EXHIBIT 99.1
FOR IMMEDIATE DISTRIBUTION
CONTACT: Corporate Communications Investor Relations
404-715-2554 404-715-6679
DELTA AIR LINES REPORTS SECOND QUARTER 2003 RESULTS
ATLANTA, July 17, 2003 - Delta Air Lines (NYSE:DAL) today reported results for
the quarter ending June 30, 2003, and other significant news. The key points
are, Delta:
- - REPORTS SECOND QUARTER NET INCOME OF $184 MILLION, OR $1.40 DILUTED
EARNINGS PER COMMON SHARE, WHICH INCLUDES GOVERNMENT REIMBURSEMENTS AND
A GAIN FROM THE SALE OF WORLDSPAN.
- - EXCLUDING UNUSUAL ITEMS DESCRIBED BELOW, REPORTS A SECOND QUARTER NET
LOSS OF $237 MILLION, OR $1.95 LOSS PER COMMON SHARE, WHICH IS $75
MILLION WORSE THAN THE JUNE 2002 QUARTER NET LOSS.
- - ENDS QUARTER WITH $3.0 BILLION IN CASH, OF WHICH $2.8 BILLION IS
UNRESTRICTED CASH.
- - REPORTS OPERATING PROFIT OF $31 MILLION FOR THE MONTH OF JUNE.
- - CONTINUES TO EXECUTE PLANS TO ADDRESS INDUSTRY CHALLENGES WHILE
ANTICIPATING A SLOW RECOVERY.
Delta Air Lines reported net income of $184 million and diluted
earnings per share of $1.40 for the June 2003 quarter, which includes government
reimbursements of security costs and a gain from the sale of Delta's equity
investment in Worldspan. In the June 2002 quarter, Delta reported a net loss of
$186 million and loss per share of $1.54.
Excluding the unusual items described below, the June 2003 quarter net
loss and loss per share were $237 million and $1.95, respectively, compared to a
net loss of $162 million and loss per share of $1.34 in the June 2002 quarter.
The First Call consensus estimate for the June 2003 quarter was a loss per share
of $2.08, excluding unusual items. Delta reported an operating profit of $31
million in the month of June. Positive cash flow from operations was $335
million for the June 2003 quarter, which included government reimbursements of
$398 million.
Note 1 to the attached Consolidated Statements of Operations shows a
reconciliation of the reported net income to the net loss excluding unusual
items, as well as reconciliations of other financial measures including and
excluding unusual items.
EARNINGS PERFORMANCE
"Even though we saw some initial post-war traffic recovery, the overall
revenue environment remains weak. One-time events played the most significant
role in Delta's June quarter results," said Leo
F. Mullin, chairman and chief executive officer. "While encouraged by our
progress, it is clear that Delta must remain diligent in our efforts to
establish a viable revenue-to-cost relationship. Delta still faces many
challenges as we cautiously emerge from the worst business cycle in our
company's history."
Second quarter operating revenues decreased 4.8 percent, compared to
the June 2002 quarter. Charter revenue for the June 2003 quarter was $71
million, including $51 million from military charters. The significant increase
in military charter revenue offsets some of the negative revenue impact due to
the military action in Iraq. Passenger unit revenues increased 6.1 percent,
compared to the June 2002 quarter. Delta has outperformed the industry in
year-over-year unit revenue comparisons for each of the last 13 months through
May 2003 and expects to continue to outperform the industry for the June 2003
quarter.
As a result of the government reimbursements, which were recorded as an
offset to operating expenses, operating expenses for the June 2003 quarter
decreased 13.6 percent and unit costs decreased 3.4 percent as compared to the
June 2002 quarter.
Excluding unusual items, operating expenses decreased 1.9 percent,
compared to the June 2002 quarter. Excluding unusual items, unit costs increased
9.7 percent and fuel price neutralized(1) unit costs increased 7.4 percent,
principally due to significant capacity reductions in the June 2003 quarter. The
increase in total unit costs was primarily war-related, driven by higher fuel
costs and short-term capacity reductions. Increases in fuel price drove unit
costs up 2.3 percent, while the war-related capacity reductions caused an
additional 7.1 percent year-over-year increase. Absent these items, unit costs
would have been flat to the prior year.
The load factor for the June 2003 quarter was 75.2 percent, a 1.8 point
increase as compared to the June 2002 quarter. System capacity was down 10.7
percent and mainline capacity was down 14.0 percent on a year-over-year basis.
In the June quarter, Delta restored approximately 4.0 percent of the total 12.0
percent of system capacity that had been suspended as a result of the conflict
in Iraq. While demand has increased since the end of major military combat in
Iraq, it has not yet returned to pre-war levels and the remaining capacity
reductions are necessary in order to best match capacity with demand.
In the June 2003 quarter, Delta's fuel hedging program reduced costs by
$36 million, pretax. Delta hedged 84 percent of its jet fuel requirements in the
quarter at an average price of $0.78 per gallon, excluding fuel taxes. Delta's
total fuel price for the June 2003 quarter was $0.76 per gallon.
Quarterly and full year 2003 guidance on fuel hedging, capacity and
unit costs is provided in Table 1 below.
DELTA REMAINS FOCUSED ON MAINTAINING LIQUIDITY
While Delta began the June 2003 quarter with a $2.5 billion liquidity
position, there were strategic opportunities in the capital markets during the
quarter that allowed Delta to improve its liquidity position.
"While Delta is taking the right steps to navigate through the
financial crisis that has plagued the industry, the company still faces a long
road to recovery," said M. Michele Burns, executive vice president and chief
financial officer. "We continue to seek out every opportunity to build a solid
financial foundation for the future."
As of June 30, 2003, Delta had $3.0 billion in cash, of which $2.8
billion is unrestricted. Delta also
had unencumbered aircraft with an estimated base value of $2.8 billion, of which
approximately $500 million is eligible under Section 1110 of the U.S. Bankruptcy
Code(2).
Delta had positive cash flow from operations for the June 2003 quarter
of $335 million. Excluding unusual cash items, Delta achieved breakeven cash
flow from operations in the quarter.(3)
Delta completed several significant financing transactions during the
June 2003 quarter that increased Delta's liquidity position from $2.5 billion at
March 31, 2003, to $3.0 billion at June 30, 2003. In April, Delta borrowed $490
million of new secured long-term debt. Also during the quarter, Delta issued
$350 million of convertible senior notes, including a $50 million option
exercised by the initial purchaser. On June 30, 2003, Delta completed the sale
of its equity investment in Worldspan, which resulted in an immediate cash
payment of approximately $285 million. The gain from this sale is recognized in
other income (expense) on the Consolidated Statements of Operations.
Delta had a $250 million receivables securitization agreement that
expired at the end of March. As a result, on April 2, 2003, Delta paid $250
million, which represented the total amount owed under this agreement. In
addition, Delta terminated its $500 million undrawn credit facility that was due
to expire in August 2003.
Also during the quarter, Delta received a five-year $409 million letter
of credit facility that replaced an existing facility due to expire in June
2003.
DELTA CONTINUES IMPLEMENTATION OF COST CUTTING AND REVENUE ENHANCING INITIATIVES
Delta recently announced details of its profit improvement program,
which includes company-wide initiatives intended to reduce non-fuel unit costs
by 15 percent by the end of 2005, as compared to 2002. Delta recognizes that
network carriers must make structural changes in order to compete effectively in
the ever changing industry environment. The company's broad-based profit
improvement program is fundamentally transforming the way the company does
business, improving productivity, increasing efficiencies and redesigning the
travel process to provide customers with consistency, control and choice. During
the June 2003 quarter and as discussed below, Delta continued implementing these
initiatives and is currently realizing initial benefits from the program.
The first phases of Delta's marketing agreement with Continental
Airlines and Northwest Airlines were launched in June. Delta and Northwest began
placing their codes on each other's flights out of Memphis and Salt Lake City in
June, while Delta and Continental began codesharing on flights from Atlanta,
Cleveland and Salt Lake City in July. Other customer benefits, including
reciprocal frequent flyer point accrual and award redemption, airport lounge
reciprocity, and frequent flyer elite status benefits also went into effect in
June. By the end of 2003, Delta expects to operate 1,300 codeshare flights and
place its code on an additional 1,300 flights operated by Northwest and
Continental. The alliance is expected to provide Delta with an annual revenue
benefit of approximately $200 million when fully implemented.
Song, Delta's new low-fare operation, was successfully launched on
April 15 and served nine markets with 10 aircraft during the June 2003 quarter.
Song has consistently achieved load factors above 70.0 percent during the
quarter. Song is exceeding operational expectations with a completion factor of
99.9 percent and on-time performance of 90.8 percent for the June 2003 quarter.
Furthermore, Song flights have consistently been able to achieve a turn time of
less than 50 minutes by using new, more
efficient processes. Due to the success of this initiative, turn time
efficiencies are currently being tested for use on Delta's mainline flights. By
November, Song will be fully implemented, serving 28 markets with 36 aircraft.
Delta's initiative to enhance airport self-service through the use of
new technology and customer service agent roles was implemented in 35 of Delta's
largest airports during the quarter, providing enhanced service to more than 60
percent of domestic passengers. The new airport lobby design is intended to get
customers through the check-in process in less than two minutes. The program
will be rolled out to a total of 81 airports this year, benefiting 90 percent of
Delta's customers.
EXPLANATION OF UNUSUAL ITEMS
June 2003 Quarter
In the June 2003 quarter, Delta recorded an offset to operating
expenses related to government reimbursements of security costs received under
the Emergency Wartime Supplemental Appropriations Act (Appropriations Act), a
gain on the sale of its equity investment in Worldspan, and a charge related to
derivative and hedging activities accounted for under Statement of Financial
Accounting Standard (SFAS) 133. These items totaled a net gain of $421 million,
net of tax, and are further described below. The attached Consolidated Statement
of Operations for the June 2003 quarter shows Delta's net income as reported
under Generally Accepted Accounting Principles in the United States (GAAP), as
well as net loss excluding these items. Delta believes this information is
helpful to investors to evaluate recurring operational performance because (1)
the reimbursements received under the Appropriations Act and the gain from the
sale of Delta's equity investment in Worldspan are one-time events; and (2) the
SFAS 133 charge reflects volatility in earnings driven by changes in the market
which are beyond the company's control.
Items excluded are:
- - A $251 million gain, net of tax, from government reimbursements
received under the Appropriations Act;
- - A $176 million gain, net of tax, from the sale of Delta's equity
investment in Worldspan; and
- - A $6 million charge, net of tax, for fair value adjustments of certain
equity rights in other companies and fuel derivative instruments in
accordance with SFAS 133.
June 2002 Quarter
In the June 2002 quarter, Delta recorded charges related to the
temporary carrying costs of surplus pilots and grounded aircraft and SFAS 133
derivatives. These items totaled $24 million, net of tax. In addition to net
loss as reported under GAAP, Delta also discloses net loss excluding these items
because it believes this information is helpful to investors to evaluate
recurring operational performance. For further information, please see Note 1 to
the attached Consolidated Statements of Operations.
OTHER MATTERS
Attached to this earnings release are Delta's Consolidated Statements
of Operations for the three and six months ended June 30, 2003, and 2002; a
statistical summary for those periods; selected balance sheet data as of June
30, 2003, and Dec. 31, 2002; and a reconciliation of certain GAAP to non-GAAP
financial measures.
Delta will host a Webcast to discuss its quarterly earnings today, July
17, 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 airline in terms of
passengers carried and the leading U.S. carrier across the Atlantic, offers
5,734 flights each day to 444 destinations in 79 countries on Delta, Song, 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.
2003 GUIDANCE
- ------------------------------------------------------------ ------------------ ------------------ ------------------
Table 1 Q3 2003 Q4 2003 Full Year
-------
2003
- ------------------------------------------------------------ ------------------ ------------------ ------------------
Percent of projected aircraft fuel requirements hedged 54% 45% 65%
- ------------------------------------------------------------ ------------------ ------------------ ------------------
Average aircraft fuel hedge price per gallon (excluding 79(cents) 76(cents) 78(cents)
fuel tax)
- ------------------------------------------------------------ ------------------ ------------------ ------------------
Capacity Down 6 to 7% Down 3 to 4% Down 5 to 6%
(year-over-year change)
- ------------------------------------------------------------ ------------------ ------------------ ------------------
Unit costs, excluding unusual items Up 6 to 7% Up 3 to 4% Up 6 to 7%
(year-over-year change)(4)
- ------------------------------------------------------------ ------------------ ------------------ ------------------
Fuel price neutralized unit costs, Up 5 to 6% Up 2 to 3% Up 4 to 5%
excluding unusual items(4,5)
(vs. prior year unit costs, excluding unusual items)
- ------------------------------------------------------------ ------------------ ------------------ ------------------
ENDNOTES
(1) The amount of operating cost incurred per available seat mile during a
reporting period, adjusting the average fuel price per gallon for that period to
equal the average fuel price per gallon for the corresponding period in the
prior year.
(2) For a discussion of the method used to estimate the value of Delta's
unencumbered aircraft, please see page 25 of Delta's Form 10-Q for the quarter
ended March 31, 2003, which was filed with the Securities and Exchange
Commission on May 15, 2003. Given the difficult business environment, there is
no assurance that Delta will have access to financing using these aircraft as
collateral. In any event, the amount that could be financed using these aircraft
would be significantly less than their base value.
(3) Breakeven cash flow, excluding unusual cash items, equals operating cash
flow of $335 million minus $398 million of government reimbursements and adding
back $56 million, which represents the increase in restricted cash during the
June 2003 quarter.
(4) Delta is unable to reconcile this financial measure to unit costs under GAAP
for the periods presented because Delta cannot project specific unusual items
that may occur in the periods presented. Please see Note 1 to the Consolidated
Statements of Operations for GAAP and non-GAAP unit costs for 2002.
(5) Average aircraft fuel price per gallon was $0.71, $0.76 and $0.67 for the
three months ended September 30, 2002, the three months ended December 31, 2002,
and the twelve months ended December 31, 2002, respectively.
Statements in this news release that are not historical facts, including
statements regarding Delta's beliefs, expectations, intentions or strategies,
may be "forward-looking statements" within the meaning of section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended. All forward-looking statements involve a number of
risks and uncertainties that could cause actual results to differ materially
from the beliefs, expectations, intentions and strategies reflected in or
suggested by the forward-looking statements. These risks and uncertainties
include, but are not limited to, the effects of terrorist attacks, military
conflicts, the state of the domestic and international economy, demand for air
travel, the availability and cost of aircraft fuel, competitive factors in the
airline industry and the outcome of negotiations on collective bargaining
agreements and other labor issues. In addition, there can be no assurance that
the profit improvement program goals mentioned in this news release will be
achieved due to these and other factors. Additional information concerning risks
and uncertainties that could cause differences between actual results and
forward-looking statements is contained in Delta's Securities and Exchange
Commission filings, including its Form 10-K for the year ended December 31,
2002, its Registration Statement on Form S-4 filed with the Commission on July
11, 2003, and its Form 8-K furnished to the Commission today. Caution should be
taken not to place undue reliance on Delta's forward-looking statements, which
represent Delta's views only as of July 17, 2003, and which Delta has no current
intention to update.
# # #
DELTA AIR LINES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited; in millions, except share and per share data)
Three Months Ended
June 30,
Percent
2003 2002 Change
Operating Revenues:
Passenger $ 3,049 $ 3,217 (5.2%)
Cargo 114 109 4.6%
Other, net 144 148 (2.7%)
Total operating revenues 3,307 3,474 (4.8%)
Operating Expenses:
Salaries and related costs 1,592 1,563 1.9%
Aircraft fuel 435 401 8.5%
Depreciation and
amortization 299 291 2.7%
Contracted services 219 241 (9.1%)
Landing fees and other rents 212 211 0.5%
Aircraft maintenance materials
and outside repairs 159 181 (12.2%)
Aircraft rent 179 179 0.0%
Other selling expenses 124 140 (11.4%)
Passenger commissions 50 89 (43.8%)
Passenger service 76 98 (22.4%)
Restructuring and related items -- 23 --
Appropriations Act
reimbursements (398) -- --
Other 164 184 (10.9%)
Total operating expenses 3,111 3,601 (13.6%)
Operating Income (Loss) 196 (127) --
Other Income (Expense):
Interest expense (184) (164) (12.2%)
Interest income 7 9 (22.2%)
Gain from sale of investments 283 -- --
Fair value adjustments of
SFAS 133 derivatives (9) (15) 40.0%
Misc. income, net 8 10 (20.0%)
Total other income (expense) 105 (160) 165.6%
Income (Loss) Before Income Taxes 301 (287) 204.9%
Income Tax (Provision) Benefit (117) 101 (215.8%)
Net Income (Loss) 184 (186) 198.9%
Preferred Stock Dividends (4) (3) (33.3%)
Net Income (Loss) Available
To Common Shareowners $ 180 $ (189) 195.2%
Basic Earnings (Loss) per Share $ 1.46 $ (1.54) 194.8%
Diluted Earnings (Loss) Per Share $ 1.40 $ (1.54) 190.9%
Net Loss Excluding
Unusual Items (Note 1) $ (237) $ (162) (46.3%)
Basic and Diluted Loss Per Share
Excluding Unusual Items
(Note 1) $ (1.95) $ (1.34) (45.5%)
Operating Margin 5.9% (3.7%) 9.6 pts.
DELTA AIR LINES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited; in millions, except share and per share data)
Six Months Ended
June 30,
Percent
2003 2002 Change
Operating Revenues:
Passenger $ 5,980 $ 6,095 (1.9%)
Cargo 227 220 3.2%
Other, net 255 262 (2.7%)
Total operating revenues 6,462 6,577 (1.7%)
Operating Expenses:
Salaries and related costs 3,226 3,064 5.3%
Aircraft fuel 946 740 27.8%
Depreciation and amortization 597 572 4.4%
Contracted services 451 504 (10.5%)
Landing fees and other rents 430 414 3.9%
Aircraft maintenance materials
and outside repairs 303 366 (17.2%)
Aircraft rent 362 357 1.4%
Other selling expenses 239 285 (16.1%)
Passenger commissions 105 196 (46.4%)
Passenger service 156 192 (18.8%)
Restructuring and related items 43 63 (31.7%)
Appropriations Act reimbursements (398) -- --
Other 341 386 (11.7%)
Total operating expenses 6,801 7,139 (4.7%)
Operating Loss (339) (562) 39.7%
Other Income (Expense):
Interest expense (355) (315) (12.7%)
Interest income 17 19 (10.5%)
Gain (loss) from sale of investments 283 (3) --
Loss on extinguishment of ESOP Notes (14) -- --
Fair value adjustments of SFAS 133
derivatives (15) (43) 65.1%
Misc. income, net -- 15 --
Total other income (expense) (84) (327) 74.3%
Loss Before Income Taxes (423) (889) 52.4%
Income Tax Benefit 141 306 (53.9%)
Net Loss (282) (583) 51.6%
Preferred Stock Dividends (8) (7) (14.3%)
Net Loss Available To Common Shareowners $ (290) $ (590) 50.8%
Basic and Diluted Loss Per Share $ (2.35) $ (4.79) 50.9%
Net Loss Excluding Unusual Items (Note 1) $ (663) $ (516) (28.5%)
Basic and Diluted Loss Per Share
Excluding Unusual Items (Note 1) $ (5.44) $ (4.25) (28.0%)
Operating Margin -5.2% -8.5% 3.3 pts.
DELTA AIR LINES, INC.
STATISTICAL SUMMARY
(unaudited)
Three Months Ended
June 30,
Percent
2003 2002 Change
Revenue Psgr Miles (millions) 24,074 26,319 (8.5%)
Available Seat Miles (millions) 32,034 35,859 (10.7%)
Passenger Mile Yield (cents) 12.67 12.23 3.6%
Operating Revenue Per
Available Seat Mile (cents) 10.32 9.69 6.5%
Passenger Revenue Per
Available Seat Mile (cents) 9.52 8.97 6.1%
Operating Cost per
Available Seat Mile (cents) 9.71 10.05 (3.4%)
Operating Cost per Available
Seat Mile - Excluding (cents)
(Note 1) 10.95 9.98 9.7%
Fuel Price Neutralized
Operating Cost per
Available Seat Mile (cents) 9.48 * *
Fuel Price Neutralized
Operating Cost per Available
Seat Mile - Excluding (cents)
(Note 1) 10.72 * *
Passenger Load Factor
(percent) 75.15 73.39 1.76 pts.
Breakeven Passenger Load
Factor (percent) 70.34 76.30 (5.96)pts.
Breakeven Passenger Load
Factor - Excluding (percent)
(Note 1) 80.16 75.79 4.37 pts.
Psgrs Enplaned (thousands) 25,969 27,427 (5.3%)
Revenue Ton Miles (millions) 2,737 3,018 (9.3%)
Cargo Ton Miles (millions) 329 386 (14.8%)
Cargo Ton Mile Yield (cents) 34.60 28.30 22.3%
Fuel Gallons Consumed
(millions) 571 634 (10.0%)
Average Price Per Fuel Gallon,
net of hedging gains (cents) 76.29 63.13 20.8%
Number of Aircraft in Fleet,
End of Period 816 831 (1.8%)
Full-Time Equivalent Employees,
End of Period 69,800 75,700 (7.8%)
DELTA AIR LINES, INC.
STATISTICAL SUMMARY
(unaudited)
Six Months Ended
June 30,
Percent
2003 2002 Change
Revenue Psgr Miles (millions) 46,958 49,549 (5.2%)
Available Seat Miles
(millions) 65,238 69,599 (6.3%)
Passenger Mile Yield (cents) 12.73 12.30 3.5%
Operating Revenue Per
Available Seat Mile (cents) 9.90 9.45 4.8%
Passenger Revenue Per
Available Seat Mile (cents) 9.17 8.76 4.7%
Operating Cost per
Available Seat Mile (cents) 10.42 10.26 1.6%
Operating Cost per Available
Seat Mile - Excluding (cents)
(Note 1) 10.97 10.17 7.9%
Fuel Price Neutralized
Operating Cost per
Available Seat Mile (cents) 10.04 * *
Fuel Price Neutralized
Operating Cost per Available
Seat Mile - Excluding (cents)
(Note 1) 10.58 * *
Passenger Load Factor
(percent) 71.98 71.19 0.79 pts.
Breakeven Passenger Load
Factor (percent) 76.06 77.76 (1.70)pts.
Breakeven Passenger Load
Factor - Excluding (percent)
(Note 1) 80.34 77.03 3.31 pts.
Psgrs Enplaned (thousands) 50,879 52,045 (2.2%)
Revenue Ton Miles (millions) 5,378 5,691 (5.5%)
Cargo Ton Miles (millions) 682 736 (7.3%)
Cargo Ton Mile Yield (cents) 33.25 29.92 11.1%
Fuel Gallons Consumed
(millions) 1,159 1,233 (6.0%)
Average Price Per Fuel Gallon,
net of hedging gains (cents) 81.67 60.00 36.1%
Number of Aircraft in Fleet,
End of Period 816 831 (1.8%)
Full-Time Equivalent Employees,
End of Period 69,800 75,700 (7.8%)
SELECTED BALANCE SHEET DATA:
June 30, December 31,
2003 2002
(unaudited)
(in millions)
Cash and cash equivalents $ 2,815 $ 1,969
Restricted cash 208 134
Total assets 25,557 24,720
Total debt, including current
maturities 12,187 10,740
Capital lease obligations,
current and long-term 109 127
Total shareowners' equity 679 893
Note 1: The following tables show reconciliations of certain financial measures
adjusted for the items shown below.
Three Months Ended Six Months Ended
June 30, June 30,
2003 2002 2003 2002
(in millions)
Net loss excluding unusual items $ (237) $ (162) $ (663) $ (516)
Unusual items, net of tax:
Pension benefits for workforce
reductions -- -- (27) --
Loss on extinguishment of ESOP Notes -- -- (9) --
Appropriations Act reimbursements 251 -- 251 --
Sale of Worldspan investment 176 -- 176 --
Surplus pilots / grounded aircraft -- (15) -- (40)
Fair value adjustments of
SFAS 133 derivatives (6) (9) (10) (27)
Total unusual items, net of tax 421 (24) 381 (67)
Net income (loss) $ 184 $ (186) $ (282) $ (583)
Basic earnings (loss) per share
excluding unusual items $ (1.95) $ (1.34) $ (5.44) $ (4.25)
Unusual items, net of tax:
Pension benefits for workforce
reductions -- -- (0.22) --
Loss on extinguishment of ESOP Notes -- -- (0.07) --
Appropriations Act reimbursements 2.03 -- 2.03 --
Sale of Worldspan investment 1.42 -- 1.42 --
Surplus pilots / grounded aircraft -- (0.12) -- (0.32)
Fair value adjustments of
SFAS 133 derivatives (0.04) (0.08) (0.07) (0.22)
Total unusual items, net of tax 3.41 (0.20) 3.09 (0.54)
Net income (loss) $ 1.46 $ (1.54) $ (2.35) $ (4.79)
(in millions)
Operating expenses
excluding unusual items $ 3,509 $ 3,578 $ 7,156 $ 7,076
Unusual items:
Appropriations Act reimbursements (398) -- (398) --
Pension benefits for workforce
reductions -- -- 43 --
Surplus pilots / grounded aircraft -- 23 -- 63
Total unusual items (398) 23 (355) 63
Operating expenses $ 3,111 $ 3,601 $ 6,801 $ 7,139
Unit costs excluding unusual items 10.95(cents) 9.98(cents) 10.97(cents) 10.17(cents)
Unusual items:
Appropriations Act reimbursements (1.24) -- (0.61) --
Pension benefits for workforce
reductions -- -- 0.06 --
Surplus pilots / grounded aircraft -- 0.07 -- 0.09
Total unusual items (1.24) 0.07 (0.55) 0.09
Unit costs 9.71(cents) 10.05(cents) 10.42(cents) 10.26(cents)
Note 1 (continued)
Three Months Ended Six Months Ended
June 30, June 30,
2003 2002 2003 2002
Breakeven load factor
excluding unusual items 80.16% 75.79% 80.34% 77.03%
Unusual items:
Appropriations Act reimbursements (9.82) -- (4.79) --
Pension benefits for workforce
reductions -- -- 0.51 --
Surplus pilots / grounded aircraft -- 0.51 -- 0.73
Total unusual items (9.82) 0.51 (4.28) 0.73
Breakeven load factor 70.34% 76.30% 76.06% 77.76%
Three Months Ended Six Months Ended
June 30, June 30,
2003 2003
(in millions, except where noted)
Fuel price neutralized unit costs(1)(3):
Operating expenses $ 3,111 $ 6,801
Less fuel expense (435) (946)
Plus current year fuel gallons
x prior year fuel price(2)(4) 360 695
Fuel price neutralized operating expenses 3,036 6,550
ASMs 32,034 65,238
Fuel price neutralized unit costs (cents) 9.48 10.04
vs. June 2002 quarter unit costs (cents) 10.05 10.26
Change (5.7%) (2.1%)
(in cents, except where noted)
Fuel price neutralized unit costs - excluding:
Fuel price neutralized unit costs 9.48 10.04
Items excluded:
Pension benefits for workforce reductions (0.06)
Appropriations Act reimbursements 1.24 0.61
Rounding (0.01)
Fuel price neutralized unit costs - excluding 10.72 10.58
vs. June 2002 quarter unit costs - excluding 9.98 10.17
Change 7.4% 4.0%
(1) Operating cost per available seat mile (ASM), adjusting average fuel price
per gallon for the period to equal the average fuel price per gallon for the
corresponding period in the prior year.
(2) 571 million gallons x 63.13 cents/gallon for the three months ended June 30,
2003.
(3) We believe this non-GAAP financial measure assists investors in
understanding the impact of changes in fuel costs on our operations.
(4) 1,159 million gallons x 60.00 cents/gallon for the six months ended June 30,
2003.
Note 1 (continued)
Three Months Ended Twelve Months
Ended
September 30, December 31, December 31,
2002 2002 2002
Unit costs excluding unusual items 9.81(cents) 9.97(cents) 10.03(cents)
Unusual items:
Severance costs -- 0.36 0.09
Asset impairments 0.60 0.10 0.18
Surplus pilots / grounded aircraft 0.05 0.03 0.07
Aircraft deferral costs -- 0.09 0.02
2002 closure of leased facilities -- 0.04 0.01
Restructuring and other reserve
reversals (0.04) (0.19) (0.06)
Stabilization Act compensation (0.09) -- (0.03)
Total unusual items 0.52 0.43 0.28
Unit costs 10.33(cents) 10.40(cent) 10.31(cents)