Delta Air Lines annual report 1964

DELTA AIR LINES, INC.
}> DELTA AIR LINES, INC.
Comparative Summary of Operations YEARs ENDED JUNE ao
Dollars expressed in thousands except per share figures
1964 1963
Operating Revenues .......................................... . $224,672 $210,073
Operating Expenses ........................................... . $189,871 $177,622
Net Income ................................................. . $ 15,694 $ 13,824
Shares Outstanding at year end ................................ . 2,550,000 2,550,000
Earnings Per Share ........................................... . $6.15 $5.42
Total Stockholder Equity ...................................... . $ 77,017 $ 64,893
Stockholder Equity Per Share ................................. '. . $30.20 $25.45
Revenue Passengers Carried ................................... . 5,233,548 4,606,367
Available Seat Miles (000) ............................. . ...... . 5,582,349 4,953,787
Revenue Passenger Miles (000) ................................. . 3,353,842 3,004,157
Passenger Load Factor .................. . ..................... . 60.08% 60.64%
Five years of jet progress
This is in essence the annual report to our
stockholders, but it also is the story of your
Company's continuous growth over three decades.
Late in fiscal year 1964, which ended on June 30,
your Company's 40-millionth passenger since its
certification as an air mail carrier in 1934 received a
warm, friendly "Welcome Aboard." Forty million
seats occupied - more than enough to accommodate
the combined populations of the world's five largest
cities: Tokyo, London, New York, Shanghai,
and Moscow.
Such a number is a remarkable achievement by any
standards, but an even more graphic story of rapid
progress unfolds with a breakdown of the figure. It
shows that 49% of those passengers were carried
since the arrival of the jet airplane in 1959. And the
revenue passenger miles flown in that short period
were 55% of the company's 30-year total of 22 billion.
The early jet years plagued the industry with over
capacity and spiraling costs, creating a period of
severely depressed industry earnings. Your Company,
however, minimized enough of the adversities to
emerge as an industry pace-setter with profits
increasing each year. It was a five-year period of
steady growth with Delta's participation in the total
trunkline market climbing from 5.5% in 1959 to
almost 9% today.
As the industry recovered from its most costly
equipment transition in history, your Company also
benefited from the basic efficiencies of the jet. The
downward trend of unit costs and a continuing
improvement in the nation's economy contributed
significantly to making the 1964 fiscal year the most
prosperous ever for your Company.
Operating revenues, expenses and income each rose
7%. Operating revenues reached a record $224,672,000,
the second 200-million dollar year of sales in the
company's history. Operating expenses totaled
$189,871,000 but again there were significant
declines in available ton mile costs and available seat
mile costs of 6% and 5% respectively.
Operating income rose to $34,801,000 and, after
deduction of non-operating charges, net income
before taxes was $32,217,000.
Record earnings of $15,694,000, equal to $6.15 per
share and a 14 % increase over the previous year, were
achieved on the 2,550,000 common shares outstanding.
Earnings for the year were without benefits from
any unusual traffic windfalls which had enhanced
some prior years' results.
Available seat miles rose 13% from 5 billion to a
record of almost 5.6 billion, reflecting the addition of
three DC-8 Fanjets and an increase in daily utilization
of jet aircraft which at the year's end was 14% above
the previous year's performance. Your Company will
accept delivery of three additional DC-8 Fanjets
during the.coming fiscal year which will increase
the jet fleet to 16 DC-8 Fanjets and
16 Convair 880 jets.
Revenue passenger miles last year increased 12% to a
new high of almost 3.4 billion, virtually doubling the
total for the first year of jet operations. In five years
available seat miles increased 113% while the passenger
load factor was at a consistently stable level.
1
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During the fiscal year your Company obtained Civil
Aeronautics Board approval to start an interchange
with Pan American Airways which provided the first
through-plane service from New Orleans and Atlanta
to London and Paris, starting May 29.
Your Company provided northern Louisiana and the
State of Mississippi with their first pure jet service in
November 1963, operating into Shreveport and
Jackson, both of which were on Delta's original
route of passenger service.
Progress reports on the DC-9 twin-jet are most
encouraging. This aircraft, which will begin its test
flights in 1965 with deliveries scheduled to start in
early 1966, insures your Company of jet coverage for
all but the shortest trip lengths when it is placed in
operation. The DC-9 will be the third member of the
commercial jetliner family which your Company has
been privileged to offer first to the world's scheduled
transportation operations.
Looking to the future, there is every indication your
Company will continue to enjoy full participation in
the industry's improved traffic picture and by dedicated,
diligent development of all markets the result will
be further improvement of the company's
relative position.
PRESIDENT AND GENERAL MANAGER
September 11, 1964
REVENUES
Operating revenues more than doubled in the five
years of jet progress, a continuation of the growth
that has produced impressive revenue gains each
year of the last decade as shown on the adjacent
chart. Revenues rose 7% to a record $224,672,000
for fiscal year 1964. This total included passenger
revenues of $205,346,000, above $200-million for the
first time in your Company's history and reflecting a
14% increase in the number of revenue passengers
carried, which totaled a record 5,233,548.
Revenue passenger mi1es were up 12% to 3,353,842,000
with the increase accounting for $13,991,000 in
passenger revenues.
EXPENSES
Operating expenses totaled $189,871,000 or 7% above
1963. The increase reflected the integration of three
additional DC-S's into the Fanjet fleet and improved
utilization of the jet fleet with a resulting 13% rise in
available seat miles and a 14% increase in available
ton miles. The largest dollar rise was $7,711,000 for
employee salaries and related costs attributable largely
to a general wage increase in May 1963 and the
addition of 1,026 new employees.
The relationship of expense increase to capacity
increase demonstrated for the third successive year
substantial reductions in unit costs. For fiscal 1964
operating expenses per available ton mile declined
6% and available seat mile costs were reduced 5%
below 1963. Compared to the peak reached
subsequent to the costly preparation and
introduction period of the jets, available ton mile
costs have been reduced 15.6%.
EARNINGS AND DIVIDENDS
This was the 17th consecutive year of profitable
operations by your Company.
Operating income for fiscal year 1964 exceeded the
previous record high by $2,350,000 reaching
$34,801,000. Net income before taxes was up 10%
from $29,296,000 to $32,217,000.
Net earnings, derived entirely from operations, increased
14% to $15,694,000, equal to $6.15 per share on the
2,550,000 common shares outstanding. For the
previous year, net earnings were $13,824,000, or $5.42
per share, when a major competitor experienced labor
difficulties in the September quarter. The quarter-
OPERATING REVENUES
In Mi ll ions of Dollars
250 - - - - - - - - - - - - - - - -
55 56 57 58 59 60 61 62 63 64
by-quarter comparison following shows the significant
normal growth of the last three quarters, which
overcame the poor first-quarter comparison with the
1963 windfall* and resulted in a significant gain
for the year.
QUARTERLY COMPARISONS
OF NET EARNINGS
(In Thousands)
Fiscal Years Per Cent
Quarters Ended 1964 1963 Change
September 30 $ 3,353 $ 5,503 * -39%
December 31 3,592 2,231 +61%
March 31 4,413 2,471 +79%
June 30 4,336 3,619 +20%
Year Ended June 30 $15,694 $13,824 +14%
Cash dividend payments for the year were $3,570,000,
or $1.40 per share on the 2,550,000 shares outstanding.
Quarterly dividends of 30 per share were paid
on September 1, 1963 and December 1, 1963. The
amount was increased to 40 per share on March 1,
1964 which was repeated on June 1, 1964.
The Board of Directors, at the regular meeting on
July 23, 1964 voted a stock split in the form of a 25%
stock dividend, payable on September 8, 1964 to
stockholders of record August 14, 1964. The split
increases the number of common shares outstanding
to 3,187,500. The Board stated its intention to continue
the usual quarterly cash dividend of 40 a share
on the new total of outstanding shares.
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PERSONNEL
Employment provided another milestone in your
Company's history. During the month of April the
10,000th employee was welcomed into the Delta
family, and at the year's end employment totaled
10,283. This represented an increase of 1,026 over
the previous year. It was the largest single-year rise
of the 1960's and resulted from the requirements of
expanded services and the associated growth of
your Company.
Stability in employment contributes immeasurably to
the maintenance of Delta's high standards and is
becoming increasingly essential as competition
intensifies. At the year's end, 48% of the total
employees had five or more years of company experience.
EMPLOYEES BY LENGTH OF SERVICE
AS OF JUNE 30, 1964
Over 20 years
15 - 20 years
10- 15 years
5 - 10 years
1- 5 years
Less than 1 year
405
1,171
1,048
2,345
3,420
1,894
10,283
General wage and salary scales again were adjusted
in May 1964, which with the additional employees,
resulted in total compensation of $82,033,000. After
careful evaluation over a long period the employees'
comprehensive medical and general insurance program
will be expanded early in the new fiscal year, providing
numerous broader benefits. The insurance program
is among the outstanding employee benefits provided
by your Company; others include a liberal policy
of "space available" free air transportation, an
employee credit union, and an adequate retirement
income plan.
Capable, stable management with more than
a century of airline experience
Top - Paul W. Pate (left), Vice President- Properties
and W. T. Beebe, Vice President- Personnel
Center - R. S. Maurer (left), Vice President - Legal and Secretary
and T. M. Miller, Executive Vice President- Traffic and Sales
Lower - C. H. Dolson (left), Executive Vice President - Operations,
and Robert Oppenlander, Vice President- Finance and Treasurer,
and (inset) Robert L. Griffith, Vice President
Promotions during the year were Thomas M. Miller
to Executive Vice President-Traffic & Sales;
Robert Oppenlander to Vice President-Finance and
Treasurer; Paul W. Pate to Vice President-Properties;
and David C. Garrett, Jr. to Assistant Vice President-
Operations. None of the promotions resulted from
vacancies, but instead were based on an endeavor to
further solidify an already strong and stable
management team.
Prior to the close of the fiscal year, Mr. Earl D.
Johnson, by mutual agreement, submitted his
resignation as Executive Vice President and as a
member of the Board of Directors. Under the terms
of his employment contract, he assumed duties as an
adviser and consultant.
On July 23, 1964, your Board of Directors elected
two new directors. They are Mr. Thomas M. Miller,
an additional representative of management, and
Mr. Charles H. Kellstadt, Chairman of the Board of
Directors of General Development Corporation,
Miami, and a former Chairman of the Board and
Chief Executive Officer of Sears, Roebuck and Co.
PASSENGER FARES
The 4% decline in passenger revenue per revenue
passenger mile from 1963 was principally attributable
to the Military Discount plan which permits military
personnel in uniform and traveling on leave to be
Checking and double checking for your pleasant and safe flight
carried as standby passengers at a 50% discount. This
fare, however, generated in its first full fiscal year
$7 million in revenues, most of which is believed to
be from new traffic, utilizing seats which otherwise
would have been empty.
In the second half of fiscal 1964 two major fare
changes were made principally to meet competition.
On January 15 certain long-haul first class fares were
lowered. On June 18 the Family Plan discount was
reduced from 50% to 25% and extended to coach as
well as first class. It was again excluded from peak-traffic
days, Fridays through Sundays, systemwide. The
effect of these changes on total revenues cannot
be measured readily; however, they do appear to
have stabilized or slightly improved the passenger
revenue per revenue passenger mile since their start.
SERVICES
Foremost among the year's numerous achievements
was the continuing expansion and public acceptance
of jet services. For the entire fiscal period, jets
accounted for 73.53% or 2,466,189,000 of the
3,353,842,000 revenue passenger miles flown,
representing a substantial increase over the previous
year. By the end of the 1964 fiscal year, jets were flying
in excess of 75% of the revenue passenger miles.
There was a significant expansion of the southern
transcontinental service pattern with the inauguration
Experienced coordinators handle the dispatch of aircraft
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of a daily, roundtrip nonstop flight between Atlanta
and San Francisco and the addition of a daily,
onestop flight from Atlanta to both San Francisco
and Los Angeles. At the year's end there was a total
of 20 jet flights daily to and from California, in
addition to a turn-around jet flight that serves Las Vegas.
In November 1963 your Company provided the first
pure-jet service for northern Louisiana and the State
of Mississippi, operating a Convair 880 through
Shreveport and Jackson, and giving Birmingham
nonstop service to New York. The first Delta jet
service into Indianapolis was scheduled on a seasonal
basis, a Convair 880 night coach that began operation
in the late spring to accommodate the summer
tourist traffic.
A more flexible service pattern in the Caribbean
resulted from the inauguration of flights between
Jamaica and Puerto Rico, the culmination of the
award granted by the Jamaica Air Transport Licensing
Authority in fiscal year 1963. Jamaican operations
increased from three to eight weekly and included the
initial Kingston-Caracas jet flight.
The Caribbean expansion coincided with the start of
an attractive "circle fare," introduced by your Company
to offer a Los Angeles-New York roundtrip via
Jamaica and/or Puerto Rico for $325, or only $35
Last night's order delivered this morning
more than a roundtrip tourist ticket to New York
alone. This fare was designed to encourage travel
via Delta to the New York World's Fair and the
Caribbean on the same trip.
Further efforts to stimulate New York World's Fair
traffic was the scheduling of the first jet night coach
from Atlanta to New York. This was in addition to
the conversion of a DC-7 to a high-density configuration
of 95 seats, solely for charters, advance sections
and group movements to the Fair.
The first through-plane jet service from New Orleans
and Atlanta to Europe was begun on May 29, 1964
on an interchange basis with Pan American Airways.
The service began only 17 days after approval of the
application by the Civil Aeronautics Board.
Your Company occupied modern new facilities in
Satellite Six at Los Angeles International Airport and
plans were begun in San Francisco to provide expanded,
more adequate quarters in both the concourse and
ticket counter areas.
CAPITALIZATION AND FINANCING
Five years of jet progress has seen stockholder equity
more than double from $37,410,000 in fiscal 1959 to
$77,017,000 at the end of fiscal year 1964. The
$77,017,000 compared with $64,893,000 at the
beginning of the year, or on a per share basis it was
an increase from $25.45 to $30.20.
The 1961 Bank Credit Agreement, as amended,
provided a maximum credit of $12,939,000 to be
borrowed by June 30, 1964. The substantial
improvements in operating revenues and net income
since the establishment of this line of credit resulted
in a steadily improved financial strength and a
gradual reduction of the need for the credit this
Agreement was originally designed to provide. During
the year it became apparent that the credit was no
longer required, and on April 28, 1964 your Company
exercised its privilege under the Agreement to cancel
the banks' commitments and terminate the Agreement
in its entirety. Under the 1958 Bank Credit
Agreement, your Company has prepaid the two
$1,250,000 quarterly installments due in September
and December of 1964.
No additional financing will be needed to meet
currently outstanding purchase commitments,
including the DC-9 jet aircraft.
FLIGHT EQUIPMENT
In 1959 your Company introduced the Douglas DC-8
jet to scheduled commercial operations and in major
markets earned recognition as "the jet leader." Steady
expansion of the fleet has enabled Delta to retain
this distinction.
During the fiscal year three additional DC-8 Fanjets
were placed in operation, increasing the jet fleet to 29
aircraft of which 16 are Convair 880's and 13 are
DC-8 Fanjets. Conversion of the first six DC-8's to
Fanjets was completed in October 1963. This
modification resulted in significantly greater operating
economy and efficiency. Three DC-8 Fanjets on order
will be delivered during the coming fiscal year.
A team of 2,500 maintenance experts keep downtime at a minimum
Since your Company's order for 15 DC-9's, and an
option for 15 more, Douglas has negotiated firm
purchase agreements from four other airlines for 39
aircraft and options for 23 more, making a total of
54 orders and 38 on option. There are indications
that this number will increase within coming months.
Another step in staying abreast of the times in
aircraft development was a deposit of $300,000 with
the Federal Aviation Agency on April 28, 1964 for
delivery positions of three U.S. built Super Sonic
Transports. This amount is refundable if your
Company should decide to forego further
participation after current studies and evaluations
of the program.
PISTON
AIRCRAFT
JET
AIRCRAFT
FLIGHT EQUIPMENT In Millions of Dollars
1960
1961
1962
1963
1964
100 80 60 40 20 0
I
I I I I I
{
1111 NET BOOK VALUE
COST
DEPRECIATION
0 20 40 60 80 100 120 140 160 180 200
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1964 REVENUE DOLLAR
Twelve Months Ended June 30, 1964
SOURCES
Passengers and
Their Excess
(000)
Baggage. . . . . . . $207,429
Mail . . . . . . . . . . . 4,299
Freight and
Express ...... .
Other ......... .
11,265
1,679
92.33
1.91
5.01
.75
Total Revenue $224,672 100.00
DISTRIBUTION
(000)
Employee salaries
and related
costs 1 $ 82,033 36.51
Depreciation and
Obsolescence of
Property and
Equipment ...... 19,930 8.87
Gasoline and Oil 24,025 10.69
Materials and
outside repairs
for Maintenance
of Equipment ... 15,453 6.88
Food and supplies
for passengers ... 7,198 3.20
Rentals and
Landing Fees .... 7,387 3.29
--
-
~
ti




t Salaries, travel, employee welfare and payroll taxes
Advertising ....... 6,595 2.94

Communications ... 4,251 1.89

Other operating
"
costs ............ 20,265 9.02
Capital Costs

(Interest and
Dividends) ...... 6,361 2.83
Taxes ............ 19,050 8.48

Retained for use
in business ...... 12,124 5.40
Total ......... $224,672 100.00
---
There were no sales of aircraft during the year and at
June 30, 1964, Delta's operating fleet consisted of
8 5 aircraft :
Number of
Manufacturer Model Number Seats
Douglas DC-8 Fanjet 13 128
Convair 880 Jet 16 92
Douglas DC-7/7B 19 77
Douglas DC-6 11 67
Convair 340/440 21 44
Curtiss C-46 5 Cargo
The fleet had a net book value of $138,805,000, of
which $129,227,000 represents the value of jet aircraft
with the balance of $9,578,000 for pistons. The piston
fleet is now largely depreciated to the established
normal residual values and DC-7's, which now have
A picture of precision in the overhaul
of an air speed indicator
a doubtful market value, are being further depreciated
to scrap value by the end of 1965, just prior to
delivery of their replacements, the DC-9's.
REGULATORY MATTERS
Service To Huntsville: In December 1963 the Civil
Aeronautics Board denied your Company's application
to serve Huntsville, Alabama. One of the primary
reasons for denial of the application was the Board's
conclusion that Delta's operation would endanger
the revenues of the subsidized local service carrier
which now provides the bulk of Huntsville's scheduled
air service. Delta will continue to study the
developing trunk air service needs of the Huntsville
area, however, in relation to the requirements of the
National Defense.
The Competitive Trunkline Service Investigation: This
Civil Aeronautics Board investigation, in progress
since December 1961 had as its purpose the
determination as to whether or not competitive
trunkline service between New Orleans and New York
via intermediate points and between Memphis and
New York via intermediate points should be modified
or suspended. On June 3, 1964 the Board in effect
terminated the investigation when it found that no
change in existing authority was required.
South American Route Investigation Case: This
extremely complex proceeding involves the investigation
of all air service needs between the United States and
South America. The Civil Aeronautics Board recently
defined the final issues to be resolved, thus clearing
the way for the public hearing which is now scheduled
to begin in January 1965. Your Company's primary
position is to protect and improve its existing
operating authority in this area.
Pacific Northwest-Southwest Service Investigation:
Shortly after the close of the fiscal year the Civil
Aeronautics Board announced its intention to
institute a proceeding covering the need for
single-carrier service between the Pacific Northwest
and the Southwest areas. Your Company filed a
route application and will be an active party in the
proceedings, hearings on which are not anticipated
until the calendar year 1965. The service areas
involved are the states of Washington, Oregon,
Idaho, Wyoming, Utah and Northwest Colorado, on
the one hand, and Southwest Colorado, New Mexico,
Kansas, Oklahoma, Texas and Louisiana, and the
cities of Kansas City and St. Louis, on the other hand.
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The heart of DELTAMATIC is the computer center in Atlanta
SA
.....,-,..,, ..
1 ",Jo:
@
LOS ANGELES
Late in the fiscal year your Company acti-
vated the initial phase of DELTAMATIC which
operates with IBM equipment and is the
most comprehensive electronic reservations
system in the airline industry.
The first operation was conversion of
reservations control from manual pro-
cedures to DELTAMATIC. Electronic control
of all space was necessary prior to linking
individual reservations offices to the com-
puter. Tie-in of the first cities began early in
the new fiscal year with a progressive cut-
over program which will result in DELTA-
MATIC's benefits for many major cities on
the system by the end of calendar year 1964.
Coinciding with the activation of
DELTAMATIC was the installation of the
world's largest privately owned computer
controlled teletypewriter message switching
center, developed by Collins Radio Com-
pany. The compatibility of the two systems
L
accentuates the simplification of trans-
mission, with a related increase in capability
and efficiency.
DELTAMATIC, which had more than 7,000
hours of simulated, real-time environmen-
tal testing subsequent to the completion of
two years of programming, handles every
phase of reservations including seat avail-
ability and the recording of all passenger
name records associated with the person
occupying the seat. It reduces many present
manual procedures from as much as 30
minutes to only seconds, but there still is
the same friendly personal service at each
reservations telephone.
Your Company is making the transition
to improved reservations service with full .
employment; convinced that continuing
expansion, transfers, promotions and nor-
mal attrition create an ever-expanding need
for additional employees.
DELTA/PAN AM
THRU JETS TO AND
FROM LONDON - PARIS
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ASSETS
CURRENT ASSETS:
Cash ................................................ .
Short-term cash investments, at cost .................... .
Accounts receivable-
Traffic-net ....................................... .
Other ............................................. .
Maintenance and operating supplies, at average cost ....... .
Prepaid expenses, etc ................................... .
Total current assets ..................... .
OTHER ASSETS ( Net assets of dusting
division and other investments) ......................... .
PROPERTY AND EQUIPMENT:
Cost-
Flight
Equipment
1964 ..................... $243,193,140
1963.... . . .. . . . . . . . . .. .. . 217,026,899
Reserves for depreciation-
1964 .................... .
1963 .................... .
104,388,285
92,262,823
Other
Property and
Equipment
$ 24,484,870
21,905,993
11,462,924
9,790,732
Advance payments for new flight equipment .............. .
DELTA AIR LINES, INC.
1964
$ 11,708,854
8,062,000
12,433,887
2,540,862
2,412,615
910,916
$ 38,069,134
$ 485,065
$267,678,010
115,851,209
$151,826,801
3,859,773
$155,686,574
$194,240,773
1963
$ 13,056,477
11,041,647
12,380,854
2,488,001
2,297,858
743,626
$ 42,008,463
$ 565,772
$238,932,892
102,053,555
$136,879,337
1,979,076
$138,858,413
$181,432,648
BALANCE SHEETS JUNE 30, 1964 AND 1963
LIABILITIES AND STOCKHOLDER EQUITY
CURRENT LIABILITIES:
Current maturities of long-term notes .................... .
Accounts payable and accrued liabilities .................. .
Tickets outstanding subject to refund or use .............. .
Air travel plan deposits ................................ .
Accrued Federal and state income taxes .................. .
Total current liabilities .................. .
LONG-TERM DEBT:
Notes payable (Note I) ................................ .
Other ................................................ .
DEFERRED FEDERAL INCOME TAXES ............... .
STOCKHOLDER EQUITY:
Common stock, par value $3.00 per share-
Authorized 4,000,000 shares
Outstanding 2,550,000 shares (Note 4) ................. .
Capital surplus ....................................... .
Retained earnings (of which $24,741,133 is not
presently available for cash dividends
under terms of credit agreements) ..................... .
PURCHASE COMMITMENTS (Note 2)
The accompanying notes are an integral part of these statements.
1964
$ 2,500,000
17,529,762
2,714,039
1,613,725
4,051,416
$ 28,408,942
$ 47,500,000
179,762
$ 47,679,762
$ 41,135,000
$ 7,650,000
22,450,114
46,916,955
$ 77,017,069
$194,240,773
1963
$ 3,026,316
15,922,314
2,864,957
1,490,900
3,774,992
$ 27,079,479
$ 56,973,684
272,013
$ 57,245,697
$ 32,214,000
$ 7,650,000
22,450,114
34,793,358
$ 64,893,472
$181,432,648
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DELTA AIR LINES, INC.
STATEME TS OF I COM FOR THE YEARS ENDED JUNE 30, 1964 AND 1963
14
OPERA TING REVENUES:
Passenger ............................ . ................ .
Freight ............................................... .
U.S. Mail .................. . ......................... .
Express .............................................. .
Excess baggage ...... .................................. .
Other operating revenue-net ........................... .
Total operating revenues ............................. .
OPERA TING EXPENSES:
Flying operations ...................................... .
Maintenance .......................................... .
Aircraft and traffic servicing ............................ .
Promotion and sales ................................... .
Depreciation .......................................... .
Passenger service ...................................... .
General and administrative ............................. .
Total operating expenses ............................. .
Income from operations
before income taxes ............................... .
OTHER EXPENSE (INCOME):
Interest expense (less capitalized
interest on advances for flight
equipment-$275,000 in 1964
and $143,000 in 1963) ............................... .
Other-net . .......................................... .
Total other expense ................................. .
Income before income taxes .......................... .
PROVISION FOR INCOME TAXES:
Current Federal and state income taxes ................... .
Deferred Federal income taxes .................. . ....... .
Net income ......................................... .
The accompanying notes are an integral part of these statements.
1964
$205,345,711
8,869,003
4,299,533
2,395,638
2,082,546
1,679,961
$224,672,392
$ 49,931,093
42,004,704
32,401,307
24,238,688
19,929,963
15,990,278
5,375,124
$189,871,157
$ 34,801,235
$ 2,791,042
$ (206,404)
$ 2,584,638
$ 32,216,597
$ 7,602,000
8,921,000
$ 16,523,000
$ 15,693,597
1963
$191,355,498
8,304,759
4,483,007
2,280,466
2,119,893
1,529,591
$210,073,214
$ 49,277,866
37,515,346
29,484,885
21,800,548
19,838,833
14,735,816
4,968,634
$177,621,928
$ 32,451,286
$ 3,416,683
(261,875)
$ 3,154,808
$ 29,296,478
$ 4,820,000
10,652,000
$ 15,472,000
$ 13,824,478
DELTA AIR LINES, INC.
STATEMENT OF RETAINED EARNINGS FOR THE YEAR ENDED JUNE 30, 1964
Balance June 30, 1963 .................................................... .
Add:
Net income for the year ................................................ .
Deduct:
Cash dividends-$ I .40 per share ........................................ .
Balance June 30, 1964 ($24,741,133 is restricted
as indicated on balance sheet) ........................................... .
T u s ISPOSITION OF FUNDS
FOR THE YEARS ENDED JUNE 30, 1964 AND 1963
1964
FUNDS PROVIDED BY:
Net income for the year ................................ . $ 15,693,597
Add non-cash expenses:
Depreciation ....................................... . 19,929,963
Deferred Federal income taxes ........................ . 8,921,000
Other ............................................. . 431,803
Total from operations ............................ . $ 44,976,363
Borrowing under credit agreements ...................... .
$ 44,976,363
FUNDS USED FOR:
Flight equipment additions, including advances ............ . $ 34,352,315
Other property and equipment additions .................. . 2,756,905
$ 37,109,220
Repayments of long-term debt ............... . .......... . 9,565,935
Cash dividends ........................................ . 3,570,000
$ 50,245,155
Increase (decrease) in working capital ...................... . $ (5,268,792)
WORKING CAPITAL AT END OF YEAR .... . .......... . $ 9,660,192
The accompanying notes are an integral part of these statements.
$ 34,793,358
15,693,597
$ 50,486,955
3,570,000
$ 46,916,955
1963
$ 13,824,478
19,838,833
10,652,000
1,374,308
$ 45,689,619
5,436,000
$ 51,125,619
$ 33,819,990
2,466,763
$ 36,286,753
6,071,911
2,550,000
$ 44,908,664
$ 6,216,955
$ 14,928,984
15
DELTA AIR LINES, INC.
16
NOTES TO FINANCIAL STATEMENTS JUNE 30, 1964
1. LONG-TERM NOTES PAYABLE:
The Company's outstanding borrowings of $50 million at June 30, 1964, consist of $15 million due a group of twenty-
four banks under 4% unsecured notes repayable in quarterly installments of $1,250,000 from March 31, 1965
through December 31, 1967, and $35 million payable to four insurance companies under 6% unsecured notes
repayable on a semi-annual basis during the period 1968-1974.
2. FLIGHT EQUIPMENT PURCHASE COMMITMENTS:
The Company has outstanding purchase commitments requiring expenditures of approximately $69 million subse-
quent to June 30, 1964, for the acquisition of two Douglas DC-8 Fan jet aircraft scheduled for delivery in November
1964, one DC-8 Fanjet aircraft scheduled for delivery in April 1965, and fifteen Douglas DC-9 twin-jet aircraft to be
delivered beginning in early 1966.
3. INVESTMENT CREDIT:
The amount of investment credit used by the Company to satisfy Federal income taxes payable amounted to
$2.4 million in 1964 and $2 million in prior years. These amounts (included with Deferred Federal Income Taxes) are
being amortized to income over the approximate life of the properties which gave rise to the credit. At June 30, 1964,
the Company also had approximately $2.3 million of unused investment credit which is available for future years.
4. SUBSEQUENT STOCK SPLIT:
On July 23, 1964, the Board of Directors declared a stock split to be effected in the form of a 25% stock dividend.
The 637,500 dividend shares will be distributed on September 8, 1964, to stockholders of record on August 14, 1964.
AUDITORS' OPINION
ARTHUR ANDERSEN & Co.
To the Board of Directors,
Delta Air Lines, Inc. :
34 PEACHTREE STREET,N.W.
ATLANTA 3
We have examined the balance sheet of Delta Air Lines, Inc. (a Louisiana corpo-
ration) as of June 30, 1964, and the related statements of income, retained earnings,
and funds for the year then ended. Our examination was made in accordance with
generally accepted auditing standards, and accordingly included such tests of the ac-
counting records and such other auditing procedures as we considered necessary in the
circumstances. We had made a similar examination for the year ended June 30, 1963.
In our opinion, the accompanying balance sheet and statements of income, re-
tained earnings, and funds present fairly the financial position of Delta Air Lines, Inc.
as of June 30, 1964, and the results of its operations and the sources and disposition
of funds for the year then ended, in conformity with generally accepted accounting
principles applied on a basis consistent with that of the preceding year.
Atlanta, Georgia,
August 12, 1964.
DELTA1S STORY TO THE PUBLIC
While the theme of basic advertising continues
to be the Delta Tradition of service, increased
jet schedules and travel to the World's Fair
have been actively promoted in the past year.
Their spirit and pride make
the big difference on DELTA
You can't teach people to smile from the inside. Or add that alert twin.kle
to their eyes. Or plant eagerness in their steps . .. These things are born
of pride in a job, spo.rked by the spirit of a team that's "all go" and
kno ws iL .. No air line sells the special kind of service such special
people provide. You either get it or you d on't. On Delta you do!
You'll remember how pleasant long after you've forgotten ~
C.IIDlt ' M,d"'R:uMl :' FI.L.a~
.. IIJAUlUl ; O<--T"""-'
~
Nobody beat,
D1lt1 with Jet,
to CH/CASO
Non,otopaatl:2:lp,10:00p
oolt..<Je\ld.Uy. Jtft/w1#
D,,J,17U6,oi,f,\11$1.46
~
4 Jet serrlces
to DETROIT
'Theonly.l.wto~hl
MellOA.rpo,t, l,v, l .1611",
3:~.&.65,pandll:2.Spt
J.-n#/.- do,yl74.(I();
,o,.,1,1157.90
The most nonstop
Jets to ATLANTA
No,IU:lol,4:Mp,6:Mp
Od...-.Jo.la:3:~1rw13,_
Tlv,/lyJ_,_
da.,"9.60; .. ;.,.mM
am ~ pmJet
serrice to DALLAS
Only~
Lv. 9:15"1. 12:l&p'
Lv. 4:Mp,an7:26p"
J-Uf/onl?J.515
Fast11t,-,,n/ng
Jet ser-,foe to
LOS ANGELES
Lv. $;~.rr. 10:19p'
Aloomon1i111.lel
Lv. t :15-.arr. t :tllp
-~,'.SIi!
The most Jets,
theonly
non-stop Jets
to CINCINNATI
l,v, t:lS., t:$p
l,v. l:~,rr. 4:06p
Lv,3:25p,.,.._7:33p
Lv.ll:25p,":33.t
J ~ f -: N:)'161.10
~;,;,,146.411
The mm! erenlng
Jet serrke to
SAN FRANCISCO
Lv. $:Mp,an-, I0:41p
Aloo""""'111Jet
Lv. t :ts.,,,~p
.,_rvlf-$1$7.116
How long ainoe you've
taken your wife along on
a trip ... or out to a oham
pagne dinner ? You c&.n
.do both at onoe on a Delta
J et. Thrifty Family Plan
farea m ake it a bargain I
111, oir 1;,., will, tile BIG JETS
Nobody, but n~body
4 ~
k ;;;--..
beats DELTA with ~~~Ii~
non-stop FanJets to
~ ~ : , J . ,
For a World oFFamily Fun-
SAN FRANCISCO ., '
3 Non-Stop FanJets dall)<
-~ I '..~ :.~ ~-~
.::..-,.::~::; ~
). CELTA
You'll ""'member Mw plJJ.nl Jong after you've rora:ott.en how fcu,tf
Jet DELTA to New York
and the World's Fair
World's Greatest city-only min
away by Delta's Big Jets
(eofflmuchln,lha.n:,ou.mi/thtthinli)
a-.. ,_ .. , _ _ ..,,.,...,._,
.,..,.....,_,_.,._D,llo
----......... --IIIIO
.... ,-.,_ .. , .... ._.... ..
- - . - . . . . - .... -lilolt,, ...
---,.---
--11....-. ...... 0...,, ...
-........... --. ..
...,..._0,, , l),lla.- ,,-
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---..... ,
...........
rr1th0Do11 o - -U..oo-Yo,k
................. _
,.._.,.... ....
------ "'"'"
-~ ... t.o-..-.................. ..
.... ........,~
..... ,.._,..._
--"--,,1 ...... 0,..-
_.,...,.,~---
,.,.,..,"""""'""'12455
--...
- .,
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--
0.-.,..,1..o _ _
i;._ .... ,_
.... l),lla .... _ ,... ____ ,, _
_ ....,..,.,.11115 ___ ...
__ ..,,_, ._A,-111.
Ht Ii Alllnt'T'OIUI.A,
:=,_ :.: :: ::: ~.:::
Your first Delta ticket ia
the beginning of a beaut.i-
ful friendabip. You're sure
of swift comfort a loft ..
plus the pereonal aervioe
that makea Delta d ifferent.
Next trip, dial Delta!
,,,f oir lint .,,;,11
,,.f BIG JETS
Nowt 2 one-stop
FanJets daily to
New Orleans
Thru-plane -only 4 hr. 51 min.
Thrifty Jetourist fare only $118.75 Add u..:
~
>. ce'i: ..
=fA
the air hnf with the BIG JETS
17
DELTA AIR LINES, INC.
FIVE YEARS OF JET AGE GROWTH YEARS ENDED JUNE 30
Dollars expressed in thousands except per share figures
Operating Revenues
Passenger .................................................... .
Mail ........................................................ .
Freight ...................................................... .
Express ..................................................... .
All other .................................................... .
Total operating revenues .......................................... .
Operating expenses ............................... . ............... .
Operating income ................................................ .
Non-operating expense-net. ...................................... .
Net income before taxes .......................................... .
Taxes on income ................................................. .
Net income ...................................................... .
Special item-profit on disposition of flight
equipment (after taxes) ........................................ .
Total income and special item ..................................... .
Per share of stock outstanding at year end* ......................
Dividends paid . . . . . . . . . . . . . . . . . . . . .
. . ... . ................. . ..... .
Dividends paid per share* ........................ . ............ .
Total assets ................................. . ................... .
Stockholder equity ............................................... .
Stockholder equity per share* .................................... . .
Shares of common stock outstanding at year end* .... . ............... .
Revenue plane miles (000) ........................................ . .
Revenue passengers carried ............ . ........................... .
Available seat miles (000) .. . .......... . .................. .. .. . .... .
Revenue passenger miles (000) ..................................... .
Passenger load factor ....... . ..................................... .
Available ton miles (000) ...... . ....... . .......... . ..... . .......... .
Revenue ton miles (000) .......................................... .
Passenger revenue per passenger mile . .......................... . ... .
Operating expenses per available seat mile ............... . ...... . ... . .
Operating expenses per available ton mile ........................... .
*Adjusted to reflect 50% stock split March 1963 and 33-1/3% stock split March 1962.
18
1964
$205,346
4,299
8,869
2,396
3,762
$224,672
189,871
$ 34,801
2,584
$ 32,217
16,523
$ 15,694
$ 15,694
$6.15
$ 3,570
$1.40
$194,241
$ 77,017
$30.20
2,550,000
65,815
5,233,548
5,582,349
3,353,842
60.08%
740,852
378,465
6.12
3.38
25.63
1963
$191,355
4,483
8,305
2,280
3,650
$210,073
177,622
$ 32,451
3,155
$ 29,296
15,472
$ 13,824
$ 13,824
$5.42
$ 2,550
$1.00
$181,433
$ 64,893
$25.45
2,550,000
61,242
4,606,367
4,953,787
3,004,157
60.64%
648,185
342,661
6.37
3.56
27.40
1962 1961
$155,994 $134,946
3,414 . 2,579
5,814 4,070
1,669 1,408
2,886 3,129
$169,777 $146,132
154,671 134,431
$ 15,106 $ 11,701
2,862 2,733
$ 12,244 $ 8,968
6,579 4,842
$ 5,665 $ 4,126
1,320 526
$ 6,985 $ 4,652
$2.74 $2.07
$ 1,520 $ 1,346
$0.65 $0.60
$158,088 $134,938
$ 53,619 $ 41,056
$21.03 $18.29
2,550,000 2,244,469
55,713 49,455
3,768,707 3,569,778
4,123,318 3,389,547
2,393,991 2,034,047
58.06% 60.01%
542,232 442,251
269,044 223,592
6.52 6.63
3.74 3.95
28.52 30.40
1960
$109,672
2,140
4,250
1,362
2,767
$120,191
113,460
$ 6,731
1,313
$ 5,418
2,735
$ 2,683
156
$ 2,839
$1.27
$ 1,346
$0.60
$121,890
$ 38,902
$17.33
2,244,467
49,405
3,241,511
3,027,450
1,757,208
58.04%
387,552
195,373
6.24
3.74
29.28
TOTAL EARNINGS
In Millions of Dol lars
16.5
15.0
13.5
12.0
10.5
9.0
7.5
6.0
4.5
3.0
0
60 61 62 63 64
STOCKHOLDER EQUITY
PER SHARE*
In Dollars
35.0
32.5
30.0
27.5
25.0
L
22.5
20.0
17.5
60 61 62 63 64
DELTA AIR LINES, INC.
REVENUE
PASSENGERS CARRIED
In Millions
5.5
5.0
4.5
4.0
3.5
1.5 ]
1.0
.5 -
.0
60 61 62 63
REVENUE
PASSENGER MILES
In Bi llions
F
F
F
64
3.50 - - - - - - - - - - -
3.25 -
Ill JET
3.00 - PISTON - -
2.75 - - - - - ---:
1.25
1.00
.50
.25
.0
60 61 62 63 64
*Adjusted to reflect 50% stock split March 1963 and 33-1/3% stock split March 1962.
19
DELTA TICKET OFFICES
City Ticket Offices Reservation Telephone
ALEXANDRIA Airport ............................... Hillcrest 2-44 71
ASHEVILLE Lobby, Battery Park Hotel. ................. ALpine 2-7601
ATLANTA Fulton National Bank Bldg.; Piedmont and} 521-3000
Biltmore Hotels ; Merchandise Mart Bldg.
ATLANTIC CITY Bellevue-Stratford & Sheraton Hotels .. SAratoga 7-9900
AUGUSTA Richmond Hotel ................................ 798-2251
BALTIMORE Lord Baltimore Hotel .................. Southfield 6-2100
BATON ROUGE Lobby, Capitol House Hotel .............. ELgin 6-4333
BEAUMONT Airport. ............................... RAndolph 2-3471
BIRMINGHAM 2002 Fifth Ave., North ........................ 592-9601
BRUNSWICK Airport ................................ MElrose 8-2531
CARACAS, YENZ. Edificio Roraima ........................... 339-349
and Macuto-Sheraton Hotel ................. 81-21-84
CHARLESTON Lobby, Francis Marion Hotel .......... SHerwood 4-2567
CHARLOTTE 201 S. Tryon St. (Cutter Building) ................ 392-4321
CHATTANOOGA Lobby, Hotel Patten ......................... 265-3631
CHICAGO 67 East Mon~oe, Co~rad Hilton Hotel } ..... Financial 6-5300
and 1649 Orrmgton m Evanston
CINCINNATI Sheraton-Gibson and Netherl'd-Hilton Hotels ..... 241-1700
CLEARWATER Tampa International Airport .............. . .... 446-8318
COLUMBIA Lobby, Wade Hampton Hotel ............... . SWift 4-3000
COLUMBUS, GA. Ralston Hotel ........................ FAirfax 7-7458
COLUMBUS, OHIO Lobby, Deshler Cole Hotel ................. 237-7474
DALLAS 212 S. Akard St. (Baker Hotel);} .......... FLeetwood 7-6161
Statler Hotel Lobby
DAYTON Biltmore Hotel ................................... 223-7141
DETROIT 1205 Washington Blvd. and Lobby,} ...... WOodward 5-3000
General Motors Bldg.
EVANSVILLE Lobby, Mccurdy Hotel. ................. HArrison 5-9023
FORT LAUDERDALE 10 S.E. Sixth Avenue ............... JAckson 4-0331
FORT WAYNE Lobby, Van Orman Hotel. ................ . .... 742-2201
FORT WORTH Lobby, Hotel Texas ...................... EDison 2-7871
HOT SPRINGS Airport. .............................. NAtional 3-1671
HOUSTON Rice and Shamrock-Hilton Hotels ............ CApitol 5-1361
INDIANAPOLIS Lobby, Claypool Hotel ................. MElrose 4-3200
JACKSON Heidelberg Hotel ................................. 939-5200
JACKSONVILLE Hotel Robert Meyer ..................... ELgin 3-3171
KANSAS CITY Muehlebach Hotel. ...................... GRand 1-7733
KINGSTON, JAMAICA Lobby, Myrtle Bank Hotel .................. 24816
KNOXVILLE Farragut Hotel. ................................ 577-6611
LAS VEGAS Sahara Hotel ................................... 382-0077
LEXINGTON Airport ....................................... 254-5569
LITTLE ROCK Lobby, Coachman's Inn ................ FRanklin 6-3141
LONDON, ENGLAND (PAA) 193 Piccadilly w. 1 ............... REG 7292
LOS ANGELES 529 w. Sixth Street. ................... MAdison 0-1050
BEVERLY HILLS Beverly Hilton Hotel. .............. CRestview 3-1813
20
City Ticket Offices Reservation Telephone
HOLLYWOOD Hollywood Roosevelt Hotel. .......... MAdison 0-1050
LONG BEACH Jurgens Trust Building ............... NEwmark 9-4000
PASADENA 700 E. Colorado Blvd .................. SYcamore 5-0449
LOUISVILLE Shop 102, Starks Bldg ........................... 584-3142
MACON Lobby, Hotel Dempsey ............................. 788-3363
MARACAIBO, YENZ. Edificio Icuma, Ave. 5 de Julio Maracaibo .... 75-281
MEMPHIS Peabody Hotel .................................. 398-9211
MERIDIAN Airport. ....................................... 482-3141
MIAMI Columbus Hotel; Ashe Bldg., U. of Miami ..... FRanklin 3-0441
MIAMI BEACH 1632 Collins Ave. and 230 71st St ........ FRanklin 3-0441
MILWAUKEE 718 N. Plankington Ave .................. Division 2-4675
MONROE Lobby, Frances Hotel. ...................... FAirfax 3-5116
MONTEGO BAY, JAMAICA Casa Montego Hotel .................... 2811
MONTGOMERY Lobby, Jefferson Davis Hotel. ................. 263-6404
NEW ORLEANS Sheraton-Charles and Roosevelt Hotels ......... 524-8592
NEW YORK Rockefeller Center; Airlines Building; 100 }
Broadway; Lobby, Statler Hotel; East
Side Terminal; West Side Terminal; 635 PLaza 1-6600
Madison Ave. ; 200 Livingston St., Brooklyn;
35 Mamaroneck Ave., White Plains
WESTCHESTER ... White Plains 6-1626
NASSAU AND SUFFOLK ....... !Vanhoe 1-6811
NEW ARK 3 Commerce Street ......................... Mitchell 2-2228
ORLANDO Lobby, San Juan Hotel ..................... CHerry 1-45Jl
CAPE KENNEDY 7000 North Atlantic Ave .......... 262-4373, 636-3144
PADUCAH Airport ........................................ 443-1732
PARIS, FRANCE (PAA) 138 Champs Elysees; 1 Rue Scribe ...... BAL 9200
PHILADELPHIA Bellevue-Strat. and Sheraton Hotels ..... SAratoga 7-9900
PORT ARTHUR Airport ............................. RAndolph 2-3471
PORT AU PRINCE, HAITI 2 Rue Du Fort Per ... : .................. 3805
SAN DIEGO U .s. Grant Hotel ............................... 239-2345
SAN FRANCISCO Sheraton-Pala~e. Hotel; . } ....... EXbrook 7-3242
Downtown A1rhne Termmal
OAKLAND 1922 Broadway ...................... TEmple Bar 4-6680
SAN JUAN, PUERTO RICO 311 Recinto Sur ..................... 791-0045
SAVANNAH Manger Hotel. ........................... ADams 3-0267
SHREVEPORT Captain Shreve Hotel .......................... 425-3232
SPRINGFIELD Airport. ............................. UNiversity 6-1951
ST. LOUIS Lobby, Statler Hotel. ........................ MAin 1-7580
ST. PETERSBURG Tampa International Airport. ............... 896-7141
TAMPA 500 Florida Ave. (Hillsboro Hotel) ............... . .. 877-8111
TOLEDO Commodore Perry Hotel Arcade ........... . ........ 244-8661
WASHINGTON, D.C. 1605 K Street, N.W. and } 296-7000
Washington Hotel
WEST PALM BEACH Town House Motor Hotel, } 832-6411
(100 Datura Street)
DIRECTORS
R. W. COURTS
Atlanta, Georgia
EDWARD H. GERRY
New York, New York
R. S. MAURER
Atlanta, Georgia
CARLETON PUTNAM
Washington, D.C.
OFFICERS
R. W. FREEMAN, Chairman
New Orleans, Louisiana
C.H. DOLSON
Atlanta, Georgia
CHARLES H. KELLSTADT
Miami, Florida
T. M. MILLER
Atlanta, Georgia
GEORGE M. SNELLINGS, JR.
Monroe, Louisiana
C. E. WOOLMAN
President and General Manager
DELTA AIR LINES, INC.
EMERY FLINN
Miami, Florida
JOHN R. LONGMIRE
St. Louis, Missouri
WINSHIP NUNNALLY
Atlanta, Georgia
C. E. WOOLMAN
Atlanta, Georgia
C.H. DOLSON T. M. MILLER
Executive Vice President-Operations
W. T. BEEBE
Vice President-Personnel
ROBERT L. GRIFFITH
Vice President
ROBERT OPPENLANDER
Vice President-Finance and Treasurer
Executive Vice President-Traffic and Sales
R. S. MAURER
Vice President-Legal and Secretary
PAUL W. PATE
Vice President-Properties
DA YID C. GARRETT, JR. CHARLES P. KNECHT R. H. WHARTON C. B. WILDER
Assistant Vice President- Assistant Vice President- Assistant Vice President- Assistant Vice President-
0 perations Sales Personnel Operations-Technical
CATHERINE FITZGERALD
Assistant Treasurer
J. R. HOWELL
Assistant Treasurer
TRANSFER AGENTS: The Citizens & Southern National Bank, Atlanta, Georgia
and The First National City Bank, New York, New York
REGISTRARS: Trust Company of Georgia, Atlanta, Georgia
HUGH H. SAXON
Assistant Treasurer
and Morgan Guaranty Trust Company of New York, New York, New York
COMMON STOCK: Listed on the New York Stock Exchange
AUDITORS: Arthur Andersen & Co.
ANNUAL MEETING: October 22, 1964, Monroe, Louisiana
DELTA AIR LINES, INC., GENERAL OFFICES, ATL.ANTA AIRPORT, ATLANTA, GEORGIA