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SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549

FORM 10-Q

x     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2004

or

o     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 1-5424

DELTA AIR LINES, INC.

State of Incorporation:   Delaware

IRS Employer Identification No.:   58-0218548

P.O. Box 20706, Atlanta, Georgia 30320-6001

Telephone:   (404) 715-2600

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days.
Yes   x      No   o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).
Yes   x      No   o

Number of shares outstanding by each class of common stock, as of April 30, 2004:

Common Stock, $1.50 par value - 124,516,847 shares outstanding

This document is also available on our web site at http://investor.delta.com/edgar.cfm.

FORWARD-LOOKING STATEMENTS

          Statements in this Form 10-Q (or otherwise made by us or on our behalf) 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. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from historical experience or our present expectations. For examples of such risks and uncertainties, please see the cautionary statements contained in Risk Factors Relating to the Airline Industry and Delta in Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations in this Form 10-Q. We undertake no obligation to publicly update or revise any forward-looking statements to reflect events or circumstances that may arise after the date of this report.

1

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

DELTA AIR LINES, INC.
Consolidated Balance Sheets
(In Millions, Except Share Data)

ASSETS

 

March 31,
2004

 

December 31,
2003

 

 

 

 

 

 

(Unaudited)

 

 

 

CURRENT ASSETS:

 

 

 

 

 

     Cash and cash equivalents

 

 

$

2,180

 

 

 

$

2,710

 

 

     Restricted cash

 

 

 

265

 

 

 

 

207

 

 

     Accounts receivable, net of an allowance for uncollectible accounts
        of $36 at March 31, 2004 and $38 at December 31, 2003

 

 

 

823

 

 

 

 

662

 

 

     Expendable parts and supplies inventories, net of an allowance for
        obsolescence of $176 at March 31, 2004 and $183 at December 31, 2003

 

 

 

208

 

 

 

 

202

 

 

     Deferred income taxes

 

 

 

745

 

 

 

 

710

 

 

     Prepaid expenses and other

 

 

 

463

 

 

 

 

476

 

 

 

 

 

 

 

 

 

 

          Total current assets

 

 

 

4,684

 

 

 

 

4,967

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PROPERTY AND EQUIPMENT:

 

 

 

 

 

 

 

 

 

 

 

     Flight equipment

 

 

 

21,170

 

 

 

 

21,008

 

 

     Accumulated depreciation

 

 

 

(6,690

)

 

 

 

(6,497

)

 

 

 

 

 

 

 

 

 

          Flight equipment, net

 

 

 

14,480

 

 

 

 

14,511

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

     Flight and ground equipment under capital leases

 

 

 

465

 

 

 

 

463

 

 

     Accumulated amortization

 

 

 

(363

)

 

 

 

(353

)

 

 

 

 

 

 

 

 

 

          Flight and ground equipment under capital leases, net

 

 

 

102

 

 

 

 

110

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

     Ground property and equipment

 

 

 

4,565

 

 

 

 

4,477

 

 

     Accumulated depreciation

 

 

 

(2,488

)

 

 

 

(2,408

)

 

 

 

 

 

 

 

 

 

          Ground property and equipment, net

 

 

 

2,077

 

 

 

 

2,069

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

     Advance payments for equipment

 

 

 

97

 

 

 

 

62

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

          Total property and equipment, net

 

 

 

16,756

 

 

 

 

16,752

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER ASSETS:

 

 

 

 

 

 

 

 

 

 

 

     Goodwill

 

 

 

2,092

 

 

 

 

2,092

 

 

     Operating rights and other intangibles, net of accumulated amortization
        of $181 at March 31, 2004 and $179 at December 31, 2003

 

 

 

93

 

 

 

 

95

 

 

     Restricted investments for Boston airport terminal project

 

 

 

230

 

 

 

 

286

 

 

     Other noncurrent assets

 

 

 

2,319

 

 

 

 

2,164

 

 

 

 

 

 

 

 

 

 

          Total other assets

 

 

 

4,734

 

 

 

 

4,637

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total assets

 

 

$

26,174

 

 

 

$

26,356

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

2

DELTA AIR LINES, INC.
Consolidated Balance Sheets
(In Millions, Except Share Data)

LIABILITIES AND SHAREOWNERS’ DEFICIT

 

March 31,
2004

 

December 31,
2003

 

 

 

 

 

 

(Unaudited)

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

     Current maturities of long-term debt and capital leases

 

 

$

784

 

 

 

$

1,021

 

 

     Accounts payable, deferred credits and other accrued liabilities

 

 

 

1,789

 

 

 

 

1,709

 

 

     Air traffic liability

 

 

 

1,807

 

 

 

 

1,308

 

 

     Taxes payable

 

 

 

965

 

 

 

 

915

 

 

     Accrued salaries and related benefits

 

 

 

1,273

 

 

 

 

1,285

 

 

     Accrued rent

 

 

 

199

 

 

 

 

336

 

 

 

 

 

 

 

 

 

 

          Total current liabilities

 

 

 

6,817

 

 

 

 

6,574

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NONCURRENT LIABILITIES:

 

 

 

 

 

 

 

 

 

 

 

     Long-term debt and capital leases

 

 

 

11,292

 

 

 

 

11,040

 

 

     Long-term debt issued by Massachusetts Port Authority

 

 

 

498

 

 

 

 

498

 

 

     Postretirement benefits

 

 

 

2,243

 

 

 

 

2,253

 

 

     Accrued rent

 

 

 

704

 

 

 

 

701

 

 

     Pension and related benefits

 

 

 

4,605

 

 

 

 

4,886

 

 

     Other

 

 

 

201

 

 

 

 

204

 

 

 

 

 

 

 

 

 

 

          Total noncurrent liabilities

 

 

 

19,543

 

 

 

 

19,582

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

DEFERRED CREDITS:

 

 

 

 

 

 

 

 

 

 

 

     Deferred gains on sale and leaseback transactions

 

 

 

414

 

 

 

 

426

 

 

     Deferred revenue and other credits

 

 

 

154

 

 

 

 

158

 

 

 

 

 

 

 

 

 

 

          Total deferred credits

 

 

 

568

 

 

 

 

584

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

COMMITMENTS AND CONTINGENCIES (Notes 4 and 5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EMPLOYEE STOCK OWNERSHIP PLAN PREFERRED STOCK:

 

 

 

 

 

 

 

 

 

 

 

     Series B ESOP Convertible Preferred Stock, $1.00 par value,
        $72.00 stated and liquidation value; 5,748,394 shares issued
        and outstanding at March 31, 2004, and 5,839,708 shares
        issued and outstanding at December 31, 2003

 

 

 

414

 

 

 

 

420

 

 

     Unearned compensation under employee stock ownership plan

 

 

 

(140

)

 

 

 

(145

)

 

 

 

 

 

 

 

 

 

          Total Employee Stock Ownership Plan Preferred Stock

 

 

 

274

 

 

 

 

275

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SHAREOWNERS’ DEFICIT:

 

 

 

 

 

 

 

 

 

 

 

     Common stock, $1.50 par value; 450,000,000 shares authorized;
        180,915,087 shares issued at March 31, 2004 and
        at December 31, 2003

 

 

 

271

 

 

 

 

271

 

 

     Additional paid-in capital

 

 

 

3,242

 

 

 

 

3,272

 

 

     Retained earnings

 

 

 

457

 

 

 

 

844

 

 

     Accumulated other comprehensive loss

 

 

 

(2,326

)

 

 

 

(2,338

)

 

     Treasury stock at cost, 56,605,503 shares at March 31, 2004
        and 57,370,142 shares at December 31, 2003

 

 

 

(2,672

)

 

 

 

(2,708

)

 

 

 

 

 

 

 

 

 

          Total shareowners’ deficit

 

 

 

(1,028

)

 

 

 

(659

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total liabilities and shareowners’ deficit

 

 

$

26,174

 

 

 

$

26,356

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

3

DELTA AIR LINES, INC.
Consolidated Statements of Operations
(Unaudited)
(In Millions, Except Share and Per Share Data)

 

 

Three Months Ended
March 31,

 

 

 

 

 

 

2004

 

2003

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING REVENUES:

 

 

 

 

 

 

 

     Passenger

 

$

3,051

 

$

2,931

 

     Cargo

 

 

122

 

 

113

 

     Other, net

 

 

119

 

 

111

 

 

 

 

 

          Total operating revenues

 

 

3,292

 

 

3,155

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES:

 

 

 

 

 

 

 

     Salaries and related costs

 

 

1,609

 

 

1,634

 

     Aircraft fuel

 

 

574

 

 

511

 

     Depreciation and amortization

 

 

307

 

 

303

 

     Contracted services

 

 

241

 

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