Delta Air Lines annual report 1973

DELTA AIR LINES, INC.
ANNUAL REPORT 1973
The Cover
Representatives of Delta's All-Pro Team- now
27,500 strong and always "Ready When You Are'.'
Contents
Merger with Northeast .. . ..... .... .. . .. . .
Highlights of the Year. . . . . . . . . . . . . . . . . . . 2
Report to the Stockholders. . . . . . . . . . . . . . . . 3
Revenues and Expenses. . . . . . . . . . . . . . . . . . 6
Earnings and Dividends. . . . . . . . . . . . . . . . . 7
Capitalization and Financing. . . . . . . . . . . . . 7
Flight Equipment and Purchase
Commitments...... . . . . . . . . . . . . . . . . 8
Facilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Environmental Matters ........ . ......... 11
Security Programs. . . . . . . . . . . . . . . . . . . . . . 12
Personnel. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Regulatory Matters. . . . . . . . . . . . . . . . . . . . . . 14
Route Map . . ................ . ... .. . 20, 21
Financial Statements-
Balance Sheets. . . . . . . . . . . . . . . . . . . 22, 23
Statements of Income . .. . ......... 24, 25
Statements of Retained Earnings ....... 26
Statements of Additional Paid-in
Capital. ....................... 27
Auditors' Report. .......... .. .... . .. 26
Statements of Changes in Financial
Position . . . ... . .. . ..... . ....... 28
Notes to Financial Statements .. ........ 29
Five-Year Summary .................. 36, 37
Board of Directors. . . . . . . . . . . . . . . . . . . . . . 38
Officers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Delta Air Lines Annual Report 1973
Merger with Northeast
The merger with Northeast Airlines, Inc.
was consummated on August l, 1972. In
exchange for all outstanding common stock
of Northeast, Delta issued 668,515 shares of
its common stock. Delta also issued to Storer
Broadcasting Company (majority stockholder
of Northeast) warrants to purchase 500,000
shares of Delta stock at $48.00 per share on
or prior to May 1, 1978, in exchange for the
transfer to Delta of the approximately $40
million owed by Northeast to Storer at merger
date. Delta assumed the other long-term
debt of Northeast totaling $38 million,
including $22 million in subordinated
convertible debentures maturing in 1986
and convertible into Delta stock at $250 per
share. Immediately after the merger, Delta
prepaid $3.5 million of the remaining debt
and renegotiated the $12.5 million insurance
company and bank loans from secured to
unsecured debt on essentially the same terms
as Delta1s existing bank credit agreements.
The merger was accounted for as a
pooling of interests and all prior financial
statements of Delta have been restated to
include Northeast's results of operations.
(See Note 2 on page 30 and Note 1 on page 36.)
Unless otherwise indicated, 1972 results of
operations used for comparison purposes on
pages 2 through 19 of this report are based
on a combining of Delta-only results and
unaudited Northeast results for the twelve
months ended June 30, 1972. An unaudited
statement of income for this period is pre-
sented on pages 24 and 25.
Highlights of the Year
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
1973 1972 Change
Operating
Revenues. ..... $1,049,699 $895,629 +17%
Operating
Expenses ... $928,940 $823,565 +13%
Net Income. $65,995 $33,227 +99%
Earnings Per
Share. $3.32 $1 .68 +98%
Revenue Passengers
Enplaned. . . 23,702,870 20,820,918 +14%
Available Seat
Miles (000). .. 27,958,095 26,023,066 + 7%
Revenue Passenger
Miles (000). . .. . ... . . 14,449,748 12,595,325 +15%
Passenger Load
Factor ..
' '
. . . '
. . .
. . '
51.68% 48.40% + 7%
2
Report to the Stockholders
The major highlight of the past year was
the successful merger with Northeast
Air lines. The merger was consummated on
August 1, 1972, adding to Delta's route
system major new opportunities in the highly
competitive Northeast to Florida, Bermuda
and the Bahamas markets as well as the less
competitive interior New England markets.
Beginning in December, 1972, Delta
brought to these markets substantially
improved schedules including significant
new connecting flight patterns between New
England points and Delta's traditionally
strong markets in the Southeast and South-
west. The response of the traveling and ship-
ping public to these improvements has been
extremely gratifying. Even more gratifying,
however, has been the full cooperation and
extraordinary efforts displayed by the original
Delta and former Northeast employees as they
faced and overcame the tremendous chal-
lenges of smoothly combining the two com-
panies without permitting any deterioration
in our traditional personalized service.
Perhaps the best indicator of the merger's
success is in the financial results achieved.
For fiscal 1973, net earnings were at an all-
time high of $66 million or 99% above the
combined earnings of Delta and Northeast
last year. Operating revenues passed the
billion dollar mark for the first time at$ 1.05
billion as passenger traffic increased 15%
and yield improved by 2%. Cargo revenues
3
were up 17% to $76.3 million despite a
continued slowdown in mail volumes.
Total operating capacity was held to
only a 7% growth resulting in load factors
improving from 48.4% to 51.7%. Most of this
growth was a result of the substantial
improvements in schedules on the former
Northeast system. Unit operating costs
increased 5% to 3.32<!: per available seat mile
partially due to the expensing of all known
one-time costs related to the merger.
Immediately after the merger, Delta
implemented a three-year program to mod-
ernize and standardize its aircraft fleet for
purposes of improving operating efficiency
and unit operating costs. The previously
announced order for Boeing 727 -200 aircraft
was expanded to a total of 36. These aircraft
( 10 of which had been delivered at year-end)
will replace the fleets of 13 DC-9-14, 15 CV-
880, and 7 DC-8-33 aircraft. The DC-9's have
been sold to Southern Airways with final
delivery scheduled no later than October,
1973. The CV-880 and DC-8-33 aircraft were
sold to The Boeing Company with delivery
scheduled over a ten to twelve month period
beginning in October, 1973. In addition to
these major sales, two Boeing 727-100 air-
craft were sold in May, 1973, and negotiations
are underway for the sale of four DC-9-31
aircraft for delivery late in fiscal 197 4.
The leased DC-10 aircraft will be
returned to United Air Lines in May, 1975.
To replace these aircraft, the original delivery
schedule for the first 24 Lockheed L-1011
aircraft was revised during the year and an
additional 6 aircraft were ordered for delivery
in 1976. Financing for all outstanding pur-
chase commitments will be provided from
internally generated funds, the $85 million
loan agreement with Lazard Brothers&. Co.,
Limited, and from a new bank credit agree-
ment now being finalized.
The new Chairman of the Civil Aero-
nautics Board, the Honorable Robert D. Timm,
has expressed his intention to institute
affirmative programs designed to improve
the financial stability of the entire airline
4
industry. These programs include the mini-
mizing of regulatory lag in fare decisions,
the exercise of caution in awarding new
competition, and the phased elimination of
discriminatory and uneconomic discount
fares. Consistent application of such positive
programs is most important to the creation
of a financially stable industry with an
adequate opportunity to earn a fair and
reasonable return on the investor's dollar.
Fiscal 197 4 will be a year of completely
different challenges from those faced in the
past year, principally due to the present
uncertain outlook for the general economy.
Because of these uncertainties, Delta's operat-
ing plans for the last half of the year have
been designed to permit rapid response to
either higher or lower traffic growth. Pas-
senger mile yields should continue to improve
as the family and youth discount fares are
phased out. In addition, a moderate fare
increase will probably be approved by the
CAB before the end of 1973 to help offset the
impact of inflation on operating costs.
Growth in unit operating costs should
moderate noticeably from the 1973 levels as
the benefits of the merger and the more
efficient new aircraft are partially realized.
Even with the uncertainties-and uncertainty
is always present in a dynamic economy and
a dynamic industry-we are confident that
197 4 and the years beyond will be successful
for Delta.
~ ~(h'4
W. T. BEEBE DAVID C. GARRETT, JR.
Chairman of the Board & President
Chief Executive Officer
September 7, 1973
5
Revenues and Expenses
Operating revenues passed the billion dollar
mark for the first time in the history of our
company, reaching$ 1.05 billion, a 17%
increase over the combined total for Del ta
and Northeast last year. Both passenger
revenues and cargo revenues increased 17%
to a total of $960.2 million and $76.3 million,
respectively.
Passenger traffic continued to reflect
the generally strong economy as revenue
passenger miles increased 15% to a total of
14.4 billion. Freight traffic also showed a
healthy increase of 24%, but mail volume
was down 6%.
The passenger mile yield increased 2%
to 6.65<!: from 6.49<!: in 1972. This increase
resulted primarily from a 2. 7% fare increase
on September 5, 1972. Effective June 1, 1973,
the Civil Aeronautics Board ordered Family
and Youth discount fares phased out over a
twelve-month period. Because this change
was in effect for only one month in fiscal
1973, revenues were affected only nominally.
Cargo yield was up 3% over the previous year.
Operating expenses were $929 million,
an increase of 13% over last year. Operating
capacity was up 7%, due primarily to the
introduction of five Douglas DC-lO's in the
Winter season and increased utilization on
the former Northeast aircraft. Responding
to continued high levels of inflation and
6
the added cost of combining the Delta and
Northeast operations, unit costs per seat mile
and ton mile rose 5% and 7%, respectively.
Earnings and Dividends
Reflecting continued good traffic growth,
higher yields, and the effectiveness of the
Delta-Northeast merger, net earnings were
$66.0 million, or $3.32 per share, a 99%
increase over the combined Delta and North-
east results last year. The earnings for Delta
alone last year were $42.2 million, or
$2.20 per share.
The current year's results include a non-
recurring charge of $4.0 million ( 11 <i: per
share after taxes) for such merger related
expenses as personnel relocation and
training, aircraft and facilities alterations,
and initial advertising and sales promotion.
Also included is a gain of $4.7 million (12<!:
per share after taxes) from the sale of DC-9-14
and B-727 -100 aircraft. The 1972 results
included a SQ: per share after tax reduction
in amortization expense resulting from the
refund of advances made for SST develop-
ment and a SQ: per share after tax gain from
insurance proceeds on a DC-9 aircraft
destroyed in a training accident.
Dividend payments for the year totaled
$9,925,000, or 50<!: per share. Fiscal 1973
marked the 24th consecutive year of cash
dividend payments. At its July, 1973 meeting,
the Board of Directors increased the dividend
by 20% to an annual rate of 60<!: per share.
Capitalization and Financing
During fiscal 197 3~ Delta borrowed the $20
million available under the 1971 Bank Credit
Agreement. This amount had been pre-
viously advanced to Lockheed and Lockheed
is reimbursing Delta for the cost of the
borrowings. The principal will be repaid to
Delta and Delta will repay the banks in
equal installments concurrently with the
delivery of the first twelve L-1011 aircraft.
7
The renegotiated loan agreement with
Lazard Brothers & Co., Limited, was finalized
during the year and provides approximately
$85 million to finance the Rolls-Royce
engines on the first 24 Lockheed L-1011 air-
craft. Repayments will be in semi-annual
installments over a period of ten years,
starting six months after the first borrowings
which were made in July, 1973.
Delta is negotiating a new bank credit
agreement which will provide for borrowings
up to $300 million on a revolving basis
through September 30, 1975, at which time
the balance outstanding will be converted
to a term loan, repayable quarterly over five
years. Initial proceeds of the new agreement
will be used to repay the $156 million prin-
cipal now outstanding under the 1967 Bank
Credit Agreement.
At June 30, 1973, outstanding commit-
ments for aircraft and related spares will
require the future expenditure of approx-
imately $680 million during fiscal years 197 4
through 1977. It is estimated that funds pro-
vided by the new bank credit agreement and
the Lazard agreement, together with funds
generated internally from earnings, depre-
ciation, and deferred taxes, will adequately
cover these purchase commitments and the
payment of normal debt maturities.
Stockholder equity at June 30, 1973 was
$364,553,000 or $18.35 per share on the
19,866,524 shares outstanding, including
the 668,515 shares issued to Northeast stock-
holders at merger date.
Flight Equipment and Purchase
Commitments
During fiscal 1973, Delta accepted delivery
of 5 leased wide-bodied DC-10 aircraft and
10 B-727-200 aircraft, in addition to the fleet
of 21 B-727's, 14 DC-9's, and 6 FH-227's
acquired in the merger with Northeast.
During the year, 7 DC-9-14's and 2 B-727-
lO0's were sold, and a Convair 880 was
retired after being damaged in an accident.
8
As of June 30, 1973, Delta operated the
following passenger fleet:
Type of Fleet
Aircraft Seats Owned Leased Total
B-747 ........ 370 5 5
DC-10 .. . .... 250 5 5
DC-8-61 ...... 195 13 13
DC-8-51 .. . . .. 135 21 21
DC-8-33 ...... 135 7 7
B-727-200 ..... 131 10 13 23
B-727-100 . .... 96 6 6
CV-880 . ... .. 96 15 15
DC-9-31/32 ... 90 67 10 77
DC-9-14 .. .. .. 68 6 6
FH-227 . ...... 43 6 6
Totals .. .. . . 150 34 184
The five leased DC-10 aircraft will be re-
turned to United Air Lines in May, 1975. The
remaining 29 leased aircraft were acquired in
the Northeast merger under very favorable
payment terms.
On July 31, 1973, a leased DC-9-31 air-
craft was destroyed in a landing accident at
Boston. Since the last accident involving pas-
senger fatalities in May, 1953, Delta's safety
record had extended for more than twenty
years during which time Delta flew some
146,000,000 passengers more than
95,000,000,000 revenue passenger miles.
At June 30, 1973, Delta had purchase
commitments for 26 additional Boeing 727-
200 aircraft to be delivered during fiscal 197 4
and 1975 and 30 Lockheed L-1011 aircraft for
deli very during fiscal years 197 4 through
1977. Options are outstanding on six 727-200
aircraft for deli very in fiscal 197 5. All of the
new 727-200 aircraft are equipped with wide-
bodied interiors and the 727-100 and 727-200
aircraft acquired in the merger are being
modified to wide-bodied interiors.
Concurrently with the receipt of the
new Boeing 727-200 aircraft, Delta is selling
its DC-9-14 fleet to Southern Airways. Seven
of these aircraft had been delivered at year-
end and the remaining six are being delivered
9
at a rate of two per month in the September,
1973 quarter. Delta has also entered into
agreements with the Boeing Company to sell
its fleet of 15 CV-880 aircraft and 7 DC-8-33
aircraft and associated spare parts and
engines. Delivery of these aircraft to Boeing
will be made over a ten to twelve-month
period beginning in October, 1973. Delta
recently signed a Letter of Intent to sell 4
DC-9-31 aircraft to Ozark Air Lines with
delivery to be made late in fiscal 197 4. Be-
cause of the rapidly increasing cargo lift ca-
pacity made available by the introduction of
of the new wide-bodied aircraft, Delta is
phasing out its all-cargo services and the
three all-cargo L-100-20 aircraft will be sold
in fiscal 197 4.
Facilities
During the past year Delta moved into new
or expanded airport facilities at Atlanta,
Houston, Ft.Lauderdale, Kansas City, Las
Vegas, Orlando, and Philadelphia. Expanded
terminal facilities were acquired in the mer-
ger at the critical Kennedy and LaGuardia
airports in New York and at the Washington
National Airport. New terminal construction
is underway at Birmingham, Cincinnati,
Newark, Memphis, and Knoxville. The new
Dallas/Ft.Worth Regional Airport, which
covers more land area than Manhattan, will
be opened later in 1973. Systemwide facilities
for the new L-1011 airer aft are nearing com -
pletion. The major addition to the Atlanta
Maintenance and Overhaul Base, designed to
accommodate the expanding wide-body air-
craft fleet, was occupied during the year.
Fuel storage facilities are being
expanded in Atlanta, Boston, and several
other cities to support expanded schedules
and to provide additional fuel reserve
capacity.
A 50% expansion of the Greenbriar
Finance Center will be complete in September,
1973. This addition will house the new IBM
360-195 computer system designed to meet
passenger reservation needs throughout this
decade. The leased 360-65 computer system
10
acquired in the merger has now been con-
solidated with other fully compatible systems
at the Greenbriar facility.
New City Ticket offices were opened
in Boston and Worcester and are planned
for Manchester, Hartford, Bangor, and
Bermuda. Facilities at all former Northeast
cities are being reviewed with modifications
made as required.
New Reservations offices in Los Angeles
and Dallas were completed and other Sales,
Reservations, and Ticket office improvement
and expansion programs are presently
in progress.
Environmental Matters
Delta's three-year program for modernizing
and standardizing its aircraft includes full
consideration of the need to minimize or
eliminate noise and air pollution. All new
aircraft received during the past year and all
aircraft on order meet current Federal Air
Regulations for noise levels and are equipped
with smokeless engines. As these aircraft
are received and the first generation CV-880
and DC-8-33 aircraft are retired, the noise
and visible smoke levels at major airports
served by Delta will be noticeably improved.
The existing DC-9 and B-727 engines have
been fully modified to eliminate visible
smoke emissions. Airport landing and take-
off procedures are constantly monitored and
revised to achieve minim um noise levels
in the airport area so long as such revisions
do not in any way compromise safety.
Delta is also concerned about the
potential water pollution created by its
ground operations. The Atlanta Maintenance
and Overhaul Base includes an industrial
waste treatment plant which utilizes the
latest available technology. At most major
airports, facilities are installed or under
construction to filter the drainage from
airport buildings and ramps in order to
eliminate contaminants before the water
is released into adjacent rivers and streams.
11
Security Programs
Since December, 1972, all domestic airlines
have been conducting 100% passenger
screening in accordance with Federal Avia-
tion Regulations. Prior to boarding flights,
all passengers are screened for weapons and
all carry-on luggage is searched. Delta is
presently evaluating the use of x-ray devices
to speed up the search of carry-on baggage
and reduce passenger inconvenience.
Wherever practical Delta is utilizing the
''secure concourse'' approach to screening.
This procedure provides maximum security
at minimum costs and minimum congestion
at individual boarding gates. Since these
programs were begun, no attempt to hijack
an airliner in the United States has
been successful.
Effective April, 1973, the Civil Aero-
nautics Board approved a security charge of
34q: per flight coupon to cover the cost of the
passenger screening operation. On May 12,
1973, the Board approved an additional 25<i'.
charge per flight coupon to offset the cost
of the federally required airport armed guard
program. These charges are subject to further
review by the Civil Aeronautics Board after
the actual cost to the airline industry of
conducting these programs is fully known.
Personnel
Excluding temporary disadvantaged youth
and vacation relief employees, the team of
Delta Professionals numbered 27,500 at year-
end, up 11.5% over the combined total at
June 30, 1972. Total salaries and related
fringe benefits increased 16% to $450.4
million, equal to 43<i: of each revenue dollar.
The merger approval by the Civil Aero-
nautics Board was subject to certain Labor
Protective Provisions such as salary levels
and the costs of transfers. In those relatively
few cases in which an employee's total pay
was adversely affected by the merger, Delta is
paying displacement allowances for a period
of four years or until the employee's normal
12
pay exceeds the minimum established under
the merger agreement. A total of 825 em-
ployees were transferred as a direct result of
the merger, primarily from Boston and Miami
to Atlanta, at a cost to Delta, including pay-
ments for losses on home sales, of $2.3
million. An estimated additional 125 trans-
fers are planned for the next several months
to complete the centralization of certain
functions.
On April 16, 1973, Delta concluded an
agreement with the U.S. Departments of Labor
and Justice to assure transfer and promotional
opportunities for certain qualified minority
and female employees who, the government
alleged, may have been denied such oppor-
tunities because of their race or sex. Approx-
imately 1,900 employees are directly affected
by this five-year agreement. The agreement
provides for back pay awards under certain
conditions, for which the Company's maxi-
mum liability is estimated not to exceed
$800,000.
In 1972, Delta's flight personnel and the
Atlanta Maintenance Base personnel both
received Awards of Merit from the National
Safety Council for outstanding accomplish-
ment in the field of personnel safety in 1971.
These awards are typical of Delta's historical
emphasis on safety first-for its employees
and its customers. Even so, the Occupational
Safety and Health Act of 1970 imposes on
Delta and all employers extensive new
responsibilities for safe working environ-
ments and safe work practices. These respon-
sibilities and the appropriate authority have
been assigned to a Management Safety
Committee composed of representatives
from each of the Company's major
departments.
Officers retiring during the past year
were Mr. P.W. Pate as Vice President-
Properties, Mr. R.H. Wharton as Assistant
Vice-President-Employee Relations, and
Mr. C.B. Wilder as Assistant Vice President-
Operations Administration. The combined
13
careers of these gentlemen totaled almost a
century of excellent service to Delta and the
industry.
Mr. George B. Storer, Sr. retired on
October 27, 1972 as a Director and was elected
Director Emeritus. Mr. Stuart W. Patton, a
Director of Storer Broadcasting Co., was
elected to succeed Mr. Storer.
Regulatory Matters
As has been true during the past several
years, regulatory activities continue to be
concentrated in areas other than new route
proceedings, and in particular in the field
of rates and fares.
Regulatory Climate.
Under the guidance of its new Chairman,
the Honorable Robert D. Timm, during
recent months the Civil Aeronautics Board
has increased its efforts to improve the profit-
ability of the entire airline industry. These
activities have included continuing caution
in the institution of new route cases which
could result in uneconomic levels of com-
petition; programmed elimination of dis-
criminatory and uneconomic discount fares
such as the "youth" and "family fare" plans;
advance planning to meet possible fuel
shortages; and other affirmative programs.
It would appear that the CAB will retain
this same approach during ensuing months.
Route Cases.
A number of route cases, mostly started
some years ago, remained active during the
fiscal year. On the domestic system the CAB
granted Delta nonstop authority between
Memphis and Miami. This service was
inaugurated on July 1, 1973. The award came
in a proceeding ordered by a federal appeals
court to review an ear lier denial of the same
Delta application. Although the current
decision also grants Southern permissive
nonstop Memphis-Miami authority, Southern
has nevertheless appealed the Delta award
14
to the same federal court which reviewed
the earlier case. Final court decision is not
expected before the end of 1973 and in the
meantime Delta will continue to operate
its new nonstop services.
In the same proceeding the CAB denied
a Delta application for nonstop Atlanta-
Nashville authority, while granting such
authority to Southern Airways. This portion
of the CAB proceeding is not involved in
the court appeal.
In another proceeding remanded by a
federal court, the Board has granted Miami-
Houston authority to Continental Air Lines.
Implementation of this decision would
necessitate termination of Delta's four year
old Miami-Houston nonstop operations.
Delta has appealed the decision to a federal
court of appeals, however, and at Delta's
request the court has stayed the award to
Continental. Pending court review on the
merits, therefore, Delta will continue to
operate in this market and Continental will
be unable to institute this service. Final
decision in this court case is not expected
before the end of 1973.
In 1970 a CAB Administrative Law
Judge recommended that Delta be granted
nonstop Atlanta-Cleveland authority (in
competition with United) and that Eastern
be authorized to compete with Delta in the
Atlanta-Detroit and Atlanta-Cincinnati
markets. This case was subsequently
remanded by the CAB to the Judge for a new
hearing to update the record. The new
hearing was concluded during the last fiscal
year, following which (on July 12, 1973) a
new initial decision reached the same con-
clusions concerning all three markets that
were reached in 1970. This latest decision
will be reviewed by the CAB and its decision
is not expected before late 1973.
During the fiscal year Del ta asked the
CAB to dismiss its application for nonstop
Nashville-Detroit authority. This action was
taken in light of the Board's denial of Delta's
Atlanta-Nashville application. The CAB
15
has not yet ruled on the dismissal motion,
and probably will not do so until it decides
the Detroit-Nashville Nonstop Service Inves-
tigation in which the Board's Administrative
Law Judge recommended denial of Delta's
Nashville-Detroit application. The CAB
decision is expected sometime in the fall
of 1973.
During the fiscal year the CAB insti-
tuted the Miami-Los Angeles Competitive
Nonstop Service Case, to consider whether
to lift the stay on Delta's authority in this
market which was imposed at the time of
the Delta-Northeast merger, or to grant
competitive Miami-Los Angeles authority
to some other carrier (or to leave the market
a National Airlines monopoly). The Admin-
istrative Law Judge has recommended Pan
American Airways' selection for this market
and the termination of Delta's stayed
authority. The matter is being reviewed by
the full CAB, however, and Del ta is vigorous! y
seeking the right to re-institute service in
this market.
On July 9, 1973, an Administrative
Law Judge issued his initial decision in the
New England Service Investigation. In this
case the former Northeast Airlines routes in
northern New England are being investigated
to determine what adjustments, if any,
should be made in them and in the related
route systems of other carriers in order to
serve the future needs of this section of the
country. The Administrative Law Judge
recommended retention of most of Delta's
certificate authority in the area, but would
not require the Company to resume service
at this time at those New England points at
which it is now suspended while other
carriers (generally commuter carriers) con-
tinue to provide replacement service. This
decision will be reviewed by the CAB and
Delta will argue for a number of revisions
in the Judge's initial decision.
On the international system, Delta has
filed applications for nonstop authority
between Atlanta and the Bahama Islands,
and between Miami and Jamaica. Neither
16
of these applications, nor the Company's
pending Atlanta-London/Frankfurt applica-
tion, has yet been set for hearing.
Various applications have been filed
by other carriers for new route authority,
for realignment of their existing authority,
or for route exchanges with other carriers,
which would create new or different com-
petition for Delta, but all of these proceedings
are in preliminary stages.
Merger Cases.
During the year all major, pending merger
proceedings before the CAB were terminated.
The merger between Eastern Air Lines and
Caribbean Atlantic Airlines was approved,
subject to a number of restrictions which
will mitigate the effect of the merger on
Delta's Caribbean operations. A proposed
merger between American Air lines and
Western Air Lines was disapproved by the
CAB and a proposed National Air lines-
North west Airlines merger was voluntarily
terminated by those two carriers.
Rate and Fare Cases.
The CAB's investigation into the structure
and level of U.S. airline passenger fares has
been in continual process for nearly three and
one-half years. Seven of the Investigation's
ten phases have now fully been decided, and
two others await only a response to requests
for reconsideration of the Board's basic
decisions. During the fiscal year the CAB
decided the "Discount Fare" phase of the
Investigation, in which it ordered the youth
standby, youth reservation and family fares
terminated on a progressive basis over a one-
year period ending on June 1, 197 4; ruled
that Discover America excursion fares would
no longer be considered lawful after mid-
197 4; and established new policy guidelines
to contain the practice of publishing exces-
sive numbers of discounted fares which often
dilute revenue far more than they generate
new traffic.
17
During the fiscal year the CAB also
rendered its final decision in the "Seating
Configuration11 phase of the Investigation.
In this decision the CAB provided strong
incentives for all carriers to eliminate such
space wasting and expensive features as
coach lounges and, thereby, improve the
overall productivity of their aircraft.
Continental has sought court review of
this action.
In August of 1972, the CAB permitted
the final portion of its fare level decision to
become effective, resulting in a 2. 7% increase
over then-existing fares. This increase
became effective on September 5, 1972. Also
during the fiscal year the CAB approved the
addition of surcharges on existing fares in
order to cover the costs of the new anti-
hijacking program.
The major remaining portion of the
Investigation concerns the overall fare
structure-the relationship between differ-
ent basic types of fares and between fares
for differing lengths of travel; and such
features as reduced "off-peak11 fares used by
Delta in its famous "Early Bird11 and "Owly
Bird11 services-in which decision is expected
later in 1973.
Since the close of the fiscal year the
CAB found that the passenger fare levels
actually charged from October 1969 to mid-
October 1970 were fully lawful. Certain non-
airline parties have sought judicial review,
although the decision was a unanimous one
by the present four members of the Board.
Other court cases which seek reparations for
passengers on the theory that the October
1969-October 1970 fares were improper
remain in abeyance pending final conclusion
of this proceeding.
The CAB and the carriers are also
actively engaged in comprehensive investi-
gations of the reasonableness and the struc-
ture of domestic airline air frieght rates; and
of the proper level of the rates paid to the
carriers for the carriage of mail. The mail
case has been pending since the latter part
18
of 1970, and only recently has been split into
two phases so that mail rates for the past
period of December, 1970-March 27, 1973 can
be set expeditiously and any additional
compensation due the carriers for that
period of time can be paid in the reasonably
near future. The remainder of the proceed-
ing, dealing with rates for the future carriage
of air mail, first-class-mail-by-air, and newly-
instituted containerized mail programs, will
be processed during the latter part of 1973
and in 197 4. Miscellaneous other rate and
fare proceedings remain in preliminary
stages before the CAB.
19
20
Delta Air Lines System Route Map
Border to border, coast to coast, thru
the Caribbean and on to South
America, Delta's fleet of 184 jets
connects 99 key destinations in five
countries, bringing that distinctive
Delta brand of personal service to over
23 million passengers yearly.
MA
(
NNIS
NTUCKET
HA'S
EYARD
BERMUDA
DELTA/
PAN AM
TH RU -JETS
TO AND
tFROM
EUROPE
21
DELTA AIR LIN ES, INC.
Balance Sheets
June 30, 1973 and 197 2 (Note 2)
ASSETS
CURRENT ASSETS
Cash.
Short-term cash investments,
at cost.
Accounts receivable, net.
Maintenance and operating
supplies, at average cost .
Prepaid expenses, etc
Total current assets.
PROPERTY AND EQUI PMENT
(Note4):
Flight
Equipment Other
Cost -
1973 $978,428
1972 906,067
$152,464
135,690
Accumulated depreciation -
1973 439,635 75,841
1972 388,447 64,471
Advance payments for new
equipment (Note 4).
OTHER ASSETS, being
amortized:
Nonoperating property and
equipment, etc ..
Preoperating expenses .
Unamortized debt expense . .
22
1973 1972
(In Thousands]
23,709
73,096
96,805
58,043
6,566
3,028
164,442
1,130,892
515,476
615,416
123,915
739,331
1,797
1,777
579
$ 45,696
29,023
74,719
55,731
5,670
4,699
140,819
1,041,757
452,918
588,839
98,717
687,556
2,789
636
4,153 3,425
$ 907,926 $ 831 ,800
LIABILITIES AND
STOCKHOLDER EQUITY
CURRENT LIABILITIES:
Current maturities of long-term
debt. . ...... $
Accounts payable and accrued
liabilities .
Unearned transportation revenue
Accrued income taxes.
Total current liabilities ..
LONG-TERM DEBT (Note 3).
DEFERRED CREDITS (Note 5):
Deferred Federal income taxes .
Unamortized investment tax
credits .
COMM ITM ENTS (Note 4)
STOCKHOLDER EQUITY (Notes
2 and 6):
Common stock, par value $3.00
per share - Authorized
25,000,000 shares; Outstanding
19,866,524 shares in 1973 and
19,828,385 shares in 1972.
Common stock purchase
warrants ..
Additional paid-in capital.
Retained earnings (of which
$168,125,000 is restricted at
June 30, 1973 as to the
payment of cash dividends
under credit agreements) .
DELTA AIR LIN ES, INC .
1973 1972
(In Th ousands)
51 ,400
90,692
19,114
27,309
188,515
168,000
161 ,347
25,511
186,858
59,600
6,750
72,768
225,435
$ 43,896
78,469
17,618
14,789
154,77 2
199,585
146,881
23,925
170,806
59,485
6,750
71 ,037
169,365
364,553 306,637
$907,926 $831 ,800
The accompanying notes are an integral part of these balance sheets.
23
DELTA A IR LINES, INC.
Statements of Income
For the years ended June 30, 1973 and 1972 (Note 2)
OPERATING REVENUES:
Passenger ...... .. . .
Cargo . .
Other, net . .
Total operating revenues ... . .
OPERATING EXPENSES:
Flying operations.
Maintenance ......... .
Aircraft and traffic servicing .
Promotion and sales . .
Passenger service ...... . .. .
Depreciation and amortization .. .. .... . ... .. . . .. .. .. .
General and administrative . .
Total operating expenses .. .
OPERATING INCOME .
OTHER EXPENSE (INCOME):
Interest expense ..
Less - Interest capitalized on advances for equipment.
Miscellaneous income, net ......... .. . .
Gain on disposition of aircraft ..
Merger integration costs ....
INCOME BEFORE INCOME TAXES.
PROVISION FOR INCOM E TAXES (Note 5) ....... . .. . .
NET INCOME.
NET INCOME PER COMMON SHARE (Note 1 ) . .
Th e accompanying notes are an integral part of these statements.
24
1973
. . .... $ 960,215
. . . . . . . . . . . 76,323
13,161
.. . ... .. . . . 1,049,699
259,649
. . . 141 ,330
202,173
110,452
..... 102,153
84,301
28,882
928,940
120,759
,
. . .... . '
15,808
(6,345)
9,463
(4,316)
(4,653)
4,024
4,518
116,241
50,246
.. $ 65,995
$3.32
DELTA AIR LINES, INC.
Twelve Months
Ended
June 30, 1972
1972 (Unaudited)
(In Thousands)
$806,068
65,160
12,338
883,566
229,807
128,765
167,743
94,649
80,357
86,376
28,303
816,000
67,566
17,926
(3,770)
14,156
(656)
(1 ,897)
11,603
55,963
27,489
$ 28,474
$1.44
$817,665
65,303
12,661
895,629
231,565
129,884
169,534
96,829
81 ,136
86,135
28,482
823,565
72,064
17,701
(3,770)
13,931
(736)
(1,897)
11,298
60,766
27,539
$ 33,227
$1 .68
25
DELTA A IR LIN ES, IN C .
Statements of Retained Earnings
Fo r the years e nded June 30, 1973 and 1972 (Note 2)
1973 1972
(In Thousands)
BALANCE AT BEGINNING OF
YEAR, as previously reported
To record deficit (as restated) of
Northeast Airlines, Inc. as of
December 31, 1970 (Note 2)
BALANCE At BEGINNING OF
YEAR, as restated.
Add (Deduct):
Net income . .
Cash dividends - $.50 per share
Loss of Northeast Airlines, Inc.
for the six months ended
June 30, 1972 (Note 2).
BALANCE AT END OF YEAR
(restricted as indicated on
.. $169,365
65,995
(9,925)
$203,999
(5 1,975)
152,024
28,474
(9,570)
(1 ,563)
balance sheet). . . .. . . $225.435 $169,365
The accompanying notes are an integral part of these statements.
Auditors' Report
ARTHU R ANDERSEN & Co.
ATLANTA, G EORG IA
To the Stockholders and Board of Directors
of Delta Air Lines, Inc.:
We have examined the balance sheets of Delta Air
Lines, Inc. (a Delaware corporation) as of June 30, 1973
and 1972; and the related statements of income, retained
earnings, additional paid-in capital and changes in finan-
cial position for the years 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. The finan-
cial statements of Northeast Airlines, Inc. for the year
ended December 31, 1971 (which period was combined
with Delta's results of operations for the year ended June
30, 1972 as discussed in Note 2 to the financial statements)
were examined by other auditors and we were furnished
with their report thereon.
In our opinion, based upon our examination and the
report of other auditors, the accompanying financial state-
ments present fairly the financial position of Delta Air
Lines, Inc. as of June 30, 1973 and 1972, and the results
of its operations and the changes in financial position for
the years then ended, in conformity with generally
accepted accounting principles consistently applied during
the periods.
Atlanta, Georgia,
August 22, 197 3.
26
~ C2r-._ ~ < G:, ,
DELTA AI R LINES, INC .
Statements of Additional Paid-in Capital
For the years ended June 30, 1973 and 1972 (Note 2)
1973 1972
[In Th ousands]
BALANCE AT BEGINNING OF
YEAR, as previously reported . . $22,450
To record additional paid-in capital
(as restated) of Northeast
Airlines, Inc. as of December
31, 1970 (Note 2) . . 39,316
BALANCE AT BEGINNING OF
YEAR, as restated ............... $71 ,037 61,766
Add :
Capital cont ributed (both cash
and debt assumed) to
Northeast by Storer
Broadcasting Company, less
amount allocated to common
stock purchase warrants ..
Excess of proceeds over par
value of common shares
issued under employee stock
option plan (Note 6).
Income tax reduction to
Company resulting from sales
by employees of common
shares issued under stock
option plan.
BALANCE AT END OF YEAR.
170 8,265
1,126 1,006
435
. . $72,768 $71 ,037
Th e accompanying notes are an integral part of these statements.
27
DELTA AIR LIN ES, IN C .
Statements of Changes in Financial Position
For the years ended June 30, 1973 and 1972 (Note 2)
1973 1972
[In Th ousa nds)
FUNDS PROVIDED BY:
Net income. . . .. ... $ 65,995
Add expenses not requiring cur-
rent outlay of working capital-
Depreciation and amortization
Deferred income taxes .
Investment tax credit, net.
Other . .
Total from operations.
Disposition of property
and equipment (book value).
Long-term financing .
Refund of SST advance ....... . .
Common stock issued under
employee stock option plan,
including income tax reduction .
Capital (cash) contributed to
Northeast.
Other. . ... . . . . .
FUNDS USED FOR:
84,914
14,466
1,586
720
167 ,681
17,876
5,000
1,676
499
192,732
Property and equipment additions -
Flight equipment and advances 135,036
Other. 18,695
Reduction of long-term debt.
Cash dividends.
Preoperating expenses.
153,731
36,585
9,925
2,611
202,852
$ 28,474
86,376
12,512
2,339
165
129,866
4,073
3,000
1,110
7,200
1,962
147,211
80,741
11,496
92,237
25,339
9,570
127,146
INCREASE (DECREASE) IN
WORKING CAPITAL $( 10,120) $ 20,065
CHANGES IN WORKING
CAPITAL COMPONENTS:
Increase (decrease) in-
Cash and short-term
investments.
Receivables, net.
Other current assets.
Decrease (increase) in -
Current maturities of long-
term debt .
.. $ 22,086
2,312
(775)
(7,504)
Short-term notes payable ..
Accounts payable and accrued
liabilities . (12,223)
(14,016)
Other current liabilities .
$(10,120)
$ 32,100
1,118
480
201
14,910
(11 ,571)
(17,173)
$ 20,065
The accompanying notes are an integral part of these statements
28
DELTA AIR LINES, INC.
Notes to Financial Statements
June 30. 1973 and 1972
1. SUMMARY OF ACCOUNTING POLICIES:
Passenger Revenue: Passenger ticket sales are
recorded as revenue when the transportation is
used. The value of unused tickets is included in
current liabilities in the financial statements.
Depreciation: Substantially all of the Com-
pany's flight equipment is being depreciated on
a straight-line basis to residual values (10% of
cost) over a 10-year period from dates placed in
service. Ground property and equipment is de-
preciated on a straight-line basis over its esti-
mated service life (various lives ranging from 3
to 30 years).
Maintenance and Repairs: All maintenance
and repair costs, including engine and airframe
overhauls, are charged to maintenance expense
when incurred. Major replacements and better-
ments are capitalized.
Interest Capitalized: Interest on advances for
new equipment is capitalized based on the Com-
pany's current interest rate on long-term debt.
Capitalization of interest ceases when the equip-
ment is placed in service.
Preoperating Expenses: When new aircraft
fleets are introduced, training and other major
costs incurred are deferred and then amortized
on a straight-line basis generally over a period
of two years or less.
Retirement Plans: All of the Company's per-
manent employees are covered under its non-
contributory trusteed plans providing for
retirement, disability, and survivor benefits. The
total expense under these plans amounted to
approximately $26,100,000 in 1973 and
$22,500,000 in 1972. The Company's policy is to
fund each year's accrued costs under the plans,
which costs include amortization of prior service
costs over a thirty-year period. At December 31,
1972 (date of latest actuarial study), the assets of
the plans exceeded the actuarially computed pres-
ent value of vested benefits under the plans.
Income Taxes: Total income taxes are provided
by applying the applicable tax rates to book in-
come before income taxes. (As discussed in Note 2,
29
DELTA AIR LINES, INC.
no effect has been given to income tax reductions
resulting from Northeast's losses to August 1,
1972.) Deferred Federal income taxes are provided
for all significant items (principally depreciation
and interest capitalized) where there is a timing
difference in recording such items for financial
reporting purposes and for income tax purposes.
Utilized investment tax credits are amortized
( as a reduction of the provision for income taxes)
over the approximate life of the related equip-
ment. (See Note 5.)
Earnings Per Share: Net income per common
share is computed based on the weighted average
number of outstanding shares during the year
(19,852,842 shares in 1973 and 19,810,495 shares
in 1972). The 668,515 common shares issued for
Northeast's common stock are considered as out-
standing throughout the two years ended June 30,
1973. Outstanding stock options and warrants
(see Note 6) have no material dilutive effect on
net income per common share.
2. MERGER WITH
NORTHEAST AIRLINES, INC.:
On August 1, 1972, Delta's merger with North-
east Airlines, Inc. was consummated. Delta issued
(a) 668,515 shares of its common stock for all of
the outstanding common stock of Northeast, and
(b) warrants to Storer Broadcasting Company
(majority stockholder of Northeast) to purchase
500,000 shares of Delta common stock at $48.00
per share on or prior to May 1, 1978, in exchange
for Storer transferring to Delta the $40,085,000
owed by Northeast to Storer at August 1, 1972.
The estimated fair value of the warrants at the
date of the merger agreement (May 12, 1971) was
$6,750,000.
The merger was accounted for as a pooling of
intere$tS and, accordingly, prior financial state-
ments of Delta have been restated. The audited
accompanying statements of income, retained
earnings, additional paid-in capital and changes
in financial position for 1972 reflect the combin-
ation of Delta's results of operations for the year
ended June 30, 1972 with Northeast's audited
results for its year ended December 31, 1971.
Northeast's net loss of $1,563,000 ($.08 per share)
30
I
DELTA AIR LIN ES, IN C .
for the six months ended June 30, 1972 was
ch arged directly to retained earnings.
For purposes of comp aring like operating
periods, an unaudited statement of income re-
flecting the combined results of operations for
the twelve months ended June 30, 1972 h as been
presented.
The following tabulation reconciles Delta's
previously reported 1972 operating revenues, net
income and net income per share with restated
amounts. Adjustments m ade to conform North-
east's method of accounting for preoperating costs
with Delta's method do not h ave a significant
effect on restated net income for the periods
shown.
Operating Revenues:
As previously reported.
Northea~ ... .. . . . . . .... . .
As restated .
Net Income (Loss) :
As previously reported .
Northeast.
Twelve Months
Ended
June 30, 1972
1972 (U naudited)
-----rin Th o usands)
. . $757 ,569 $757 ,569
125,997 138,060
. . $883,566 $895,629
. $ 42,169 $ 42,169
(13,695) (8,942)
As restated. . . . $ 28,474 $ 33,227
Net Income Per Share:
As previously reported . $2.20 $2.20
As restated . 1.44 1.68
Northeast's operating losses to August 1, 1972
have been included in consolidated income tax
returns of Storer Broadcasting Company. Accord-
ing! y, no effect has been given to income tax
reductions resulting from these losses. Net income
per share, as restated, for 1972 would have been
higher by approximately $.34 (audited period)
and $.22 (unaudited period) if such income tax
reductions had been reflected.
Northeast's operating revenues and net loss
for the month of July, 1972, which are included
in the fiscal 1973 results of operations, amounted
to $12,464,000 and $131,000 ($.01 per share) ,
respectively.
31
DELTA AIR LINES, INC.
3. LONG-TERM DEBT:
At June 30, 1973 and 1972, the Company's
long-term debt (including current maturities)
was as follows:
(a) Due banks under unsecured
notes carrying an interest rate
of 1 /4% above the prime rate,
repayable in quarterly
installments to September 30,
1976, with $52,000,000
payable on December 31 ,
1976 ($48,150,000 payable
1973 1972
(In Th ousands)
infiscal1974) .. . .......... $177,150 $192,037
(b) Due insurance companies
under 6% and 7% unsecured
notes, repayable in
installments to December 31 ,
1979 ($3,250,000 payable in
fiscal 1974).
(c) Convertible Subordinated
Debentures, 6 1 /2%, maturing
August 1, 1986, with annual
sinking fund redemptions of
$1 ,100,000 beginning July 31 ,
1976 (Note 6).
(d) Other.
Total. .. . .. . ............. .
Less - Current maturities .. .
20,250
22,000
219,400
51,400
25,279
22,000
4,165
243,481
43,896
$168,000 $199,585
The Company will need additional long-term
funds to partially finance future expenditures for
the aircraft acquisition program discussed in
Note 4. The Company has arranged for a long-
term loan of approximately $85,000,000 from a
syndicate of United Kingdom banks to finance
the Rolls-Royce engines for its first 24 Lockheed
L-1011 aircraft. In addition, the Company is
presently negotiating a new bank credit agree-
ment for long-term borrowings up to $300,000,000,
of which $156,000,000 would be used to repay
principal outstanding at June 30, 1973 under a
present agreement.
32
DELTA AIR LINES, IN C
4. PURCHASE AND LEASE COMMITMENTS:
At June 30, 1973, the Company had purchase
commitments for the following aircraft and re-
lated spare engines:
Airc raft
30 Lockheed L-1011 .
26 Boeing 727-200.
Advances Estimated
And Other Expenditures
Expenditures to During Fiscal
June 30, 1973 1974through 1977
(In Th ousands]
.. .. . $ 96,968 $507,000
40,825 173,000
$137,793 $680,000
The last 12 Lockheed L-1011 aircraft are cancel-
lable by specified interim dates prior to October
1, 1974. The Company has options to purchase an
additional 6 Boeing 727-200 aircraft.
In connection with its aircraft acquisition
program, the Company has entered into agree-
ments to sell its 15 Convair 880 aircraft, 13
Douglas DC-9-14 aircraft (7 of which were de-
livered to purchaser prior to June 30, 197 3), 4
Douglas DC-9-31 aircraft, 7 Douglas DC-8-33
aircraft, and related spare engines and parts.
At June 30, 1973, the Company leased thirty-
four aircraft at an aggregate annual rental of
approximately $29,500,000. Leases for five of these
aircraft expire in May, 1975, and thereafter, annual
rentals will approximate $14,800,000 until the
leases expire at various dates during 1981 and
1982. Annual rentals covering ground facilities
(terminal space, maintenance facilities, ticket
offices, etc.) under leases expiring after June 30,
197 4, total approximately $18,100,000.
Operating expenses for 1973 included
$21,200,000 for aircraft rentals, $18,600,000 for
rental of ground facilities and $20,200,000 for
airport landing fees.
33
DELTA AIR LINES, INC.
5. INCOME TAXES:
The provision for income taxes for 197 3 and
1972 consisted of the following elements:
Current income taxes -
Federal. ...... ... . . . . .
State.
Deferred Federal income taxes .
Investment tax credits.
Less - Amortization of utilized
investment tax credits over
approximate life of related
equipment ..
1973 1972
(In Th ousands)
$33,027
1,167
14,466
8,076
56,736
(6,490)
$11 ,949
689
12,512
8,654
33,804
(6,315)
$50,246 $27,489
At June 30, 1973, all available investment tax
credits have been utilized to reduce the Com-
pany's Federal income taxes payable.
The Company has filed a petition with the
U.S. Tax Court contesting income tax deficiencies
assessed by the Internal Revenue Service for the
taxable years 1963 through 1965. The petition
has been granted and the case is scheduled for
trial later in 1973. In the opinion of management,
the settlement of this matter will not have a
material effect on the Company's financial
position.
34
DELTA AIR LINES, IN C .
I
..
6. COMMON STOCK:
At June 30, 1973, the Company had 1,113,116
1 shares of common stock reserved for future is-
suance of stock options (525,116 shares), stock
purchase warrants (500,000 shares at $48 per
~ share) and conversion of Convertible Subordi-
nated Debentures (88,000 shares at $250 per share).
Under the Company's Qualified Stock Option
Plans for 600,000 shares of common stock, options
for 224,250 shares have been granted and options
for 149,741 shares were outstanding at June 30,
, 1973 (10,675 shares at $34.75 per share, 7,016
shares at $34.50 per share, 7,050 shares at $30.25
per share and 125,000 shares at $51.75 per share).
In addition, stock options assumed from North-
east for 37 5 shares were outstanding. Transactions
during 1973 and 1972 were as follows:
Option Shares
1973 1972
Outstanding at beginning of year. 67,505 99,250
Assumed from Northeast. 3,375
Granted .. . . . . . . . . . '
. . . . . 125,000
Exercised .. (38,139) (34,870)
Expired .. (4,250) (250)
Outstanding at end of year. 150,116 67,505
Exercisable at end of year. 18,304 49,068
Common stock transactions during 1973 and
1972 were as follows:
Outstanding at beginning
of year, as previously
reported .
Issued for common stock
of Northeast.
Outstanding at beginning
of year, as restated . .
Exercise of employee
stock options.
Common Shares
1973 1972
19,125,000
668,515
. 19,828,385 19,793,515
38,139 34,870
Outstanding at end of year ..... 19,866,524 19,828,385
35
DELTA AI R LINES, INC.
Five Years of Delta Air Lines Growth Years ended June 30
(Dollars expressed in thou sands except per share figu res)
AS PREVIOUSLY REPORTED:
Operating revenues.
Net income ... .. . . . . . . .. . .. ... _ . . .
Net income per share.
AS RESTATED TO REFLECT POOLING OF
NORTHEAST AIRLINES, INC (1 ):
Operating revenues
Passenger
Cargo ... . . .... . . .
.. . . $ 960,215
76,323
Other, net. . . . . . . . 13,161
Total operating revenues.
Operating expenses.
. . . . . . . . ... . . . . $1 ,049,699
. . . . . . . . . 928,940
Operating income . .. . . .. . .. .
Interest expense, etc , net . . . .. . . . . .. .
Gain (loss) on disposition of aircraft .
. .$ 120,759
9,171
4,653
Income before taxes and extraordinary items ... $ 11 6,241
Income taxes. . 50,246
Income before extraordinary items . . . .. . . . . .. $ 65,995
Extraordinary items ($.04 and $.36 per share) .
Net income . . . . .. .... . . .. . . . . _ .. ... $ 65,995
$3.32
Net income per share . ... . . . . . .... ... .
Dividends paid ......... . .. . . . ..... . .
Dividends paid per share . . . . .... . . .
$9,925
$.50
Stockholder equity. . . . . . . . . . . . . . . . . . . . . . $ 364,55 3
Stockholder equity per share. . . . . . . . . . . . . . . $1 8.35
Shares of common stock outstanding . . 19,866,524
Revenue passengers enplaned .... 23,702,870
Available seat miles (000). ...... . .... . . ... . . 27,958,095
Revenue passenger miles (000). . . .. . .. ... . 14,449,748
Passenger load factor.. . . . . . . . . . . . . 51.68%
Break-even load factor. 45 .18%
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.
3,815,285
1,711 ,229
6.65q;
3.32Q:
24 _
35q;
( 1) The restated amount s and statistical data for years 1969 through
1972 combine Delta-only results of operations for the four years
ended J une 30, 1972 with Northeast's re sults for the fo ur years
ended Dece mber 31 . 1971 . (See Note 2 to Financial Statement s)
36
$757,569
$ 42,169
$2.20
$806,068
65,160
12,338
$883,566
816,000
$ 67,566
13,500
1,897
$ 55,963
27,489
$ 28,474
$ 28,474
$1.44
$9,570
$.50
$306,637
$15.46
19,828,385
20,562,953
26,018,780
12,433,986
47 .79%
43.80%
3,613,790
1,482,453
6.48q;
3 _
14q;
22.58q;
1971
$66 1,246
$ 29,994
$1.57
$7 13,665
60,097
10,320
$784,082
735,605
$ 48,477
15,699
$ 32,778
12,419
$ 20,359
(700)
$ 19,659
$.99
$9,562
$.50
$278,239
$14.06
19,793,515
18,880,818
24,838,909
11 ,575,358
46 .60%
43.40%
3,403,838
1,381,954
6.17q;
2.96q;
21 .61q;
DELTA AI R LINES, INC .
1970
$622,129
$ 44,527
$2.33
$679,018
56,615
8,585
$744,218
669,429
$ 74,789
18,477
(227)
$ 56,085
33,511
$ 22,574
(7,224)
$ 15,350
$.78
$7,650
$.40
$257,142
$12 .99
19,793,515
18,830,393
22,820,681
11 ,232,679
49 .22%
43.76%
3,094,437
1,323,265
6 05(1;
2.93(1;
21 63(1;
$516,113
$ 39,19 1
$2.05
$573,136
46,842
7,840
$627,818
547,321
$ 80,497
12,429
61 1
$ 68,679
33,305
$ 35,374
$ 35,374
$1 .79
$7,650
$.40
$230,473
$11 .64
19,793,515
17,101 ,623
18,509,976
9,979,663
53 .92%
46.37%
2,506,394
1,152,193
5.74(1;
2 96(1;
21 84(1;
37
DELTA AI R LINES, INC.
Board of Directors
R. W . FREEMAN Chairman of the Finance Committee
N ew Orleans, Louisiana
C.H. DOLSON Chairman of the Ex ecutive Committee
Atlanta, Georgia
W . T. BEEBE Atlanta, Georgia
B. W . BIEDENHARN M onroe, Louisian a
R. W . COURTS Atlanta, Georgia
EMERY FLINN Miami, Florida
DAVID C . GARRETT, JR. Atlanta, Georgia
EDWARD H . GERRY New York, N ew York
C HARLES H . KELLSTADT Miami, Florida
JOHN R. LONGMIRE St. Louis, M issouri
R. S. MAURER Atlanta, Georgia
BILL MICHAELS Miami, Florida
T. M . MILLER Atlanta, Georgia
ROBERT OPPENLANDER Atlanta, Georgia
STUART W. PATTON Miami, Florida
CARLETON PUTNAM Washington , D .C.
GEORGE M . SNELLINGS, JR. M onroe, Louisiana
38
DELTA AIR LINES, INC.
Officers
W . T. BEEBE Chairman of the Board & Chief
Executive Officer
DAVID C. GARRETT, JR. President
FINANCE
ROBERT OPPENLANDER Senior Vice President- Finance & Treasurer
W . A. ATCHISON Vice President-Computer Services
M . 0 . GALLOWAY Vice President-Comptroller
PAULW. PATE
J. D . DUNN
J. R. HOWELL
HUGH H . SAXON
Vice President- Properties*
A sst. Vice President- Purchasing
A sst. Treasurer
A ss t. Treas urer
LE GAL & CORPORATE AFFAIRS
R. S. MAURER
MORRIS SHIPLEY
J. W . CALLISON
A. C. FORD
FRANKF. ROX
GEORGE E. SHEDD
SIDNEY F. DAVIS
IKE LASSETER
MA RKETING
T. M. MILLER
SHELBY D. DEMENT
C HARLES P. KNECHT
J. A. COOPER
R. L. GIBSON
J. T. MAPLES
J. W . MEYER
HENRY ROSS
O PERATIONS
HOYT T. FINCHER
E. L. HAMNER
D . P. HETTERMANN
C. A. SMITH
J. K. BURNETTE
JOHNP. DAVIS
HOLLIS L. HARRIS
JACKS. KING
W . L. MILLER
J. F. NYCUM
L. G. RODEFELD
C. B. WILDER
PERSONNEL
R. W . ALLEN
R. H . WHARTON
J. A. YORK
*Retired July 1, 1973
**Retired February 15, 1973
Senior Vice President- General Counsel
& Secretary
Vice President-Government Affairs
A sst. Vice President- Law
A sst. Vice President-Long Range Planning
A sst. Vice President- Law
A sst. Vice President-Public Relations
A sst. Secretary & A sst. to Gen eral Counsel
A sst. Secretary
Senior Vice President-Marketing
Vice President-Marketing Administration
Vice President-Sales
A sst. Vice President-Marketing
A sst. Vice President- Traffic Administration
A sst. Vice President- Marketing Planning
A sst. Vice President-Customer Relations
A sst. Vice President-Sales Promotion
Senior Vice President- Operation s
Vice President-Stations
Vice President-Technical Operations
Vice President-Flight Operations
Asst. Vice President-Quality Con trol.
A sst. Vice President- Maintenance
A sst. Vice President-In-Flight Services
A sst. Vice President-Flight Control
A sst. Vice President-Material Services
A sst. Vice President-Flight Equipment
Development
A sst. Vice President-Communications
Asst. Vice President-Operations
Administration*
Senior Vice President- Personnel
Asst. Vice President- Employee Relations*'
A sst. Vice President- Employee Services
39
DELTA AIR LINES, IN C.
Transfer Agent and Registrar
The Citizens and Southern National Bank
99 Annex
Atlanta, Georgia 30399
Common Stock
Listed on the New York Stock Exchange
Auditors
Arthur Andersen & Co.
Annual Meeting
October 25, 1973, Monroe, Louisiana
Notice to the Stockholders of Delta Air Lines, Inc.
Part 245 of the Economic Regulations of the Civil
Aeronautics Board provides that: (1) any person who
either owns, as of December 31st of the year preceding
issuance of this annual report, or subsequently acquires,
beneficially or as trustee, more than 5%, in the aggregate,
of any class of the capital stock or capital of Delta Air
Lines, Inc., shall file with the Board a report containing
the information required by Sec. 245.12 of Subpart 245,
on or before April 1, as to the capital stock or capital
owned as of December 31 of the preceding year, and, in
the case of stock subsequently acquired, a report under
Sec. 245.13, within 10 days after such acquisition, unless
such person has otherwise filed with the Board a report
covering such acquisition or ownership, (2) any bank or
broker covered by ( 1), to the extent that it holds shares as
trustee on the last day of any quarter of a calendar year,
shall file with the Board, within 30 days after the end of
the quarter, a report in accordance with the provisions of
Section 245.14; and (3) any person required to report under
this subpart who grants a security interest in more than
5% of any class of the capital stock or capital of Delta Air
Lines, Inc. shall within 30 days after granting such security
interest file with the Board a report containing the
information required in Section 245.15. 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, Hartsfield Atlanta International Airport
Atlanta , Georgia 30320
40