Delta Airlines 2004 Annual Report Download - page 41

Table of Contents
In October 2004, we sold eight owned MD-11 aircraft and related inventory for $227 million. We recorded a $41 million impairment charge related to the
sale of the aircraft. For additional information about this charge, see Note 14 of the Notes to the Consolidated Financial Statements.
During November 2004, we sold our remaining equity investment in Orbitz for approximately $143 million. We recorded a $123 million gain related to
this transaction. For additional information about our investment in Orbitz, see Note 16 of the Notes to the Consolidated Financial Statements.
In March 2005, we exchanged $176 million principal amount of enhanced equipment trust certificates due in 2005 for a like aggregate principal amount of
enhanced equipment trust certificates due in 2006 and 2008. For additional information about this transaction, see Note 20 of the Notes to the Consolidated
Financial Statements.
For additional information about financing and other transactions affecting liquidity, see Note 6 of the Notes to the Consolidated Financial Statements. For
additional information about our liquidity position, see the "Business Environment" section above.
Future Aircraft Order Commitments
To preserve liquidity, we have taken the following actions regarding our orders for Mainline aircraft:
• During 2003, we entered into a definitive agreement to sell 11 B737-800 aircraft to a third party immediately after those aircraft are
delivered to us by the manufacturer in 2005.
• During 2004, we deferred the delivery of the following aircraft on firm order: deferred seven B737-800 aircraft from 2005 to 2007; deferred
five B737-800 aircraft from 2006 to 2007; deferred four B737-800 aircraft from 2006 to 2008; deferred two B777-200 aircraft from 2005 to
2008; and deferred three B777-200 aircraft from 2006 to 2009.
Our long-term plan is to reduce our Mainline aircraft fleet by up to four fleet types over approximately the next four years. During 2005, we expect to
retire 24 Mainline aircraft: 21 B737-300 and B737-200 aircraft, and three B767-200 aircraft. These retirements will not have a material impact on our 2005
Consolidated Financial Statements.
We have additional aircraft commitments that are discussed below in "Contractual Obligations". For additional information about our aircraft order
commitments, see Note 8 of the Notes to the Consolidated Financial Statements.
Shareowners' Deficit
Shareowners' deficit was $5.8 billion at December 31, 2004 and $659 million at December 31, 2003. The increase in our shareowners' deficit is primarily
due to our $5.2 billion net loss in 2004, which includes a $1.9 billion goodwill impairment charge and a $1.2 billion income tax provision to reserve
substantially all of our net deferred tax assets. For additional information about the goodwill impairment and valuation allowance, see Notes 5 and 9,
respectively, of the Notes to the Consolidated Financial Statements.
ESOP Preferred Stock
Delaware Law provides that a company may pay dividends on its stock only (1) out of its "surplus," which is generally defined as the excess of a
company's net assets over the aggregate par value of its issued stock, or (2) from its net profits for the fiscal year in which the dividend is paid or from its net
profits for the preceding fiscal year. Delaware Law also prohibits a company from redeeming or purchasing its stock for cash or other property, unless the
company has sufficient "surplus."
Because we expected to have, and did in fact have, a negative "surplus" at December 31, 2003, our Board of Directors took the following actions, effective
in December 2003, related to our ESOP Preferred Stock to comply with Delaware Law:
• Suspended indefinitely the payment of dividends on our ESOP Preferred Stock. Unpaid dividends on the ESOP Preferred Stock will accrue
without interest, until paid, at a rate of $4.32 per share per year. The ESOP Preferred Stock is held by Fidelity Management Trust Company
in its 37