Delta Airlines 2003 Annual Report Download - page 125

Table of Contents
to our decision to return these aircraft to service, we reversed the remaining $56 million reserve related to these B-737-300 aircraft.
During the December 2002 quarter, we entered into an agreement with Boeing to defer 31 mainline aircraft previously scheduled for delivery in 2003
and 2004. As a result of these deferrals, we had no mainline aircraft deliveries in 2003 and have none scheduled for 2004. We incurred a $30 million
charge related to these deferrals.
During the December 2002 quarter, we decided to accelerate the retirement of 37 owned EMB-120 aircraft to achieve costs savings and operating
efficiencies. We removed these aircraft from service during 2003. The accelerated retirement of these aircraft as well as a reduction in their estimated
future cash flows and fair values resulted in an impairment charge.
During 2002, we recorded the following impairment charges for our owned B-727, MD-11 and EMB-120 aircraft:
Used in Operations (3) Held for Sale
No. of No. of Spare
(dollars in millions) Writedown(1) Aircraft Writedown Aircraft Subtotal Parts(2) Total
B-727 $ 24 23 $ 37 36 $ 61 $ — $ 61
MD-11 141 8 — — 141 18 159
EMB-120 27 37 — — 27 4 31
Total $ 192 $ 37 $ 229 $ 22 $ 251
(1)
The fair value of aircraft used in operations was determined using third party appraisals.
(2)
Charges related to the writedown of the related spare parts inventory to their net realizable value.
(3)
Reflects the classification of these aircraft at the time of the 2002 impairment analysis, which may differ from the classification at December 31, 2003.
• Workforce Reductions
We recorded a $127 million charge related to our decision in October 2002 to reduce staffing by up to approximately 8,000 jobs across all workgroups,
excluding pilots, to further reduce operating costs. We offered eligible non-pilot employees several programs, including voluntary severance, leaves of
absence and early retirement. Approximately 3,900 employees elected to participate in one of these programs. Involuntary reductions were expected to
affect approximately 4,000 employees (see Note 16).
The total charge includes (1) $51 million for costs associated with the voluntary programs that were recorded as special termination benefits under our
pension and postretirement medical benefit obligations (see Note 11) and (2) $76 million for severance and related costs.
• Surplus Pilots and Grounded Aircraft
We recorded $93 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 included related requalification training and relocation costs for certain pilots.
F-54