[X] |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 |
[ ] |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 |
Successor | Predecessor | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
ASSETS (in millions) |
September 30, 2007 |
December 31, 2006 |
||||||||
(Unaudited) | ||||||||||
CURRENT
ASSETS: |
||||||||||
Cash and cash
equivalents |
$ | 1,623 | $ | 2,034 | ||||||
Short-term
investments |
767 | 614 | ||||||||
Restricted
cash |
579 | 750 | ||||||||
Accounts
receivable, net of an allowance for uncollectible accounts of $23 at September 30, 2007 and $21 at December 31, 2006 |
1,213 | 915 | ||||||||
Expendable
parts and supplies inventories, net of an allowance for obsolescence of $7 at September 30, 2007 and $161 at December 31, 2006 |
257 | 181 | ||||||||
Deferred
income taxes, net |
807 | 402 | ||||||||
Prepaid
expenses and other |
399 | 489 | ||||||||
Total current
assets |
5,645 | 5,385 | ||||||||
PROPERTY
AND EQUIPMENT: |
||||||||||
Flight
equipment |
9,330 | 17,641 | ||||||||
Accumulated
depreciation |
(193 | ) | (6,800 | ) | ||||||
Flight
equipment, net |
9,137 | 10,841 | ||||||||
Ground
property and equipment |
1,815 | 4,575 | ||||||||
Accumulated
depreciation |
(158 | ) | (2,838 | ) | ||||||
Ground
property and equipment, net |
1,657 | 1,737 | ||||||||
Flight and
ground equipment under capital leases |
587 | 474 | ||||||||
Accumulated
amortization |
(38 | ) | (136 | ) | ||||||
Flight and
ground equipment under capital leases, net |
549 | 338 | ||||||||
Advance
payments for equipment |
215 | 57 | ||||||||
Total
property and equipment, net |
11,558 | 12,973 | ||||||||
OTHER
ASSETS: |
||||||||||
Goodwill
|
12,169 | 227 | ||||||||
Identifiable
intangibles, net of accumulated amortization of $92 at September 30, 2007 and $190 at December 31, 2006 |
2,861 | 89 | ||||||||
Other
noncurrent assets |
540 | 948 | ||||||||
Total other
assets |
15,570 | 1,264 | ||||||||
Total assets
|
$ | 32,773 | $ | 19,622 |
Successor | Predecessor | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
LIABILITIES AND SHAREOWNERS EQUITY
(DEFICIT) (in millions, except share data) |
September 30, 2007 |
December 31, 2006 |
||||||||
(Unaudited) | ||||||||||
CURRENT
LIABILITIES: |
||||||||||
Current
maturities of long-term debt and capital leases |
$ | 904 | $ | 1,503 | ||||||
Air traffic
liability |
2,206 | 1,797 | ||||||||
Accounts
payable |
975 | 936 | ||||||||
Taxes payable
|
332 | 500 | ||||||||
Deferred
revenue |
1,117 | 363 | ||||||||
Accrued
salaries and related benefits |
744 | 405 | ||||||||
Note payable
|
297 | | ||||||||
Other accrued
liabilities |
129 | 265 | ||||||||
Total current
liabilities |
6,704 | 5,769 | ||||||||
NONCURRENT
LIABILITIES: |
||||||||||
Long-term
debt and capital leases |
7,430 | 6,509 | ||||||||
Pension and
related benefits |
3,214 | | ||||||||
Postretirement benefits |
1,038 | | ||||||||
Deferred
income taxes, net |
1,524 | 406 | ||||||||
Deferred
revenue |
2,566 | 346 | ||||||||
Other
|
549 | 368 | ||||||||
Total
noncurrent liabilities |
16,321 | 7,629 | ||||||||
LIABILITIES SUBJECT TO COMPROMISE |
| 19,817 | ||||||||
COMMITMENTS AND CONTINGENCIES |
||||||||||
SHAREOWNERS EQUITY (DEFICIT): |
||||||||||
Common
stock: |
||||||||||
Predecessor
common stock at $0.01 par value; 900,000,000 shares authorized, 202,081,648 shares issued at December 31, 2006 |
| 2 | ||||||||
Successor
common stock at $0.0001 par value; 1,500,000,000 shares authorized, 275,454,694 shares issued at September 30, 2007 |
| | ||||||||
Additional
paid-in capital |
9,479 | 1,561 | ||||||||
Retained
earnings (accumulated deficit) |
384 | (14,414 | ) | |||||||
Accumulated
other comprehensive income (loss) |
15 | (518 | ) | |||||||
Predecessor
stock held in treasury, at cost, 4,745,710 shares at December 31, 2006 |
| (224 | ) | |||||||
Successor
stock held in treasury, at cost, 6,339,220 shares at September 30, 2007 |
(130 | ) | | |||||||
Total
shareowners equity (deficit) |
9,748 | (13,593 | ) | |||||||
Total
liabilities and shareowners equity (deficit) |
$ | 32,773 | $ | 19,622 |
Successor | Predecessor | Successor | Predecessor | ||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Three Months Ended September 30, |
Five Months Ended September 30, |
Four Months Ended April 30, |
Nine Months Ended September 30, |
||||||||||||||||||||
(in millions, except per share data) | 2007 | 2006 | 2007 | 2007 | 2006 | ||||||||||||||||||
OPERATING
REVENUE: |
|||||||||||||||||||||||
Passenger: |
|||||||||||||||||||||||
Mainline
|
$ | 3,539 | $ | 3,207 | $ | 5,877 | $ | 3,829 | $ | 8,876 | |||||||||||||
Regional
affiliates |
1,099 | 1,016 | 1,859 | 1,296 | 2,909 | ||||||||||||||||||
Cargo
|
120 | 121 | 202 | 148 | 372 | ||||||||||||||||||
Other, net
|
469 | 407 | 737 | 523 | 1,129 | ||||||||||||||||||
Total
operating revenue |
5,227 | 4,751 | 8,675 | 5,796 | 13,286 | ||||||||||||||||||
OPERATING
EXPENSE: |
|||||||||||||||||||||||
Aircraft fuel
and related taxes |
1,270 | 1,276 | 2,060 | 1,270 | 3,377 | ||||||||||||||||||
Salaries and
related costs |
1,109 | 1,069 | 1,817 | 1,302 | 3,362 | ||||||||||||||||||
Contract
carrier arrangements |
815 | 724 | 1,345 | 956 | 1,993 | ||||||||||||||||||
Depreciation
and amortization |
297 | 293 | 490 | 386 | 912 | ||||||||||||||||||
Contracted
services |
264 | 230 | 424 | 326 | 670 | ||||||||||||||||||
Aircraft
maintenance materials and outside repairs |
253 | 230 | 418 | 320 | 689 | ||||||||||||||||||
Passenger
commissions and other selling expenses |
248 | 233 | 423 | 298 | 679 | ||||||||||||||||||
Landing fees
and other rents |
178 | 201 | 300 | 250 | 692 | ||||||||||||||||||
Passenger
service |
94 | 96 | 155 | 95 | 250 | ||||||||||||||||||
Aircraft rent
|
60 | 70 | 96 | 90 | 238 | ||||||||||||||||||
Profit
sharing |
79 | | 144 | 14 | | ||||||||||||||||||
Other
|
107 | 161 | 205 | 189 | 372 | ||||||||||||||||||
Total
operating expense |
4,774 | 4,583 | 7,877 | 5,496 | 13,234 | ||||||||||||||||||
OPERATING
INCOME |
453 | 168 | 798 | 300 | 52 | ||||||||||||||||||
OTHER
(EXPENSE) INCOME: |
|||||||||||||||||||||||
Interest
expense (contractual interest expense totaled $366 for the four months ended April 30, 2007, and $299 and $914 for the three and nine months ended
September 30, 2006, respectively) |
(132 | ) | (222 | ) | (252 | ) | (262 | ) | (663 | ) | |||||||||||||
Interest
income |
42 | 16 | 75 | 14 | 46 | ||||||||||||||||||
Miscellaneous, net |
| (31 | ) | 9 | 27 | (12 | ) | ||||||||||||||||
Total other
expense, net |
(90 | ) | (237 | ) | (168 | ) | (221 | ) | (629 | ) | |||||||||||||
INCOME
(LOSS) BEFORE REORGANIZATION ITEMS, NET |
363 | (69 | ) | 630 | 79 | (577 | ) | ||||||||||||||||
REORGANIZATION ITEMS, NET |
| 98 | | 1,215 | (3,685 | ) | |||||||||||||||||
INCOME
(LOSS) BEFORE INCOME TAXES |
363 | 29 | 630 | 1,294 | (4,262 | ) | |||||||||||||||||
INCOME TAX
(PROVISION) BENEFT |
(143 | ) | 23 | (246 | ) | 4 | 40 | ||||||||||||||||
NET INCOME
(LOSS) |
220 | 52 | 384 | 1,298 | (4,222 | ) | |||||||||||||||||
PREFERRED
STOCK DIVIDENDS |
| | | | (2 | ) | |||||||||||||||||
NET INCOME
(LOSS) ATTRIBUTABLE TO COMMON SHAREOWNERS |
$ | 220 | $ | 52 | $ | 384 | $ | 1,298 | $ | (4,224 | ) | ||||||||||||
BASIC
INCOME (LOSS) PER SHARE |
$ | 0.56 | $ | 0.26 | $ | 0.98 | $ | 6.58 | $ | (21.53 | ) | ||||||||||||
DILUTED
INCOME (LOSS) PER SHARE |
$ | 0.56 | $ | 0.22 | $ | 0.97 | $ | 4.63 | $ | (21.53 | ) |
Successor | Predecessor | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(in millions) | Five Months Ended September 30, 2007 |
Four Months Ended April 30, 2007 |
Nine Months Ended September 30, 2006 |
||||||||||||
Net cash
(used in) provided by operating activities |
$ | (198 | ) | $ | 1,025 | $ | 992 | ||||||||
Cash Flows
From Investing Activities: |
|||||||||||||||
Property and
equipment additions: |
|||||||||||||||
Flight
equipment, including advance payments |
(342 | ) | (167 | ) | (171 | ) | |||||||||
Ground
property and equipment, including technology |
(79 | ) | (41 | ) | (88 | ) | |||||||||
Proceeds from
sales of flight equipment |
24 | 21 | 34 | ||||||||||||
Proceeds from
sales of investments |
| 34 | | ||||||||||||
Purchase of
short-term investments |
(49 | ) | | | |||||||||||
Decrease
(increase) in restricted cash |
108 | 56 | (93 | ) | |||||||||||
Other,
net |
| | 4 | ||||||||||||
Net cash used
in investing activities |
(338 | ) | (97 | ) | (314 | ) | |||||||||
Cash Flows
From Financing Activities: |
|||||||||||||||
Payments on
long-term debt and capital lease obligations |
(327 | ) | (166 | ) | (398 | ) | |||||||||
Proceeds from
Exit Facilities |
| 1,500 | | ||||||||||||
Proceeds from
long-term obligations |
319 | | | ||||||||||||
Payments on
DIP Facility |
| (2,076 | ) | | |||||||||||
Other,
net |
(3 | ) | (50 | ) | (5 | ) | |||||||||
Net cash used
in financing activities |
(11 | ) | (792 | ) | (403 | ) | |||||||||
Net
(Decrease) Increase in Cash and Cash Equivalents |
(547 | ) | 136 | 275 | |||||||||||
Cash and cash
equivalents at beginning of period |
2,170 | 2,034 | 2,008 | ||||||||||||
Cash and cash
equivalents at end of period |
$ | 1,623 | $ | 2,170 | $ | 2,283 | |||||||||
Supplemental disclosure of cash paid (refunded) for: |
|||||||||||||||
Interest, net
of amounts capitalized |
$ | 231 | $ | 243 | $ | 548 | |||||||||
Interest
received from the preservation of cash due to Chapter 11 filing |
| (50 | ) | (79 | ) | ||||||||||
Professional
fee disbursements due to bankruptcy |
| | 73 | ||||||||||||
Cash received
from aircraft renegotiation |
| | (10 | ) | |||||||||||
Non-cash
transactions: |
|||||||||||||||
Flight
equipment |
$ | | $ | 135 | $ | | |||||||||
Flight
equipment under capital leases |
35 | 13 | 140 | ||||||||||||
Debt
extinguishment from aircraft renegotiation |
14 | | 171 |
(in millions, except share data) | Common Stock |
Additional Paid-In Capital |
Retained Earnings (Accumulated Deficit) |
Accumulated Other Comprehensive Income (Loss) |
Treasury Stock |
Total | ||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Balance at January 1, 2007 (Predecessor) |
$ | 2 | $ | 1,561 | $ | (14,444 | ) | $ | (518 | ) | $ | (224 | ) | $ | (13,623 | ) | ||||||||||
Comprehensive income: |
||||||||||||||||||||||||||
Net income
from January 1 to April 30, 2007 |
| | 1,298 | | | 1,298 | ||||||||||||||||||||
Other
comprehensive income |
| | | 75 | | 75 | ||||||||||||||||||||
Total comprehensive income |
| | | | | 1,373 | ||||||||||||||||||||
Balance at April 30, 2007 (Predecessor) (Unaudited) |
2 | 1,561 | (13,146 | ) | (443 | ) | (224 | ) | (12,250 | ) | ||||||||||||||||
Fresh
start adjustments: |
||||||||||||||||||||||||||
Cancellation
of Predecessor common stock |
(2 | ) | (1,561 | ) | | | 224 | (1,339 | ) | |||||||||||||||||
Elimination
of Predecessor accumulated deficit and accumulated other comprehensive loss |
| | 13,146 | 443 | | 13,589 | ||||||||||||||||||||
Reorganization value ascribed to Successor |
| 9,400 | | | | 9,400 | ||||||||||||||||||||
Balance at May 1, 2007 (Successor) (Unaudited) |
| 9,400 | | | | 9,400 | ||||||||||||||||||||
Issuance of
275,454,694 shares of common stock ($0.0001 per share), including 6,339,220 shares held in Treasury ($20.52 per share)(1) |
| | | | (130 | ) | (130 | ) | ||||||||||||||||||
Comprehensive income: |
||||||||||||||||||||||||||
Net income
from May 1 to September 30, 2007 |
| | 384 | | | 384 | ||||||||||||||||||||
Other
comprehensive income |
| | | 15 | | 15 | ||||||||||||||||||||
Total
comprehensive income |
399 | |||||||||||||||||||||||||
Compensation expense associated with equity awards |
| 79 | | | | 79 | ||||||||||||||||||||
Balance at September 30, 2007 (Successor) (Unaudited) |
$ | | $ | 9,479 | $ | 384 | $ | 15 | $ | (130 | ) | $ | 9,748 |
(1) |
Weighted average price per share |
|
276 million shares of common stock to holders of allowed general, unsecured claims of $12.5 billion. We have reserved 110 million shares of common stock for future distributions to holders of allowed general, unsecured claims when disputed claims are resolved. |
|
Nearly all 14 million shares of common stock to eligible non-contract, non-management employees. We will distribute the remaining shares of common stock as eligible employees return to work during 2007. |
|
$66 million principal amount of senior unsecured notes in connection with our settlement agreement relating to the restructuring of certain of our lease and other obligations at the Cincinnati-Northern Kentucky International Airport (the Cincinnati Airport Settlement Agreement). For additional information on this subject, see Note 4; |
|
an aggregate of $102 million in cash to holders in satisfaction of their claims, including to holders of administrative claims, state and local priority tax claims, certain secured claims and de minimis allowed unsecured claims; |
|
$225 million in cash to the Pension Benefit Guaranty Corporation (the PBGC) in connection with the termination of our qualified defined benefit pension plan for pilots (the Pilot Plan); and |
|
$650 million in cash to fund an obligation (the Pilot Obligation) under our comprehensive agreement with the Air Line Pilots Association, International (ALPA), the collective bargaining representative of Deltas pilots, to reduce pilot labor costs. We paid $353 million and deposited the remaining $297 million in a grantor trust for the benefit of Delta pilots. The amount in the grantor trust is classified as restricted cash with a corresponding note payable on our Consolidated Balance Sheet until it is distributed in January 2008. |
(in millions) | Predecessor December 31, 2006 |
|||||
---|---|---|---|---|---|---|
Pension,
postretirement and other benefits |
$ | 10,329 | ||||
Debt and
accrued interest |
5,079 | |||||
Aircraft
lease related obligations |
3,115 | |||||
Accounts payable and other accrued liabilities |
1,294 | |||||
Total liabilities subject to compromise |
$ | 19,817 |
Predecessor | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(in millions) | Four Months Ended April 30, 2007 |
Three Months Ended September 30, 2006 |
Nine Months Ended September 30, 2006 |
||||||||||||
Discharge of
claims and liabilities(1) |
$ | 4,424 | $ | | $ | | |||||||||
Revaluation
of frequent flyer obligation(2) |
(2,586 | ) | | | |||||||||||
Revaluation
of other assets and liabilities(3) |
238 | | | ||||||||||||
Aircraft
financing renegotiations and rejections(4) |
(440 | ) | 100 | (1,490 | ) | ||||||||||
Contract
carrier agreements(5) |
(163 | ) | | | |||||||||||
Emergence
compensation(6) |
(162 | ) | | | |||||||||||
Professional
fees |
(88 | ) | (34 | ) | (87 | ) | |||||||||
Pilot
collective bargaining agreement(7) |
(83 | ) | | (2,100 | ) | ||||||||||
Interest
income(8) |
50 | 32 | 79 | ||||||||||||
Facility
leases(9) |
43 | (1 | ) | (25 | ) | ||||||||||
Vendor waived
pre-petition debt |
29 | 15 | 20 | ||||||||||||
Retiree
healthcare claims(10) |
(26 | ) | | | |||||||||||
Debt issuance
costs |
| | (13 | ) | |||||||||||
Compensation
expense(11) |
| | (55 | ) | |||||||||||
Other |
(21 | ) | (14 | ) | (14 | ) | |||||||||
Total reorganization items, net |
$ | 1,215 | $ | 98 | $ | (3,685 | ) |
(1) |
The discharge of claims and liabilities primarily relates to allowed general, unsecured claims in our Chapter 11 proceedings, such as (a) ALPAs claim under our comprehensive agreement reducing pilot labor costs; (b) the PBGCs claim relating to the termination of the Pilot Plan; (c) claims relating to changes in postretirement healthcare benefits and the rejection of our non-qualified retirement plans; (d) claims associated with debt and certain municipal bond obligations based upon their rejection; (e) claims relating to the restructuring of financing arrangements or the rejection of leases for aircraft; and (f) other claims due to the rejection or modification of certain executory contracts, unexpired leases and contract carrier agreements. For additional information on these subjects, see Notes 1 and 10 of the Notes to the Consolidated Financial Statements in our Form 10-K. |
In accordance with the Plan, we discharged our obligations to holders of allowed general, unsecured claims in exchange for the distribution of 386 million newly issued shares of common stock and the issuance of certain debt securities and obligations. Accordingly, in discharging our liabilities subject to compromise, we recognized a reorganization gain of $4.4 billion as follows: |
(in millions) | ||||||
---|---|---|---|---|---|---|
Liabilities
subject to compromise |
$ | 19,345 | ||||
Reorganization value |
(9,400 | ) | ||||
Liabilities
reinstated |
(4,429 | ) | ||||
Issuance of
new debt securities and obligations, net of discounts of $22 |
(938 | ) | ||||
Other |
(154 | ) | ||||
Discharge of claims and liabilities |
$ | 4,424 |
(2) |
We revalued our SkyMiles frequent flyer obligation at fair value as a result of fresh start reporting, which resulted in a $2.6 billion reorganization charge. For information about a change in our accounting policy for the SkyMiles program, see Note 2. |
(3) |
We revalued our assets and liabilities at estimated fair value as a result of fresh start reporting. This resulted in a $238 million gain, primarily reflecting the fair value of newly recognized intangible assets, which was partially offset by reductions in the fair value of tangible property and equipment. |
(4) |
Estimated claims for the four months ended April 30, 2007 relate to the restructuring of the financing arrangements for 143 aircraft, the rejection of two aircraft leases and adjustments to prior claims estimates. The credit for the three months ended September 30, 2006 related to adjustments to claims estimates. Estimated claims for the nine months ended September 30, 2006 relate to the restructuring of the financing arrangements for 169 aircraft and the rejection of 16 aircraft leases. |
(5) |
In connection with amendments to our contract carrier agreements with Chautauqua Airlines, Inc. (Chautauqua) and Shuttle America Corporation (Shuttle America), both subsidiaries of Republic Airways Holdings, Inc. (Republic Holdings), which, among other things, reduced the rates we pay those carriers, we recorded (1) a $91 million allowed general, unsecured claim and (2) a $37 million net charge related to our surrender of warrants to purchase up to 3.5 million shares of Republic Holdings common stock. Additionally, in connection with an amendment to our contract carrier agreement with Freedom Airlines, Inc. (Freedom), a subsidiary of Mesa Air Group, Inc., which, among other things, reduced the rates we pay that carrier, we recorded a $35 million allowed general, unsecured claim. |
(6) |
In accordance with the Plan, we made $130 million in lump-sum cash payments to approximately 39,000 eligible non-contract, non-management employees. We also recorded an additional charge of $32 million related to our portion of payroll related taxes associated with the issuance, as contemplated by the Plan, of approximately 14 million shares of common stock to these employees. For additional information regarding the stock grants, see Note 10. |
(7) |
Allowed general, unsecured claims of $83 million for the four months ended April 30, 2007 and $2.1 billion for the nine months ended September 30, 2006 in connection with Comairs and Deltas respective comprehensive agreements with ALPA reducing pilot labor costs. |
(8) |
Reflects interest earned due to the preservation of cash during our Chapter 11 proceedings. |
(9) |
For the four months ended April 30, 2007, we recorded a net $43 million gain, primarily reflecting a $126 million net gain in connection with our settlement agreement with the Massachusetts Port Authority (Massport) which was partially offset by a net $80 million charge from an allowed general, unsecured claim under the Cincinnati Airport Settlement Agreement. For additional information regarding our settlement agreement with Massport and the Cincinnati Airport Settlement Agreement, see Note 4. |
(10) |
Allowed general, unsecured claims in connection with agreements reached with committees representing pilot and non-pilot retired employees reducing their postretirement healthcare benefits. |
(11) |
Reflects a charge for rejecting substantially all of our stock options in our Chapter 11 proceedings. For additional information regarding this matter, see Note 2 of the Notes to the Consolidated Financial Statements in our Form 10-K. |
(in millions) | Predecessor April 30, 2007 |
Debt Discharge, Reclassifications and Distribution to Creditors |
Repayment of DIP Facility and New Exit Financing |
Revaluation of Assets and Liabilities |
Successor Reorganized Balance Sheet May 1, 2007 |
|||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
CURRENT
ASSETS |
||||||||||||||||||||||
Cash, cash
equivalents and short-term investments |
$ | 2,915 | $ | | $ | (557 | ) | $ | | $ | 2,358 | |||||||||||
Restricted
and designated cash |
1,069 | | | | 1,069 | |||||||||||||||||
Accounts
receivable, net |
1,086 | | | | 1,086 | |||||||||||||||||
Expendable
parts and supplies inventories, net |
183 | | | 58 | 241 | |||||||||||||||||
Deferred
income taxes, net |
441 | | | 302 | 743 | |||||||||||||||||
Prepaid
expenses and other |
437 | (19 | ) | | (75 | ) | 343 | |||||||||||||||
Total current
assets |
6,131 | (19 | ) | (557 | ) | 285 | 5,840 | |||||||||||||||
PROPERTY
AND EQUIPMENT |
||||||||||||||||||||||
Net flight
equipment and net flight equipment under capital lease |
11,087 | | | (1,254 | ) | 9,833 | ||||||||||||||||
Other
property and equipment, net |
1,498 | | | 215 | 1,713 | |||||||||||||||||
Total
property and equipment, net |
12,585 | | | (1,039 | ) | 11,546 | ||||||||||||||||
OTHER
ASSETS |
||||||||||||||||||||||
Goodwill |
227 | | | 12,199 | 12,426 | |||||||||||||||||
Intangibles,
net |
88 | | | 2,865 | 2,953 | |||||||||||||||||
Other
noncurrent assets |
740 | | 48 | 68 | 856 | |||||||||||||||||
Total other
assets |
1,055 | | 48 | 15,132 | 16,235 | |||||||||||||||||
Total
assets |
$ | 19,771 | $ | (19 | ) | $ | (509 | ) | $ | 14,378 | $ | 33,621 | ||||||||||
CURRENT
LIABILITIES |
||||||||||||||||||||||
Current
maturities of long-term debt and capital leases |
$ | 1,292 | $ | 5 | $ | | $ | 35 | $ | 1,332 | ||||||||||||
DIP
Facility |
1,959 | | (1,959 | ) | | | ||||||||||||||||
Accounts
payable, accrued salaries and related benefits |
1,396 | 561 | (50 | ) | 155 | 2,062 | ||||||||||||||||
SkyMiles
deferred revenue |
602 | | 620 | 1,222 | ||||||||||||||||||
Air traffic
liability |
2,567 | | | | 2,567 | |||||||||||||||||
Taxes
payable |
423 | | | (2 | ) | 421 | ||||||||||||||||
Total current
liabilities |
8,239 | 566 | (2,009 | ) | 808 | 7,604 | ||||||||||||||||
NONCURRENT
LIABILITIES |
||||||||||||||||||||||
Long-term
debt and capital leases |
5,132 | 37 | | 398 | 5,567 | |||||||||||||||||
Exit
Facilities |
| | 1,500 | | 1,500 | |||||||||||||||||
SkyMiles
deferred revenue |
294 | | | 1,958 | 2,252 | |||||||||||||||||
Other notes
payable |
| 697 | | | 697 | |||||||||||||||||
Pension,
postretirement and related benefits |
62 | 4,202 | | | 4,264 | |||||||||||||||||
Other |
1,026 | | | 1,311 | 2,337 | |||||||||||||||||
Total
noncurrent liabilities |
6,514 | 4,936 | 1,500 | 3,667 | 16,617 | |||||||||||||||||
Liabilities
subject to compromise |
19,345 | (19,345 | ) | | | | ||||||||||||||||
SHAREOWNERS (DEFICIT) EQUITY |
||||||||||||||||||||||
Debtors |
||||||||||||||||||||||
Common stock
and additional paid in capital Debtors |
1,563 | | | (1,563 | ) | | ||||||||||||||||
Retained
deficit and other Debtors |
(15,890 | ) | 4,424 | | 11,466 | | ||||||||||||||||
Reorganized Debtors |
||||||||||||||||||||||
Common stock
and additional paid in capital Reorganized Debtors |
| 9,400 | | | 9,400 | |||||||||||||||||
Total
liabilities and shareowners (deficit) equity |
$ | 19,771 | $ | (19 | ) | $ | (509 | ) | $ | 14,378 | $ | 33,621 |
|
Debt Discharge, Reclassifications and Distribution to Creditors. Adjustments reflect the elimination of liabilities subject to compromise totaling $19.3 billion on our Consolidated Balance Sheet immediately prior to the Effective Date. Excluding certain liabilities assumed by the Successor, liabilities subject to compromise of $13.8 billion were discharged in the Chapter 11 cases. Adjustments include: |
(a) |
The recognition or reinstatement of $561 million to accounts payable, accrued salaries and related benefits comprised of (1) a $225 million obligation to the PBGC relating to the termination of the Pilot Plan (which is reflected on the Consolidated Balance Sheet net of a $3 million discount) and (2) $339 million to reinstate or accrue certain liabilities related to the current portion of our pension and postretirement benefit plans and for certain administrative claims and cure costs. |
(b) |
The recognition of $697 million in other notes payable comprised of (1) the $650 million Pilot Obligation relating to our comprehensive agreement with ALPA reducing pilot labor costs (which is reflected on the Consolidated Balance Sheet net of a $19 million discount) and (2) $66 million principal amount of senior unsecured notes (following the reduction of the $85 million face value of the notes for the application of certain payments made by us in 2006 and 2007) under the Cincinnati Airport Settlement Agreement. For additional information on the Cincinnati Airport Settlement Agreement, see Note 4. |
(c) |
The reinstatement of $4.2 billion to pension, postretirement and related benefits comprised of (1) $3.2 billion associated with our non-pilot defined benefit pension plan (the Non-pilot Plan) and other long-term accrued benefits and (2) $1.0 billion associated with postretirement benefits. |
|
Repayment of DIP Facility and New Exit Financing. Adjustments reflect the repayment of the DIP Facility and borrowing under the Exit Facilities. Financing fees related to (1) the DIP Facility were written off at the Effective Date and (2) fees related to the Exit Facilities were capitalized and will be amortized over the term of the facility. For additional information regarding the Exit Facilities, see Note 4. |
|
Revaluation of Assets and Liabilities. Significant adjustments reflected in the Fresh Start Consolidated Balance Sheet based on the revaluation of assets and liabilities are summarized as follows: |
(a) |
Property and equipment, net. A net adjustment of $1.0 billion to reduce the net book value of fixed assets to their estimated fair value. |
(b) |
Goodwill. An adjustment of $12.2 billion to reflect reorganization value of the Successor in excess of the fair value of tangible and identified intangible assets. During the September 2007 quarter, goodwill decreased by $50 million as a result of net adjustments in the fair value of certain assets and liabilities. These adjustments were recorded on the Successors opening balance sheet at May 1, 2007. |
(c) |
Intangibles. An adjustment of $2.9 billion to recognize identifiable intangible assets. These intangible assets reflect the estimated fair value of our trade name, takeoff and arrival slots, SkyTeam alliance agreements, marketing agreements, customer relationships and certain contracts. Certain of these assets will be subject to an annual impairment review. For additional information on intangible assets, see Note 2. |
(d) |
Long-term debt and capital leases. An adjustment of $398 million primarily to reflect a $223 million net premium associated with long-term debt and a $138 million net premium associated with capital lease obligations to be amortized to interest expense over the life of such debt and capital lease obligations. |
(e) |
SkyMiles deferred revenue. An adjustment to revalue our obligation under the SkyMiles frequent flyer program to reflect the estimated fair value of miles to be redeemed in the future. Adjustments of $2.0 billion and $620 million were reflected for the fair value of these miles in long-term and current classifications, respectively. Effective with our emergence from bankruptcy, we changed our accounting policy from an incremental cost basis to a deferred revenue model for miles earned |
through travel. For additional information on the accounting policy for our SkyMiles frequent flyer program, see Note 2. |
(f) |
Noncurrent liabilities other. An adjustment of $1.3 billion primarily related to the tax effect of fresh start valuation adjustments. |
(g) |
Total shareowners deficit. The adoption of fresh start reporting resulted in a new reporting entity with no beginning retained earnings or accumulated deficit. All common stock of the Predecessor was eliminated and replaced by the new equity structure of the Successor based on the Plan. The Fresh Start Consolidated Balance Sheet reflects initial shareowners equity value of $9.4 billion, representing the low end in the range of $9.4 billion to $12.0 billion estimated in our financial projections developed in connection with the Plan. The low end of the range is estimated to reflect market conditions as of the Effective Date and therefore was used to establish initial shareowners equity value. |
|
In-sourcing revenue. We reclassified $79 million and $215 million, respectively, associated with revenue for our maintenance in-sourcing business to other, net revenue, and reclassified the related costs to (1) salaries and related costs, (2) aircraft maintenance materials and outside repairs and (3) other operating expense. Previously, these revenues and expenses were reflected on a net basis in other operating expense. |
|
Delta Global Services, LLC (DGS). We reclassified $45 million and $127 million, respectively, associated with salaries for employees at our wholly owned subsidiary, DGS, to salaries and related costs. DGS provides staffing services to both internal and external customers. Previously, these costs were recorded in contracted services. |
|
Fuel taxes. We reclassified $34 million and $95 million, respectively, to aircraft fuel expense. Previously, fuel taxes were recorded in other operating expense. |
|
Crown Room Club. We reclassified $13 million and $38 million, respectively, associated with the expense of our Crown Room Club operations to several operating expense line items, primarily salaries and related costs and contracted services. Our Crown Room Club provides amenities to members when traveling. Previously, these expenses were recorded net in other, net revenue. |
|
Arrangements with Other Airlines. We reclassified to passenger revenue $20 million and $116 million, respectively, of revenue associated with (1) SkyMiles earned or redeemed on other airlines and (2) frequent flyer miles of other airlines earned or redeemed on Delta. Previously, these amounts were reflected in other, net revenue. |
Estimated Useful Life | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Asset Classification | Successor | Predecessor | |||||||||
Flight
equipment |
2530
years |
25
years |
|||||||||
Capitalized
software |
57
years |
57
years |
|||||||||
Ground property
and equipment |
340
years |
340
years |
|||||||||
Leasehold
improvements |
Shorter of
lease term or estimated useful life |
Shorter of
lease term or estimated useful life |
|||||||||
Flight equipment under capital lease |
Shorter of lease term or estimated useful life |
Shorter of lease term or estimated useful life |
Successor | Predecessor | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
September 30, 2007 |
December 31, 2006 |
||||||||||
(in millions) | Gross Carrying Amount |
Gross Carrying Amount |
|||||||||
Goodwill |
$ | 12,169 | $ 227 |
||||||||
Trade
name |
880 | 1 |
|||||||||
Takeoff and
arrival slots |
635 | 71 |
|||||||||
SkyTeam
alliance |
480 | |
|||||||||
Other |
2 | |
|||||||||
Total |
$ | 14,166 | $ 299 |
Successor | Predecessor | ||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
September 30, 2007 | December 31, 2006 | ||||||||||||||||||||||||||
(in millions) | Esitmated Life in Year(s) |
Gross Carrying Amount |
Accumulated Amortization |
Estimated Life in Years |
Gross Carrying Amount |
Accumulated Amortization |
|||||||||||||||||||||
Marketing
agreements |
4 | $ | 710 | $ | (81 | ) | $ | | $ | | |||||||||||||||||
Contracts
|
17 to
34 |
205 | (7 | ) | | | |||||||||||||||||||||
Customer
relationships |
4 | 40 | (4 | ) | | | |||||||||||||||||||||
Operating
rights |
| | 9 to
19 |
121 | (104 | ) | |||||||||||||||||||||
Other |
1 | 1 | | 3 to 5 |
3 | (3 | ) | ||||||||||||||||||||
Total |
$ | 956 | $ | (92 | ) | $ | 124 | $ | (107 | ) |
(in millions) | ||||||
---|---|---|---|---|---|---|
Three months
ending December 31, 2007 |
$ | 55 | ||||
2008
|
217 | |||||
2009
|
217 | |||||
2010
|
217 | |||||
2011
|
18 | |||||
After 2011 |
140 | |||||
Total |
$ | 864 |
Aircraft Fuel and Related Taxes | Other Income (Expense) | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Successor | Predecessor | Successor | Predecessor | ||||||||||||||||
(in millions) | Three Months Ended September 30, 2007 |
Three Months Ended September 30, 2006 |
Three Months Ended September 30, 2007 |
Three Months Ended September 30, 2006 |
|||||||||||||||
Open fuel
hedge contracts |
$ | | $ | | $ | (3 | ) | $ | (11 | ) | |||||||||
Settled fuel hedge contracts |
17 | (26 | ) | 4 | (20 | ) | |||||||||||||
Total |
$ | 17 | $ | (26 | ) | $ | 1 | $ | (31 | ) |
Aircraft Fuel and Related Taxes | Other Income (Expense) | ||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Successor | Predecessor | Successor | Predecessor | ||||||||||||||||||||||||
(in millions) | Five Months Ended September 30, 2007 |
Four Months Ended April 30, 2007 |
Nine Months Ended September 30, 2006 |
Five Months Ended September 30, 2007 |
Four Months Ended April 30, 2007 |
Nine Months Ended September 30, 2006 |
|||||||||||||||||||||
Open fuel
hedge contracts |
$ | | $ | | $ | | $ | (1 | ) | $ | 15 | $ | (3 | ) | |||||||||||||
Settled fuel hedge contracts |
21 | (8 | ) | (22 | ) | 5 | (1 | ) | (20 | ) | |||||||||||||||||
Total |
$ | 21 | $ | (8 | ) | $ | (22 | ) | $ | 4 | $ | 14 | $ | (23 | ) |
Successor | Predecessor | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
(in millions) | September 30, 2007 |
December 31, 2006 |
||||||||
Senior
Secured(1) |
||||||||||
Senior
Secured Exit Financing Facility(2) |
||||||||||
7.36%
First-Lien Synthetic Revolving Facility due April 30, 2012 |
$ | 567 | $ | | ||||||
8.61% Second-Lien Term Loan due April 30, 2014 |
900 | | ||||||||
1,467 | | |||||||||
Secured
Super-Priority Debtor-in-Possession Credit Agreement(2) |
||||||||||
8.12% GE DIP
Credit Facility Term Loan A due March 16, 2008 |
| 600 | ||||||||
10.12% GE DIP
Credit Facility Term Loan B due March 16, 2008 |
| 700 | ||||||||
12.87% GE DIP Credit Facility Term Loan C due March 16, 2008 |
| 600 | ||||||||
| 1,900 | |||||||||
Other
senior secured debt(2) |
||||||||||
14.11% Amex Facility Note due in installments during 2007 |
| 176 | ||||||||
| 176 | |||||||||
Secured(1) |
||||||||||
Series
2000-1 Enhanced Equipment Trust Certificates (EETC) |
||||||||||
7.38% Class
A-1 due in installments from 2007 to May 18, 2010 |
120 | 136 | ||||||||
7.57% Class
A-2 due November 18, 2010 |
738 | 738 | ||||||||
7.92% Class B due November 18, 2010 |
182 | 182 | ||||||||
1,040 | 1,056 | |||||||||
Series
2001-1 EETC |
||||||||||
6.62% Class
A-1 due in installments from 2007 to March 18, 2011 |
127 | 130 | ||||||||
7.11% Class
A-2 due September 18, 2011 |
571 | 571 | ||||||||
7.71% Class B due September 18, 2011 |
207 | 207 | ||||||||
905 | 908 | |||||||||
Series
2001-2 EETC(2)(3) |
||||||||||
7.35% Class A
due in installments from 2007 to December 18, 2011 |
291 | 313 | ||||||||
8.55% Class B
due in installments from 2007 to December 18, 2011 |
124 | 145 | ||||||||
9.90% Class C due in installments from 2007 to December 18, 2011 |
55 | 64 | ||||||||
470 | 522 |
Successor | Predecessor | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
(in millions) | September 30, 2007 |
December 31, 2006 | ||||||||
Series 2002-1 EETC |
||||||||||
6.72% Class
G-1 due in installments from 2007 to January 2, 2023 |
421 | 454 | ||||||||
6.42% Class
G-2 due July 2, 2012 |
370 | 370 | ||||||||
7.78% Class C due in installments from 2007 to January 2, 2012 |
95 | 111 | ||||||||
886 | 935 | |||||||||
Series
2003-1 EETC(2) |
||||||||||
6.11% Class G
due in installments from 2007 to January 25, 2008 |
272 | 291 | ||||||||
9.11% Class C due in installments from 2007 to January 25, 2008 |
135 | 135 | ||||||||
407 | 426 | |||||||||
General
Electric Capital Corporation(GECC)(2)(4)(5) |
||||||||||
9.86% Notes
due in installments from 2007 to July 7, 2011 |
145 | 168 | ||||||||
9.86% Notes
due in installments from 2007 to July 7, 2011(3) |
103 | 119 | ||||||||
7.33% Notes due in installments from 2007 to September 27, 2014(6) |
415 | 271 | ||||||||
663 | 558 | |||||||||
Other
secured debt(2) |
||||||||||
8.70% Senior
Secured Notes due in installments from 2007 to September 29, 2012 |
169 | 189 | ||||||||
4.95% to 7.56% Other secured financings due in installments from 2007 to September 28, 2022(7)(8) |
1,001 | 1,354 | ||||||||
Total senior secured and secured debt |
$ | 7,008 | $ | 8,024 | ||||||
Unsecured(8) |
||||||||||
Massachusetts Port Authority Special Facilities Revenue Bonds |
||||||||||
5.05.5%
Series 2001A due in installments from 2012 to January 1, 2027 |
$ | | $ | 338 | ||||||
4.25% Series
2001B due in installments from 2027 to January 1, 2031(2) |
| 80 | ||||||||
4.3% Series
2001C due in installments from 2027 to January 1, 2031(2) |
| 80 | ||||||||
8.75% Boston
Terminal A due in installments from 2007 to June 30, 2016 |
209 | | ||||||||
Development Authority of Clayton County, loan agreement(2)(3) |
||||||||||
3.92% Series
2000A due June 1, 2029 |
65 | 65 | ||||||||
4.00% Series
2000B due May 1, 2035 |
110 | 110 | ||||||||
4.00% Series
2000C due May 1, 2035 |
120 | 120 | ||||||||
Other
unsecured debt |
||||||||||
7.7% Notes
due December 15, 2005 |
| 122 | ||||||||
7.9% Notes
due December 15, 2009 |
| 499 | ||||||||
9.75%
Debentures due May 15, 2021 |
| 106 | ||||||||
8.3% Notes
due December 15, 2029 |
| 925 | ||||||||
8.125% Notes
due July 1, 2039 |
| 538 | ||||||||
10.0% Senior
Notes due August 15, 2008 |
| 248 | ||||||||
8.0%
Convertible Senior Notes due June 3, 2023 |
| 350 | ||||||||
2 7/8%
Convertible Senior Notes due February 18, 2024 |
| 325 | ||||||||
3.01% to 8.00% Other unsecured debt due in installments from 2007 to December 1, 2030 |
71 | 703 | ||||||||
Total unsecured debt |
575 | 4,609 | ||||||||
Total secured and unsecured debt, including liabilities subject to compromise |
7,583 | 12,633 | ||||||||
Plus: unamortized premiums, net |
185 | | ||||||||
Total secured and unsecured debt, including liabilities subject to compromise |
7,768 | 12,633 | ||||||||
Less: pre-petition debt classified as liabilities subject to compromise(7)(8) |
| (4,945 | ) | |||||||
Total debt |
7,768 | 7,688 | ||||||||
Less: current maturities |
(819 | ) | (1,466 | ) | ||||||
Total long-term debt |
$ | 6,949 | $ | 6,222 |
(1) |
Our senior secured debt and secured debt is collateralized by first liens, and in many cases second and junior liens, on substantially all of our assets, including but not limited to accounts receivable, owned aircraft, certain spare engines, certain spare parts, certain flight simulators, ground equipment, landing slots, international routes, equity interests in certain of our domestic subsidiaries, intellectual property and real property. For more information on the Senior Secured Exit Financing Facility, see Exit Financing in this Note. |
(2) |
Our variable interest rate long-term debt is shown using interest rates which represent LIBOR or Commercial Paper plus a specified margin, as provided for in the related agreements. The rates shown were in effect at September 30, 2007, if applicable. For our long-term debt discharged as part of our emergence from bankruptcy, the rates shown were in effect at December 31, 2006. |
(3) |
In October 2007, we completed the issuance and sale of $1.4 billion of Pass Through Certificates, Series 2007-1 (the Certificates). The proceeds from this offering are primarily being used to prepay certain existing aircraft-secured financings. For additional information regarding the Certificates, see 2007-1 EETC below. |
(4) |
For information about the letters of credit issued by, and our related reimbursement obligation to, GECC, see Letter of Credit Enhanced Special Facility Bonds and Reimbursement Agreement and Other GECC Agreements in Note 6 of the Notes to the Consolidated Financial Statements in our Form 10-K. |
(5) |
For additional information about this debt, as amended, see Reimbursement Agreement and Other GECC Agreements in Note 6 of the Notes to the Consolidated Financial Statements in our Form 10-K. |
(6) |
On September 27, 2007, we and GECC amended this credit facility, among other things, to increase to $415 million the outstanding principal amount of borrowings under this facility and to reduce the interest rate we pay on these borrowings. |
(7) |
In accordance with SOP 90-7, substantially all of our unsecured debt had been classified as liabilities subject to compromise at December 31, 2006. Additionally, certain of our undersecured debt had been classified as liabilities subject to compromise at December 31, 2006. For more information on liabilities subject to compromise, see Note 1. |
(8) |
Certain of our secured and undersecured debt, which was classified as liabilities subject to compromise at December 31, 2006, has been reclassified from liabilities subject to compromise to long-term debt or converted to operating leases as of emergence in connection with restructuring initiatives during our Chapter 11 reorganization. |
Years Ending December 31, (in millions) |
Principal Amount |
|||||
---|---|---|---|---|---|---|
Three months
ending December 31, 2007 |
$ | 95 | ||||
2008
|
803 | |||||
2009
|
477 | |||||
2010
|
1,379 | |||||
2011
|
1,204 | |||||
After 2011 |
3,810 | |||||
Total |
$ | 7,768 |
|
maintain a minimum fixed charge coverage ratio (defined as the ratio of (1) earnings before interest, taxes, depreciation, amortization and aircraft rent, and subject to other adjustments to net income (EBITDAR) to (2) the sum of gross cash interest expense, cash aircraft rent expense and the interest portion of our capitalized lease obligations, for successive trailing 12-month periods ending at each quarter-end date through the maturity date of the respective Exit Facilities), which minimum ratio will range from 1.00:1 to 1.20:1 in the case of the First-Lien Facilities and from 0.85:1 to 1.02:1 in the case of the Second-Lien Facility; |
|
maintain unrestricted cash, cash equivalents and short-term investments of not less than $750 million in the case of the First-Lien Facilities and $650 million in the case of the Second-Lien Facility, in each case at all times following the 30th day after the Closing Date; |
|
maintain a minimum total collateral coverage ratio (defined as the ratio of (1) certain of our Collateral that meets specified eligibility standards (Eligible Collateral) to (2) the sum of the aggregate outstanding exposure under the First-Lien Facilities and the Second-Lien Facility and the aggregate termination value of certain hedging agreements) of 125% at all times; and |
|
in the case of the First-Lien Facilities, also maintain a minimum first-lien collateral coverage ratio (together with the total collateral coverage ratio described above, the collateral coverage ratios) (defined as the ratio of (1) Eligible Collateral to (2) the sum of the aggregate outstanding exposure under the First Lien Facilities and the aggregate termination value of certain hedging agreements) of 175% at all times. |
|
provides for agreements under which we will continue to use certain facilities at the Cincinnati Airport at substantially reduced costs; |
|
settles all disputes among us, the KCAB, the Bond Trustee and the former, present and future holders of the 1992 Bonds (the 1992 Bondholders); |
|
gives the Bond Trustee, on behalf of the 1992 Bondholders, a $260 million allowed general, unsecured pre-petition claim in our bankruptcy proceedings; and |
|
provides for our issuance of $66 million principal amount of senior unsecured notes to the Bond Trustee on behalf of the 1992 Bondholders. |
Year Ending December 31, (in millions) |
Amount | |||||
---|---|---|---|---|---|---|
Three months
ending December 31, 2007 |
$ | 315 | ||||
2008
|
1,273 | |||||
2009
|
1,225 | |||||
2010 |
712 | |||||
Total |
$ | 3,525 |
Carrier | Aircraft in Operation as of September 30, 2007 |
Number of Aircraft Scheduled to be in Operation as of December 31, 2007 |
Number of Aircraft Scheduled to be in Operation Immediately Prior to the Expiration Date of the Agreement |
Expiration Date of Agreement |
||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Atlantic
Southeast Airlines, Inc. (ASA) |
153 | 153 | 149 | 2020 | ||||||||||||||
SkyWest
Airlines, Inc. (SkyWest) |
82 | 82 | 82 | 2020 | ||||||||||||||
SkyWest/ASA(1) |
10 | 12 | 12 | 2012 | ||||||||||||||
Chautauqua
|
39 | 39 | 24 | 2016 | ||||||||||||||
Freedom
(ERJ-145 aircraft)(2) |
36 | 36 | 22 | 2017 | ||||||||||||||
Freedom
(CRJ-900 aircraft)(2) |
| 2 | 14 | 2017 | ||||||||||||||
Shuttle
America |
16 | 16 | 16 | 2019 | ||||||||||||||
ExpressJet
Airlines, Inc. (ExpressJet) |
10 | 10 | 10 | 2009 | ||||||||||||||
Pinnacle Airlines, Inc. |
| 1 | 16 | 2019 |
The table above was not subject to the review procedures of our Independent Registered Public Accounting Firm. |
(1) |
We have an agreement with SkyWest, ASA and Sky West, Inc., the parent company of SkyWest and ASA, under which the parties collectively determine whether the aircraft are operated by SkyWest or ASA. |
(2) |
We have separate agreements with Freedom that involve different aircraft types, expiration dates and terms. These agreements are shown separately to illustrate the variance in the number of aircraft that will be operated during the term of each agreement. |
|
ASA, SkyWest, Chautauqua, Freedom and Shuttle America for all periods presented; and |
|
ExpressJet from February 27, 2007 to September 30, 2007. |
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(in millions) | 2007 | 2006 | 2007 | 2006 | |||||||||||||||
ASMs
|
4,691 | 4,033 | 13,373 | 11,310 | |||||||||||||||
RPMs
|
3,771 | 3,107 | 10,551 | 8,820 | |||||||||||||||
Number of aircraft operated, end of period |
346 | 324 | 346 | 324 |
The table above was not subject to the review procedures of our Independent Registered Public Accounting Firm. |
Employee Group | Approximate Number of Employees Represented |
Union | Date on which Collective Bargaining Agreement Becomes Amendable |
|||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Delta Pilots
|
6,200 | ALPA |
December 31,
2009 |
|||||||||||
Delta Flight
Superintendents |
180 | PAFCA(1) |
January 1,
2010 |
|||||||||||
Comair Pilots
|
1,520 | ALPA |
March 2,
2011 |
|||||||||||
Comair
Maintenance Employees |
530 | IAM(2) |
December 31,
2010 |
|||||||||||
Comair Flight Attendants |
920 | IBT(3) |
December 31, 2010 |
The table above was not subject to the review procedures of our Independent Registered Public Accounting Firm. |
(1) |
PAFCA Professional Airline Flight Controllers Association |
(2) |
IAM International Association of Machinists and Aerospace Workers |
(3) |
IBT International Brotherhood of Teamsters |
Current Fleet | ||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Aircraft Type | Owned | Capital Lease |
Operating Lease |
Total | Average Age |
Orders | Options | Rolling Options |
||||||||||||||||||||||||||
B-737-700
|
| | | | | 10 | | | ||||||||||||||||||||||||||
B-737-800
|
71 | | | 71 | 6.9 | 43 | (1) | 60 | 120 | |||||||||||||||||||||||||
B-757-200
|
68 | 34 | 18 | 120 | 16.0 | | | | ||||||||||||||||||||||||||
B-757-200ER
|
| 2 | 4 | 6 | 10.7 | | | | ||||||||||||||||||||||||||
B-767-300
|
4 | | 20 | 24 | 17.2 | | | | ||||||||||||||||||||||||||
B-767-300ER
|
50 | | 9 | 59 | 11.6 | | 10 | (3) | | |||||||||||||||||||||||||
B-767-400ER
|
21 | | | 21 | 6.6 | | 16 | | ||||||||||||||||||||||||||
B-777-200ER
|
8 | | | 8 | 7.7 | | | | ||||||||||||||||||||||||||
B-777-200LR
|
| | | | | 8 | 11 | 12 | ||||||||||||||||||||||||||
MD-88
|
63 | 33 | 23 | 119 | 17.3 | | | | ||||||||||||||||||||||||||
MD-90
|
16 | | | 16 | 11.8 | | | | ||||||||||||||||||||||||||
CRJ-100
|
35 | 13 | 49 | 97 | 10.1 | | | | ||||||||||||||||||||||||||
CRJ-200
|
5 | | 12 | 17 | 5.2 | | 20 | | ||||||||||||||||||||||||||
CRJ-700
|
17 | | | 17 | 3.9 | | 25 | | ||||||||||||||||||||||||||
CRJ-900 |
3 | | | 3 | 0.1 | 24 | (2) | 30 | | |||||||||||||||||||||||||
Total |
361 | 82 | 135 | 578 | 12.4 | 85 | 172 | 132 |
The table above was not subject to the review procedures of our Independent Registered Public Accounting Firm. |
(1) |
Includes 41 aircraft which we have entered into definitive agreements to sell to third parties immediately following delivery of these aircraft to us by the manufacturer. |
(2) |
Excludes 16 aircraft orders we assigned to a regional air carrier in April 2007. See Aircraft Order Commitments in Note 5 for additional information regarding this matter. |
(3) |
At our discretion, these options may be exercised for either B-767-300 or B-767-300ER aircraft. |
Pension Benefits | |||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Successor | Predecessor | Successor | Predecessor | ||||||||||||||||||||
(in millions) | Three Months Ended September 30, 2007 |
Three Months Ended September 30, 2006 |
Five Months Ended September 30, 2007 |
Four Months Ended April 30, 2007 |
Nine Months Ended September 30, 2006 |
||||||||||||||||||
Service cost
|
$ | | $ | | $ | | $ | | $ | 35 | |||||||||||||
Interest cost
|
110 | 178 | 184 | 145 | 534 | ||||||||||||||||||
Expected
return on plan assets |
(105 | ) | (130 | ) | (175 | ) | (129 | ) | (390 | ) | |||||||||||||
Amortization
of prior service cost |
| | | | 1 | ||||||||||||||||||
Recognized
net actuarial loss |
| 57 | | 19 | 171 | ||||||||||||||||||
Settlement
gain on termination |
| | | (30 | ) | | |||||||||||||||||
Revaluation of liability |
| | | (143 | ) | | |||||||||||||||||
Net periodic (benefit) cost |
$ | 5 | $ | 105 | $ | 9 | $ | (138 | ) | $ | 351 |
Other Postretirement Benefits | |||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Successor | Predecessor | Successor | Predecessor | ||||||||||||||||||||
(in millions) | Three Months Ended September 30, 2007 |
Three Months Ended September 30, 2006 |
Five Months Ended September 30, 2007 |
Four Months Ended April 30, 2007 |
Nine Months Ended September 30, 2006 |
||||||||||||||||||
Service cost
|
$ | 3 | $ | 4 | $ | 5 | $ | 4 | $ | 14 | |||||||||||||
Interest cost
|
16 | 24 | 26 | 21 | 73 | ||||||||||||||||||
Amortization
of prior service benefit |
| (11 | ) | | (31 | ) | (32 | ) | |||||||||||||||
Recognized
net actuarial loss |
| 2 | | 8 | 6 | ||||||||||||||||||
Revaluation of liability |
| | | 49 | | ||||||||||||||||||
Net periodic cost |
$ | 19 | $ | 19 | $ | 31 | $ | 51 | $ | 61 |
Other Postemployment Benefits | |||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Successor | Predecessor | Successor | Predecessor | ||||||||||||||||||||
(in millions) | Three Months Ended September 30, 2007 |
Three Months Ended September 30, 2006 |
Five Months Ended September 30, 2007 |
Four Months Ended April 30, 2007 |
Nine Months Ended September 30, 2006 |
||||||||||||||||||
Service cost
|
$ | 8 | $ | 11 | $ | 13 | $ | 8 | $ | 37 | |||||||||||||
Interest cost
|
31 | 31 | 52 | 41 | 93 | ||||||||||||||||||
Expected
return on plan assets |
(39 | ) | (41 | ) | (65 | ) | (51 | ) | (122 | ) | |||||||||||||
Amortization
of prior service benefit |
| | | (2 | ) | | |||||||||||||||||
Recognized
net actuarial loss |
| 2 | | 5 | 8 | ||||||||||||||||||
Revaluation of liability |
| | | (273 | ) | | |||||||||||||||||
Net periodic (benefit) cost |
$ | | $ | 3 | $ | | $ | (272 | ) | $ | 16 |
Successor | Predecessor | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
(in millions) | September 30, 2007 |
December 31, 2006 |
||||||||
Deferred
tax assets: |
||||||||||
Net operating
loss carryforwards |
$ | 2,834 | $ | 2,921 | ||||||
Additional
minimum pension liability |
| 615 | ||||||||
AMT credit
carryforward |
346 | 346 | ||||||||
Employee
benefits |
1,741 | 2,898 | ||||||||
Deferred
revenue |
1,300 | 311 | ||||||||
Other
temporary differences (primarily reorganization charges) |
2,408 | 2,183 | ||||||||
Valuation allowance |
(4,614 | ) | (5,169 | ) | ||||||
Total deferred tax assets |
$ | 4,015 | $ | 4,105 |
Successor | Predecessor | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
(in millions) | September 30, 2007 |
December 31, 2006 | ||||||||
Deferred tax liabilities: |
||||||||||
Depreciation
|
$ | 3,425 | $ | 3,870 | ||||||
Intangibles
|
1,062 | (20 | ) | |||||||
Other |
245 | 259 | ||||||||
Total deferred tax liabilities |
$ | 4,732 | $ | 4,109 |
Successor | Predecessor | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
(in millions) | September 30, 2007 |
December 31, 2006 |
||||||||
Current
deferred tax assets, net |
$ | 807 | $ | 402 | ||||||
Noncurrent deferred tax liabilities, net |
(1,524 | ) | (406 | ) | ||||||
Net deferred tax liabilities |
$ | (717 | ) | $ | (4 | ) |
(in millions) | Unrecognized Pension Liability |
Fuel Derivative Instruments |
Marketable Equity Securities |
Valuation Allowance |
Total | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Balance at January 1, 2007 (Predecessor) |
$ | (727 | ) | $ | (23 | ) | $ | 2 | $ | 230 | $ | (518 | ) | |||||||||
SFAS 158
|
6 | | | | 6 | |||||||||||||||||
Unrealized
gain |
| 70 | | | 70 | |||||||||||||||||
Realized gain |
| (1 | ) | | | (1 | ) | |||||||||||||||
Balance at April 30, 2007 (Predecessor) |
(721 | ) | 46 | 2 | 230 | (443 | ) | |||||||||||||||
Elimination
of Predecessor other comprehensive loss |
721 | (46 | ) | (2 | ) | (230 | ) | 443 | ||||||||||||||
Unrealized
gain |
| 5 | | | 5 | |||||||||||||||||
Realized gain
|
| 3 | | | 3 | |||||||||||||||||
Tax effect
|
| (3 | ) | | 3 | | ||||||||||||||||
Net of tax |
| 5 | | 3 | 8 | |||||||||||||||||
Balance at June 30, 2007 (Successor) |
$ | | $ | 5 | $ | | $ | 3 | $ | 8 | ||||||||||||
Unrealized
gain |
| 24 | | | 24 | |||||||||||||||||
Realized gain
|
| (17 | ) | | | (17 | ) | |||||||||||||||
Tax effect
|
| (3 | ) | | 3 | | ||||||||||||||||
Net of tax |
| 4 | | 3 | 7 | |||||||||||||||||
Balance at September 30, 2007 (Successor) |
$ | | $ | 9 | $ | | $ | 6 | $ | 15 |
Predecessor | |||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(in millions) | Additional Minimum Pension Liability |
Fuel Derivative Instruments |
Marketable Equity Securities |
Valuation Allowance |
Total | ||||||||||||||||||
Balance at January 1, 2006 |
$ | (2,553 | ) | $ | | $ | 1 | $ | (170 | ) | $ | (2,722 | ) | ||||||||||
Unrealized
gain |
| 4 | | | 4 | ||||||||||||||||||
Realized gain |
| (2 | ) | | | (2 | ) | ||||||||||||||||
Balance at June 30, 2006 |
$ | (2,553 | ) | $ | 2 | $ | 1 | $ | (170 | ) | $ | (2,720 | ) | ||||||||||
Unrealized
(loss) gain |
| (57 | ) | 1 | | (56 | ) | ||||||||||||||||
Realized gain |
| (1 | ) | | | (1 | ) | ||||||||||||||||
Balance at September 30, 2006 |
$ | (2,553 | ) | $ | (56 | ) | $ | 2 | $ | (170 | ) | $ | (2,777 | ) |
Shares (000) |
||||||
---|---|---|---|---|---|---|
Authorized
under the 2007 Plan |
30,000 | |||||
Awarded(1) |
(26,443 | ) | ||||
Forfeited
|
54 | |||||
Returned to Treasury |
5,322 | |||||
Available for Future Grants |
8,933 |
(1) |
Awards include unrestricted common stock grants, restricted stock, stock options and performance shares. |
Shares (000) |
Weighted Average Grant-Date Fair Value |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|
Granted
|
7,455 | $ | 20.23 | |||||||
Vested
|
(187 | ) | 20.45 | |||||||
Forfeited |
(47 | ) | 20.45 | |||||||
Non-vested at September 30, 2007 |
7,221 | $ | 20.22 |
Assumption | ||||||
---|---|---|---|---|---|---|
Risk-free
interest rate |
4.8 | % | ||||
Average
expected life of stock options (in years) |
6.0 | |||||
Expected
volatility of common stock |
55.0 | % | ||||
Weighted average fair value of a stock option granted |
$ | 10.70 |
Shares (000) |
Weighted Average Exercise Price |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|
Outstanding
at the beginning of the period |
| $ | | |||||||
Granted
|
3,348 | 18.65 | ||||||||
Exercised
|
| | ||||||||
Forfeited |
(9 | ) | 18.84 | |||||||
Outstanding at the end of the period |
3,339 | $ | 18.65 | |||||||
Exercisable at the end of the period |
143 | $ | 18.84 |
Successor | Predecessor | Successor | Predecessor | ||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(in millions, except per share data) |
Three Months Ended September 30, 2007 |
Three Months Ended September 30, 2006 |
Five Months Ended September 30, 2007 |
Four Months Ended April 30, 2007 |
Nine Months Ended September 30, 2006 |
||||||||||||||||||
Basic: |
|||||||||||||||||||||||
Net income
(loss) |
$ | 220 | $ | 52 | $ | 384 | $ | 1,298 | $ | (4,222 | ) | ||||||||||||
Dividends on allocated Series B ESOP Convertible Preferred Stock |
| | | | (2 | ) | |||||||||||||||||
Net income
(loss) attributable to common shareowners |
$ | 220 | $ | 52 | $ | 384 | $ | 1,298 | $ | (4,224 | ) | ||||||||||||
Basic weighted average shares outstanding |
393.5 | 197.3 | 393.5 | 197.3 | 196.2 | ||||||||||||||||||
Basic earnings (loss) per share |
$ | 0.56 | $ | 0.26 | $ | 0.98 | $ | 6.58 | $ | (21.53 | ) | ||||||||||||
Diluted: |
|||||||||||||||||||||||
Net income
(loss) attributable to common shareowners |
$ | 220 | $ | 52 | $ | 384 | $ | 1,298 | $ | (4,224 | ) | ||||||||||||
Gain recognized on the forgiveness of convertible debt |
| | | (216 | ) | | |||||||||||||||||
Net income (loss) attibutable to common shareowners assuming conversion |
$ | 220 | $ | 52 | $ | 384 | $ | 1,082 | $ | (4,224 | ) | ||||||||||||
Basic
weighted average shares outstanding |
393.5 | 197.3 | 393.5 | 197.3 | 196.2 | ||||||||||||||||||
Additional
shares assuming: |
|||||||||||||||||||||||
Restricted
shares |
1.6 | | 0.6 | | | ||||||||||||||||||
Conversion of
8.0% Convertible Senior Notes |
| 12.5 | | 12.5 | | ||||||||||||||||||
Conversion of 2 7/8% Convertible Senior Notes |
| 23.9 | | 23.9 | | ||||||||||||||||||
Weighted average shares outstanding, as adjusted |
395.1 | 233.7 | 394.1 | 233.7 | 196.2 | ||||||||||||||||||
Dilutive earnings (loss) per share |
$ | 0.56 | $ | 0.22 | $ | 0.97 | $ | 4.63 | $ | (21.53 | ) |
(a) |
Market approach. Prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities |
(b) |
Cost approach. Amount that would be required to replace the service capacity of an asset (replacement cost) |
(c) |
Income approach. Techniques to convert future amounts to a single present amount based on market expectations (including present value techniques, option-pricing and excess earnings models). |
(in millions) |
Successor September 30, 2007 |
|
Quoted Prices in Active Markets for Identical Assets (Level 1) |
Significant other observable inputs (Level 2) |
Valuation Technique |
|||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Short term
investments |
$ | 767 | $ | 767 | $ | | (a) |
|||||||||||||||
Fuel hedging derivatives |
17 | | 17 | (a) |
(in millions) |
Successor May 1, 2007 |
|
Significant Other Observable Inputs (Level 2) |
Significant(1) Unobservable Inputs (Level 3) |
Valuation Technique |
||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Expendable
parts and supplies inventories |
$ | 241 |
$ | 241 | $ | |
(a)
(b) |
||||||||||||||||
Prepaid
expense and other |
343 |
343 | |
(a) (b)
(c) |
|||||||||||||||||||
Net flight
equipment and net flight equipment under capital lease |
9,833 |
9,833 | |
(a)
(b) |
|||||||||||||||||||
Other
property and equipment |
1,713 |
1,713 | |
(a)
(b) |
|||||||||||||||||||
Indefinite-lived intangible assets(2) |
1,997 |
| 1,997 |
(a)
(c) |
|||||||||||||||||||
Definite-lived intangible assets(2) |
956 |
| 956 |
(c) |
|||||||||||||||||||
Other
noncurrent assets |
856 |
856 | |
(a) (b)
(c) |
|||||||||||||||||||
Debt and
obligations under capital lease |
6,899 |
6,899 | |
(a)
(c) |
|||||||||||||||||||
SkyMiles
deferred revenue(3) |
3,474 |
| 3,474 |
(a) |
|||||||||||||||||||
Accounts payable and other noncurrent liabilities |
405 |
405 | |
(a) (c) |
(1) |
These valuations were based on the present value of future cash flows for specific assets derived from our projections of future revenue, expense and airline market conditions. These cash flows were then discounted to their present value using a rate of return that considers the relative risk of not realizing the estimated annual cash flows and time value of money. |
(2) |
Intangible assets are identified by asset type in Note 2. |
(3) |
The fair value of our SkyMiles frequent flyer award liability was determined based on the estimated price we would pay a third party to assume the obligation for miles expected to be redeemed under our SkyMiles program. These miles were valued based upon the weighted average of the equivalent ticket value of similar fares on Delta and the amounts paid to other SkyTeam alliance partners. See Note 2 for the accounting policy related to our SkyMiles frequent flyer program. |
|
A $112 million charge in landing fees and other rents. This adjustment is associated primarily with our airport facility leases at JFK. It resulted from historical differences associated with recording escalating rent expense based on actual rent payments instead of on a straight-line basis over the lease term as required by SFAS No. 13, Accounting for Leases. |
|
A $108 million net charge related to the sale of mileage credits under our SkyMiles frequent flyer program. This includes an $83 million decrease in passenger revenues, a $106 million decrease in other, net operating revenues, and an $81 million decrease in other operating expenses. This net charge primarily resulted from the reconsideration of our position with respect to the timing of recognizing revenue associated with the sale of mileage credits that we expect will never be redeemed for travel. |
|
A $90 million charge in salaries and related costs to adjust our accrual for postemployment healthcare benefits. This adjustment is due to healthcare payments applied to this accrual over several years, which should have been expensed as incurred. |
Successor | Predecessor | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(in millions) |
Three Months Ended September 30, 2007 |
Three Months Ended September 30, 2006 |
Increase (Decrease) |
% Increase (Decrease) |
||||||||||||||
Operating
Revenue: |
||||||||||||||||||
Passenger:
|
||||||||||||||||||
Mainline |
$ | 3,539 | $ | 3,207 | $ | 332 | 10 | % | ||||||||||
Regional affiliates |
1,099 | 1,016 | 83 | 8 | % | |||||||||||||
Total
passenger revenue |
4,638 | 4,223 | 415 | 10 | % | |||||||||||||
Cargo |
120 | 121 | (1 | ) | (1 | )% | ||||||||||||
Other, net |
469 | 407 | 62 | 15 | % | |||||||||||||
Total operating revenue |
$ | 5,227 | $ | 4,751 | $ | 476 | 10 | % |
Successor | Increase (Decrease) Three Months Ended September 30, 2007 vs. 2006 |
||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(in millions) |
Three Months Ended September 30, 2007 |
Passenger Revenue |
RPMs | ASMs | Passenger Mile Yield |
PRASM | Load Factor |
||||||||||||||||||||||||
Passenger
Revenue: |
|||||||||||||||||||||||||||||||
North
America |
$ | 3,175 | 4 | % | 3 | % | (2 | )% | 1 | % | 6 | % | 4.0 pts |
||||||||||||||||||
International |
1,429 | 24 | % | 15 | % | 14 | % | 8 | % | 9 | % | 1.1 pts |
|||||||||||||||||||
Charter |
34 | 22 | % | 70 | % | 42 | % | NM | NM | NM |
|||||||||||||||||||||
Total passenger revenue |
$ | 4,638 | 10 | % | 7 | % | 3 | % | 3 | % | 6 | % | 2.9 pts |
Successor | Predecessor | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(in millions) | Three Months Ended September 30, 2007 |
Three Months Ended September 30, 2006 |
Increase (Decrease) |
% Increase (Decrease) |
||||||||||||||
Operating
Expense: |
||||||||||||||||||
Aircraft fuel
and related taxes |
$ | 1,270 | $ | 1,276 | $ | (6 | ) | | % | |||||||||
Salaries and
related costs |
1,109 | 1,069 | 40 | 4 | % | |||||||||||||
Contract
carrier arrangements |
815 | 724 | 91 | 13 | % | |||||||||||||
Depreciation
and amortization |
297 | 293 | 4 | 1 | % | |||||||||||||
Contracted
services |
264 | 230 | 34 | 15 | % | |||||||||||||
Aircraft
maintenance materials and outside repairs |
253 | 230 | 23 | 10 | % | |||||||||||||
Passenger
commissions and other selling expenses |
248 | 233 | 15 | 6 | % | |||||||||||||
Landing fees
and other rents |
178 | 201 | (23 | ) | (11 | )% | ||||||||||||
Passenger
service |
94 | 96 | (2 | ) | (2 | )% | ||||||||||||
Aircraft
rent |
60 | 70 | (10 | ) | (14 | )% | ||||||||||||
Profit
sharing |
79 | | 79 | NM | ||||||||||||||
Other |
107 | 161 | (54 | ) | (34 | )% | ||||||||||||
Total operating expense |
$ | 4,774 | $ | 4,583 | $ | 191 | 4 | % |
Combined | Predecessor | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(in millions) |
Nine Months Ended September 30, 2007 |
Nine Months Ended September 30, 2006 |
Increase (Decrease) |
% Increase (Decrease) |
||||||||||||||
Operating
Revenue: |
||||||||||||||||||
Passenger: |
||||||||||||||||||
Mainline |
$ | 9,706 | $ | 8,876 | $ | 830 | 9 | % | ||||||||||
Regional liates |
3,155 | 2,909 | 246 | 8 | % | |||||||||||||
Total
passenger revenue |
12,861 | 11,785 | 1,076 | 9 | % | |||||||||||||
Cargo
|
350 | 372 | (22 | ) | (6 | )% | ||||||||||||
Other, net |
1,260 | 1,129 | 131 | 12 | % | |||||||||||||
Total operating revenue |
$ | 14,471 | $ | 13,286 | $ | 1,185 | 9 | % |
Combined | Increase (Decrease) Nine Months Ended September 30, 2007 vs. 2006 |
||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(in millions) |
Nine Months Ended September 30, 2007 |
Passenger Revenue |
RPMs | ASMs | Passenger Mile Yield |
PRASM | Load Factor |
||||||||||||||||||||||||
Passenger
Revenue: |
|||||||||||||||||||||||||||||||
North
American |
$ | 9,171 | 3 | % | | % | (4 | )% | 3 | % | 7 | % | 3.3 pts |
||||||||||||||||||
International |
3,605 | 29 | % | 18 | % | 17 | % | 9 | % | 10 | % | 0.5 pts |
|||||||||||||||||||
Charter |
85 | (1 | )% | 17 | % | 10 | % | NM | NM | NM |
|||||||||||||||||||||
Total passenger revenue |
$ | 12,861 | 9 | % | 5 | % | 2 | % | 4 | % | 7 | % | 2.4 pts |
Combined | Predecessor | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(in millions) |
Nine Months Ended September 30, 2007 |
Nine Months Ended September 30, 2006 |
Increase (Decrease) |
% Increase (Decrease) |
||||||||||||||
Operating
Expense: |
||||||||||||||||||
Aircraft fuel
and related taxes |
$ | 3,330 | $ | 3,377 | $ | (47 | ) | (1 | )% | |||||||||
Salaries and
related costs |
3,119 | 3,362 | (243 | ) | (7 | )% | ||||||||||||
Contract
carrier arrangements |
2,301 | 1,993 | 308 | 15 | % | |||||||||||||
Depreciation
and amortization |
876 | 912 | (36 | ) | (4 | )% | ||||||||||||
Contracted
services |
750 | 670 | 80 | 12 | % | |||||||||||||
Aircraft
maintenance materials and outside repairs |
738 | 689 | 49 | 7 | % | |||||||||||||
Passenger
commissions and other selling expenses |
721 | 679 | 42 | 6 | % | |||||||||||||
Landing fees
and other rents |
550 | 692 | (142 | ) | (21 | )% | ||||||||||||
Passenger
service |
250 | 250 | | | % | |||||||||||||
Aircraft
rent |
186 | 238 | (52 | ) | (22 | )% | ||||||||||||
Profit
sharing |
158 | | 158 | NM | ||||||||||||||
Other |
394 | 372 | 22 | 6 | % | |||||||||||||
Total operating expense |
$ | 13,373 | $ | 13,234 | $ | 139 | 1 | % |
|
Emergence gain. A net $2.1 billion gain due to our emergence from bankruptcy, comprised of (1) a $4.4 billion gain related to the discharge of liabilities subject to compromise in connection with the settlement of claims, (2) a $2.6 billion charge associated with the revaluation of our SkyMiles frequent flyer obligation and (3) a $238 million gain from the revaluation of our remaining assets and liabilities to fair value. For additional information regarding this emergence gain, see Note 1 of the Notes to the Condensed Consolidated Financial Statements. |
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Aircraft financing renegotiations and rejections. $440 million of estimated claims primarily associated with the restructuring of the financing arrangements for 143 aircraft and adjustments to prior claims estimates. |
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Contract carrier agreements. A net charge of $163 million in connection with amendments to certain contract carrier agreements. For additional information regarding this charge and our contract carrier agreements, see Notes 1 and 5, respectively, of the Notes to the Condensed Consolidated Financial Statements. |
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Emergence compensation. In accordance with the Plan, we made $130 million in lump-sum cash payments to approximately 39,000 eligible non-contract, non-management employees. We also recorded an additional charge of $32 million related to our portion of payroll related taxes associated with the issuance, as contemplated by the Plan, of approximately 14 million shares of common stock to those employees. For additional information regarding the common stock issuance, see Note 10 of the Notes to the Condensed Consolidated Financial Statements. |
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Pilot collective bargaining agreement. An $83 million allowed general, unsecured claim in connection with Comairs agreement with ALPA to reduce Comairs pilot labor costs. |
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Facility leases. A net $43 million gain, which primarily reflects (1) a $126 million net gain related to our settlement agreement with the Massachusetts Port Authority offset by (2) a net $80 million charge from an allowed general, unsecured claim in connection with the settlement relating to the restructuring of certain of our lease and other obligations at the Cincinnati Airport. For additional information regarding these matters, see Notes 1 and 4 of the Notes to the Condensed Consolidated Financial Statements. |
Successor | Predecessor | Combined | Predecessor | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Three Months Ended September 30, 2007 |
Three Months Ended September 30, 2006 |
Nine Months Ended September 30, 2007 |
Nine Months Ended September 30, 2006 |
|||||||||||||||
Consolidated: |
||||||||||||||||||
Revenue
Passenger Miles (millions)(1) |
34,036 | 31,784 | 92,827 | 88,220 | ||||||||||||||
Available Seat
Miles (millions)(1) |
40,943 | 39,643 | 114,350 | 111,963 | ||||||||||||||
Passenger Mile
Yield(1) |
13.63 | ¢ | 13.29 | ¢ | 13.85 | ¢ | 13.36 | ¢ | ||||||||||
Passenger
Revenue Per Available Seat Mile(1) |
11.33 | ¢ | 10.65 | ¢ | 11.25 | ¢ | 10.53 | ¢ | ||||||||||
Operating Cost
Per Available Seat Mile(1) |
11.66 | ¢ | 11.56 | ¢ | 11.69 | ¢ | 11.82 | ¢ | ||||||||||
Passenger Load
Factor(1) |
83.1 | % | 80.2 | % | 81.2 | % | 78.8 | % | ||||||||||
Breakeven
Passenger Load Factor(1) |
75.0 | % | 77.0 | % | 74.2 | % | 78.4 | % | ||||||||||
Fuel Gallons
Consumed (millions) |
575 | 566 | 1,597 | 1,600 | ||||||||||||||
Average Price
Per Fuel Gallon, Net of Hedging activity |
$ | 2.21 | $ | 2.25 | $ | 2.09 | $ | 2.11 | ||||||||||
Number of
Aircraft in Fleet, End of Period |
578 | 607 | 578 | 607 | ||||||||||||||
Full-Time
Equivalent Employees, End of Period |
55,022 | 51,059 | 55,022 | 51,059 | ||||||||||||||
Mainline: |
||||||||||||||||||
Revenue
Passenger Miles (millions) |
29,048 | 27,220 | 78,818 | 75,359 | ||||||||||||||
Available Seat
Miles (millions) |
34,707 | 33,679 | 96,391 | 95,208 | ||||||||||||||
Operating Cost
Per Available Seat Mile |
10.49 | ¢ | 10.42 | ¢ | 10.52 | ¢ | 10.74 | ¢ | ||||||||||
Number of Aircraft in Fleet, End of Period |
444 | 440 | 444 | 440 |
(1) Includes the operations under contract carrier agreements with
unaffiliated regional air carriers:
ASA, 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.
|
Long-term debt, not including liabilities subject to compromise. During the nine months ended September 30, 2007, we (1) entered into the Exit Facilities to borrow up to $2.5 billion, (2) repaid the $2.1 billion DIP Facility, (3) issued $66 million principal amount of senior unsecured notes in connection with a settlement agreement relating to the restructuring of certain lease and other obligations at the Cincinnati Airport and (4) amended our Spare Parts Loan to borrow an additional $181 million. In October 2007, we completed the issuance and sale of $1.4 billion principal amount of Certificates. |
|
Long-term debt classified as liabilities subject to compromise. In connection with our emergence from Chapter 11, we discharged $3.8 billion of the $4.9 billion of long-term debt classified as liabilities subject to compromise at December 31, 2006. |
|
Aircraft order commitments. Our aircraft order commitments are estimated to be $3.5 billion at September 30, 2007, compared to $3.0 billion at December 31, 2006. For additional information regarding these commitments, see Note 5 of the Notes to the Condensed Consolidated Financial Statements. |
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provides for agreements under which we will continue to use certain facilities at the Cincinnati Airport at substantially reduced costs; |
|
settles all disputes among us, the KCAB, the Bond Trustee and the former, present and future holders of the 1992 Bonds (the 1992 Bondholders); |
|
gives the Bond Trustee, on behalf of the 1992 Bondholders, a $260 million allowed general, unsecured pre-petition claim in our bankruptcy proceedings; and |
|
provides for our issuance of $66 million principal amount of senior unsecured notes to the Bond Trustee on behalf of the 1992 Bondholders. |
(a) |
Exhibits |
10.1 |
Delta Air Lines, Inc. 2007 Officer and Director Severance Plan, as amended October 14, 2007 |
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10.2 |
Offer of Employment dated August 28, 2007 between Delta Air Lines, Inc. and Richard H. Anderson |
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10.3 |
Delta 2007 Performance Compensation Plan Award Agreement between Delta Air Lines, Inc. and Edward H. Bastian dated August 28,
2007 |
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10.4 |
Separation Agreement and General Release between Delta Air Lines, Inc. and James M. Whitehurst dated August 27, 2007 |
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10.5 |
Description of Certain Benefits of Members of the Board of Directors and Executive Officers |
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15 |
Letter from Ernst & Young LLP regarding unaudited interim financial information |
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31.1 |
Certification by Deltas Chief Executive Officer with respect to Deltas Quarterly Report on Form 10-Q for the quarterly period
ended September 30, 2007 |
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31.2 |
Certification by Deltas President and Chief Financial Officer with respect to Deltas Quarterly Report on Form 10-Q for the
quarterly period ended September 30, 2007 |
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32 |
Certification pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code by Deltas Chief Executive Officer and
President and Chief Financial Officer with respect to Deltas Quarterly Report on Form 10-Q for the quarterly period ended September 30,
2007 |