Delta Air Lines Reports Fourth Quarter

Delta Air Lines today reported results for the quarter and full year
ending Dec. 31, 2003, and other significant news. The key points are,
Delta:


* Reports a fourth quarter net loss of $327 million, or $2.69 loss per
common share. Full year 2003 net loss is $773 million, or $6.40 loss per
share. * Excluding the unusual items described below, reports a fourth
quarter net loss of $207 million, or $1.71 loss per common share.
Excluding unusual items, full year 2003 net loss is $1.0 billion, or $8.58
loss per share. * Ends quarter with $2.9 billion in cash, of which $2.7
billion is unrestricted cash. * As challenges continue into 2004,
reaffirms its focus on cost containment and improving customer service.

Delta Air Lines reported a net loss of $327 million and a loss per share
of $2.69 for the December 2003 quarter. In the December 2002 quarter,
Delta reported a net loss of $363 million and a loss per share of $2.98.
For the full year 2003, Delta reported a net loss of $773 million and a
loss per share of $6.40. This is compared to a net loss of $1.3 billion
and $10.44 loss per share for the full year 2002.

Excluding the unusual items described below, the December 2003 quarter net
loss and loss per share were $207 million and $1.71, respectively,
compared to a net loss of $230 million and loss per share of $1.90 in the
December 2002 quarter(1). The First Call mean estimate for the December
2003 quarter was a loss per share of $1.66, excluding unusual items, with
estimates ranging between a loss per share of $1.58 and $1.85. Excluding
the unusual items described below, the full year 2003 net loss was $1.0
billion and loss per share was $8.58 compared to a net loss of $958
million and loss per share of $7.89 for calendar year 2002(1).

“While in line with our expectations, today`s financial results are
disappointing, especially given the expected performance of the other air
carriers,” said Gerald Grinstein, Delta`s chief executive officer. “2003
was a year full of significant financial challenges for Delta. While we
have made progress in addressing these challenges, Delta still faces many
hurdles in 2004. Accordingly, we have begun a complete strategic
reassessment of our business to ensure we are competitive in the rapidly
changing industry environment. Delta must continue toward its goal of
maximizing the use of its resources and creating business efficiencies
across the company. We will continue to focus on our priorities to reduce
costs, improve customer service and work with Delta people to find
solutions to our challenges.”
Fourth quarter operating revenues increased 2.7 percent and passenger unit
revenues increased 4.6 percent, compared to the December 2002 quarter. The
load factor for the December 2003 quarter was 72.7 percent, a 1.5 point
increase as compared to the December 2002 quarter. System capacity was
down 1.8 percent and mainline capacity was down 4.8 percent from the prior
year. Detailed traffic, capacity, load factor, yield and unit revenue
information is provided in Table 1 below.

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Operating expenses for the December 2003 quarter increased 2.6 percent and
unit costs increased 4.5 percent from the December 2002 quarter. Excluding
unusual items, unit costs increased 2.3 percent and fuel price neutralized
unit costs(2) increased 0.8 percent.

Delta`s profit improvement initiatives achieved approximately $1.2 billion
in gross cost savings and revenue benefits for the full year 2003. Netted
against related cost pressures, the amount achieved is approximately $700
million. Much of the cost savings is attributable to productivity gains
resulting from the additional use of technology and the hard work of
Delta`s employees.

“Delta had significant cost pressures in 2003, but thanks to our profit
improvement initiatives and the efforts of Delta people, we were able to
mitigate the pressures,” said M. Michele Burns, Delta`s executive vice
president and chief financial officer. “We know that there is much more
work to be done and we are committed to continuing our progress.”

In the December 2003 quarter, Delta`s fuel hedging program reduced costs
by $21 million, pretax. Delta hedged 46 percent of its jet fuel
requirements in the quarter at an average price of $0.76 per gallon,
excluding fuel taxes. Delta`s total fuel price for the December 2003
quarter was $0.85 per gallon. Guidance on fuel hedging, capacity, unit
costs and other items is provided in Table 2 below.

At Dec. 31, 2003, Delta had $2.9 billion in cash, of which $2.7 billion
was unrestricted. For the December 2003 quarter, Delta had positive cash
flow from operations of $82 million and non-fleet capital expenditures of
$125 million, resulting in a cash burn for the quarter.

During the December 2003 quarter, Delta received cash proceeds of
approximately $45 million from the sale of certain equity investments in
Orbitz and Hotwire. These transactions resulted in a net gain of $21
million, net of tax, in Delta`s Consolidated Statements of Operations.
Subsequent to the sale, Delta has a 13 percent equity stake in Orbitz.

As announced in November, Delta recorded a non-cash charge to equity
related to its pension plans during the December 2003 quarter(3). This
charge of $1.1 billion, net of tax, impacted Delta`s balance sheet, but
did not affect the results of operations for the December 2003 quarter.
The actual amount was greater than previously estimated due to the impact
of changes to actuarial assumptions caused by updated demographic data.
The charge does not impact Delta`s current cash funding obligations to its
pension plans. Delta`s pension plans meet all funding requirements and
Delta intends to continue to fund its pension plans as required by law.

As previously announced in October 2003, Delta entered into a definitive
agreement to sell to a third party 11 Boeing 737-800 aircraft immediately
after those aircraft are delivered to Delta by the manufacturer in 2005.
This transaction is expected to reduce Delta`s capital expenditures by
approximately $500 million through 2005. As a result of this transaction,
Delta recognized a $26 million charge, net of tax, in the December 2003
quarter. Also as previously announced, Delta intends to defer until 2008
the delivery of eight additional B737-800 aircraft, which were also
scheduled for delivery in 2005. The deferrals are expected to further
reduce Delta`s capital expenditures through 2005 by approximately $360
million.

Full details at http://www.delta.com
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