced customer service through mutual
codesharing arrangements, reciprocal frequent flyer and lounge programs and
coordinated cargo operations. In 2002, Delta, its European SkyTeam partners and
Korean Air received antitrust immunity from the U.S. Department of
Transportation ("DOT"). The grant of antitrust immunity enables Delta and its
immunized partners to offer a more integrated route network, and develop common
sales, marketing and discount programs for customers.
Delta Connection Program. The Delta Connection program is Delta's
regional carrier service, which feeds traffic to Delta's route system through
contracts with regional air carriers that operate flights serving passengers in
small and medium-sized cities. It enables Delta to increase the number of
flights in certain locations, to better match capacity with demand and to
preserve its presence in smaller markets.
4
Delta has contractual arrangements with six regional carriers to
operate regional jet and turboprop aircraft using Delta's "DL" code. ASA and
Comair are wholly owned subsidiaries of Delta which operate all of their flights
under Delta's code. Delta has agreements with Atlantic Coast Airlines ("ACA"),
SkyWest Airlines ("SkyWest"), Chautauqua Airlines ("Chautauqua") and American
Eagle ("Eagle"), which operate some of their flights using Delta's code. For
information regarding Delta's agreements with ACA, SkyWest and Chautauqua, see
Note 9 of the Notes to the Consolidated Financial Statements on pages 48-50 of
Delta's 2002 Annual Report to Shareowners, which is incorporated by reference.
Delta's contract with Eagle, which is limited to certain flights
operated to and from the Los Angeles International Airport, is structured as a
revenue proration agreement. The Delta-Eagle prorate arrangement establishes a
fixed dollar or percentage division of revenues for tickets sold to passengers
traveling on connecting flight itineraries.
Delta Shuttle. The Delta Shuttle is the Company's high-frequency
service targeted to Northeast business travelers. It provides nonstop, hourly
service between New York - La Guardia Airport (Marine Air Terminal) and both
Boston - Logan International Airport and Washington, D.C. - Ronald Reagan
National Airport.
Song. On January 29, 2003, Delta announced a new low-fare operation,
Song, that will primarily offer flights between cities in the Northeast United
States and Florida leisure destinations. Delta plans to operate the initial Song
flight in April 2003 and increase operations by October 2003 to 144 daily
flights using a fleet of 36 Boeing 757 aircraft. Song is designed to assist
Delta in competing more effectively with low-fare airlines in leisure markets
through a combination of larger aircraft, high frequency flights, advanced
in-flight entertainment technology and innovative product offerings. Song will
replace Delta Express, the Company's existing low-fare, leisure-oriented
service.
Delta-Continental-Northwest Marketing Alliance. On August 22, 2002,
Delta entered into a marketing alliance with Continental Airlines and Northwest
Airlines which includes mutual codesharing, reciprocal frequent flyer and
airport lounge access arrangements. Delta's marketing relationship with
Continental and Northwest is designed to permit the carriers to retain their
separate identities and route networks while increasing the number of domestic
and international connecting passengers using the three carriers' route
networks. The implementation of the marketing alliance is subject to a number of
conditions, including approvals which have been obtained from the Delta and
Northwest pilot groups; review by the U.S. Department of Justice ("DOJ") and the
DOT; and the consent of certain of the international airline partners of the
three airlines. The DOJ reviewed the alliance arrangement pursuant to its
authority to enforce the antitrust laws and determined not to challenge the
alliance in January 2003 following the carriers' decision to accept certain DOJ
conditions. The DOT completed its initial review of the marketing arrangements
in January 2003 and proposed six conditions for the alliance. On February 28,
2003, after consultations with the DOT, the carriers submitted a proposal in
which they accepted three of the DOT's conditions and proposed alternative
language for three other conditions. On March 3, 2003, the DOT issued a notice
stating that it would consider the carriers' proposed language and reach a
decision within 30 days on whether the alternate conditions are satisfactory.
The current expectation is that the carriers should be in a position to
5
complete the DOT review process and obtain the international airline partner
consents in order to begin implementation of their marketing alliance during
2003.
Factors that Impact Demand for Air Travel
Demand for air travel is affected by various factors, including
economic conditions, fare levels, terrorism fears, international hostilities,
airport security measures, seasonality and weather conditions. In addition,
demand for air travel at particular airlines may be impacted from time to time
by, among other things, actual or threatened disruptions to operations due to
labor issues. In general, demand for air travel is higher in the June and
September quarters, particularly in international markets, because there is more
vacation travel during these periods than during the remainder of the year. Due
to these and other factors, operating results for an interim period are not
necessarily indicative of operating results for an entire year, and operating
results for an historical period are not necessarily indicative of operating
results for a future period.
Regulatory Matters
The DOT and the Federal Aviation Administration ("FAA") exercise
regulatory authority over air transportation in the United States. The DOT has
authority to issue certificates of public convenience and necessity required for
airlines to provide domestic air transportation. An air carrier which the DOT
finds "fit" to operate is given unrestricted authority to operate domestic air
transportation (including the carriage of passengers and cargo). Except for
constraints imposed by Essential Air Service regulations, which are applicable
to certain small communities, airlines may terminate service to a city without
restriction.
The DOT has jurisdiction over certain economic and consumer protection
matters such as unfair or deceptive practices or methods of competition,
advertising, denied boarding compensation, baggage liability and disabled
passenger transportation. The DOT also has authority to review certain joint
venture agreements between major carriers. The FAA has primary responsibility
for matters relating to air carrier flight operations, including airline
operating certificates, control of navigable air space, flight personnel,
aircraft certification and maintenance, and other matters affecting air safety.
Authority to operate international routes and international codesharing
arrangements are regulated by the DOT and by the foreign governments involved.
International route awards are also subject to the approval of the President of
the United States for conformance with national defense and foreign policy
objectives.
The Transportation Security Administration, which became a division of
the Department of Homeland Security on March 1, 2003, is responsible for certain
civil aviation security matters, including passenger and baggage screening at
U.S. airports.
6
Delta is also subject to various other federal, state, local and
foreign laws and regulations. The DOJ has jurisdiction over airline competition
matters. The U.S. Postal Service has authority over certain aspects of the
transportation of mail. Labor relations in the airline industry are generally
governed by the Railway Labor Act. Environmental matters are regulated by
various federal, state, local and foreign governmental entities.
Fares and Rates
Airlines are permitted to set ticket prices in most domestic and
international city pairs without governmental regulation, and the industry is
characterized by significant price competition. Certain international fares and
rates are subject to the jurisdiction of the DOT and the governments of the
foreign countries involved. Most of Delta's tickets are sold by travel agents,
and fares are subject to commissions, overrides and discounts paid to travel
agents, brokers and wholesalers.
Route Authority
Delta's flight operations are authorized by certificates of public
convenience and necessity and, to a limited extent, by exemptions issued by the
DOT. The requisite approvals of other governments for international operations
are provided by bilateral agreements with, or permits or approvals issued by,
foreign countries. Because international air transportation is governed by
bilateral or other agreements between the United States and the foreign country
or countries involved, changes in United States or foreign government aviation
policies could result in the alteration or termination of such agreements,
diminish the value of Delta's international route authorities or otherwise
affect Delta's international operations. Bilateral agreements between the United
States and various foreign countries served by Delta are subject to
renegotiation from time to time.
Certain of Delta's international route and codesharing authorities are
subject to periodic renewal requirements. Delta requests extension of these
authorities when and as appropriate. While the DOT usually renews temporary
authorities on routes where the authorized carrier is providing a reasonable
level of service, there is no assurance of this result. Dormant route authority
may not be renewed in some cases, especially where another U.S. carrier
indicates a willingness to provide service.
Competition
Delta faces significant competition with respect to domestic and
international routes, services and fares. All domestic routes served by Delta
are subject to competition from both new and existing carriers, and service over
virtually all of Delta's domestic routes is highly competitive. On most domestic
and international routes, the Company competes with at least one, and usually
more than one, scheduled passenger airline. Delta also competes with all-cargo
carriers, charter airlines and, particularly on its shorter routes, with surface
transportation.
7
The continuing growth of low-cost carriers in the United States places
significant competitive pressures on Delta and other network carriers. A number
of low-cost carriers, including Southwest Airlines, AirTran Airways and JetBlue
Airways, are offering increased seat capacity in Delta's markets. Delta's
ability to compete effectively with low-cost carriers depends, in part, on its
ability to achieve operating costs per available seat mile ("unit costs") that
are competitive with those carriers. Delta's unit costs are higher than those of
Southwest, AirTran and JetBlue.
International marketing alliances formed by domestic and foreign
carriers, such as the Star Alliance (among United Airlines, Lufthansa German
Airlines and others), the oneworld alliance (among American Airlines, British
Airways and others) and the Wings Alliance (between Northwest Airlines and
KLM-Royal Dutch Airlines), have significantly increased competition in
international markets. Through marketing and codesharing arrangements with U.S.
carriers, foreign carriers have obtained access to interior U.S. passenger
traffic. Similarly, U.S. carriers have increased their ability to sell
international transportation such as transatlantic services to and beyond
European cities through alliances with international carriers.
The airline industry is characterized by substantial price competition.
If price reductions are not offset by increases in traffic or changes in the mix
of traffic that improve Delta's passenger mile yield, Delta's operating results
will be adversely impacted.
Delta regularly monitors competitive developments in the airline
industry, and evaluates its strategic alternatives. These strategic alternatives
include, among other things, internal growth, codesharing arrangements,
marketing alliances, joint ventures, and mergers and acquisitions. Delta's
evaluations involve internal analysis and, where appropriate, discussions with
third parties.
Airport Access
Operations at three major U.S. airports and certain foreign airports
served by Delta are regulated by governmental entities through "slot"
allocations. Each slot represents the authorization to land at, or take off
from, the particular airport during a specified time period.
In the United States, the FAA currently regulates slot allocations at
JFK and La Guardia Airport in New York and Ronald Reagan National Airport in
Washington, D.C. Delta's operations at those three airports generally require
slot allocations. Under legislation enacted by Congress, slot rules will be
phased out at JFK and La Guardia Airport by 2007.
Delta currently has sufficient slot authorizations to operate its
existing flights, and has generally been able to obtain slots to expand its
operations and to change its schedules. There is no assurance, however, that
Delta will be able to obtain slots for these purposes in the future because,
among other reasons, slot allocations are subject to changes in governmental
policies.
8
Possible Legislation or DOT Regulation
A number of Congressional bills and proposed DOT regulations have been
considered in recent years to address airline competition issues. Some of these
proposals would require large airlines with major operations at certain airports
to divest or make available to other airlines slots, gates, facilities and other
assets at those airports. Other measures would limit the service or pricing
responses of major carriers that appear to target new entrant airlines. In
addition, concerns about airport congestion issues have caused the DOT and FAA
to consider various proposals for access to certain airports, including
"congestion-based" landing fees and programs that would regularly withdraw slots
from existing carriers and reallocate those slots (either by lottery or auction)
to the highest bidder or to carriers with little or no current presence at such
airports. These proposals, if enacted, could negatively impact Delta's existing
services and its ability to respond to competitive actions by other airlines.
Worldspan
Delta owns 40% of WORLDSPAN, L.P. ("Worldspan"), a Delaware limited
partnership which operates and markets a computer reservation system ("CRS") and
related systems for the travel industry. Northwest Airlines and American
Airlines own 34% and 26%, respectively, of Worldspan.
On March 3, 2003, Delta, Northwest and American entered into an
agreement to sell their equity interests in Worldspan to a third party. The
completion of this transaction is subject to financing, governmental and
regulatory approvals and other customary closing conditions, the satisfaction of
which cannot be guaranteed.
CRS services are used primarily by travel agents to book airline,
hotel, car rental and other travel reservations and issue airline tickets. The
CRS industry is highly competitive. CRS services are provided by several
companies in the United States and worldwide. In the United States, other CRS
competitors are SABRE, Galileo International and AMADEUS. CRS vendors are
subject to regulations promulgated by the DOT and certain foreign governments.
Orbitz
Delta owns approximately 18% of Orbitz, LLC ("Orbitz"), a Delaware
limited liability company which operates an online travel agency that offers
travel services to consumers and business customers via the Internet. American
Airlines, Continental Airlines, Northwest Airlines and United Airlines also hold
ownership interests in Orbitz.
Consumers use online travel agents for making reservations and
purchasing airline tickets, hotel rooms, rental cars and travel-related
products. The three largest online travel agents in the United States are
Expedia, Travelocity and Orbitz. Online travel agents compete with one another,
with airline websites, with traditional travel agents and with other travel
service providers for travel-related reservations and bookings.
9
Fuel
Delta's results of operations can be significantly impacted by changes
in the price and availability of aircraft fuel. The following table shows
Delta's aircraft fuel consumption and costs for 2000-2002.
Percent of Total
Gallons Consumed Cost (1) Average Price Operating
Year (Millions) (Millions) Per Gallon(1) Expenses
---------------- ---------- -------------- ----------------
2000 2,922 $ 1,969 67.38(cent) 13%
2001 2,649 1,817 68.60 12
2002 2,514 1,683 66.94 12
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(1) Net of fuel hedge gains under Delta's fuel hedging program.
Aircraft fuel expense decreased 7% in 2002 compared to 2001. Total
gallons consumed decreased 5% mainly due to capacity reductions. The average
fuel price per gallon fell 2% to 66.94(cent). Delta's fuel cost is shown net of
fuel hedge gains of $136 million for 2002 and $299 million for 2001.
Approximately 56% and 58% of Delta's aircraft fuel requirements were hedged
during 2002 and 2001, respectively.
Delta's aircraft fuel purchase contracts do not provide material
protection against price increases or for assured availability of supplies. The
Company purchases most of its aircraft fuel from petroleum refiners under
contracts which establish the price based on various market indices. Delta also
purchases aircraft fuel on the spot market, from off-shore sources and under
contracts which permit the refiners to set the price and give the Company the
right to terminate upon short notice if the price is unacceptable.
Delta periodically enters into heating and crude oil derivative
contracts to manage the risk associated with changes in aircraft fuel prices.
Information regarding Delta's fuel hedging program is set forth under "Aircraft
Fuel Price Risk" on pages 23-24, and in Notes 3 and 4 of the Notes to the
Consolidated Financial Statements on pages 39-41, of Delta's 2002 Annual Report
to Shareowners, and is incorporated by reference.
Although Delta is currently able to obtain adequate supplies of jet
fuel, it is not possible to predict the future availability or price of aircraft
fuel. Political disruptions in oil producing countries, changes in government
policy concerning aircraft fuel production, transportation or marketing, changes
in aircraft fuel production capacity, environmental concerns and other
unpredictable events may result in fuel supply shortages and fuel price
increases in the future.
Employee Matters
Railway Labor Act. Delta's relations with labor unions in the United
States are governed by the Railway Labor Act. Under the Railway Labor Act, a
labor union seeking to represent an unrepresented craft or class of employees is
required to file with the National Mediation Board ("NMB") an application
alleging a representation dispute, along with authorization cards signed by at
least 35% of the employees in that craft or class. The NMB then investigates the
dispute
10
and, if it finds the labor union has obtained a sufficient number of
authorization cards, conducts an election to determine whether to certify the
labor union as the collective bargaining representative of that craft or class.
Under the NMB's usual rules, a labor union will be certified as the
representative of the employees in a craft or class only if more than 50% of
those employees vote for union representation.
Under the Railway Labor Act, a collective bargaining agreement between
an airline and a labor union does not expire, but instead becomes amendable as
of a stated date. Either party may request the NMB to appoint a federal mediator
to participate in the negotiations for a new or amended agreement. If no
agreement is reached in mediation, the NMB may determine, at any time, that an
impasse exists and offer binding arbitration. If either party rejects binding
arbitration, a 30-day "cooling off" period begins. At the end of this 30-day
period, the parties may engage in "self help," unless the President of the
United States appoints a Presidential Emergency Board ("PEB") to investigate and
report on the dispute. The appointment of a PEB maintains the "status quo" for
an additional 60 days. If the parties do not reach agreement during this period,
the parties may then engage in "self help." "Self help" includes, among other
things, a strike by the union or the imposition of proposed changes to the
collective bargaining agreement by the airline. Congress and the President have
the authority to prevent "self help" by enacting legislation which, among other
things, imposes a settlement on the parties.
Collective Bargaining. At December 31, 2002, Delta, ASA and Comair had a
total of 75,100 full-time equivalent employees. Approximately 18% of these
employees are represented by unions. The following table presents certain
information concerning the union representation of domestic employees of Delta,
ASA and Comair.
AMENDABLE DATE OF
APPROXIMATE NUMBER OF COLLECTIVE BARGAINING
EMPLOYEE GROUP EMPLOYEES REPRESENTED UNION AGREEMENT
- ---------------------------- ----------------------------- --------------------------------- -------------------------
Delta Pilots 7,930 Air Line Pilots Association, May 1, 2005
International
- ---------------------------- ----------------------------- --------------------------------- -------------------------
Delta Flight 190 Professional Airline Flight December 31, 2004
Superintendents Control Association
- ---------------------------- ----------------------------- --------------------------------- -------------------------
ASA Pilots 1,520 Air Line Pilots Association, September 15, 2002
International
- ---------------------------- ----------------------------- --------------------------------- -------------------------
ASA Flight Attendants 775 Association of Flight September 26, 2003
Attendants
- ---------------------------- ----------------------------- --------------------------------- -------------------------
ASA Flight Dispatchers 70 Professional Airline Flight April 18, 2006
Control Association
- ---------------------------- ----------------------------- --------------------------------- -------------------------
Comair Pilots 1,530 Air Line Pilots Association, May 21, 2006
International
- ---------------------------- ----------------------------- --------------------------------- -------------------------
Comair Maintenance 430 International Association of May 31, 2004
Employees Machinists and Aerospace
Workers
- ---------------------------- ----------------------------- --------------------------------- -------------------------
Comair Flight Attendants 770 International Brotherhood of July 19, 2007
Teamsters
- ---------------------------- ----------------------------- --------------------------------- -------------------------
ASA is in collective bargaining negotiations with the Air Line Pilots
Association, International, which represents ASA's approximately 1,520 pilots.
The outcome of these collective bargaining negotiations cannot presently be
determined.
11
Labor unions are engaged in organizing efforts to represent various
groups of employees of Delta, ASA and Comair who are not represented for
collective bargaining purposes. The outcome of these organizing efforts cannot
presently be determined.
Pilot Furloughs. The collective bargaining agreement between Delta and
the Air Line Pilots Association, International ("ALPA"), the union representing
Delta pilots, generally provides that no pilot on the seniority list as of July
1, 2001 will be furloughed unless the furlough is caused by a circumstance
beyond Delta's control, as defined in that agreement. In April 2002, an
arbitrator upheld Delta's right to furlough up to 1,400 pilots on the basis that
the September 11, 2001 terrorist attacks and the resulting reduction in
passenger traffic constituted a circumstance beyond Delta's control as set out
in the collective bargaining agreement. The arbitrator retained jurisdiction
over this matter to consider any issues that might arise regarding the Company's
plans to continue the furloughs, or its obligation to implement reasonable
mechanisms for recalling furloughed pilots, if the conditions existing as of
September 11, 2001 were ameliorated to an extent that exceeded Delta's original
expectations. On February 13, 2003, the arbitrator issued a supplemental
opinion, ruling (1) that furloughs will be capped at 1,060, the number of pilots
currently furloughed; (2) that Delta will not have to begin recalling any of the
existing furloughed pilots until system traffic exceeds pre-September 11, 2001
levels; and (3) that the recall schedule will be subject to the Company's
training capacity. While this ruling will result in the retention of some pilots
in excess of its needs, Delta believes the ruling will not have a material
adverse effect on Delta.
Environmental Matters
The Airport Noise and Capacity Act of 1990 (the "ANCA") recognizes the
rights of operators of airports with noise problems to implement local noise
abatement procedures so long as such procedures do not interfere unreasonably
with interstate or foreign commerce or the national air transportation system.
It generally provides that local noise restrictions on Stage 3 aircraft first
effective after October 1, 1990, require FAA approval. While Delta has had
sufficient scheduling flexibility to accommodate local noise restrictions in the
past, Delta's operations could be adversely impacted if locally-imposed
regulations become more restrictive or widespread.
The United States Environmental Protection Agency (the "EPA") is
authorized to regulate aircraft emissions. Delta's aircraft comply with the
applicable EPA standards.
In February 1998, the EPA and the FAA signed a Memorandum of Agreement
("MOA") to develop a voluntary process with the airline industry to reduce
emissions that lead to ozone formation. The MOA includes a proposal with a
voluntary engine modification program to reduce emissions from aircraft engines.
As a result of the MOA, air carriers, the EPA, the FAA and local and state
regulators are evaluating potential options for emission reductions from airport
activities, including aircraft engine emissions reductions and
alternative-fueled ground service equipment, but no conclusion or agreement has
been reached. In addition to the MOA, Delta has agreed to reduce emissions at
certain airports by utilizing alternative-fueled ground service equipment.
12
In April 2001, Miami-Dade County filed a lawsuit, which is titled
Miami-Dade County, Florida v. Advance Cargo Services, Inc., et al., in Florida
Circuit Court against 17 defendants, including Delta, alleging responsibility
for past and future environmental cleanup costs at the Miami International
Airport. The County also provided notice to over 200 other potentially
responsible parties seeking to recover past and future cleanup costs. The County
is continuing to investigate and remediate various environmental conditions at
the airport. At this time, it is not possible to reasonably estimate Delta's
potential exposure in this matter due to a number of issues, including
uncertainties regarding the contamination at the airport, the extent of
remediation required and the County's potential recovery from responsible
parties. Delta is vigorously defending the lawsuit.
Delta has been identified by the EPA as a potentially responsible party
(a "PRP") with respect to certain Superfund Sites, and has entered into consent
decrees regarding some of these sites. Delta's alleged disposal volume at each
of these sites is small when compared to the total contributions of all PRPs at
each site. Delta is aware of soil and/or ground water contamination present on
its current or former leaseholds at several domestic airports; to address this
contamination, the Company has a program in place to investigate and, if
appropriate, remediate these sites. Delta believes that the resolution of these
matters will not have a material adverse effect on its consolidated financial
statements.
Frequent Flyer Program
Delta has a frequent flyer program, the SkyMiles(R) program, offering
incentives to increase travel on Delta. This program allows participants to earn
mileage for travel awards by flying on Delta, Delta Connection carriers and
participating airlines. Mileage credit may also be earned by using certain
services offered by program partners such as credit card companies, hotels, car
rental agencies, telecommunication services and internet services. In addition,
Delta has programs under which individuals and companies may purchase mileage
credits. Delta reserves the right to terminate the program with six months
advance notice, and to change the program's terms and conditions at any time
without notice.
Mileage credits can be redeemed for free or upgraded air travel on
Delta and participating airline partners, for membership in Delta's Crown Room
Club and for other program partner awards. Travel awards are subject to certain
transfer restrictions and capacity-controlled seating. In some cases, blackout
dates may apply. Miles earned prior to May 1, 1995 do not expire so long as
Delta has a frequent flyer program. Miles earned or purchased on or after May 1,
1995 will not expire as long as, at least once every three years, the
participant (1) takes a qualifying flight on Delta or a Delta Connection
carrier; (2) earns miles through one of Delta's program partners; or (3) redeems
miles for any program award.
Delta accounts for its frequent flyer program obligations by recording a
liability for the estimated incremental cost of travel awards the Company
expects to be redeemed. The estimated incremental cost associated with a travel
award does not include any contribution to overhead or profit. Such incremental
cost is based on Delta's system average cost per passenger for fuel, food and
other direct passenger costs. Delta does not record a liability for mileage
earned by participants who have not reached the level to become eligible for a
free travel award. Delta believes this is appropriate because the large majority
of these participants are not expected to
13
earn a travel award. Delta does not record a liability for the expected
redemption of miles for non-travel awards since the cost of these awards to
Delta is negligible.
Delta estimated the potential number of round-trip travel awards
outstanding under its frequent flyer program to be 13.7 million, 13.1 million
and 12.2 million at December 31, 2002, 2001 and 2000, respectively. Of these
travel awards, Delta expected that approximately 10.0 million, 9.6 million, and
9.2 million, respectively, would be redeemed. At December 31, 2002, 2001 and
2000, Delta had recorded a liability for these awards of $228 million, $226
million and $199 million, respectively. The difference between the round-trip
awards outstanding and the awards expected to be redeemed is the estimate, based
on historical data, of awards which will (1) never be redeemed; or (2) be
redeemed for something other than award travel.
Frequent flyer program participants flew 2.8 million, 2.4 million and
2.3 million award round-trips on Delta in 2002, 2001 and 2000, respectively.
These round-trips accounted for approximately 9%, 8% and 7% of the total
passenger miles flown for 2002, 2001 and 2000, respectively. Delta believes that
the relatively low percentage of passenger miles flown by SkyMiles members
traveling on program awards and the restrictions applied to travel awards
minimize the displacement of revenue passengers.
Civil Reserve Air Fleet Program
Delta participates in the Civil Reserve Air Fleet ("CRAF") program,
which permits the U.S. military to use the aircraft and crew resources of
participating U.S. airlines during airlift emergencies, national emergencies or
times of war. Delta has agreed to make available under the CRAF program, during
the period October 1, 2002 through September 30, 2003, up to 100% of its
international range aircraft. As of March 27, 2003, the following number of
Delta aircraft are available for CRAF activation:
Number of
International Number of
Passenger Aeromedical Total
Description of Event Aircraft Aircraft Aircraft
Stage Leading to Activation Allocated Allocated by Stage
- --------- --------------------------- ------------- -------------- --------
I Minor Crisis 3 Not Applicable 3
II Major Theater Conflict 11 19 30
III Total National Mobilization 37 35 72
On February 8, 2003, the CRAF program was activated at Stage I. Delta
anticipates no material impact on its operations as a result of this activation.
14
ITEM 2. PROPERTIES
Flight Equipment
Information relating to Delta's aircraft fleet is set forth under
"Delta's Aircraft Fleet" on page 70, and in Notes 7 and 9 of the Notes to the
Consolidated Financial Statements on pages 47-50, of Delta's 2002 Annual Report
to Shareowners, and is incorporated by reference.
Ground Facilities
Delta leases most of the land and buildings that it occupies. The
Company's largest aircraft maintenance base, various computer, cargo, flight
kitchen and training facilities and most of its principal offices are located at
or near Hartsfield Atlanta International Airport in Atlanta, Georgia, on land
leased from the City of Atlanta generally under long-term leases. Delta owns a
portion of its principal offices, its Atlanta reservations center and other
improved and unimproved real property in Atlanta, as well as a limited number of
radio transmitting and receiving sites and certain other facilities.
Delta leases ticket counter and other terminal space, operating areas
and air cargo facilities in most of the airports which it serves. These leases
generally run for periods of less than one year to thirty years or more, and
often contain provisions for periodic adjustment of lease rates. At most
airports which it serves, Delta has entered into use agreements which provide
for the non-exclusive use of runways, taxiways, and other facilities; landing
fees under these agreements normally are based on the number of landings and
weight of aircraft. The Company also leases aircraft maintenance facilities at
certain airports; these leases generally require Delta to pay the cost of
providing, operating and maintaining such facilities. In addition to its Atlanta
maintenance base, Delta's other major aircraft maintenance facilities are
located at Cincinnati/Northern Kentucky International Airport, Dallas/Ft. Worth
International Airport and Salt Lake City International Airport. Delta leases
marketing, ticket and reservations offices in certain major cities which it
serves; these leases are generally for shorter terms than the airport leases.
Additional information relating to Delta's ground facilities is set forth in
Note 7 of the Notes to the Consolidated Financial Statements on page 47 of
Delta's 2002 Annual Report to Shareowners, and is incorporated by reference.
In recent years, some airports have increased or sought to increase the
rates charged to airlines to levels that, in the airlines' opinion, are
unreasonable. The extent to which such charges are limited by statute or
regulation and the ability of airlines to contest such charges has been subject
to litigation and to administrative proceedings before the DOT. If the
limitations on such charges are relaxed, or the ability of airlines to challenge
such charges is restricted, the rates charged by airports to airlines may
increase substantially.
The City of Atlanta, with the support of Delta and other airlines, has
begun a ten year capital improvement program (the "CIP") at Hartsfield Atlanta
International Airport. Implementation of the CIP should increase the number of
flights that may operate at the airport and reduce flight delays. The CIP
includes, among other things, a new approximately 9,000 foot full-service runway
(targeted for completion in May 2006), related airfield improvements, additional
terminal and gate capacity, new cargo and other support facilities and roadway
and
15
other infrastructure improvements. If fully implemented, the CIP is currently
estimated to cost approximately $5.4 billion. The CIP runs through 2010, with
individual projects scheduled to be constructed at different times. A
combination of federal grants, passenger facility charge revenues, increased
user rentals and fees, and other airport funds are expected to be used to pay
CIP costs directly and through the payment of debt service on bonds. There is no
assurance the CIP will be implemented on schedule and within budget, or that it
will be fully implemented. Failure to implement certain portions of the CIP in a
timely manner could adversely impact Delta's operations at Hartsfield Atlanta
International Airport.
During 2001, Delta entered into lease and financing agreements with the
Massachusetts Port Authority ("Massport") for the redevelopment and expansion of
Terminal A at Boston's Logan International Airport. The completion of this
project will enable Delta to consolidate all of its domestic operations at that
airport into one location. Construction began in the June 2002 quarter and is
scheduled to be completed during 2005. Project costs will be funded with $498
million in proceeds from Special Facilities Revenue Bonds issued by Massport on
August 16, 2001. Delta agreed to pay the debt service on the bonds under a
long-term lease agreement with Massport and issued a guarantee to the bond
trustee covering the payment of the debt service on the bonds. Additional
information about these bonds is set forth in Note 6 of the Notes to the
Consolidated Financial Statements on pages 43-46 of Delta's 2002 Annual Report
to Shareowners, and is incorporated by reference.
ITEM 3. LEGAL PROCEEDINGS
In Re Northwest Airlines, et al. Antitrust Litigation. In June 1999,
two purported class action antitrust lawsuits were filed in the U.S. District
Court for the Eastern District of Michigan against Delta, US Airways, Northwest
Airlines and the Airlines Reporting Corporation, an airline-owned company that
operates a centralized clearinghouse for travel agents to report and account for
airline ticket sales.
In the first case, the plaintiffs allege, among other things: (1) that
the defendants and certain other airlines conspired with Delta in violation of
Section 1 of the Sherman Act to restrain competition and assist Delta in fixing
and maintaining anticompetitive prices for air passenger service to and from its
Atlanta and Cincinnati hubs; and (2) that Delta violated Section 2 of the
Sherman Act by exercising monopoly power to establish such prices in an
anticompetitive or exclusionary manner. The complaint asserts that, for purposes
of plaintiffs' damages claims, the purported plaintiff class consists of all
persons who purchased a Delta full-fare ticket between June 11, 1995 and the
present on routes (1) that start or end at Delta's hubs in Atlanta or
Cincinnati; (2) on which Delta has over a 50% market share; (3) that are longer
than 150 miles; and (4) that have total annual traffic of over 30,000
passengers.
In the second case, the plaintiffs assert similar allegations and
claims under Sections 1 and 2 of the Sherman Act with respect to US Airways'
pricing practices at its Pittsburgh and Charlotte hubs ("US Airways Hubs"). The
complaint asserts, among other things, that Delta, the other defendants and
certain other airlines conspired with US Airways to restrain competition and
assist US Airways in fixing and maintaining prices for air passenger service to
and from the US Airways Hubs.
16
In both cases, plaintiffs have requested a jury trial, and are seeking
in their complaints injunctive relief; costs and attorneys' fees; and
unspecified damages, to be trebled under the antitrust laws. In May 2002, the
District Court granted the plaintiffs' motion for class action certification and
denied the airlines' motions for summary judgment. The U.S. Court of Appeals for
the Sixth Circuit refused to hear the airlines' interlocutory appeal of the
District Court's order granting class action certification. The trial for this
lawsuit has not yet been scheduled.
Hall, et al. v. United Airlines, et al. In January 2002, a travel agent
in North Carolina filed an amended purported class action lawsuit against
numerous airlines, including Delta, in the U.S. District Court for the Eastern
District of North Carolina on behalf of all travel agents in the United States
which sold tickets from September 1, 1997 to the present on any of the defendant
airlines. The lawsuit alleges that Delta and the other airline defendants
conspired to fix travel agent commissions in violation of Section 1 of the
Sherman Act. The plaintiff, who has requested a jury trial, is seeking in its
complaint injunctive relief; costs and attorneys' fees; and unspecified damages,
to be trebled under the antitrust laws.
In September 2002, the District Court granted the plaintiff's motion
for class action certification, certifying a class consisting of all travel
agents in the United States, Puerto Rico and the U.S. Virgin Islands which sold
tickets on the defendant airlines between 1997 and 2002. In December 2002, the
airline defendants filed motions for summary judgment which are pending before
the District Court. The trial of this lawsuit is scheduled to begin in September
2003. Similar litigation alleging violations under Canadian competition law is
pending against Delta and other airlines in Canada.
Albany Travel Company, et al. v. Orbitz LLC, et al. In April 2002, six
travel agencies filed a purported class action lawsuit in the U.S. District
Court for the Central District of California against Delta, American Airlines,
United Airlines and Orbitz, LLC on behalf of an alleged nationwide class of
traditional travel agents. The lawsuit alleges that the defendants violated
Sections 1 and 2 of the Sherman Act by conspiring (1) to prevent travel agents
from acting as effective competitors in the distribution of airline tickets to
passengers; and (2) to monopolize the distribution of common carrier air travel
in the United States. The plaintiffs, who have requested a jury trial, are
seeking in their complaint injunctive relief; costs and attorneys' fees; and
unspecified damages, to be trebled under the antitrust laws. The District Court
granted the airlines' motion to stay this lawsuit pending a final judgment in
the Hall v. United Airlines case described above because both lawsuits involve
substantially similar claims.
All Direct Travel, Inc., et al. v. Delta Air Lines, et al. Two travel
agencies have filed a purported class action lawsuit against Delta in the U.S.
District Court for the Central District of California on behalf of all travel
agencies from which Delta has demanded payment for breach of the agencies'
contractual and fiduciary duties to Delta in connection with Delta ticket sale
transactions during the period from September 20, 1997 to the present. The
lawsuit alleges that Delta's conduct (1) violates the Racketeer Influenced and
Corrupt Organizations Act of 1970; and (2) creates liability for unjust
enrichment. The plaintiffs, who have requested a jury trial, are seeking in
their complaint injunctive and declaratory relief; costs and attorneys fees; and
unspecified treble damages.
17
In January 2003, the District Court denied the plaintiffs' motion for
class action certification. Plaintiffs have filed a petition for review of this
order with the U.S. Court of Appeals for the Ninth Circuit, which has not yet
decided whether to permit this interlocutory appeal. Delta has filed with the
District Court a motion for summary judgment which is pending. The trial of this
lawsuit is scheduled to begin in November 2003.
Power Travel International, Inc., et al. v. American Airlines, et al.
In August 2002, a travel agency filed a purported class action lawsuit in New
York state court against Delta, American Airlines, Continental Airlines,
Northwest Airlines, United Airlines and JetBlue Airways, on behalf of an alleged
nationwide class of U.S. travel agents. JetBlue has been dismissed from the
case, and the remaining defendants removed the action to the U.S. District Court
for the Southern District of New York. The lawsuit alleges that the defendants
breached their contracts with and their duties of good faith and fair dealing to
U.S. travel agencies when these airlines discontinued the payment of published
base commissions to U.S. travel agencies at various times beginning in March
2002. The plaintiffs' complaint seeks unspecified damages, as well as
declaratory and injunctive relief. The defendants have filed a motion to dismiss
this lawsuit, which is pending before the District Court. Similar litigation
involving contract claims alleged under the agency agreements applicable to
Canadian travel agents is pending against Delta and other airlines in Canada.
Jeans v. Delta Air Lines, Inc. In May 2000, an individual filed an
amended class action lawsuit against Delta in the Circuit Court of Jackson
County, Missouri on behalf of all persons who relinquished their seats on an
overbooked Delta flight in exchange for a travel voucher that may be redeemed
for a round-trip, economy class Delta ticket. The complaint asserts claims for
fraud, breach of contract and unjust enrichment. It alleges, among other things,
that Delta failed to disclose that it limits the number of seats on each flight
that may be obtained by redeeming travel vouchers. The plaintiff, who has
requested a jury trial, is seeking unspecified damages. In January 2003, the
Circuit Court granted Delta's motion for summary judgment dismissing the
plaintiff's claims. The plaintiff has appealed to the Missouri Court of Appeals.
Multidistrict Pilot Retirement Plan Litigation. During the June 2001
quarter, the Delta Pilots Retirement Plan ("Retirement Plan") and related
non-qualified pilot retirement plans sponsored and funded by Delta were named as
defendants in five purported class action lawsuits filed in federal district
courts in California, Massachusetts, Ohio, New Mexico and New York. The
complaints (1) seek to assert claims on behalf of a class consisting of certain
groups of retired and active Delta pilots; (2) allege that the calculation of
the retirement benefits of the plaintiffs and the class violated the Retirement
Plan and the Internal Revenue Code; and (3) seek unspecified damages. In October
2001, the Judicial Panel on Multidistrict Litigation granted Delta's motion to
transfer these cases to the U.S. District Court for the Northern District of
Georgia for coordinated pretrial proceedings. Discovery in these cases is
proceeding.
* * *
18
An adverse decision in any of these cases could result in substantial
damages against Delta. Delta is vigorously defending these lawsuits. Although
the ultimate outcome of these matters cannot be predicted with certainty,
management believes that the resolution of these actions will not have a
material adverse effect on Delta's consolidated financial statements.
For a discussion of certain environmental matters, see "ITEM 1.
Business - Environmental Matters" on pages 12-13 of this Form 10-K.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable.
EXECUTIVE OFFICERS OF THE REGISTRANT
Certain information concerning Delta's executive officers follows.
Unless otherwise indicated, all positions shown are with Delta. There are no
family relationships between any of Delta's executive officers.
Leo F. Mullin Chairman of the Board and Chief Executive Officer,
January 2000 to date; Chairman of the Board,
President and Chief Executive Officer, October 1999
to January 2000; President and Chief Executive
Officer, August 1997 to October 1999. Mr. Mullin was
Vice Chairman of Unicom Corporation and its principal
subsidiary, Commonwealth Edison Company, from 1995 to
August 1997. He was an executive of First Chicago
Corporation from 1981 to 1995, serving as that
company's President and Chief Operating Officer from
1993 to 1995. Age 60.
Frederick W. Reid President and Chief Operating Officer, May 2001 to
date; Executive Vice President and Chief Marketing
Officer, July 1998 to May 2001. Mr. Reid was an
executive of Lufthansa German Airlines from 1991 to
June 1998, serving as President and Chief Operating
Officer from April 1997 to June 1998, as Executive
Vice President from 1996 to March 1997, and as Senior
Vice President, The Americas, from 1991 to 1996. Age
52.
M. Michele Burns Executive Vice President and Chief Financial Officer,
August 2000 to date; Senior Vice President - Finance
and Treasurer, February 2000 to August 2000; Vice
President - Finance and Treasurer, September 1999 to
February 2000; Vice President - Corporate Tax,
January 1999 to September 1999. Ms. Burns was a
partner at Arthur Andersen LLP from 1991 to January
1999. Age 45.
19
Robert L. Colman Executive Vice President - Human Resources, October
1998 to date. Mr. Colman was an executive of General
Electric Corporation from October 1993 to October
1998, serving as Vice President - Human Resources for
General Electric Aircraft Engines Business. Age 57.
Vicki B. Escarra Executive Vice President and Chief Marketing Officer,
May 2001 to date; Executive Vice President - Customer
Service, July 1998 to May 2001; Senior Vice President
- Airport Customer Service, November 1996 through
June 1998; Vice President - Airport Customer Service,
August 1996 through October 1996; Vice President -
Reservation Sales and Distribution Planning, May 1996
through July 1996; Vice President - Reservation
Sales, November 1994 to May 1996. Age 50.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Information required by this item is set forth in Note 12 of the Notes
to the Consolidated Financial Statements on pages 55-57, and under "Common
Stock" and "Market Prices and Dividends" on page 69, of Delta's 2002 Annual
Report to Shareowners, and on page 30 of Delta's Proxy Statement dated March 25,
2003, and is incorporated by reference.
ITEM 6. SELECTED FINANCIAL DATA
Information required by this item is set forth on page 68 of Delta's
2002 Annual Report to Shareowners, and is incorporated by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Information required by this item is set forth under "Management's
Discussion and Analysis of Financial Condition and Results of Operations" on
pages 13-25, and in the related "Glossary of Defined Terms" on page 12, of
Delta's 2002 Annual Report to Shareowners, and is incorporated by reference.
20
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Information required by this item is set forth under "Market Risks
Associated With Financial Instruments" on pages 23-24, and in Notes 1, 2, 3 and
4 of the Notes to the Consolidated Financial Statements on pages 31-41 of
Delta's 2002 Annual Report to Shareowners, and is incorporated by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Information required by this item is set forth on pages 26-67 of
Delta's 2002 Annual Report to Shareowners, and is incorporated by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
The Audit Committee of Delta's Board of Directors annually considers
and recommends to the Board the selection of Delta's independent auditors. As
recommended by the Audit Committee, the Board of Directors on March 6, 2002
decided to no longer engage Arthur Andersen LLP ("Andersen") as Delta's
independent auditors and engaged Deloitte & Touche LLP to serve as Delta's
independent auditors for 2002. The appointment of Deloitte & Touche LLP as
independent auditors for 2002 was ratified by Delta's shareowners at the 2002
annual meeting.
Andersen's reports on Delta's consolidated financial statements for the
2001 and 2000 fiscal years did not contain an adverse opinion or disclaimer of
opinion, nor were they qualified or modified as to uncertainty, audit scope or
accounting principles.
During Delta's 2001 and 2000 fiscal years and through March 27, 2002
(the date of Delta's Form 10-K for the year ended December 31, 2001), there were
no disagreements with Andersen on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure which,
if not resolved to Andersen's satisfaction, would have caused them to make
reference to the subject matter in connection with their report on Delta's
consolidated financial statements for such years; and there were no reportable
events, as listed in Item 304(a)(1)(v) of SEC Regulation S-K.
Delta provided Andersen with a copy of the foregoing disclosures.
Attached as Exhibit 16 to this Form 10-K is a copy of Andersen's letter dated
March 27, 2002 stating its agreement with such statements.
21
During Delta's 2001 and 2000 fiscal years and through March 6, 2002,
Delta did not consult Deloitte & Touche LLP with respect to the application of
accounting principles to a specified transaction, either completed or proposed,
or the type of audit opinion that might be rendered on Delta's consolidated
financial statements, or any other matters or reportable events listed in Items
304(a)(2)(i) and (ii) of SEC Regulation S-K.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information required by this item is set forth under "Certain
Information About Nominees" on pages 5-6, and under "Section 16 Beneficial
Ownership Reporting Compliance" on page 50, of Delta's Proxy Statement dated
March 25, 2003, and is incorporated by reference. Certain information regarding
executive officers is contained in Part I of this Form 10-K.
ITEM 11. EXECUTIVE COMPENSATION
Information required by this item is set forth under "Compensation of
Directors" on pages 9-10, under "Compensation Committee Interlocks and Insider
Participation" on page 10, and on pages 19-29, of Delta's Proxy Statement dated
March 25, 2003, and is incorporated by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDER MATTERS
Information required by this item is set forth under "Beneficial
Ownership of Securities" on pages 10-12, and under "Equity Compensation Plan
Information" on page 30, of Delta's Proxy Statement dated March 25, 2003, and is
incorporated by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Not applicable.
ITEM 14. CONTROLS AND PROCEDURES
Based on their evaluation of Delta's disclosure controls and procedures
conducted within 90 days of the date of filing this report on Form 10-K, Delta's
Chairman of the Board and Chief Executive Officer and its Executive Vice
President and Chief Financial Officer have concluded that Delta's disclosure
controls and procedures are effective in timely alerting them to material
information required to be included in this report on Form 10-K. There were no
significant changes in Delta's internal controls or in other factors that could
significantly affect these controls subsequent to the date of their evaluation.
22
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a)(1), (2). The financial statements and schedule required by this item are
listed in the Index to Consolidated Financial Statements and Schedules on page
24 of this Form 10-K.
(3). The exhibits required by this item are listed in the Exhibit Index
on pages 34-37 of this Form 10-K. The management contracts and compensatory
plans or arrangements required to be filed as an exhibit to this Form 10-K are
listed as Exhibits 10.6 to 10.20 in the Exhibit Index.
(b). During the quarter ended December 31, 2002, Delta filed a Current Report on
Form 8-K dated October 15, 2002 regarding its financial results for the
September 2002 quarter. This Form 8-K was filed under Item 5 - Other Events and
Regulation FD Disclosure.
23
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES
INDEPENDENT AUDITORS' REPORT - Incorporated by reference to page 66 of Delta's
2002 Annual Report to Shareowners.
COPY OF REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS - Incorporated by reference to
page 67 of Delta's 2002 Annual Report to Shareowners.
CONSOLIDATED FINANCIAL STATEMENTS - All of which are incorporated by reference
to Delta's 2002 Annual Report to Shareowners:
Consolidated Balance Sheets - December 31, 2002 and 2001
Consolidated Statements of Operations for the years ended December 31, 2002,
2001 and 2000
Consolidated Statements of Cash Flows for the years ended December 31, 2002,
2001 and 2000
Consolidated Statements of Shareowners' Equity for the years ended December 31,
2002, 2001 and 2000
Notes to the Consolidated Financial Statements
COPY OF REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULE
SCHEDULE SUPPORTING FINANCIAL STATEMENTS:
Schedule
Number
- --------
II Valuation and Qualifying Accounts for the years ended December
31, 2001 and 2000. The required information for the year ended
December 31, 2002 is included in Note 21 of the Notes to the
Consolidated Financial Statements on page 64 of Delta's 2002
Annual Report to Shareowners, and is incorporated by reference.
All other schedules have been omitted as not applicable.
24
THE FOLLOWING IS A COPY OF THE AUDIT REPORT PREVIOUSLY ISSUED BY ARTHUR
ANDERSEN LLP IN CONNECTION WITH DELTA'S ANNUAL REPORT ON FORM 10-K FOR
THE YEAR ENDED DECEMBER 31, 2001. THIS AUDIT REPORT HAS NOT BEEN
REISSUED BY ARTHUR ANDERSEN LLP.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULE
To Delta Air Lines, Inc.:
We have audited, in accordance with auditing standards generally accepted in the
United States, the consolidated financial statements included in Delta Air
Lines, Inc.'s annual report to shareowners incorporated by reference in this
Form 10-K and have issued our report thereon dated January 23, 2002. Our audits
were made for the purpose of forming an opinion on those statements taken as a
whole. The schedule listed in the accompanying index is the responsibility of
the company's management, is presented for purposes of complying with the
Securities and Exchange Commission's rules, and is not part of the basic
financial statements. The schedule has been subjected to the auditing procedures
applied in the audits of the basic financial statements and, in our opinion,
fairly states in all material respects the financial data required to be set
forth therein in relation to the basic consolidated financial statements taken
as a whole.
/s/ ARTHUR ANDERSEN LLP
Atlanta, Georgia
January 23, 2002
25
SCHEDULE II
DELTA AIR LINES, INC.
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEAR ENDED DECEMBER 31, 2001
(Amounts in Millions)
Column A Column B Column C Column D Column E
Additions
-----------------------------
Balance at Charged to Charged to Other Balance at
Beginning of Costs and Accounts- Deductions- End of
Description Period Expenses Describe Describe Period
- ------------------------------------------ ------------ ----------------------------- ----------- ----------
DEDUCTION (INCREASE) IN THE
BALANCE SHEET FROM THE ASSET TO
WHICH IT APPLIES:
Allowance for uncollectible accounts
receivable $ 31 $ 18 - $(6) (a) $ 43
RESERVE FOR RESTRUCTURING AND
OTHER NONRECURRING CHARGES: $ 56 $115 - (50) (b) $ 121
(a) Represents write-off of accounts considered to be uncollectible, less
collections.
(b) Represents payments made.
26
SCHEDULE II
DELTA AIR LINES, INC.
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEAR ENDED DECEMBER 31, 2000
(Amounts in Millions)
Column A Column B Column C Column D Column E
Additions
-----------------------------
Balance at Charged to Charged to Other Balance at
Beginning of Costs and Accounts- Deductions- End of
Description Period Expenses Describe Describe Period
- ------------------------------------------ ------------ ----------------------------- ----------- ----------
DEDUCTION (INCREASE) IN THE
BALANCE SHEET FROM THE ASSET
TO WHICH IT APPLIES:
Allowance for uncollectible accounts
receivable $ 39 $ 15 - $ (23)(a) $ 31
RESERVE FOR RESTRUCTURING AND
OTHER NONRECURRING CHARGES: $ 41 $ 22 - $ (7) (b) $ 56
(a) Represents write-off of accounts considered to be uncollectible, less
collections.
(b) Represents payments made.
27
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, on the 27th day of
March, 2003.
DELTA AIR LINES, INC.
By: /s/ Leo F. Mullin
-------------------------
Leo F. Mullin
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below on the 27th day of March, 2003 by the
following persons on behalf of the registrant and in the capacities indicated.
Signature Title
- ----------------------------- -------------------------------------------
Edward H. Budd* Director
- -----------------------------
Edward H. Budd
/s/ M. Michele Burns Executive Vice President and
- ----------------------------- Chief Financial Officer
M. Michele Burns (Principal Financial Officer and Principal
Accounting Officer)
George M.C. Fisher* Director
- -----------------------------
George M.C. Fisher
David R. Goode* Director
- ------------------------------
David R. Goode
Gerald Grinstein* Director
- -----------------------------
Gerald Grinstein
28
Signature Title
- ------------------------------------------------ -------------------------------------------------
James M. Kilts* Director
- ------------------------------------------------
James M. Kilts
/s/ Leo F. Mullin Chairman of the Board and Chief Executive Officer
- ------------------------------------------------- (Principal Executive Officer)
Leo F. Mullin
John F. Smith, Jr.* Director
- ------------------------------------------------
John F. Smith, Jr.
Joan E. Spero* Director
- ------------------------------------------------
Joan E. Spero
Andrew J. Young* Director
- ------------------------------------------------
Andrew J. Young
*By: /s/ Leo F. Mullin Attorney-In-Fact
------------------------------------
Leo F. Mullin
29
CERTIFICATIONS
I, Leo F. Mullin, certify that:
1. I have reviewed this annual report on Form 10-K of Delta Air
Lines, Inc. for the fiscal year ended December 31, 2002;
2. Based on my knowledge, this Form 10-K does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
Form 10-K;
3. Based on my knowledge, the financial statements, and other
financial information included in this Form 10-K, fairly present in all material
respects the financial condition, results of operations and cash flows of Delta
as of, and for, the periods presented in this Form 10-K;
4. Delta's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for Delta and have:
(a) designed such disclosure controls and procedures to
ensure that material information relating to Delta, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this Form 10-K is being prepared;
(b) evaluated the effectiveness of Delta's disclosure
controls and procedures as of a date within 90 days prior to the filing date of
this Form 10-K (the "Evaluation Date"); and
(c) presented in this Form 10-K our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date.
5. Delta's other certifying officer and I have disclosed, based
on our most recent evaluation, to Delta's auditors and the Audit Committee of
Delta's Board of Directors (or persons performing the equivalent function):
(a) all significant deficiencies in the design or
operation of internal controls which could adversely affect Delta's ability to
record, process, summarize and report financial data and have identified for
Delta's auditors any material weaknesses in internal controls; and
(b) any fraud, whether or not material, that involves
management or other employees who have a significant role in Delta's internal
controls.
30
6. Delta's other certifying officer and I have indicated in this
Form 10-K whether there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Date: March 27, 2003.
/s/ Leo F. Mullin
-------------------------
Leo F. Mullin
Chairman of the Board and
Chief Executive Officer
31
CERTIFICATIONS
I, M. Michele Burns, certify that:
1. I have reviewed this annual report on Form 10-K of Delta Air
Lines, Inc. for the fiscal year ended December 31, 2002;
2. Based on my knowledge, this Form 10-K does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
Form 10-K;
3. Based on my knowledge, the financial statements, and other
financial information included in this Form 10-K, fairly present in all material
respects the financial condition, results of operations and cash flows of Delta
as of, and for, the periods presented in this Form 10-K;
4. Delta's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for Delta and have:
(a) designed such disclosure controls and procedures to
ensure that material information relating to Delta, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this Form 10-K is being prepared;
(b) evaluated the effectiveness of Delta's disclosure
controls and procedures as of a date within 90 days prior to the filing date of
this Form 10-K (the "Evaluation Date"); and
(c) presented in this Form 10-K our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date.
5. Delta's other certifying officer and I have disclosed, based
on our most recent evaluation, to Delta's auditors and the Audit Committee of
Delta's Board of Directors (or persons performing the equivalent function):
(a) all significant deficiencies in the design or
operation of internal controls which could adversely affect Delta's ability to
record, process, summarize and report financial data and have identified for
Delta's auditors any material weaknesses in internal controls; and
(b) any fraud, whether or not material, that involves
management or other employees who have a significant role in Delta's internal
controls.
32
6. Delta's other certifying officer and I have indicated in this
Form 10-K whether there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Date: March 27, 2003.
/s/ M. Michele Burns
----------------------------
M. Michele Burns
Executive Vice President and
Chief Financial Officer
33
EXHIBIT INDEX
3.1. Delta's Certificate of Incorporation (Filed as Exhibit 3.1 to
Delta's Quarterly Report on Form 10-Q for the quarter ended September 30,
1998).*
3.2. Delta's By-Laws.
4.1. Rights Agreement dated as of October 24, 1996, between Delta
and First Chicago Trust Company of New York, as Rights Agent, as amended by
Amendment No. 1 thereto dated as of July 22, 1999 (Filed as Exhibit 1 to Delta's
Form 8-A/A Registration Statement dated November 4, 1996, and Exhibit 3 to
Delta's Amendment No. 1 to Form 8-A/A Registration Statement dated July 30,
1999).*
4.2. Certificate of Designations, Preferences and Rights of Series
B ESOP Convertible Preferred Stock and Series D Junior Participating Preferred
Stock (Filed as part of Exhibit 3.1 of this Form 10-K).*
4.3. Indenture dated as of March 1, 1983, between Delta and The
Citizens and Southern National Bank, as trustee, as supplemented by the First
and Second Supplemental Indentures thereto dated as of January 27, 1986 and May
26, 1989, respectively (Filed as Exhibit 4 to Delta's Registration Statement on
Form S-3 (Registration No. 2-82412), Exhibit 4(b) to Delta's Registration
Statement on Form S-3 (Registration No. 33-2972), and Exhibit 4.5 to Delta's
Annual Report on Form 10-K for the year ended June 30, 1989).*
4.4. Third Supplemental Indenture dated as of August 10, 1998,
between Delta and The Bank of New York, as successor trustee, to the Indenture
dated as of March 1, 1983, as supplemented, between Delta and The Citizens and
Southern National Bank of Florida, as predecessor trustee (Filed as Exhibit 4.5
to Delta's Annual Report on Form 10-K for the year ended June 30, 1998).*
4.5. Indenture dated as of April 30, 1990, between Delta and The
Citizens and Southern National Bank of Florida, as trustee (Filed as Exhibit
4(a) to Amendment No. 1 to Delta's Registration Statement on Form S-3
(Registration No. 33-34523)).*
4.6. First Supplemental Indenture dated as of August 10, 1998,
between Delta and The Bank of New York, as successor trustee, to the Indenture
dated as of April 30, 1990, between Delta and The Citizens and Southern National
Bank of Florida, as predecessor trustee (Filed as Exhibit 4.7 to Delta's Annual
Report on Form 10-K for the year ended June 30, 1998).*
4.7. Indenture dated as of May 1, 1991, between Delta and The
Citizens and Southern National Bank of Florida, as Trustee (Filed as Exhibit 4
to Delta's Registration Statement on Form S-3 (Registration No. 33-40190)).*
34
4.8. Indenture dated as of December 14, 1999, between Delta and The
Bank of New York, as Trustee, relating to $500 million of 7.70% Notes due 2005,
$500 million of 7.90% Notes due 2009 and $1 billion of 8.30% Notes due 2029.
(Filed as Exhibit 4.2 to Delta's Registration Statement on Form S-4
(Registration No. 333-94991)).*
4.9. Reimbursement Agreement dated as of May 1, 2000, among Delta,
Certain Banks and Commerzbank AG, New York Branch, as Letter of Credit Fronting
Bank and Agent, as amended by the First Amendment thereto dated as of November
9, 2001 (Filed as Exhibit 4.2 to Delta's Form 10-Q for the quarter ended June
30, 2002).*
4.10. Second Amendment dated as of September 24, 2002, to
Reimbursement Agreement dated as of May 1, 2000, as amended, by and among Delta,
Certain Banks and Commerzbank AG, New York Branch, as Letter of Credit Fronting
Bank and Agent (Filed as Exhibit 4.1 to Delta's Current Report on Form 8-K dated
September 27, 2002).*
4.11. Note Purchase Agreement dated February 22, 1990, among the
Delta Family-Care Savings Plan, as Issuer, Delta, as Guarantor, and Various
Lenders relating to the Guaranteed Serial ESOP Notes (Filed as Exhibit 10 to
Delta's Current Report on Form 8-K dated April 25, 1990).*
4.12. Amendment No. 1 dated July 27, 1999, to the Note Purchase
Agreement dated February 22, 1990, among the Delta Family-Care Savings Plan, as
Issuer, Delta, as Guarantor, and Various Lenders relating to the Guaranteed
Serial ESOP Notes (Filed as Exhibit 4.11 to Delta's Annual Report on Form 10-K
for the year ended June 30, 1999).*
Delta is not filing any other instruments evidencing any indebtedness
because the total amount of securities authorized under any single such
instrument does not exceed 10% of the total assets of Delta and its subsidiaries
on a consolidated basis. Copies of such instruments will be furnished to the
Securities and Exchange Commission upon request.
10.1. Sixth Amended and Restated Limited Partnership Agreement of
WORLDSPAN, L.P. dated as of April 30, 1993 (Filed as Exhibit 10.6 to Delta's
Annual Report on Form 10-K for the year ended June 30, 1993).*
10.2. Purchase Agreement No. 2022 between The Boeing Company and
Delta relating to Boeing Model 737-632/-732/-832 Aircraft (Filed as Exhibit 10.3
to Delta's Quarterly Report on Form 10-Q for the quarter ended March 31,
1998).*/**
10.3. Purchase Agreement No. 2025 between The Boeing Company and
Delta relating to Boeing Model 767-432ER Aircraft (Filed as Exhibit 10.4 to
Delta's Quarterly Report on Form 10-Q for the quarter ended March 31, 1998).*/**
10.4. Letter Agreements related to Purchase Agreements No. 2022
and/or No. 2025 between The Boeing Company and Delta (Filed as Exhibit 10.5 to
Delta's Quarterly Report on Form 10-Q for the quarter ended March 31, 1998).*/**
10.5. Aircraft General Terms Agreement between The Boeing Company
and Delta (Filed as Exhibit 10.6 to Delta's Quarterly Report on Form 10-Q for
the quarter ended March 31, 1998).*/**
35
10.6. Delta 2000 Performance Compensation Plan (Filed as Appendix A
to Delta's Proxy Statement dated September 15, 2000).*
10.7. Forms of Executive Retention Protection Agreements for
Executive Officers and Senior Vice Presidents (Filed as Exhibit 10.16 of Delta's
Annual Report on Form 10-K for the year ended June 30, 1997).*
10.8. Employment Agreement dated as of November 29, 2002, between
Delta and Leo F. Mullin.
10.9. Letter Agreement dated June 5, 1998, between Delta and
Frederick W. Reid concerning Mr. Reid's employment with Delta (Filed as Exhibit
10.20 to Delta's Annual Report on Form 10-K for the year ended June 30, 1998).*
10.10. Letter Agreement dated September 17, 1998, between Delta and
Robert L. Colman concerning Mr. Colman's employment with Delta (Filed as Exhibit
10 to Delta's Quarterly Report on Form 10-Q for the quarter ended September 30,
1998).*
10.11. Letter Agreement dated May 28, 2002, supplementing the Letter
Agreement dated September 17, 1998, between Delta and Robert L. Colman
concerning Mr. Colman's employment with Delta (Filed as Exhibit 10.3 to Delta's
Quarterly Report on Form 10-Q for the quarter ended June 30, 2002).*
10.12. 2002 Delta Excess Benefit Plan (Filed as Exhibit 10.1 to
Delta's Quarterly Report on Form 10-Q for the quarter ended March 31, 2002).*
10.13. 2002 Delta Supplemental Excess Benefit Plan (Filed as Exhibit
10.2 to Delta's Quarterly Report on Form 10-Q for the quarter ended March 31,
2002).*
10.14. Form of Excess Benefit Agreement between Delta and its
officers (Filed as Exhibit 10.3 to Delta's Quarterly Report on Form 10-Q for the
quarter ended March 31, 2002).*
10.15. Delta's 2002 Retention Program (Filed as Exhibit 10.1 to
Delta's Quarterly Report on Form 10-Q for the quarter ended June 30, 2002).*
10.16. Delta's Executive Life Insurance Program, including forms of
agreements entered into as of July 1, 2002 between Delta and its officers (Filed
as Exhibit 10 to Delta's Form 10-Q for the quarter ended September 30, 2002).*
10.17. Directors' Deferred Compensation Plan, as amended (Filed as
Exhibit 10.1 to Delta's Quarterly Report on Form 10-Q for the quarter ended
March 31, 2001).*
10.18. Directors' Charitable Award Program (Filed as Exhibit 10.3 to
Delta's Quarterly Report on Form 10-Q for the quarter ended September 30,
1997).*
36
10.19. Delta's Non-Employee Directors' Stock Plan (Filed as Exhibit
4.5 to Delta's Registration Statement on Form S-8 (Registration No. 33-65391)).*
10.20. Delta's Non-Employee Directors' Stock Option Plan, as amended
(Filed as Exhibit 10.2 to Delta's Quarterly Report on Form 10-Q for the quarter
ended March 31, 2001).*
12. Statement regarding computation of ratio of earnings to fixed
charges for the years ended December 31, 2002, 2001, 2000, 1999 and 1998.
13. Portions of Delta's 2002 Annual Report to Shareowners.
16. Letter from Arthur Andersen LLP dated March 27, 2002 to the
Securities and Exchange Commission (Filed as Exhibit 16 to Delta's Form 10-K for
the year ended December 31, 2001).*
21. Subsidiaries of the Registrant.
23. Consent of Deloitte & Touche LLP.
24. Powers of Attorney.
99.1 Certification pursuant to Section 1350 of Chapter 63 of Title
18 of the United States Code by Delta's Chairman of the Board and Chief
Executive Officer and its Executive Vice President and Chief Financial Officer
with respect to Delta's Annual Report on Form 10-K for the year ended December
31, 2002.
- ---------------------------
* Incorporated by reference.
** Portions of this exhibit have been omitted and filed separately with the
Securities and Exchange Commission pursuant to Delta's request for confidential
treatment.
37