Delta Airlines 2005 Annual Report Download - page 42

Table of Contents
Intangible Assets" ("SFAS 142"). For additional information about the impairment charge, see Note 7 of the Notes to the Consolidated
Financial Statements.
Restructuring, asset writedowns, pension settlements and related items, net totaled a $41 million net gain for 2004 compared to a
$268 million net charge for 2003. The 2004 amount includes (1) a $527 million gain related to the elimination of the healthcare
coverage subsidy for nonpilot employees who retire after January 1, 2006; (2) settlement charges totaling $257 million primarily
related to our Pilot Plan; (3) a $194 million charge related to voluntary and involuntary workforce reduction programs; and (4) a
$41 million aircraft impairment charge related to our agreement, entered into in the September 2004 quarter, to sell eight owned
MD-11 aircraft. The charge for 2003 consists of (1) $212 million related to settlements under the Pilot Plan; (2) $43 million related to
a net curtailment loss for the cost of pension and postretirement obligations for participants under our 2002 workforce reduction
programs; and (3) $41 million associated with the planned sale of 11 B737-800 aircraft. This charge was partially offset by a
$28 million reduction to operating expenses from revised estimates of remaining costs associated with our restructuring activities. For
additional information about these restructuring, asset writedowns, pension settlements and related items, net, see Note 16 of the Notes
to the Consolidated Financial Statements.
Reimbursements under the Appropriations Act totaled $398 million in 2003, representing reimbursements from the
U.S. government to air carriers for certain passenger and air carrier security fees paid to the TSA. 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 20 of the Notes to the Consolidated Financial Statements.
Other operating expenses increased 20%. This primarily reflects a 7% increase from higher professional fees mainly from our
restructuring and contingency planning efforts, a 4% increase due to a loss on certain aircraft transactions, a 4% increase from a rise in
the navigation charges due to increased international capacity and a 4% increase due to higher fuel taxes.
Operating Loss and Operating Margin
We incurred an operating loss of $3.3 billion for 2004, compared to an operating loss of $785 million for 2003. Operating margin,
which is the ratio of operating income (loss) to operating revenues, was (22%) and (6%) for 2004 and 2003, respectively.
Other Income
Other expense, net for 2004 was $684 million, compared to other expense, net of $404 million for 2003. This change is primarily
attributable to the following:
• Interest expense increased $67 million for 2004 compared to 2003 primarily due to higher levels of debt outstanding
and higher interest rates on variable debt.
• Gain (loss) from sale of investments, net was $123 million for 2004 compared to $321 million for 2003. In 2004, we
sold our remaining equity interest in Orbitz, recognizing a gain of $123 million. The gain in 2003 was primarily related
to a $279 million gain from the sale of our equity investment in WORLDSPAN, L.P. ("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 18 of the Notes to the Consolidated Financial Statements.
• Fair value adjustments of derivatives accounted for under SFAS No. 133, "Accounting for Derivative Instruments and
Hedging Activities" ("SFAS 133") resulted in a $31 million charge for 2004 compared to a $9 million charge for 2003.
These adjustments related to our equity warrants and other similar rights in certain companies and to derivative
instruments used in our fuel hedging program. For additional information about the impact of SFAS 133 on our
Consolidated Statements of Operations, see Note 6 of the Notes to the Consolidated Financial Statements.
• Gain (loss) on extinguishment of debt, net was $9 million for 2004 compared to zero in 2003. During 2004, we
recorded a gain due to the exchange of certain of our unsecured 7.7% Notes
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