Delta Airlines 2003 Annual Report Download - page 14

Table of Contents
Fuel
Our results of operations can be significantly impacted by changes in the price and availability of aircraft fuel. The following table shows our aircraft fuel
consumption and costs for 2001-2003.
Percentage of Total
Gallons Consumed Cost (1) Average Price Operating
Year (Millions) (Millions) Per Gallon (1) Expenses
2001 2,649 $ 1,817 68.60¢ 12%
2002 2,514 1,683 66.94 12
2003 2,370 1,938 81.78 14
(1) Net of fuel hedge gains under our fuel hedging program.
Aircraft fuel expense increased 15% in 2003 compared to 2002. Total gallons consumed decreased 6% mainly due to capacity reductions. The average fuel
price per gallon rose 22% to 81.78¢ as compared to 2002. Our fuel cost is shown net of fuel hedge gains of $152 million for 2003, $136 million for 2002 and
$299 million for 2001. Approximately 65%, 56% and 58% of our aircraft fuel requirements were hedged during 2003, 2002 and 2001, respectively. In
February 2004, we settled all of our fuel hedge contracts prior to their scheduled settlement dates. For more information concerning the settlement of our fuel
hedge contracts, see Note 22 of the Notes to the Consolidated Financial Statements.
Our aircraft fuel purchase contracts do not provide material protection against price increases or assure the availability of our fuel supplies. We purchase
most of our aircraft fuel from petroleum refiners under contracts that establish the price based on various market indices. We also purchase aircraft fuel on the
spot market, from off-shore sources and under contracts that permit the refiners to set the price.
To attempt to reduce our exposure to changes in fuel prices, we periodically enter into heating and crude oil derivative contracts. Information regarding our
fuel hedging program is set forth under Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations—Market Risks
Associated with Financial Instruments—Aircraft Fuel Price Risk" and in Notes 3 and 4 of the Notes to the Consolidated Financial Statements.
Although we are currently able to obtain adequate supplies of aircraft fuel, it is impossible to predict the future availability or price of aircraft fuel. Political
disruptions or wars involving oil-producing countries, changes in government policy concerning aircraft fuel production, transportation or marketing, changes
in aircraft fuel production capacity, environmental concerns and other unpredictable events may result in fuel supply shortages and fuel price increases in the
future.
8