Delta Airlines 2004 Annual Report Download - page 39

Table of Contents
for future lease payments related to nine B737-300 leased aircraft as a result of a decision in 2002 to return these aircraft to service and (2) a $23 million
adjustment of certain prior year restructuring reserves based on revised estimates of remaining costs. For additional information on these restructuring, asset
writedowns, pension settlements and related items, net, see Note 14 of the Notes to the Consolidated Financial Statements.
Appropriations Act reimbursements totaled $398 million in 2003, representing reimbursements from the U.S. government to air carriers for certain
passenger and air carrier security fees. We recorded these amounts as a reduction to operating expenses in our Consolidated Statement of Operations. For
additional information about the Appropriations Act, see Note 18 of the Notes to the Consolidated Financial Statements.
Stabilization Act compensation totaled $34 million in 2002, representing amounts we recognized as compensation in the applicable period under the Air
Transportation Safety and System Stabilization Act ("Stabilization Act"). We recorded these amounts as a reduction to operating expenses in our Consolidated
Statement of Operations. For additional information about the Stabilization Act, see Note 18 of the Notes to the Consolidated Financial Statements.
Other operating expenses fell 16%, primarily reflecting a 9% decrease due to lower insurance rates under U.S. government-provided insurance policies
and lower volume-related insurance premiums due to decreased capacity and traffic, as well as a 3% decline due to lower communication and supplies
expenses.
Operating Loss and Operating Margin
We incurred an operating loss of $785 million in 2003, compared to an operating loss of $1.3 billion in 2002. Operating margin was (6%) and (9%) for
2003 and 2002, respectively.
Other Income (Expense)
Other expense, net totaled $404 million during 2003, compared to other expense, net of $693 million in 2002. Included in these results are the following:
• A $92 million increase in interest expense in 2003 compared to 2002 primarily due to higher levels of outstanding debt in 2003.
• A $321 million gain in 2003 from the sale of certain investments. This primarily relates to a $279 million gain from the sale of our equity
investment in Worldspan and a $28 million gain from the sale of a portion of our equity interest in Orbitz. For additional information about
these investments, see Note 16 of the Notes to the Consolidated Financial Statements.
• Gain (loss) on extinguishment of debt, net was zero for 2003 compared to a $42 million loss in 2002, which resulted from our purchase of a
portion of the outstanding ESOP Notes. During 2003, we recorded a $15 million loss from our purchase of a portion of the outstanding
ESOP Notes, offset by a $15 million gain related to a debt exchange. For additional information about our purchase of ESOP Notes in 2003
and 2002 and our debt exchange in 2003, see Note 6 of the Notes to the Consolidated Financial Statements.
• A $9 million charge in 2003 compared to a $39 million charge in 2002 for fair value adjustments of financial instruments accounted for
under SFAS 133. This relates to derivative instruments we use in our fuel hedging program and to our equity warrants and other similar
rights in certain companies.
• Miscellaneous income, net was $5 million in 2003 compared to $20 million in 2002 due primarily to a decrease in earnings from our equity
investment in Worldspan, which we sold in June 2003. 35