Delta Airlines 2002 Annual Report Download - page 169

- FLEET CHANGES
As a result of the effects of the September 11 terrorist attacks on our
business and the related decline in aircraft values, we recorded $286
million in asset writedowns. These writedowns include (1) the
impairment of 16 MD-90 and eight MD-11 owned aircraft, which reflects
further reductions in the estimated future cash flows and fair values
of these aircraft since our impairment review in 1999, as well as a
revised schedule for retiring these aircraft; (2) charges related to
the accelerated retirement of 40 owned B-727 aircraft by 2003; and (3)
the writedown to fair value of 18 owned L-1011 aircraft. These charges
are summarized in the table below:
Used in Operations Held for Sale
------------------------ ----------------------
No. of No. of
(dollars in millions) Writedown(1) Aircraft Writedown Aircraft Total
--------------------- ------------ -------- --------- -------- -----
MD-90 $ 98 16 $ -- -- $ 98
MD-11 93 8 -- -- 93
B-727-200 81 36 2 4 83
L-1011 -- -- 12 18 12
----- ---- -----
Total $ 272 $ 14 $ 286
===== ==== =====
(1) The fair value of aircraft used in operations was determined using
third-party appraisals.
The net book value of the aircraft held for sale is included in other
noncurrent assets on our Consolidated Balance Sheets at December 31,
2001, and is not material.
In addition, we recorded a $71 million reserve related to our decision
to remove nine leased B-737-300 aircraft from service to more closely
align capacity and demand, and to improve scheduling and operating
efficiency. The reserve consisted of future lease payments for these
aircraft less estimated sublease income. We also recorded an additional
$6 million charge for the writedown to net realizable value of related
aircraft spare parts.
- SURPLUS PILOTS AND GROUNDED AIRCRAFT
We recorded $30 million in expenses for the temporary carrying cost of
surplus pilots and grounded aircraft related to our capacity reductions
which became effective on November 1, 2001. This cost also includes
related requalification training and relocation costs for certain
pilots.
- OTHER
We recorded $160 million in charges that include (1) an $81 million
charge related to the write-off of previously capitalized amounts that
would provide no future economic benefit due to our decision to cancel
or delay certain airport and technology projects following September
11, 2001; (2) a $63 million charge related to contract termination
costs; (3) a $9 million charge related to the write-off of certain
receivables, primarily those of foreign air carriers and other related
businesses, that we believe became uncollectible as a result of those
businesses' weakened financial condition after September 11, 2001; and
(4) a $7 million charge related to our decision to close certain
facilities.
2000
In 2000, we recorded charges totaling $108 million ($66 million net of tax, or
$0.53 basic and $0.50 diluted earnings per share) in asset writedowns,
restructuring and related items, net on our Consolidated Statements of
Operations, as follows:
- WORKFORCE REDUCTIONS
We recorded an $86 million charge relating to our decision to offer an
early retirement medical option program to enable eligible employees to
retire with continued medical coverage without paying certain early
retirement medical premiums. Approximately 2,500 employees participated
in this program.
- OTHER
We recorded a $22 million restructuring charge relating to our decision
to close our Pacific gateway in Portland, Oregon.