Delta Airlines 2003 Annual Report Download - page 21

Table of Contents
Vicki B. Escarra Executive Vice President and Chief Marketing Officer, May 2001 to date; Executive Vice President — Customer
Service, July 1998 to May 2001; Senior Vice President - Airport Customer Service, November 1996 through June
1998; Vice President — Airport Customer Service, August 1996 through October 1996; Vice President — Reservation
Sales and Distribution Planning, May 1996 through July 1996; Vice President — Reservation Sales, November 1994
to May 1996. Age 51.
Risk Factors Relating to the Airline Industry and Delta
The airline industry has changed fundamentally since the terrorist attacks on September 11, 2001, and our business, financial condition and operating
results have been materially adversely affected.
Since the terrorist attacks of September 11, 2001, the airline industry has experienced fundamental and lasting changes, including substantial revenue
declines and cost increases, which have resulted in industry-wide liquidity issues. The terrorist attacks significantly reduced the demand for air travel, and
additional terrorist activity involving the airline industry could have an equal or greater impact. Additionally, during 2003, the industry's financial results were
negatively impacted by the military action in Iraq and the Severe Acute Respiratory Syndrome ("SARS") outbreak. Although global economic conditions
have improved from their depressed levels after September 11, 2001, the airline industry has continued to experience a reduction in high-yield business travel
and increased price sensitivity in customers' purchasing behavior. The airline industry has continued to add or restore capacity despite these conditions. We
expect all of these events will continue to have a material adverse effect on our business, financial condition and operating results.
Bankruptcies and other restructuring efforts by our competitors have put us at a competitive disadvantage.
Since September 11, 2001, several air carriers have sought to reorganize under Chapter 11 of the Bankruptcy Code, including United, the second-largest
U.S. air carrier, U.S. Airways Group, Inc. ("U.S. Airways"), the seventh-largest U.S. air carrier, and several smaller competitors. Since filing for Chapter 11
on August 11, 2002, U.S. Airways has emerged from bankruptcy, but has recently announced that it is seeking additional cost concessions from its unions.
Additionally, American has recently restructured certain labor costs and lowered its operating cost base. These reorganizations or restructurings have enabled
these competitors to significantly lower their operating costs. Our unit costs have gone from being among the lowest of the hub and spoke carriers to among
the highest for the full year 2003.
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