ATLANTA, Oct. 16, 2007 – Delta Air Lines (NYSE:DAL) today reported results for the quarter ended Sept. 30, 2007. Key points include:

  • Delta generated third quarter pre-tax income of $363 million on operating revenue of $5.2 billion, the highest quarterly revenue in company history.
  • Net income for the September 2007 quarter was $220 million, or $0.56 per diluted share.
  • During the quarter, Delta continued to strengthen its balance sheet, paying down more than $1.0 billion in debt obligations.
  • Delta has accrued almost $160 million in profit sharing through the September 2007 quarter, in recognition of the critical role of Delta employees in achieving the company’s financial targets.

Net income for the September 2007 quarter was $220 million, or $0.56 per diluted share. Delta’s pre-tax income of $363 million reflects a more than $430 million improvement over the pre-tax loss of $69 million excluding reorganization items in the third quarter of 20061,2. Strong revenue improvements and continued cost benefits from restructuring produced the more than 5 point improvement in Delta’s operating margin to 8.7% in the September 2007 quarter compared to the September 2006 quarter.

"I want to thank my Delta colleagues for their efforts in delivering strong improvements to our financial and operational performance,” said Richard Anderson, Delta’s chief executive officer. “As these results demonstrate, Delta has emerged as a leader in the airline industry and we intend to maintain that position. We have significant opportunities in front of us as our financial improvements, combined with the power of our people, route network and balance sheet, give us tremendous flexibility and strength as the industry continues to evolve.”

Network and Revenue Improvements
The momentum of network and revenue management initiatives produced quarterly operating revenue of $5.2 billion for the September quarter, the highest in Delta’s history. During this period, 35% of Delta’s capacity operated in international markets, up from 24% in September 2005. During the same period, the percentage of Delta’s capacity operating in domestic markets declined to 65% from 76%.

Delta improved consolidated passenger unit revenue (PRASM) to 11.33 cents in the September 2007 quarter, an increase of 6% compared to the same period last year. Based on the most recently available ATA data3, Delta’s consolidated length of haul adjusted PRASM was 96% of industry average PRASM (excluding Delta), up from 86% in 2005 and on track with Delta’s target of closing the gap to the industry by the end of 2008.

Comparisons of revenue related statistics by geographic region are as follows:

 
September 2007 Quarter vs. September 2006 Quarter
 
Domestic
Latin America
Atlantic
Pacific

Traffic

 
3.1%
21.5%
12.4%
48.6%

Capacity

 
(1.8)%
13.3%
12.5%
58.5%

Load Factor

 
4.0 pts
5.4 pts
(0.1) pts
(5.5) pts

Yield

 
1.3%
5.1%
8.6%
3.2%
Passenger Unit Revenue
6.3%
12.6%
8.5%
(3.2)%


"With our successful international expansion in 2007 and more destinations planned for 2008, including new service to China and expanded service throughout Africa, we are strengthening our position as the premier global carrier,” said Glen Hauenstein, Delta’s executive vice president – network planning and revenue management. “With significant investments in areas like onboard products, new aircraft interiors, and two-class regional jets, we are committed to providing an industry-leading customer experience and making Delta a great airline to fly.”

Cost Discipline
For the September 2007 quarter, Delta’s operating expenses increased 4%, or $191 million, over the prior year period. The increase was primarily due to $79 million in profit sharing expense, higher expenses related to an increase in capacity ($154 million) and $98 million in non-cash expenses from fresh start accounting and stock-based compensation. These increases were partially offset by the continuing benefits of Delta’s restructuring initiatives and the impact of lower fuel prices. For the same period, non-operating expenses declined more than 60%, or $147 million, due primarily to improved cash flows and lower effective interest rates.

Delta's mainline unit cost (CASM) of 10.13 cents for the third quarter of 2007 represented a slight decrease compared to the third quarter of 20064. Excluding expenses from profit sharing, mainline non-fuel CASM was 6.50 cents, a decline of nearly 3%.

"Delta’s results demonstrate the momentum we have in our business and the opportunity we have to take our performance to the next level – improving pre-tax margins and generating strong free cash flows,” said Edward Bastian, Delta’s president and chief financial officer. “We are maintaining our disciplined approach to domestic capacity, including the elimination of 13 domestic aircraft from our fleet, while remaining focused on pursuing profitable international growth.”

Operational Performance
Based on the most recent available DOT data for the year-to-date period ended Aug. 31, 2007, Delta ranks first among the network carriers in on-time performance. Delta posted a third quarter mainline completion factor of 98.9%.

“With their commitment to providing the best service possible to our customers, Delta people consistently stepped up to the challenges of record load factors, severe weather, and congested air traffic control conditions to deliver top tier operational performance this year,” said Joe Kolshak, Delta’s executive vice president – operations. “As this summer’s difficulties in the Northeast clearly point out, we must continue to work closely with the DOT, FAA and Port Authority of NY and NJ to ease congestion and ensure the needs of our customers are best served.”

Strengthened Balance Sheet
During the quarter, Delta continued to strengthen its balance sheet, paying down more than $1.0 billion in debt, including its bankruptcy-related obligations to the Air Line Pilots Association and Pension Benefit Guaranty Corporation, and other debt maturities. In addition, Delta invested more than $400 million in capital expenditures, focused primarily on customer-facing initiatives, such as improvements at Delta’s Atlanta and New York-JFK hubs, and aircraft deposits.

To reduce interest rates and generate additional liquidity on the existing collateral base, Delta refinanced several debt obligations. In September, the company refinanced its spare parts credit facility with General Electric Capital Corporation, providing an incremental $181 million in proceeds and lowering the interest rate on the facility. Last week, Delta issued $1.4 billion in new enhanced equipment trust certificates (EETC). This transaction refinanced $961 million in aircraft-secured debt, including Delta’s 2001-2 EETC, lowering the interest rate and deferring more than $560 million in maturities which had been due in 2010-11.

As of Sept. 30, 2007, Delta had $3.0 billion in cash, cash equivalents and short-term investments, of which $2.4 billion was unrestricted. Delta also has an additional $1 billion available under its undrawn revolving credit facility. Delta expects to end 2007 with $2.9 billion in unrestricted cash and short-term investments plus its fully available $1 billion revolver.

Fuel Hedging
During the September 2007 quarter, Delta hedged 32% of its fuel consumption, resulting in an average fuel price per gallon of $2.17. Because fresh start accounting eliminated a portion of the hedge benefits toward fuel costs, the reported average fuel price per gallon was $2.21 for the September 2007 quarter. Delta realized approximately $46 million in cash gains on fuel hedge contracts settled during the quarter.

As of Oct. 12, 2007, Delta has hedged 20% of its projected fuel consumption for the December 2007 quarter utilizing heating oil collars with an average cap of $2.35.

Business Momentum
In the September 2007 quarter, Delta continued the positive momentum in its business, demonstrating a continued commitment to providing the best products and services to its customers while creating value for investors by:

  • Delivering industry-leading operational performance. As of the most recently reported DOT on-time data, Delta ranked #1 among the network carriers for on-time arrivals and #2 for on-time departures and completion factor. As a result, Delta has paid employees nearly $36 million in Shared Rewards payments in 2007.
  • Winning the rights to offer nonstop flights between the world’s largest airline hub in Atlanta and Shanghai, China, effective March 30, 2008, filling a critical void in air travel today by providing 65 million residents of the Southeast direct access to the world’s fastest growing economy.
  • Receiving recognition for outstanding service and overall distinction in the travel industry by Executive Travel Magazine, World Travel Awards and Global Traveler Magazine. Executive Travel Magazine recently voted Delta “best” in 11 categories in a single year, more than any other airline in the history of the publication.
  • Building on the success of the largest international expansion in its history by announcing 17 new routes for the summer of 2008. Delta will offer customers increased choice from New York-JFK on 14 new international routes, including nine destinations not served by any other U.S. major airline from JFK. In addition, Delta announced service between its Salt Lake City hub and Paris – the first trans-Atlantic service ever offered from Salt Lake City and the only nonstop service by a U.S. carrier to the French capital from the western United States.
  • Redesigning its schedule at JFK before another peak travel season to permit significant growth in international routes while helping to reduce congestion and delays at peak times. Changes Delta will make include instituting a third-bank of international departures after 7 p.m., increasing the number of flights operated with larger two-class jets, and eliminating all Delta Connection flights operated at JFK with turboprop aircraft.
  • Improving onboard service for customers through enhanced food offerings with new domestic First Class and international BusinessElite® entrees from Chef Michelle Bernstein and new food-for-sale options from Chef Todd English in U.S. Coach Class.
  • Continuing upgrades to the Delta and Delta Connection fleets, including the addition of more two-class regional jets featuring first class cabins, the introduction in trans-Atlantic service of Delta’s first long-range Boeing 757-200 aircraft featuring in-seat entertainment in every seat, and the introduction of the first Boeing 737-800 aircraft with in-seat entertainment at every seat and winglets to reduce fuel consumption on long-haul domestic routes.

Emergence-related Items
For the September 2007 quarter, offsetting emergence-related items resulted in no change to pre-tax income. These items were the adoption of fresh start reporting, which increased pre-tax income by $50 million, combined with share-based compensation expense for emergence equity awards, which decreased pre-tax income by $50 million. In total, emergence related items increased consolidated PRASM by 0.16 cents and increased mainline non-fuel CASM by 0.21 cents.

December 2007 Quarter and Full Year 2007 Guidance
The company projects the following for the December 2007 quarter and full year 2007:

 
4Q 2007 Forecast
 
2007 Forecast
 
 
 
 
Operating margin
3 – 5%
 
6 – 7%
 
 
 
 
Fuel price, including taxes
$2.36
 
$2.15
 
 
 
 
 
4Q 2007 Forecast
(compared to 4Q 2006)
 
2007 Forecast
(compared to 2006)
 
 
 
 
Mainline unit costs - excluding fuel and profit sharing
Down 5 – 7%
 
Down 4 – 5%
 
 
 
 
System Capacity
Up 3 – 4%
 
Up 2 – 3%
Domestic
Flat
 
Down 2 – 4%
International
Up 12 – 14%
 
Up 15 – 17%
 
 
 
 
Mainline Capacity
Up 3 – 4%
 
Up 1 – 3%
Domestic
Down 1 – 3%
 
Down 4 – 6%
International
Up 12 – 14%
 
Up 14 – 16%


Other Matters
Included with this press release are Delta’s Consolidated Statements of Operations for the three and nine month periods ended Sept. 30, 20075 and 2006; a statistical summary for those periods; selected balance sheet data as of Sept. 30, 2007 and Dec. 31, 2006; and a reconciliation of certain non-GAAP financial measures.

About Delta
Delta Air Lines operates service to more worldwide destinations than any airline with Delta and Delta Connection flights to 310 destinations in 54 countries. Since 2005, Delta has added more international capacity than all other major U.S. airlines combined and is the leader across the Atlantic with flights to 36 trans-Atlantic markets. To Latin America and the Caribbean, Delta offers more than 400 weekly flights to 53 destinations. Delta's marketing alliances also allow customers to earn and redeem SkyMiles on nearly 15,000 flights offered by SkyTeam and other partners. Delta is a founding member of SkyTeam, a global airline alliance that provides customers with extensive worldwide destinations, flights and services. Including its SkyTeam and worldwide codeshare partners, Delta offers flights to 475 worldwide destinations in 104 countries. Customers can check in for flights, print boarding passes and check flight status at delta.com.

 


 

Endnotes

1 Note 3 to the attached Consolidated Statements of Operations provides a reconciliation of certain non-GAAP financial measures used in this release and provides the reasons management uses those measures.

2 Reorganization items refers to revenues, expenses, gains or losses that we realized or incurred due to our reorganization under Chapter 11 of the U.S. Bankruptcy Code. In accordance with GAAP, these items are separately classified in the Consolidated Statements of Operations

3 Based on data provided by the Air Transport Association for Jan. 1 – Aug. 31, 2007.

4 Delta excludes from mainline unit costs expenses related to maintenance and staffing services which the company provides to third parties because these expenses are not related to the generation of a seat mile. Similarly, Delta excludes from passenger unit revenues, and includes in other revenue, revenues received for providing maintenance and staffing services to third parties. Management believes these classifications provide a more consistent and comparable reflection of Delta’s mainline operations.

5 In connection with its emergence from bankruptcy on April 30, 2007, Delta adopted fresh start reporting in accordance with American Institute of Certified Public Accountants’ Statement of Position 90-7, “Financial Reporting by Entities in Reorganization under the Bankruptcy Code.” The adoption of fresh start reporting resulted in Delta’s becoming a new entity for financial reporting purposes. Accordingly, Delta’s consolidated financial statements after April 30, 2007 are not comparable to its financial statements for any period prior to emergence. However, to provide a basis of comparison to prior year results, Delta has combined the results for the four months ended April 30, 2007 with the five months ended September 30, 2007. References in this press release to “Successor” refer to Delta on or after May 1, 2007, giving effect to fresh start reporting. References to “Predecessor” refer to Delta prior to May 1, 2007.


Statements in this news release that are not historical facts, including statements regarding our estimates, expectations, beliefs, intentions, projections or strategies for the future, may be “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. All forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from the estimates, expectations, beliefs, intentions, projections and strategies reflected in or suggested by the forward-looking statements. These risks and uncertainties include, but are not limited to, the cost of aircraft fuel; the impact that our indebtedness will have on our financial and operating activities and our ability to incur additional debt; the restrictions that financial covenants in our financing agreements will have on our financial and business operations; labor issues; interruptions or disruptions in service at one of our hub airports; our increasing dependence on technology in our operations; our ability to retain management and key employees; the ability of our credit card processors to take significant holdbacks in certain circumstances; the effects of terrorist attacks; 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 Annual Report on Form 10-K for the fiscal year ended December 31, 2006 and its Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2007. Caution should be taken not to place undue reliance on Delta’s forward-looking statements, which represent Delta’s views only as of Oct. 16, 2007, and which Delta has no current intention to update.

DELTA AIR LINES, INC.
 
Debtor and Debtor-In Possession
 
Consolidated Statements of Operations
 
(Unaudited)
 
   
Three Months Ended
   
   
September 30,
   
(In millions)
2007

 

(Successor)
2006

 

(Predecessor)
Percent Change
 
OPERATING REVENUE:        
  Passenger:        
  Mainline
$ 3,539
$ 3,207
10%
 
  Regional affiliates
1,099
1,016
8%
 
  Cargo
120
121
-1%
 
  Other, net
469
407
15%
 
  Total operating revenue
5,227
4,751
10%
 
OPERATING EXPENSES:
 
 
 
 
  Aircraft fuel and related taxes
1,270
1,276
0%
 
  Salaries and related costs
1,109
1,069
4%
 
  Contract carrier arrangements
815
724
13%
 
  Depreciation and amortization
297
293
1%
 
  Contracted services
264
230
15%
 
  Aircraft maintenance materials and outside repairs
253
230
10%
 
  Passenger commissions and other selling expenses
248
233
6%
 
  Landing fees and other rents
178
201
-11%
 
  Passenger service
94
96
-2%
 
  Aircraft rent
60
70
-14%
 
  Profit sharing
79
-
NM
 
  Other
107
161
-34%
 
  Total operating expenses
4,774
4,583
4%
 
OPERATING INCOME
453
168
170%
 
OTHER (EXPENSE) INCOME:
 
 
 
 
  Interest expense
(132)
(222)
-41%
 
  Interest income
42
16
163%
 
  Miscellaneous, net
-
(31)
-100%
 
  Total other expense, net
(90)
(237)
-62%
 
INCOME BEFORE REORGANIZATION ITEMS, NET
363
(69)
NM
 
REORGANIZATION ITEMS, NET
-
98
-100%
 
INCOME (LOSS) BEFORE INCOME TAXES
363
29
NM
 
INCOME TAX BENEFIT (PROVISION)
(143)
23
NM
 
NET INCOME (LOSS)
$ 220
$ 52
NM
 
OPERATING MARGIN
8.7%
3.5%
5.2
pts

DELTA AIR LINES, INC.
Consolidated Statements of Operations
(Unaudited)
                   
     
(Predecessor)
 
(Successor)
 
(Combined)
 
(Predecessor)
     
Four Months
 
Five Months
 
Nine Months
 
Nine Months
     
Ended
 
Ended
 
Ended
 
Ended
     
April 30,
 
Sept. 30,
 
Sept. 30,
 
Sept. 30,
(in millions)  
2007
 
2007
 
2007
 
2006
OPERATING REVENUE:                
  Passenger:                
  Mainline  

$ 3,829

 
$ 5,877
 
$ 9,706
 
$ 8,876
  Regional affiliates  

1,296

 
1,859
 
3,155
 
2,909
  Cargo  

148

 
202
 
350
 
372
  Other, net  

523

 
737
 
1,260
 
1,129
  Total operating revenue  

5,796

 
8,675
 
14,471
 
13,286
     
 
 
 
 
 
 
 
OPERATING EXPENSES:  
 
 
 
 
 
 
 
  Aircraft fuel and related taxes  
1,270
 
2,060
 
3,330
 
3,377
  Salaries and related costs  
1,302
 
1,817
 
3,119
 
3,362
  Contract carrier arrangements  
956
 
1,345
 
2,301
 
1,993
  Depreciation and amortization  
386
 
490
 
876
 
912
  Contracted services  
326
 
424
 
750
 
670
  Aircraft maintenance materials and outside repairs  
320
 
418
 
738
 
689
  Passenger commissions and other selling expenses  
298
 
423
 
721
 
679
  Landing fees and other rents  
250
 
300
 
550
 
692
  Passenger service  
95
 
155
 
250
 
250
  Aircraft rent  
90
 
96
 
186
 
238
  Profit sharing  
14
 
144
 
158
 
-
  Other  
189
 
205
 
394
 
372
  Total operating expenses  
5,496
 
7,877
 
13,373
 
13,234
     
 
 
 
 
 
 
 
OPERATING INCOME  
300
 
798
 
1,098
 
52
     
 
 
 
 
 
 
 
OTHER (EXPENSE) INCOME:  
 
 
 
 
 
 
 
  Interest expense  
(262)
 
(252)
 
(514)
 
(663)
  Interest income  
14
 
75
 
89
 
46
  Miscellaneous, net  
27
 
9
 
36
 
(12)
  Total other expense, net  
(221)
 
(168)
 
(389)
 
(629)
     
 
 
 
 
 
 
 
INCOME (LOSS) BEFORE REORGANIZATION ITEMS, NET  
79
 
630
 
709
 
(577)
     
 
 
 
 
 
 
 
REORGANIZATION ITEMS, NET  
1,215
 
-
 
1,215
 
(3,685)
     
 
 
 
 
 
 
 
INCOME (LOSS) BEFORE INCOME TAXES  
1,294
 
630
 
1,924
 
(4,262)
     
 
 
 
 
 
 
 
INCOME TAX (PROVISION) BENEFIT  
4
 
(246)
 
(242)
 
40
     
 
 
 
 
 
 
 
NET INCOME (LOSS)  
1,298
 
384
 
1,682
 
(4,222)
     
 
 
 
 
 
 
 
PREFERRED STOCK DIVIDENDS  
-
 
-
 
-
 
(2)
   
 
 
 
 
 
 
 
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREOWNERS  
$ 1,298
 
$ 384
 
$ 1,682
 
$ (4,224)

DELTA AIR LINES, INC.
 
Statistical Summary
 
(Unaudited)
 
     
(Successor)
 
(Predecessor)
     
     
Three Months Ended September 30,
     
     
2007
 
2006
 
Change
 
Consolidated:              
  Revenue Passenger Miles (millions) (1)  
34,036
 
31,784
 
7.1%
 
  Available Seat Miles (millions) (1)  
40,943
 
39,643
 
3.3%
 
  Passenger Mile Yield (1)  
13.63
¢
13.29
¢
2.6%
 
  Passenger Revenue per Available Seat Mile (PRASM)(1)  
11.33
¢
10.65
¢
6.4%
 
  Operating Cost Per Available Seat Mile (CASM) (1)  
11.35
¢
11.34
¢
0.1%
 
  Excluding certain items(2)  
11.16
¢
11.34
¢
-1.6%
 
  Excluding fuel and certain items(2)  
8.06
¢
8.12
¢
-0.7%
 
  Passenger Load Factor (1)  
83.1
%
80.2
%
2.9
pts
  Breakeven Passenger Load Factor (1)  
75.0
%
77.0
%
-2.0
pts
  Fuel Gallons Consumed (millions)  
575
 
566
 
1.6%
 
  Average Price Per Fuel Gallon, net of hedging activity  
$ 2.21
 
$ 2.25
 
-1.8%
 
  Excluding fresh start impact  
$ 2.17
 
$ 2.25
 
-3.6%
 
  Number of Aircraft in Fleet, End of Period  
578
 
607
 
-4.8%
 
  Full-Time Equivalent Employees, End of Period  
55,022
 
51,059
 
7.8%
 
Mainline:  
 
 
 
 
 
 
  Revenue Passenger Miles (millions)  
29,048
 
27,220
 
6.7%
 
  Available Seat Miles (millions)  
34,707
 
33,679
 
3.1%
 
  Operating Cost Per Available Seat Mile  
10.13
¢
10.16
¢
-0.3%
 
  Excluding certain items(2)  
9.90
¢
10.16
¢
-2.6%
 
  Excluding fuel and certain items(2)  
6.50
¢
6.69
¢
-2.8%
 
  Number of Aircraft in Fleet, End of Period  
444
 
440
 
0.9%
 
                 
  (1) Includes the operations under our contract carrier agreements of Atlantic Southeast Airlines, Inc., Chautauqua Airlines, Inc., Freedom Airlines, Inc., Shuttle America Corporation and SkyWest Airlines, Inc. for all periods presented and ExpressJet Airlines for the three months ended September 30, 2007.
  (2) Expenses related to profit sharing are excluded for the three months ended September 30, 2007.

DELTA AIR LINES, INC.
 
 
Statistical Summary
 
(Unaudited)
 
   
 
(Combined)
 
(Predecessor)
     
   
 
Nine Months Ended September 30,
     
   
 
2007
 
2006
 
Change
 
Consolidated:              
  Revenue Passenger Miles (millions) (1)  
92,827
 
88,220
 
5.2%
 
  Available Seat Miles (millions) (1)  
114,350
 
111,963
 
2.1%
 
  Passenger Mile Yield (1)  
13.85
¢
13.36
¢
3.7%
 
  Passenger Revenue per Available Seat Mile (PRASM)(1)  
 
 
 
 
 
 
  Combined results  
11.25
¢
10.53
¢
6.8%
 
  Operating Cost Per Available Seat Mile (CASM) (1)  
 
 
 
 
 
 
  Combined results  
11.41
¢
11.60
¢
-1.6%
 
  Excluding certain items(2)  
11.27
¢
11.50
¢
-2.0%
 
  Excluding fuel and certain items(2)  
8.35
¢
8.48
¢
-1.5%
 
  Passenger Load Factor (1)  
81.2
%
78.8
%
2.4
pts
  Breakeven Passenger Load Factor (1)  
74.2
%
78.4
%
-4.2
pts
  Fuel Gallons Consumed (millions)  
1,597
 
1,600
 
-0.2%
 
  Average Price Per Fuel Gallon, net of hedging activity  
 
 
 
 
 
 
  Combined results  
$ 2.09
 
$ 2.11
 
-0.9%
 
  Excluding fresh start impact  
$ 2.06
 
$ 2.11
 
-2.4%
 
  Number of Aircraft in Fleet, End of Period  
578
 
607
 
-4.8%
 
  Full-Time Equivalent Employees, End of Period  
55,022
 
51,059
 
7.8%
 
Mainline:  
 
 
 
 
 
 
  Revenue Passenger Miles (millions)  
78,818
 
75,359
 
4.6%
 
  Available Seat Miles (millions)  
96,391
 
95,208
 
1.2%
 
  Operating Cost Per Available Seat Mile  
 
 
 
 
 
 
  Combined results  
10.18
¢
10.49
¢
-3.0%
 
  Excluding certain items(2)  
10.01
¢
10.36
¢
-3.4%
 
  Excluding fuel and certain items(2)  
6.81
¢
7.11
¢
-4.2%
 
  Number of Aircraft in Fleet, End of Period  
444
 
440
 
0.9%
 
                 
(1) Includes the operations under our contract carrier agreements of Atlantic Southeast Airlines, Inc., Chautauqua Airlines, Inc., Freedom Airlines, Inc., Shuttle America Corporation and SkyWest Airlines, Inc. for all periods presented and ExpressJet Airlines, Inc. from February 27, 2007 to September 30, 2007.
(2) Expenses related to profit sharing and post bankruptcy-related professional fees are excluded from the nine month period ended September 30, 2007 and certain out-of-period accounting adjustments are excluded from the nine month period ended September 30, 2006.

DELTA AIR LINES, INC.
Selected Balance Sheet Data
(In Millions)
         
   
(Successor)
 
(Predecessor)
   
September 30,
 
December 31,
   
2007
 
2006
   
(Unaudited)
 
 
         
Cash and cash equivalents  
$ 1,623
 
$ 2,034
Short-term investments  
767
 
614
Restricted cash, including noncurrent  
593
 
802
Total assets  
32,773
 
19,622
Total debt and capital leases, including current maturities  
8,334
 
8,012
Total liabilities subject to compromise  
-
 
19,817
Total shareowners' equity (deficit)  
9,748
 
(13,593)


Note 2: Detailed impact of Emergence-Related Items

   
Increase/(Decrease) to 3Q07 Pre-tax Income
   
       
Revenue  
$ 76
 
     
 
 
Salaries and related  
(50)
 
Aircraft fuel  
(21)
 
Depreciation and amortization  
(12)
 
Landing fees and other rents  
3
 
Aircraft rent  
6
 
Aircraft maintenance materials and outside repairs  
(18)
 
Other  
(6)
 
Operating expense  
(98)
 
     
 
 
Non-operating expense  
22
 
     
 
 
Total  
$ -
 
         


Note 3: The following tables show reconciliations of certain financial measures. The reasons Delta uses these measures are described below.

  • Cost per available seat mile (CASM) excludes $125 million and $89 million for the three months ended September 30, 2007 and 2006, respectively, and $322 million and $241 million for the nine months ended September 30, 2007 and 2006, respectively, in expenses related to Delta’s providing maintenance and staffing services to third parties as these costs are not associated with the generation of a seat mile;
  • Delta excludes reorganization and related and certain items because management believes the exclusion of these items is helpful to investors to evaluate the company’s recurring operational performance;
  • Delta presents length of haul adjusted PRASM excluding charter revenue because management believes this provides a more meaningful comparison of the company’s PRASM to the industry;
  • Delta presents mainline CASM excluding fuel expense because management believes high fuel prices mask the progress achieved toward its business plan targets; and
  • Delta excludes profit sharing expense from CASM because management believes the exclusion of thsi item provides a more meaningful comparison of the company’s CASM to the industry.

In connection with its emergence from bankruptcy on April 30, 2007, Delta adopted fresh start reporting in accordance with American Institute of Certified Public Accountants’ Statement of Position 90-7, “Financial Reporting by Entities in Reorganization under the Bankruptcy Code.” The adoption of fresh start reporting resulted in Delta’s becoming a new entity for financial reporting purposes. Accordingly, Delta’s consolidated financial statements after April 30, 2007 are not comparable to its financial statements for any period prior to emergence. However, to provide a basis of comparison to prior year results, Delta has combined the results for the four months ended April 30, 2007 with the five months ended September 30, 2007. References in this press release to “Successor” refer to Delta on or after May 1, 2007, giving effect to fresh start reporting. References to “Predecessor” refer to Delta prior to May 1, 2007.

 
(Successor)
 
(Predecessor)
 
(Combined)
 
(Predecessor)
 
 
Three
 
Three
 
Nine
 
Nine
 
 
Months Ended
 
Months Ended
 
Months Ended
 
Months Ended
 
(in millions)
Sept. 30, 2007
 
Sept. 30, 2006
 
Sept. 30, 2007
 
Sept. 30, 2006
Pre-tax income    
$ 29
         
Items excluded    
 
         
Reorganization items, net    
(98)
         
Total items excluded    
(98)
         
Pre-tax loss excluding reorganization items    
$ (69)
         
                 

CASM
11.66
¢
11.56
¢
11.69
¢
11.82
¢
Items excluded:
 
 
 
 
 
 
 
 
Delta Global Services external expenses
(0.08)
 
(0.07)
 
(0.09)
 
(0.07)
 
Insourcing
(0.23)
 
(0.15)
 
(0.19)
 
(0.15)
 
CASM excluding items not related to ASMs
11.35
¢
11.34
¢
11.41
¢
11.60
¢
Items excluded:
 
 
 
 
 
 
 
 
Accounting Adjustments
-
 
-
 
-
 
(0.10)
 
Profit sharing
(0.19)
 
-
 
(0.13)
 
-
 
Post bankruptcy-related professional fees
-
 
-
 
(0.01)
 
-
 
Total items excluded
(0.19)
 
-
 
(0.14)
 
(0.10)
 
CASM excluding certain items
11.16
¢
11.34
¢
11.27
¢
11.50
¢
Fuel expense and related taxes
(3.10)
 
(3.22)
 
(2.92)
 
(3.02)
 
CASM excluding fuel expense and certain items
8.06
¢
8.12
¢
8.35
¢
8.48
¢
                 

 
(Successor)
 
(Predecessor)
 
(Combined)
 
(Predecessor)
 
 
Three
 
Three
 
Nine
 
Nine
 
 
Months Ended
 
Months Ended
 
Months Ended
 
Months Ended
 
(in millions)
Sept. 30, 2007
 
Sept. 30, 2006
 
Sept. 30, 2007
 
Sept. 30, 2006
 
Mainline CASM
10.49
¢
10.42
¢
10.52
¢
10.74
¢
Items excluded:
 
 
 
 
 
 
 
 
Delta Global Services external expenses
(0.10)
 
(0.08)
 
(0.10)
 
(0.08)
 
Insourcing
(0.26)
 
(0.18)
 
(0.24)
 
(0.17)
 
Mainline CASM excluding items not related to ASMs
10.13
¢
10.16
¢
10.18
¢
10.49
¢
Items excluded:
 
 
 
 
 
 
 
 
Accounting Adjustments
-
 
-
 
-
 
(0.13)
 
Profit sharing
(0.23)
 
-
 
(0.16)
 
-
 
Post bankruptcy-related professional fees
-
 
-
 
(0.01)
 
-
 
Total items excluded
(0.23)
 
-
 
(0.17)
 
(0.13)
 
Mainline CASM excluding certain items
9.90
¢
10.16
¢
10.01
¢
10.36
¢
Fuel expense and related taxes
(3.40)
 
(3.47)
 
(3.20)
 
(3.25)
 
Mainline CASM excluding fuel expense and certain items
6.50
¢
6.69
¢
6.81
¢
7.11
¢
                 

Average price per fuel gallon
$ 2.21
 
 
 
$ 2.09
     
Items excluded:
 
 
 
 
 
     
Emergence-related items
(0.04)
 
 
 
(0.03)
     
Total items excluded
(0.04)
 
 
 
(0.03)
     
Average price per fuel gallon excluding
emergence-related items
$ 2.17
 
 
 
$ 2.06
     
 
 
 
 
 
 
     

 

 
(Combined)
 
(Predecessor)
         
 
Eight
 
Twelve
         
 
Months Ended
 
Months Ended
         
 
Aug. 31, 2007
 
Dec. 31, 2005
         
                 
PRASM
11.33
¢
9.33
¢
       
Adjustment for charter revenue
(0.15)
 
(0.05)
 
       
PRASM excluding charter revenue
11.18
¢
9.28
¢
       
Length of haul adjustment
(0.17)
 
(0.64)
 
       
Length of Haul adjusted PRASM excluding charter revenue
11.01
¢
8.64
¢
       
Industry average PRASM
11.50
¢
9.93
¢
       
Percentage of industry average
96%
 
86%
 
       

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