Delta Air Lines annual report 1970

DELTA
AIR LINES
INC.
ANNUAL
REPORT
1970
$3.00 -
2 .50 -
2.00 -
o L
EARNINGS PER SHARE
RETURN ON INVESTMENT
Estimated influence of competitors'
strike and extraordinary gain
on disposition of flight equipment
62 64
Highlights of the Year
66 68
- 50
- 30
- 20
- 10
.J 0
70
A comparative summary of the major yardsticks
for evaluation of operations for years ended
June 30 is shown below. Dollars are expressed
in thousands, except per share figures.
Per Cent
1970 1969 Change
Operating
Revenues .... .. . . $622,129 $516,113 + 21%
Operating
Expenses . . .. . . . . $529,179 $433,938 +22%
Net Income ...... $ 44,527 $ 39,191 + 14%
Earnings Per
Share .... . .. . .. . . $2.33 $2.05 + 14%
Revenue Passengers
Carried .......... 13,528,206 12,107,061 + 12%
Available Seat
Miles (000) .. . ... . 18,559,724 14,768,892 +26%
Revenue Passenger
Miles (000) ....... 9,397,913 8,249,085 + 14%
Passenger Load
Factor . . . . . . . . . . . 50.64% 55.85% - 9%
2
C.H. DOLSON
Chairman of the Board
W. T. BEEBE
President
REPORTTOTHESTOCKHOLDERS
Fiscal 1970 was a year of significant
change both for Delta and for the airline
industry. The unprecedented route awards
of 1969 not only brought new competition
to our Southern Tier and Midwest to Gulf
States markets but also offered oppor-
tunities for service along new routes
granted to Delta. Unfortunately for the in-
dustry, these awards came at a time when
the general economy was leveling, indus-
try traffic growth was softening, and in-
flation was continuing. The resultant
depressed load factors and increased unit
costs more than offset the two fare in-
creases of 1969 so that the earnings posi-
tion of the industry has deteriorated sig-
nificantly over the past year.
The softening in traffic growth did not
substantially affect Delta until late in the
fiscal year because of the delayed impact
of the economic slowdown on our major
markets and an extended strike against a
competitor during the February-May,
1970 period. While the added competition
has also slowed our growth rate, we still
improved our market share throughout
the year. For the first four months of the
new competition (October through Jan-
uary), Delta's share of the 48 state domes-
tic trunk market increased from 9.4% to
10.0%. For June, 1970, after the conclu-
sion of the strike against a competitor,
the improvement was from 9.5% to 9.8%.
Net earnings for the year of $44.5 mil-
lion or $2.33 per share were 14% above
3
4
12%-
11 -
10 -
66
SHARE OF DOMESTIC TRUNK AIRLINE MARKET
(Excluding Hawaii)
1967 comparisons distorted by strike
against five major competitors
67 68 69 70
fiscal 1969, concluding a decade of sound
growth from the 17 per share earned in
fiscal 1960. Operating revenues totaled
$622.1 million and revenue passenger
miles increased 14% to 9.4 billion. Cargo
and mail revenues were almost $51 mil-
lion, an increase of 19%. Total capacity
operated increased 26% for the year due
to the delivery of additional Super DC-8
and Super DC-9 aircraft and the purchase
of two standard DC-8 aircraft for new
route awards. All piston services were
eliminated with the retirement of the re-
maining CV-440 aircraft in April, 1970.
Shortly before the close of the year,
commitments were made for the purchase
of five Super DC-9 aircraft for 1971 de-
livery to be used on the most recent North
Carolina points award. The estimated
future capital outlay for flight equipment
to be delivered through 1975 totals $410
million. Financing will be provided from
internally generated funds, the proceeds
8.00 - - 6.00
PASSENGER MILE YIELD
7.50 -
UNIT COST PER AVAILABLE SEAT MILE
- 5.50
7.00 - - 5.00
4.00
- 2.50
62 64 66 68
.J 2.00
70
from the amended 1967 Bank Credit
Agreement, and from a new loan agree-
ment now being negotiated with a group
of British banks in conjunction with the
purchase of Rolls-Royce engines for the
Lockheed L-1011 aircraft. The year's
operating results and the future outlook
are reviewed in more detail in the follow-
ing sections.
Revenues and Expenses
Operating revenues increased 21 % over
1969 to a total of $622.1 million. Passen-
ger revenues were up 20% to $565. 7 mil-
lion and revenue passenger miles were
9.4 billion, an increase of 14%. Cargo
revenues were $50.8 million, up 19%,
including a $669,000 retroactive adjust-
ment to mail revenues due to the CAB
decision reducing non-priority mail rates.
The passenger mile yield increased 6%
to 6.02 from 5. 70 in 1969. This increase
primarily came from the two fare increases
5
approved in February and October, 1969
(see further discussion under Regulatory
Matters). In addition, the percentage of
discount travel was somewhat lower due
to a June 1969 revision of Discover Amer-
ica fares to require a seven-day stay.
Despite a 6% rise, the 1970 yield is still
below that experienced in 1965, the last
full year before the broad range of sys-
temwide discount fares was introduced.
Operating expenses were up 22% over
1969 to a total of $529.2 million. Oper-
ating capacity was up 26% due to tne
added Su per DC-8 and DC-9 aircraft, a
5% improvement in aircraft utilization,
and inauguration of services on newly
granted routes. Unit available seat mile
and available ton mile costs were down
3% for the year despite the continued up-
ward pressure of inflation on all areas of
operation. Fiscal 1971 unit costs will be
adversely influenced by a sharp drop in
capacity growth to 13%, the introductory
costs of the Boeing 747, and further in-
flationary inroads.
The retroactive discontinuance of the
investment tax credit to April 18, 1969 will
not apply to our Boeing 747 and Lock-
heed L-1011 orders since these orders
were firm prior to the cut-off date. Con-
sequently, such credits will continue to be
earned through early 1975. Delta has con-
sistently followed a policy of deferring
earned credits and amortizing them over
the life of the assets involved rather than
using the "flow-through" method. At June
30, 1970, a balance of $26.5 million of un-
amortized tax credits remained to be
picked up as income over the next several
years.
Delta offers wide choice of 83
nonstop jets from Chicago
to 28 cities in 12 states.
7
8
800/o -
70 -
60 ,..
50 -
40 -
30 L
ACTUAL AND BREAK-EVEN LOAD FACTOR
62
Estimated influence of
competitors' strike
64 66
Earnings and Dividends
68 70
Net earnings were $44.5 million, equal
to $2.33 per share or 14% above the $2.05
per share earned in fiscal 1969. The cur-
rent year earnings included the effect of
both fare increases mentioned above and
an effective 7.5% surtax. 1969 earnings
included only the February fare increase
and a full 10% surtax. Dividend payments
for the year totaled $7,650,000 or 40 per
share on the 19,125,000 shares outstand-
ing. Shortly after the close of the fiscal
year, the directors voted a 25% increase
in the quarterly dividend rate to 12 per
share payable September 1, 1970. This
was the 21st consecutive year of dividend
payments and the sixth increase in the
past decade.
Flight Equipment
During fiscal 1970, Delta accepted deliv-
ery of three Super DC-B's, nine Super
DC-9's, and two standard DC-B's. In May,
1970, an additional five Super DC-9's were
ordered for delivery in 1971 to cover the
most recent route awards. Concurrent
with this order, two standard DC-9's were
acquired under a short-term lease pend-
ing receipt of the new aircraft. Addition-
ally, one L-100 cargo aircraft was leased
in order to permit full schedule coverage
while the owned aircraft are undergoing
a wing modification expected to be com-
pleted by early spring of next year.
The pattern of deliveries for all aircraft
currently on order is shown in the follow-
ing table:
Fleet Fleet
Type
of Total Deliveries in Fiscal Years Total
Aircraft Seats 6 / 30/ 70 71 72 73
DC-8 129 7
DC-8 135 21
DC-8 195 13
CV-880 96 16
DC-9 68 1 7*
DC-9 89 58 3 2
B-747 370 3 2
L-1011 250 5 6
L-100-20 Cargo 4**
136 6 9 6
*Includes two aircraft on short-term lease.
**Includes one L-100-10 on short-term lease.
74 75 6 / 30/ 75
7
21
13
16
15
63
5
6 7 24
3
6 7 167
The last of the Convair 440 aircraft were
retired in April, 1970 and Delta's fleet is
now all-jet.
Capitalization and Financing
In fiscal 1970, Delta borrowed $15 million
under the $220 million revolving bank
credit agreement increasing total borrow-
ings to $200 million at year-end. After
sometemporaryrepaymentsof $25 million
in July and August, the remaining balance
available under this agreement will be
borrowed when the Boeing 747 aircraft
are delivered in late 1970.
Delta recently signed a letter of intent
and is currently negotiating a new loan
agreement with the agent for a group of
British banks to provide financing for the
9
10
Rolls-Royce engines to be installed on
the Lockheed L-1011 aircraft. This agree-
ment will provide for borrowings not to
exceed $42 million to be repaid in semi-
annual installments over ten years at
an effective interest rate of slightly less
than 6%.
Including the most recent order for
five Super DC-9's, Delta's probable future
capital outlays for flight equipment will
exceed $410 million through 1975. The
total credit available under the above
agreements, together with normal inter-
nally generated funds from earnings, de-
preciation, and deferred tc;1xes, is currently
estimated to be adequate for these pro-
jected capital requirements.
Total stockholder equity at year-end
was equal to $13. 77 per share or
$263,392,000, an increase of 16% over
June 30, 1969.
Facilities
During the past year, Delta completed
and occupied new offices for Marketing,
Reservations, Communications, Flight
Control and Flight Training at the Green-
briar complex in Atlanta. Construction is
now underway on a second floor addition
to the Computer Center at Greenbriar to
house all accounting, treasury, purchas-
ing, and internal audit activities, with com-
pletion expected in early 1971. Construc-
tion was recently started on a major
expansion of the Atlanta maintenance
and overhaul base which is being financed
by City of Atlanta special purpose revenue
bonds. When completed in 1972, the ex-
panded facility will be twice its present
size and provide the hangar and support
Delta serves all 3 New York
airports with 27 nonstop jets
to 8 cities in 7 states.
12
facilities required for the new fleet of
Boeing 747 and Lockheed L-1011 air-
craft to be delivered through 1975.
Airport facilities for handling the Boe-
ing 7 4 7 are completed or under construc-
tion in Atlanta, Chicago, Dallas, Detroit,
LosAngeles, and Miami. New or expanded
airport facilities are progressing at Dallas/
Ft. Worth, Dayton, Kansas City, Little Rock,
Louisville, Philadelphia, Shreveport, and
Tampa.
In addition to these major expansions,
new or expanded reservations, ticketing,
and sales offices are under construction
in many cities in preparation for the ex-
pected growth of the seventies.
Personnel
Total employees at year-end numbered
more than 20,500. Including the 1,800
employees added in fiscal 1970, total
salaries and related employee benefit
costs increased 24% to $249 million, equal
to 40 cents of each revenue dollar.
Delta continues to participate fully in
a program, sponsored by the National
Alliance,of Businessmen, to hire and train
disadvantaged youth during summer
vacations. Some 270 young people were
employed under this program in 1970.
Our employees have accepted the chal-
lenge of teaching these young people
more about our country's free enterprise
system and giving them practical training
to help them select and prepare for mean-
ingful future careers.
In keeping with the growth of your
Company and the need to insure full con-
tinuity and flexibility of management, a
number of executive promotions were
made during the year. C. H. Dolson was
named Chairman of the Board and Chief
Executive Officer and was succeeded as
President by W. T. Beebe. Nine new Vice
Presidents were named including R. W.
Allen, Administration; W. A. Atchison,
Computer Services; T. P. Ball, Flight Oper-
ations; Shelby D. Dement, Marketing Ad-
ministration; Hoyt T. Fincher, Technical
Operations; M. 0. Galloway, Comptroller;
E. L. Hamner, Stations; Charles P. Knecht,
Sales; and Morris Shipley, Government
Affairs. New Assistant Vice Presidents
named were Hollis L. Harris, Facilities and
George E. Shedd, Public Relations; Sidney
F. Davis and Ike Lasseter were promoted
to Assistant Secretary. The combined
experience of these gentlemen, all pro-
moted from within the Company, exceeds
350 years.
Regulatory Matters
During the latter half of the fiscal year,
the number of new route cases somewhat
abated, but regulatory activity continued
at a high pitch with institution by the Civil
Aeronautics Board of a comprehensive
Domestic Passenger Fare Investigation.
Route Cases
In the North Carolina Points Service In-
vestigation, Delta received authority to
provide new services between Charlotte,
Greensboro/High Point/ Winston-Salem,
and Raleigh/Durham, in North Carolina,
and both Chicago and Miami. Delta's
Charlotte-New York restriction was also
lifted, soasto permit "turn-around" sched-
ules. Service was inaugurated in the
new markets on June 15, 1970.
Earlier in the fiscal year the Company
received nonstop authority in the Bir-
mingham to Cincinnati and Detroit and the
Atlanta to Kansas City markets {with the
right to operate between Kansas City and
Ft. Lauderdale via a single stop in Atlanta).
The Company's Kansas City to Atlanta
13
flights previously had been required to
make one intermediate stop at Memphis,
and the Birmingham flights had been re-
quired to proceed via Atlanta.
A number of route cases are still pend-
ing. In one, the Board's Bureau of Oper-
ating Rights has recommended that your
Company be granted nonstop Atlanta to
Cleveland authority. The Bureau also rec-
ommended competition in Delta's Atlanta
to Detroit and Atlanta to Cincinnati mar-
kets, which the Company is opposing. An
Examiner's initial decision in this proceed-
ing is awaited.
In another pending proceeding, the
same CAB Bureau has recommended
grant to the Company of nonstop Augusta
and Columbia to Washington and New
York authority. The Examiner would have
granted these authorities to another car-
rier, but his decision is being reviewed by
the Board.
Other pending new route cases include
a Twin Cities/ Milwaukee-Atlanta/ Florida
case now awaiting review by the Board
of an initial decision; and three proceed-
ings which remain in preliminary stages:
an Oklahoma-Southeast Points Case; an
Ohio/Indiana Points Nonstop Investiga-
tion; and a Nashville-Detroit Nonstop Case.
In addition, during the fiscal year Delta
filed an application for nonstop authority
between Atlanta and Boston. CAB action
is awaited on a Delta request for expe-
dited processing of this application.
In the international field, Delta is
actively seeking nonstop authority be-
tween both Chicago and Atlanta to Jamaica
in an investigation recently instituted by
the CAB. Application was recently filed by
North, South, East and West Delta flies
208 nonstop jets from Atlanta to
48 cities and 19 states.
15
16
Delta for authority between Atlanta, New
Orleans, Dallas, and Houston in the United
States and Guadalajara, Puerta Vallarta,
Mazatlan and La Paz in Mexico. These two
cases and the East Coast Points-Europe
Case remain in preliminary stages.
Delta's applications in the Omaha/
Des Moines Case, the St. Louis-Twin Cities
Service Investigation, and the Seattle/
Portland-California Case were denied
during the past fiscal year, as was the
Company's application for nonstop Mem-
ph is-Miami authority in the Southern
Route Realignment Case. Delta has ap-
pealed the latter case and the federal
court's decision is awaited. The awards
to Delta last year of Dallas fo Phoenix and
Miami to Houston authority have been
appealed by another carrier, and court
decision is also awaited in those cases.
Rate and Fare Investigations
During January, 1970, the CAB insti-
tuted a Domestic Passenger Fare Investi-
gation. This is a comprehensive study into
the structure and level of virtually all air-
line passenger fares within the 48 con-
tiguous United States. This proceeding
will also determine the fair rate of return
which the air carriers should earn on
their investment, and will examine certain
related matters such as whether the CAB
should establish load factor standards.
Decision on the nine parts of this investi-
gation is expected in early 1971, except
for questions concerning fare structure
which will require an additional six to
twelve months.
In July, 1970, a federal appellate court
found that the October 1969 fare increase
Travelers can fly 36 nonstop
jets from Miami/Ft. Lauderdale to
18 cities in 9 states on Delta.
18
had been handled improperly by the CAB
and the proceeding was remanded to the
agency. New tariffs have now been filed,
which will be passed upon by the CAB
prior to their effective date. The Domestic
Passenger Fare Investigation may later
result in additional changes in fare level
and structure. In the meantime, a number
of court cases have been filed seeking
reparations because of the invalidation
of the CAB Order approving the October
1969 fare increase, which Delta and other
airlines will oppose. These cases are all
in preliminary stages and are subject to
further actions by both the CAB and the
courts, the outcome of which cannot be
currently predicted.
Outlook
While fiscal 1970 proved to be a success-
ful year despite a number of major obsta-
cles, fiscal 1971 offers even greater chal-
lenges to Delta and the industry. After
three years of rapid capacity growth
related to the latest re-equipment cycle,
added capacity in 1971 will drop sharply.
Most of the planned increase will be attrib-
utable to the introduction of Boeing 747
aircraft late this year and to the full impact
of added services on newly authorized
routes. Recent traffic growth has been
relatively soft due to the added competi-
tion and the delayed impact of the eco-
nomic slowdown. We fully expect growth
rates to improve this fall as comparisons
are made against fully competitive prior
periods. Any upturn in the economy could
also improve total traffic in the latter part
of the fiscal year. Yields should improve
by at least 2% and could rise further if
Cross-country convenience.
Delta flies 58 nonstop jets from
Dallas/ Ft. Worth to 18 cities in 8 states.
recent fare proposals by several carriers
are approved. Unit costs will also trend
moderately upward because of continued
increases in wage rates, fuel, material,
and services. An earnings improvement
will depend largely upon the extent of
economic recovery, CAB action on fare
proposals, and a leveling of inflationary
pressures.
The individual contributions of our em-
ployees and our stockholders can only be
measured tangibly by the financial
strength and sound growth achieved by
Delta over the past decade. The years
ahead will require even greater efforts by
each of us to meet the challenges facing
Delta, the airline industry, and our nation.
C.H. DOLSON
Chairman of the Board
September 8, 1970
W. T. BEEBE
President
Delta makes the going easy with 16
nonstop jets from Los Angeles to
4 cities in 4 states.
21
DELTA AIR LINES, INC.
Balance Sheets
June 30 , 1970 and 1969
ASSETS 1970
(In Thousands)
CURRENT ASSETS:
Cash .... . ......... . .......... $ 39,431 $ 29,909
22
Short-term cash investments,
at cost ............
Accounts and notes receivable ..
Maintenance and operating
supplies, at average cost .. . ...
Prepaid expenses, etc . .........
Total current assets .....
PROPERTY AND EQUIPMENT:
Flight
Equipment Other
Cost-
1970 .. . $712,421 $101 ,932
1969 642,159 86,542
Accumulated
depreciation-
1970 .... 245,687 38,220
1969 195,886 30,398
Advance payments for new
flight equipment (Note 2)
ADVANCE FOR
SST DEVELOPMENT,
being amortized . ... . .... .
5,931 14,002
42,110 40,253
4,540 4,553
1,917 1,074
93,929 89,791
814,353
728,701
283,907
226,284
530,446 502,417
66,063 39,879
596,509 542,296
1,578 2,178
$692,016 $634,265
DELTA AIR LINES, INC.
LIABILITIES AND
STOCKHOLDER EQUITY
(In Thousands)
CURRENT LIABILITIES:
Current maturities of long-
term debt ............ .. .. . .. $ 23,379 $ 7,607
Accounts payable and accrued
liabilities ................... . 39,028 50,945
Tickets outstanding subject to
refund or use ....... . ...... . 9,594 8,713
Air travel plan deposits ....... . . 1,718 1,713
6,343
Accrued income taxes . .. . ..... ,--~- 4,855
Total current liabilities .. 80,062
,--'--- 73,833
LONG-TERM DEBT (Note 1) .... . . 206,564 214,942
DEFERRED CREDITS:
Deferred Federal income taxes . 115,431
Unamortized investment tax
92,106
26,869
credit (Note 3) . . . . . . . . . . 26,567
STOCKHOLDER EQUITY:
Common stock, par value $3.00
per share (Note 5)-
Authorized 25,000,000 shares
Outstanding 19,125,000 shares
Capital surplus .. .
Retained earnings (Note 1) .....
COMMITMENTS (Note 2)
141,998 118,975
57,375
22,450
183,567
57,375
22,450
146,690
263,392 226,515
$692,016 $634,265
The accompanying notes are an integral part of these statements.
23
DELTA AIR LINES, INC.
Statements of Income
For the years ended June 30, 1970 and 1969
1970 1969
(In Thousands)
OPERATING REVENUES:
Passenger . . .. . . . . . .... .. . . ... $565,670 $470,024
Cargo . . . . . . . . . . . . . . . . . . . . . . . . 50,786 42,536
Other . . . . . . . . . . . . . . . . . . . . . . . . 5,673 3,553
Total operating revenues 622,129 516,113
OPERATING EXPENSES:
Flying operations . .... . . . . . .... . 139,706 112,581
Maintenance . .... . . . ... . . . . . . . 84,010 74,531
Aircraft and traffic servicing ..... 107,223 83,920
Promotion and sales . ... . . .... . 62,247 52,246
Depreciation and amortization
(straight-line method) . .. . .. . . . 69,880 56,876
Passenger service . . .. .. .. .. .. . 5 1,629 39,991
General and administrative ... .. 14,484 13,793
Total operating expenses 529,179 433,938
Income from operations
before income taxes . . 92,950 82,175
OTHER EXPENSE (INCOME):
Interest expense ... . .... . . .. . . 20,250 12,634
Less-Interest capitalized on
advances for flight equipment . (4,523) (2,742)
15,727 9,892
Interest income, etc . . ... . . ... .. (1 ,085) (943)
Gain on disposition of aircraft,
net .... ..... . . .. . . ... .. . ... (174)
14,642 8,775
INCOME BEFORE INCOME
TAXES . . . ..... . .... . . . .. . . . .. 78,308 73,400
PROVISION FOR INCOME
TAXES (Note 3) . . . . . . . . . . . . . . . 33,781 34,209
NET INCOME .. .. .. . .. .. . ... ... $ 44,527 $ 39,191
NET INCOME
PER COMMON SHARE . ...... . $2.33 $2.05
The accompanying notes are an integral part of these statements.
24
DELTA AIR LINES, INC.
Statements of Retained Earnings
For the years ended June 30, 1970 and 1969
1970
(In Thousands)
BALANCE AT BEGINNING
OF YEAR . ... $146,690 $115,149
Net income ............ .
Less-Cash dividends-
$.40 per share
BALANCE AT END OF YEAR
44,527 39,191
191,217 154,340
7,650 7,650
(Note 1) . . . . $183,567 $146,690
Statements of Source and Disposition of Funds
For the years ended June 30, 1970 and 1969
1970
FUNDS PROVIDED BY:
(In Thousands)
Net income ........... . ....... $ 44,527 $ 39,191
Add noncash expenses-
Depreciation and amortization .
Deferred Federal income taxes
Investment tax credit, net of
amortization .............. .
Other, net ..... . .. ...... . .. .
Total from operations
Additional financing under-
Installment purchase
agreements ........... .. . .
Bank credit agreement .. .... .
FUNDS USED FOR:
Flight equipment additions,
69,880
23,325
(302)
2,500
139,930
15,000
154,930
56,876
21 ,333
8,212
1,117
126,729
128
90,000
216,857
including advances .. . ....... 109,714 184,340
Other property and equipment
additions . . . . . . . . . . . . . . . . . . . 16,278 25,423
Reduction of long-term debt
(Note 1) ..... . .......... .
Cash dividends .......... .
DECREASE IN
125,992 209.763
23,379
7,650
7,622
7,650
157,021 225,035
WORKING CAPITAL . . .. . . . .... $ 2,091 $ 8,178
WORKING CAPITAL
AT END OF YEAR .... . ........ $ 13,867 $ 15,958
The accompanying notes are an integral part of these statements.
25
DELTA AIR LINES, INC.
26
Notes to Financial Statements June 30, 1970
1. LONG-TERM DEBT:
At June 30, 1970, the Company's long-term debt of
$229.9 million (including current maturities) consisted
of the following :
(a) $200 million due banks under a credit agreement
which provides for borrowings up to $220 million on
a revolving basis to December 31 , 1970. At that date,
the outstanding balance will be converted to a 5-year
term loan, repayable in quarterly installments of $8
million to December, 1975 ($16 million payable in
fiscal 1971 ), with the remaining balance payable on
December 31 , 1975. Loans under the agreement are
unsecured and carry an interest rate of % above
the prime rate ,
(b) $26.2 million due insurance companies under 6%
unsecured notes, repayable in installments to Oc-
tober, 1974 ($5 million payable in fiscal 1971), and
(c) $3.7 million due the manufacturer of the Deltamatic
Reservation System , repayable in quarterly install-
ments (including 4% interest) of $710,000.
Under terms of the credit agreements, $67 million of
retained earnings at June 30, 1970, is restricted as to
the payment of cash dividends.
2. COMMITMENTS :
The Company has outstanding purchase commitments
for the acquisition of five Douglas DC-9 aircraft, five
Boeing 747 aircraft and twenty-four Lockheed L-1011
aircraft which will require an expenditure of approxi-
mately $410 million during the fiscal years 1971
through 1975.
The Company leases certain airport facilities, ticket
offices, etc., under long-term agreements. Minimum
annual rentals are approximately $7.3 million under
such leases expiring after June 30, 1973.
3. INCOME TAXES:
The provision for income taxes for 1970 and 1969 con-
sists of the following : 1970 1969
Current income taxes . .
Deferred Federal income taxes .
Investment tax credit
Less-Amortization of investment
tax credit over life of
related equipment
- - - - - -
(In Thousands)
.. $10,758 $ 4,664
23,325 21 ,333
5,465 12,798
39,548 38,795
All available investment tax credits have been utilized
to reduce the Company's Federal income taxes payable.
The Company has filed a Tax Court petition contesting
income tax deficiencies assessed by the Internal Reve-
nue Service for the taxable years 1963 through 1965.
In the opinion of management, the final settlement of
this matter will not have a material effect on the Com-
pany's financial position .
DELTA AIR LINES, INC.
4 . PENSION PLANS:
The Company has noncontributory pension plans cov-
ering substantially all of its employees. The total pen-
sion expense amounted to $11 .7 million in 1970. All
prior service costs under the plans are fully funded , and
it is the Company's policy to fund each year's accrued
pension cost.
5. STOCK OPTIONS:
Under the Company's qualified stock option plan for
100,000 shares of common stock, options for 91,500
shares have been granted and were outstanding at
June 30, 1970 (50,000 shares at $31.125 per share,
29,000 shares at $34.75 per share and 12,500 shares
at $34.50 per share). Options for 32,250 shares are
currently exercisable.
Auditors' Report
ARTHU R ANDERSEN & Co,
AT L ANTA, G EORG IA
To the Stockholders and Board of Directors
of Delta A ir Lines, Inc. :
We have exam ined the balance sheet of Delta
Air Lines, Inc. (a Delaware corporation) as of
June 30, 1970, and the related statements of
income, retained earnings and source and dis-
position of funds for the year then ended. Our
examination was made in accordance with gen-
erally accepted auditing standards.and accord-
ingly included such tests of the accounting
records and such other auditing procedures as
we considered necessary in the circumstances.
We have previously examined and reported on
the financial statements for the preceding year.
In our opinion, the financial statements re-
ferred to above present fairly the financial po-
sition of Delta A ir Lines, Inc. as of June 30,
1970, and the results of its operations and the
source and disposition of funds for the year
then ended, in conformity with generally ac-
cepted accounting principles applied on a basis
consistent with that of the preceding year.
Atlanta, Georgia,
August 14, 1970.
27
DELTA AIR LINES, INC.
28
Five Years of Delta Air Lines Growth Years Ended June 30
(Dollars expressed in thousands except per share figures)
Operating revenues 1970
Passenger ................ . .......... $565,670
Cargo ............................... 50,786
All other ............. . ............... 5,673
Total operating revenues ... ... .......... $622,129
Operating expenses ... . ................ 529,179
Operating income ........ . ............. $ 92,950
Interest expense, etc.,-net ...... . ..... .. 14,642
Gain on disposition of aircraft-net .... . ..
Net income before taxes ................ $ 78,308
Taxes on income ............ . . . ........ 33,781
Net income ........... ... ....... .. . .. .. $ 44,527
Net income per share* .... . ......... $2.33
Dividends paid .... .. ........ .. ..... .... $7,650
Dividends paid per share* .. .... .... .. $0.40
Total assets .. ...... . ............... ... . $692,016
Stockholder equity ..................... $263,392
Stockholder equity per share* ............ $13.77
Shares of common stock outstanding* . .. .. 19,125,000
Revenue passengers carried ........ ..... 13,528,206
Available seat miles (000) .......... . .. . . 18,559,724
Revenue passenger miles (000) .. .. ...... 9,397,913
Passenger load factor ............. ... ... 50.64%
Available ton miles (000) ......... . ..... . 2,508,105
Revenue ton miles (000) . ............. .. 1,125,409
Passenger revenue per passenger mile .... 6.02
Operating expenses per available seat mile . 2.85
Operating expenses per available ton mile. 21.10
*Adjusted to reflect all stock splits
1969
$470,024
42,536
3,553
$516,113
433,938
$ 82,175
8,949
174
$ 73,400
34,209
$ 39,191
$2.05
$7,650
$0.40
$634,265
$226,515
$11.84
19,125,000
12,107,061
14,768,892
8,249,085
55.85%
1,994,826
965,795
5.70
2.94
21 .75
DELTA AIR LINES, INC.
1968 1967 1966
$396,793 $362,368 $291,350
32,141 31,638 24,039
2,628 3,830 3
,541
$431,562 $397,836 $318,930
363,140 308,737 253,092
$ 68,422 $ 89,099 $ 65,838
3,036 641 1,676
235 2,402 562
$ 65,621 $ 90,860 $ 64,724
29,487 41,670 30,170
$ 36,134 $ 49,190 $ 34,554
$1.89 $2.57 $1.81
$7,650 $6,375 $6,056
$0.40 $0.33 $0.32
$468,249 $369,422 $314,350
$194,974 $166,490 $123,675
$10.19 $8.71 $6.47
19,125,000 19,125,000 19,125,000
10,368,831 9,422,422 7,556,422
11,972,737 9,687,337 8,196,349
7,116,095 6,415,467 4,997,958
59.44% 66.23% 60.98%
1,609,704 1,304,889 1,090,282
814,782 735,898 569,625
5.58 5.65 5.83
3.03 3.16 3.06
22.56 23.66 23.21
29
Board of Directors
R. W. FREEMAN
W. T. BEEBE
B. W. BIEDENHARN
R. W. COURTS
C.H. DOLSON
EMERY FLINN
DAVID C. GARRETT, JR.
EDWARD H. GERRY
CHARLES H. KELLSTADT
JOHN R. LONGMIRE
R. S. MAURER
T. M. MILLER
WINSHIP NUNNALLY
ROBERT OPPENLANDER
CARLETON PUTNAM
Chairman of the Finance Committee
New Orleans, Louisiana
Atlanta, Georgia
Monroe, Louisiana
Atlanta, Georgia
Atlanta, Georgia
Miami, Florida
Atlanta, Georgia
New York, New York
Miami, Florida
St. Louis, Missouri
Atlanta, Georgia
Atlanta, Georgia
Atlanta, Georgia
Atlanta, Georgia
Washington, D.C.
GEORGE M . SNELLINGS, JR. Monroe, Louisiana
As modern in design as a superjet
is Delta's new Greenbriar facility
in Atlanta, a center for Marketing,
Reservations, Communications, Flight
Training and Flight Control.
31
32
Officers
C. H. DOLSON
W. T. BEEBE
ADMINISTRATION
R. W. ALLEN
R. H. WHARTON
J. A. YORK
FINANCE
Cha irman of the Board
President
Vice President - Administration
A sst. Vice President - Personnel
Asst. Vice President - Employee Services
ROBERT OPPENLANDER Senior Vice President - Finance & Treasurer
W. A. ATCHISON Vice President - Computer Services
M. 0 . GALLOWAY Vice President -Comptroller
PAUL W. PATE
J. D. DUNN
J. R. HOWELL
HUGH H. SAXON
LEGAL
R. S. MAURER
MORRIS SHIPLEY
J. W. CALLISON
J. A. COOPER
FRANK F. ROX
GEORGE E. SHEDD
SIDNEY F. DAVIS
IKE LASSETER
MARKETING
T. M . MILLER
SHELBY D. DEMENT
CHARLES P. KNECHT
J. W. MEYER
HENRY ROSS
OPERATIONS
Vice President - Properties
Asst. Vice President - Purchasing
Asst. Trea surer
Asst. Treasurer
Senior Vice President -
General Counsel & Secretary
Vice President - Government Affairs
Asst. Vice President - Law
A sst. Vice President - Economic Research
Asst. Vice President - Law
Asst. Vice President - Public Relations
Asst. Secretary & Asst. to General Counsel
Asst. Secretary
Senior Vice President - Marketing
Vice President - Marketing Administration
Vice President -Sales
Asst. Vice President -Customer Relations
A sst. Vice President -
Advertising & Sales Promotion
DAVID C. GARRETT, JR. Senior Vice President - Operations
T. P. BALL
HOYT T. FINCHER
E. L. HAMNER
J. K. BURNETTE
A. C. FORD
HOLLIS L. HARRIS
D. P. HETTERMANN
JACKS. KING
W. L. MILLER
J. F. NYCUM
L. G. RODEFELD
J. H. TURNER
C. B. WILDER
Vice President - Flight Operations
Vice President - Technical Operations
Vice President -Stations
Asst. Vice President - Quality Control
Asst. Vice President - Long Range Planning
Asst. Vice President - Facilities
Asst. Vice President - Engineering
Asst. Vice President - Flight Control
Asst. Vice President - Materiel Services
Asst. Vice President- Flt. Eqpt. Development
Asst. Vice President - Communications
Asst. Vice President - Maintenance
Asst. Vice President - Operations Administration
SYSTE M ROU T E MAP
TRANSFER AGENTS:
M
THRU-JETS
TO AND FROM
EUROPE
NSBORO
POINT
TON-SALEM
EIGH
HAM
ARLESTON
ANNAH
SWICK
SONVILLE
0
The Citizens and Southern National Bank, Atlanta, Georgia
and The First National City Bank, New York City
REGISTRARS:
Tru st Company of Georgia, Atlanta , Georgia and
Morgan Guaranty Tru st Company of New York, New York City
COM MON STOCK:
Li sted on the New York Stock Exchange
AUDITORS:
Arthur Andersen & Co.
ANNUAL MEETING :
October 22, 1970, Monroe, Louisiana
Notice To The Stockholders Of Delta Air Lines, Inc.
Thi s notice is published in accordance with regulations adopted
by the Civil Aeronautics Board for effect iveness Augu st 1, 1970.
Any person who owns more than 5% of the ca pital stock or
capital of an air ca rrier as of December 31 of any yea r, either
beneficially or as trustee, is required to file a report with the
CAB on or before April 1 of the following year containing certain
information required by Section 245.13 of the CAB Economic
Regulation s.
Any person acquiring more than 5% of the ca pital stock or
ca pital is required to file a report with in 10 days of the acquisi-
tion .
Any stockholder who believes that he may be required to
file such a report may obtain further information by writing to
the Director, Bureau of Operating Rights, Civil Aeronautics Board,
Washington, D.C. 20428.
Delta Air Lines, Inc.,
General Offices, Atlanta Airport, Atlanta , Ga. 30320