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EXHIBIT 99.1
FOR IMMEDIATE DISTRIBUTION
CONTACT: Corporate Communications Investor Relations
404-715-2554 404-715-6679
DELTA AIR LINES REPORTS SEPTEMBER 2004 QUARTER RESULTS
ATLANTA, Oct. 20, 2004 - Delta Air Lines (NYSE: DAL) today reported results for
the quarter ended Sept. 30, 2004, and other significant news. The key points
are, Delta:
o REPORTS A THIRD QUARTER NET LOSS OF $646 MILLION, OR $5.16 LOSS PER
SHARE.
o EXCLUDING NON-CASH CHARGES DESCRIBED BELOW, REPORTS A THIRD QUARTER NET
LOSS OF $592 MILLION, OR $4.73 LOSS PER SHARE.
o ENDS QUARTER WITH $1.45 BILLION IN UNRESTRICTED CASH.
Delta Air Lines reported a net loss of $646 million and a loss per share
of $5.16 for the September 2004 quarter. For the September 2003 quarter, Delta
reported a net loss of $164 million and a loss per share of $1.36. Excluding the
non-cash charges described below, the September 2004 quarter net loss and loss
per share were $592 million and $4.73, respectively.1 In the September 2003
quarter, Delta reported a net loss of $172 million and a loss per share of
$1.43, excluding the unusual items described below. As announced previously,
Delta no longer records income tax benefits related to current period
operations. This change was effective in the June 2004 quarter and will continue
for the foreseeable future.
"Last month we outlined the key elements of Delta's transformation plan
which targets $1 billion in annual pilot cost savings, as well as participation
from Delta's other stakeholders," said Gerald Grinstein, Delta's chief executive
officer. "As Delta's financial situation continues to deteriorate, time is of
the essence."
FINANCIAL PERFORMANCE
September 2004 quarter operating revenues increased 5.9 percent, while
passenger unit revenues decreased 3.7 percent, compared to the September 2003
quarter. Continued weak domestic yields, down 5.9 percent as compared to the
prior-year quarter, drove the decline in passenger unit revenues. Four major
hurricanes impacted a significant portion of Delta's Southeastern operations
during the quarter, resulting in an estimated revenue loss of approximately $50
million.
The load factor for the September 2004 quarter was 77.7 percent, a 1.0
point increase as compared to the September 2003 quarter. Consolidated system
capacity was up 9.0 percent and Mainline capacity rose 8.7 percent from the
prior-year quarter. These increases were primarily driven by the restoration of
capacity that was reduced in 2003 as a result of the war in Iraq. Detailed
traffic, capacity, load factor, yield and passenger unit revenue information is
provided in Table 1 below.
Operating expenses for the September 2004 quarter increased 14.9 percent
from the September 2003 quarter and consolidated system unit costs increased 5.4
percent. Fuel expense was the primary driver of the increase, rising 63.1
percent, or $304 million, with over 88 percent of the increase resulting from
higher fuel prices. For the full year 2004, Delta expects its fuel costs to
exceed the prior year levels by $950 million with $820 million of the increase
driven by higher fuel prices.
Excluding the non-cash charges described below, operating expenses for
the September 2004 quarter increased 13.4 percent, consolidated system unit
costs increased 4.1 percent and Mainline unit costs increased 3.1 percent from
the September 2003 quarter. Excluding these charges, fuel price neutralized unit
costs2,3 for the consolidated system decreased 2.5 percent and Mainline fuel
price neutralized unit costs decreased 3.7 percent.
"A combination of record high fuel prices and the weak domestic yield
environment has materially impacted our financial results," said Michael J.
Palumbo, Delta's executive vice president and chief financial officer. "This
further demonstrates the urgent need for us to achieve our targeted benefits
through our transformation plan."
As disclosed in the March 2004 quarter, Delta settled all of its fuel
hedge contracts in February 2004, prior to their scheduled settlement dates,
resulting in a deferred gain of $82 million. In the September 2004 quarter,
Delta recognized a reduction in fuel expenses of $23.5 million, which represents
a portion of this deferred gain. Giving effect to this deferred gain, Delta's
average total fuel price for the quarter was $1.20 per gallon.
At Sept. 30, 2004, Delta had $1.77 billion in cash, of which $1.45
billion was unrestricted. Capital expenditures for the quarter were
approximately $270 million, including $155 million for aircraft. Subsequent to
Sept. 30, Delta contributed its remaining 2004 funding obligation of $44 million
to its defined benefit pension plan for pilots (Pilot Plan), and completed the
sale of eight MD-11 aircraft and four spare engines for $227 million.
TRANSFORMATION PLAN
While Delta has continued to make progress on its Profit Improvement
Initiatives begun in 2002, the company needs substantial further reductions to
its cost structure in order to achieve viability. The company completed an
extensive strategic review through which it derived its transformation plan,
announced on Sept. 8, 2004.
The transformation plan combined with the Profit Improvement Initiatives
is intended to deliver approximately $5 billion in annual benefits by 2006, as
compared to 2002, while at the same time improving the service offered to
Delta's customers. The plan calls for participation from the company's key
stakeholders, such as creditors, lessors, vendors, employees and shareowners. It
should be noted that even if Delta is successful in achieving the targeted
benefits from its transformation plan, the company will still have substantial
liquidity needs in 2005.
In connection with its transformation plan, Delta expects to record
significant one-time adjustments in the December 2004 quarter. These adjustments
relate to, among other things, (1) a gain from the elimination of the subsidy it
offers for retiree and survivor healthcare coverage and (2) charges from
voluntary and involuntary employee reduction programs. Delta cannot reasonably
estimate the net impact of these adjustments at this time.
For additional details about Delta's transformation plan and 2005
liquidity needs, please see the company's Form 8-K filed on Oct. 15, 2004.
2
EXPLANATION OF NON-CASH CHARGES AND UNUSUAL ITEMS
September 2004 Quarter Non-cash Charges
- ---------------------------------------
In the September 2004 quarter, Delta recorded two non-cash charges
totaling $54 million. These charges are described below:
(1) A $40 million asset impairment charge associated with our agreement
to sell eight MD-11 aircraft. This charge is recorded in accordance with
Statement of Financial Accounting Standards (SFAS) No. 144. 4
(2) A $14 million settlement charge related to the company's Pilot Plan.
This charge relates to the lump sum distributions under the Pilot Plan for 61
pilots who retired. As a result of the lump sum distributions, Delta must
accelerate the recognition of actuarial losses in accordance with SFAS 88. 5
Delta expects to record a settlement charge in the December 2004 quarter that is
greater than the settlement charge recorded in the September 2004 quarter.
September 2003 Quarter Unusual Items
- ------------------------------------
In the September 2003 quarter, Delta recorded a $9 million gain, net of
tax, from the extinguishment of debt and a $1 million charge, net of tax,
related to derivative and hedging activities accounted for under SFAS 133.
Consolidated Statements of Operations
- -------------------------------------
The attached Consolidated Statements of Operations for the three and
nine month periods ended September 30, 2004 and 2003 show Delta's net loss as
reported under Generally Accepted Accounting Principles in the United States
(GAAP), as well as net loss excluding the items described above. Delta believes
this information is helpful to investors to evaluate recurring operational
performance because (1) the asset impairment and the pilot settlement charges
are not representative of current period operations; (2) the extinguishment of
debt in 2003 is not representative of core operations; and (3) the SFAS 133
charge in 2003 reflects volatility in earnings driven by changes in the market
which are beyond the company's control (Delta no longer excludes SFAS 133
charges due to the reduction in our fuel hedge portfolio and other investments).
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 nine months ended Sept. 30, 2004, and 2003; a
statistical summary for those periods; selected balance sheet data as of
Sept. 30, 2004, and Dec. 31, 2003; and a reconciliation of certain GAAP to
non-GAAP financial measures.
3
SEPTEMBER 2004 QUARTER TRAFFIC, CAPACITY, LOAD FACTOR, YIELD AND PASSENGER UNIT
REVENUE VS. SEPTEMBER 2003 QUARTER
TABLE 1 Year-Over-Year Change
- -------
North America Atlantic Latin America Pacific
------------- -------- ------------- -------
Traffic 8.7% 17.8% 16.6% 14.2%
Capacity 7.2% 17.1% 16.9% 10.9%
Load Factor 1.1 pts. 0.5 pts. (0.2) pts. 2.5 pts.
Yield (5.9%) 1.4% (5.0%) 2.1%
Passenger Unit Revenue (4.6%) 2.0% (5.2%) 5.2%
ENDNOTES
1 Note 1 to the attached Consolidated Statements of Operations shows a
reconciliation of Delta's net loss reported under accounting principles
generally accepted in the United States (GAAP) to the net loss excluding
non-cash charges or unusual items, as well as reconciliations of other financial
measures including and excluding non-cash charges or unusual items.
2 "Fuel price neutralized unit costs" means 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.
3 Delta believes discussion of fuel price neutralized unit costs assists
investors in understanding the impact of changes in fuel costs on our
operations.
4 SFAS 144, "Accounting for the Impairment of Long-Lived Assets"
5 SFAS 88, "Employers' Accounting for Settlements and Curtailments of Defined
Benefit Pension Plans and for Termination Benefits"
STATEMENTS IN THIS NEWS RELEASE THAT ARE NOT HISTORICAL FACTS, INCLUDING
STATEMENTS REGARDING DELTA'S ESTIMATES, BELIEFS, EXPECTATIONS, INTENTIONS,
STRATEGIES OR PROJECTIONS, MAY BE "FORWARD-LOOKING STATEMENTS" AS DEFINED IN THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. ALL FORWARD-LOOKING STATEMENTS
INVOLVE A NUMBER OF RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO
DIFFER MATERIALLY FROM THE ESTIMATES, BELIEFS, EXPECTATIONS, INTENTIONS,
STRATEGIES AND PROJECTIONS REFLECTED IN OR SUGGESTED BY THE FORWARD-LOOKING
STATEMENTS. THESE RISKS AND UNCERTAINTIES INCLUDE, BUT ARE NOT LIMITED TO, OUR
ABILITY TO REDUCE OPERATING EXPENSES, OUR ABILITY TO OBTAIN NECESSARY FINANCING
OR DEBT PAYMENT DEFERRALS TO MEET OUR LIQUIDITY NEEDS, OUR PENSION PLAN FUNDING
OBLIGATIONS, PILOT EARLY RETIREMENTS, THE COST OF AIRCRAFT FUEL, THE EFFECT OF
CREDIT RATINGS DOWNGRADES, INTERRUPTIONS OR DISRUPTIONS IN SERVICE AT ONE OF OUR
HUB AIRPORTS, OUR INCREASING DEPENDENCE ON TECHNOLOGY IN OUR OPERATIONS, THE
OUTCOME OF NEGOTIATIONS ON COLLECTIVE BARGAINING AGREEMENTS AND OTHER LABOR
ISSUES, THE EFFECTS OF TERRORIST ATTACKS, RESTRUCTURINGS BY COMPETITORS, AND
COMPETITIVE CONDITIONS IN THE AIRLINE INDUSTRY. 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-Q FOR THE QUARTER ENDED JUNE
30, 2004, FILED WITH THE COMMISSION ON AUGUST 9, 2004 AND ITS FORM 8-K FILED
WITH THE COMMISSION ON OCTOBER 15, 2004. CAUTION SHOULD BE TAKEN NOT TO PLACE
UNDUE RELIANCE ON DELTA'S FORWARD-LOOKING STATEMENTS, WHICH REPRESENT DELTA'S
VIEWS ONLY AS OF OCTOBER 20, 2004, AND WHICH DELTA HAS NO CURRENT INTENTION TO
UPDATE.
4
DELTA AIR LINES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited; in millions, except per share data)
Three Months Ended
September 30,
Percent
2004 2003 Change
Operating Revenues:
Passenger:
Mainline $ 2,814 $ 2,699 4.3%
Regional affiliates 750 694 8.1%
Cargo 117 114 2.6%
Other, net 190 150 26.7%
Total operating revenues 3,871 3,657 5.9%
Operating Expenses:
Salaries and related costs 1,616 1,564 3.3%
Aircraft fuel 786 482 63.1%
Depreciation and
amortization 311 305 2.0%
Contracted services 249 208 19.7%
Contract carrier arrangements 234 213 9.9%
Landing fees and other rents 220 214 2.8%
Aircraft maintenance materials
and outside repairs 197 162 21.6%
Aircraft rent 181 182 -0.5%
Other selling expenses 125 128 -2.3%
Passenger commissions 60 52 15.4%
Passenger service 97 86 12.8%
Pension settlements, asset writedowns,
and related items, net 54 (7) -871.4%
Other 164 149 10.1%
Total operating expenses 4,294 3,738 14.9%
Operating Loss (423) (81) 422.2%
Other Income (Expense):
Interest expense (210) (191) -9.9%
Interest income 6 9 -33.3%
Gain from sale of investments -- 1 -100.0%
Gain on extinguishment of debt -- 15 -100.0%
Fair value adjustments of
SFAS 133 derivatives (26) (1) -2500.0%
Miscellaneous income (expense), net 1 (6) 116.7%
Total other income (expense) (229) (173) -32.4%
Loss Before Income Taxes (652) (254) -156.7%
Income Tax Benefit 6 90 -93.3%
Net Loss (646) (164) -293.9%
Preferred Stock Dividends (5) (4) -25.0%
Net Loss Available
To Common Shareowners $ (651) $ (168) -287.5%
Basic and Diluted Loss Per Share $ (5.16) $(1.36) -279.4%
Net Loss Excluding Unusual Items
see Note 1 $ (592) $ (172) -244.2%
Basic and Diluted Loss Per Share
Excluding Unusual Items - see Note 1 $ (4.73) $(1.43) -230.8%
Operating Margin -10.9% -2.2% -8.7 pts.
5
DELTA AIR LINES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited; in millions, except per share data)
Nine Months Ended
September 30,
Percent
2004 2003 Change
Operating Revenues:
Passenger:
Mainline $ 8,269 $ 7,774 6.4%
Regional affiliates 2,192 1,911 14.7%
Cargo 364 342 6.4%
Other, net 536 450 19.1%
Total operating revenues 11,361 10,477 8.4%
Operating Expenses:
Salaries and related costs 4,809 4,790 0.4%
Aircraft fuel 2,029 1,428 42.1%
Depreciation and
amortization 929 914 1.6%
Contracted services 739 659 12.1%
Contract carrier arrangements 708 572 23.8%
Landing fees and other rents 657 644 2.0%
Aircraft maintenance materials
and outside repairs 518 465 11.4%
Aircraft rent 544 544 0.0%
Other selling expenses 396 367 7.9%
Passenger commissions 165 157 5.1%
Passenger service 260 242 7.4%
Pension settlements, asset writedowns
and related items, net 171 36 375.0%
Appropriations Act reimbursements -- (398) -100.0%
Other 488 477 2.3%
Total operating expenses 12,413 10,897 13.9%
Operating Loss (1,052) (420) -150.5%
Other Income (Expense):
Interest expense (601) (558) -7.7%
Interest income 27 26 3.8%
Gain from sale of investments -- 284 -100.0%
Gain on extinguishment of debt 1 -- 100.0%
Fair value adjustments of
SFAS 133 derivatives (44) (16) -175.0%
Miscellaneous income (expense), net (10) 7 -242.9%
Total other income (expense) (627) (257) -144.0%
Loss Before Income Taxes (1,679) (677) -148.0%
Income Tax (Provision) Benefit (1,313) 231 -668.4%
Net Loss (2,992) (446) -570.9%
Preferred Stock Dividends (14) (12) -16.7%
Net Loss Available
To Common Shareowners $ (3,006) $ (458) -556.3%
Basic and Diluted Loss Per Share $ (24.06) $ (3.71) -548.5%
Net Loss Excluding Unusual Items
See Note 1 $ (1,287) $ (835) -54.1%
Basic and Diluted Loss Per Share
Excluding Unusual Items
See Note 1 $ (10.41) $ (6.87) -51.5%
Operating Margin -9.3% -4.0% -5.3 pts.
6
DELTA AIR LINES, INC.
STATISTICAL SUMMARY
(unaudited)
Three Months Ended
September 30,
Percent
2004 2003 Change
Consolidated:
Revenue Psgr Miles (millions)1 30,418 27,546 10.4%
Available Seat Miles (millions)1 39,167 35,923 9.0%
Passenger Mile Yield (cents)1 11.72 12.32 -4.9%
Operating Revenue Per
Available Seat Mile (cents)1 9.88 10.18 -2.9%
Passenger Revenue Per
Available Seat Mile (cents)1 9.10 9.45 -3.7%
Operating Cost per
Available Seat Mile (cents)1 10.96 10.40 5.4%
Operating Cost per Available
Seat Mile - Excluding (cents)1
(Note 1) 10.83 10.40 4.1%
Fuel Price Neutralized
Operating Cost per Available
Seat Mile - Excluding (cents)1
(Note 1) 10.14 10.40 -2.5%
Passenger Load Factor (percent)1 77.66% 76.68% 0.98 pts.
Breakeven Passenger Load
Factor (percent)1 86.88% 78.50% 8.38 pts.
Breakeven Passenger Load Factor1
- Excluding (percent)(Note 1) 85.70% 78.50% 7.20 pts.
Passengers Enplaned (thousands) 28,247 27,059 4.4%
Fuel Gallons Consumed (millions) 654 609 7.4%
Average Price Per Fuel Gallon,
net of hedging gains (cents) 120.27 79.15 52.0%
Number of Aircraft in Fleet,
End of Period 842 829 1.6%
Full-Time Equivalent Employees,
End of Period 69,700 70,100 -0.6%
Mainline:
Revenue Psgr Miles (millions) 26,438 24,088 9.8%
Available Seat Miles (millions) 33,576 30,901 8.7%
Operating Cost per
Available Seat Mile (cents) 10.37 9.90 4.7%
Operating Cost per Available
Seat Mile - Excluding (cents)(Note 1) 10.21 9.90 3.1%
Fuel Price Neutralized
Operating Cost per Available
Seat Mile - Excluding (cents)
(Note 1) 9.53 9.90 -3.7%
Number of Aircraft in Fleet,
End of Period 542 551 -1.6%
(1) These statistics include our contract carrier arrangements with
Independence Air, Chautauqua Airlines, Inc., and SkyWest Airlines, Inc., for the
periods presented.
7
DELTA AIR LINES, INC.
STATISTICAL SUMMARY
(unaudited)
Nine Months Ended
September 30,
Percent
2004 2003 Change
Consolidated:
Revenue Psgr Miles (millions)1 85,201 76,111 11.9%
Available Seat Miles (millions)1 113,536 103,442 9.8%
Passenger Mile Yield (cents)1 12.28 12.73 -3.5%
Operating Revenue Per
Available Seat Mile (cents)1 10.01 10.13 -1.2%
Passenger Revenue Per
Available Seat Mile (cents)1 9.21 9.36 -1.6%
Operating Cost per
Available Seat Mile (cents)1 10.93 10.53 3.8%
Operating Cost per Available
Seat Mile - Excluding (cents)1
(Note 1) 10.78 10.88 -0.9%
Fuel Price Neutralized
Operating Cost per Available
Seat Mile - Excluding (cents)1
(Note 1) 10.35 10.88 -4.9%
Passenger Load Factor (percent)1 75.04% 73.58% 1.46 pts.
Breakeven Passenger Load
Factor (percent)1 82.59% 76.77% 5.82 pts.
Breakeven Passenger Load Factor
- excluding (percent)(Note 1)1 81.36% 79.46% 1.90 pts.
Passengers Enplaned (thousands) 82,206 77,938 5.5%
Fuel Gallons Consumed (millions) 1,896 1,768 7.2%
Average Price Per Fuel Gallon,
net of hedging gains (cents) 107.00 80.80 32.4%
Number of Aircraft in Fleet,
End of Period 842 829 1.6%
Full-Time Equivalent Employees,
End of Period 69,700 70,100 -0.6%
Mainline:
Revenue Psgr Miles (millions) 73,966 66,841 10.7%
Available Seat Miles (millions) 97,260 89,662 8.5%
Operating Cost per
Available Seat Mile (cents) 10.36 10.07 2.9%
Operating Cost per Available
Seat Mile - Excluding (cents)(Note 1) 10.18 10.38 -1.9%
Fuel Price Neutralized
Operating Cost per Available
Seat Mile - Excluding (cents)
(Note 1) 9.75 10.38 -6.1%
Number of Aircraft in Fleet,
End of Period 542 551 -1.6%
(1) These statistics include our contract carrier arrangement with
Independence Air, Chautauqua Airlines, Inc., and SkyWest Airlines, Inc., for the
periods presented.
8
SELECTED BALANCE SHEET DATA:
September 30, December 31,
2004 2003
(unaudited)
(in millions)
Unrestricted cash and cash equivalents $ 1,446 $ 2,710
Restricted cash, including noncurrent 323 236
Total assets 23,526 25,939
Total debt and capital leases 12,766 12,559
Total shareowners' deficit (3,577) (659)
Note 1: The following tables show reconciliations of certain financial measures
adjusted for the items shown below.
Three Months Ended Nine Months Ended
September 30, September 30,
2004 2003 2004 2003
(in millions)
Net loss $ (646) $ (164) $(2,992) $ (446)
Items excluded (2003 items net of tax)
Pension settlements 14 - 131 -
Aircraft impairment 40 - 40 -
Deferred income tax asset valuation
allowance - - 1,534 -
Pension benefits for workforce
reductions - - - 27
Loss on extinguishment of ESOP Notes - - - 9
Gain on extinguishment of debt - (9) - (9)
Appropriations Act reimbursements - - - (251)
Sale of Worldspan investment - - - (176)
Fair value adjustments of SFAS 133
derivatives - 1 - 11
Total items excluded
(2003 items net of tax) 54 (8) 1,705 (389)
Net loss - excluding $ (592) $ (172) $(1,287) $ (835)
Basic and diluted loss per share $ (5.16) $(1.36) $(24.06) $(3.71)
Items excluded (2003 items net of tax):
Pension settlements 0.11 - 1.05 -
Aircraft impairment 0.32 - 0.32 -
Deferred income tax asset valuation
allowance - - 12.28 -
Pension benefits for workforce
reductions - - - 0.22
Loss on extinguishment of ESOP Note - - - 0.07
Gain on extinguishment of debt - (0.08) - (0.08)
Appropriations Act reimbursement - - - (2.03)
Sale of Worldspan investment - - - (1.42)
Fair value adjustments of SFAS 133
derivatives - 0.01 - 0.08
Total items excluded
(2003 items net of tax) 0.43 (0.07) 13.65 (3.16)
Basic and diluted loss per share
- excluding $ (4.73) $(1.43) $ (10.41) $(6.87)
9
Note 1 (continued)
Three Months Ended Nine Months Ended
September 30, September 30,
2004 2003 2004 2003
(in millions)
Operating expenses $ 4,294 $3,738 $ 12,413 $10,897
Items excluded:
Pension settlements (14) - (131) -
Aircraft impairment (40) - (40) -
Appropriations Act reimbursements - - - 398
Pension benefits for workforce
reductions - - - (43)
Total items excluded (54) - (171) 355
Operating expenses - excluding 4,240 3,738 12,242 11,252
Unit costs 10.96(cent) 10.40(cent) 10.93(cent) 10.53(cent)
Items excluded:
Pension settlements (0.03) - (0.12) -
Aircraft impairment (0.10) - (0.03) -
Appropriations Act reimbursements - - - 0.39
Pension benefits for workforce
reductions - - - (0.04)
Total items excluded (0.13) - (0.15) 0.35
Unit costs - excluding 10.83(cent) 10.40(cent) 10.78(cent) 10.88(cent)
Mainline unit costs 10.37(cent) 9.90(cent) 10.36(cent) 10.07(cent)
Items excluded:
Pension settlements (0.04) - (0.14) -
Aircraft impairment (0.12) - (0.04) -
Appropriations Act reimbursements - - - 0.36
Pension benefits for workforce
reductions - - - (0.05)
Total items excluded (0.16) - (0.18) 0.31
Unit costs - excluding 10.21(cent) 9.90(cent) 10.18(cent) 10.38(cent)
Breakeven load factor 86.88% 78.50% 82.59% 76.77%
Items excluded:
Pension settlements (0.31) - (0.94) -
Aircraft impairment (0.87) - (0.29) -
Appropriations Act reimbursements - - - 3.02
Pension benefits for workforce
reductions - - - (0.33)
Total items excluded (1.18) - (1.23) 2.69
Breakeven load factor - excluding 85.70% 78.50% 81.36% 79.46%
10
Note 1 (continued)
Three Months Ended Nine Months Ended
Fuel price neutralized unit costs September 30, September 30,
(in millions, except where noted) 2004 2004
Operating expenses - excluding $ 4,240 $ 12,242
Less fuel expense (786) (2,029)
Plus current year fuel gallons
x prior year fuel price(1)(2) 518 1,532
Fuel price neutralized operating expenses
- excluding 3,972 11,745
ASMs 39,167 113,536
Fuel price neutralized unit costs
- excluding (cents) 10.14 10.35
vs. September 2003 quarter unit costs
- excluding (cents) 10.40 10.88
Change (2.5%) (4.9%)
Mainline fuel price neutralized unit cost
(in millions, except where noted)
Operating expenses $ 3,481 $ 10,072
Items excluded:
Pension settlements (14) (131)
Aircraft impairment (40) (40)
Operating expenses - excluding 3,427 9,901
Less fuel expense (648) (1,673)
Plus current year fuel gallons
X prior year fuel price (3)(4) 422 1,251
Fuel price neutralized operating expenses
- excluding 3,201 9,479
ASMs 33,575 97,260
Fuel price neutralized unit costs
- excluding (cents) 9.53 9.75
vs. September 2003 quarter unit costs
- excluding (cents) 9.90 10.38
Change (3.7%) (6.1%)
Three Months Ended
September 30,
Capital Expenditures 2004
(in millions)
Cash used by investing activities - GAAP
Aircraft (including advanced deposits) $ (7)
Aircraft modifications and parts (59)
Flight equipment additions (66)
Ground property and equipment additions (89)
Add:
Aircraft seller financing 147
Less:
Boston airport terminal project expenditures 31
Capital Expenditures $(271)
(1) 654 million gallons x 79.15 cents/gallon for the three months ended
September 30, 2004.
(2) 1.9 billion gallons x 80.80 cents/gallon for the nine months ended
September 30, 2004.
(3) 550 million gallon x 76.76 cents/gallons for the three months ended
September 30, 2004.
(4) 1.6 billion gallons x 78.28 cents/gallons for the nine month ended
September 30, 2004.
11