ATLANTA, July 18, 2002 - Delta Air Lines (NYSE:DAL) today reported results for the quarter ending June 30, 2002. The key points are, Delta:

*Reports a second quarter net loss, excluding unusual items, of $162 million, or $1.34 loss per common share.

*Reports a second quarter net loss of $186 million, or $1.54 loss per common share.

*Records an operating profit for the month of June 2002.

*Continues to focus on controlling costs, capacity and liquidity.

Delta today reported a net loss of $162 million and a loss per share of $1.34 for the June 2002 quarter versus a net loss of $123 million and loss per share of $1.03 in the June 2001 quarter, excluding unusual items. Including unusual items, the June 2002 quarter net loss and loss per share were $186 million and $1.54, respectively, versus a net loss of $90 million and loss per share of $0.76 in the June 2001 quarter. Note 2 to the attached consolidated statements of operations shows a reconciliation of the net loss excluding unusual items to the reported net loss.
“Delta’s financial performance is recovering slowly as we work through one of the most challenging times in the history of our company and our industry,” said Leo F. Mullin, chairman and chief executive officer. “While these second quarter results are substantially better than those in the first quarter and in line with expectations, they clearly show that difficult times are not yet behind us.
“In light of these difficult financial conditions, Delta continues its comprehensive review of the business. Our intent is to be an airline that will thrive, not just survive, in today’s fiercely competitive aviation world. While that task will continue to require difficult choices, we strongly believe we are the best positioned hub-and-spoke airline to reach that goal.”

“In light of these difficult financial conditions, Delta continues its comprehensive review of the business. Our intent is to be an airline that will thrive, not just survive, in today’s fiercely competitive aviation world. While that task will continue to require difficult choices, we strongly believe we are the best positioned hub-and-spoke airline to reach that goal.”
Second quarter operating revenues declined 8.0 percent, and passenger unit revenues decreased 3.0 percent, compared to the June 2001 quarter. Excluding unusual items, operating expenses for the June 2002 quarter decreased 6.5 percent, unit costs decreased 0.3 percent and unit costs on a fuel price neutralized basis increased 0.5 percent. The load factor for the quarter was 73.4 percent on a 6.2 percent reduction in capacity, compared to 72.8 percent for the same period a year ago. For the June 2002 quarter, Delta’s completion factor was 99.2 percent versus 97.5 percent during the same period last year. Year-over-year comparisons are impacted by Comair’s suspension of service between March 26, 2001, and July 1, 2001, due to a strike by Comair pilots.
Delta had positive cash flow from operations for the June 2002 quarter and also recorded an operating profit in the month of June as traffic and revenue continued to improve slowly from the March 2002 quarter.
“Delta is committed to aggressively manage what we can control—costs, capacity and liquidity—as we continue to make disciplined financial and operating decisions,” said M. Michele Burns, executive vice president and chief financial officer.
Delta’s fuel hedging program saved $43 million pretax for the quarter. Delta hedged 57 percent of its jet fuel requirements in the June 2002 quarter at an average price of $0.59 per gallon. For the second half of the year, Delta has hedged 49 percent of its expected jet fuel requirements at an average price of $0.66 per gallon.
Delta’s capacity remained under tight control in the second quarter with year-over-year system and mainline capacity down 6.2 percent and 10.7 percent, respectively. For the third quarter of 2002, Delta’s year-over-year system capacity is expected to decline three to four percent and year-over-year mainline capacity is expected to decline six to seven percent.

Delta’s balance sheet remains one of the strongest in the industry. During the quarter, Delta continued to access financing opportunities in the capital markets. On April 30, 2002, Delta issued

$1.1 billion of Enhanced Equipment Trust Certificates. A portion of the proceeds from this offering was used to repay a $625 million revolving credit agreement that matured on May 1, 2002. The remainder of the proceeds is available for general corporate purposes. Delta ended the June 2002 quarter with total liquidity of $2.8 billion comprised of $1.8 billion in cash and cash equivalents and an additional near term liquidity position of $1.0 billion.

In the June 2002 quarter, Delta recorded $24 million of unusual costs, net of taxes. As previously disclosed, Delta continues to incur costs that represent the temporary carrying costs of grounded aircraft and surplus pilots as well as re-qualification training and relocation costs for pilots resulting from capacity reductions implemented in November 2001. These costs totaled $15 million, net of tax, for the June 2002 quarter and are expected to total $61 million, net of tax, for the 2002 calendar year; a total of $40 million of costs, net of tax, have been incurred for the six months ending June 2002. Also during the June 2002 quarter, Delta recorded a $9 million expense, net of tax, for non-cash, fair value adjustments of certain equity rights in other companies, primarily priceline.com, and fuel derivative instruments to comply with Statement of Financial Accounting Standard (SFAS) 133. In the June 2001 quarter, Delta recognized a $69 million non-cash gain, net of tax, related to SFAS 133 and a $36 million charge, net of tax, due to its decision to accelerate the retirement of nine Boeing 737 aircraft.
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