Delta Airlines 2005 Annual Report Download - page 70

Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Chapter 11 Proceedings
General Information
Delta Air Lines, Inc., a Delaware corporation, is a major air carrier that provides air transportation for passengers and cargo
throughout the U.S. and around the world. Our Consolidated Financial Statements include the accounts of Delta Air Lines, Inc. and
our wholly owned subsidiaries, including Comair, Inc. ("Comair"), which are collectively referred to as Delta.
On September 14, 2005 (the "Petition Date"), we and substantially all of our subsidiaries (collectively, the "Debtors") filed
voluntary petitions for reorganization under Chapter 11 of the United States Bankruptcy Code (the "Bankruptcy Code"), in the United
States Bankruptcy Court for the Southern District of New York (the "Bankruptcy Court"). The reorganization cases are being jointly
administered under the caption "In re Delta Air Lines, Inc., et al., Case No. 05-17923-ASH."
Since the Petition Date, the Bankruptcy Court has approved various motions that facilitate our continuation of normal operations.
The Bankruptcy Court's orders authorize us, among other things, in our discretion to: (1) provide employee wages, healthcare
coverage, vacation, sick leave and similar benefits without interruption; (2) honor obligations arising prior to the Petition Date ("pre-
petition obligations") to customers and continue customer service programs, including Delta's SkyMiles frequent flyer program;
(3) pay for fuel under existing fuel supply contracts and honor existing fuel supply, distribution and storage agreements; (4) honor pre-
petition obligations related to our interline, clearinghouse, code sharing and other similar agreements; (5) pay pre-petition obligations
to foreign vendors, foreign service providers and foreign governments; and (6) continue maintenance of existing bank accounts and
existing cash management systems.
The Debtors are operating as "debtors-in-possession" under the jurisdiction of the Bankruptcy Court and in accordance with the
applicable provisions of the Bankruptcy Code. In general, as debtors-in-possession, the Debtors are authorized under Chapter 11 to
continue to operate as an ongoing business, but may not engage in transactions outside the ordinary course of business without the
prior approval of the Bankruptcy Court.
Our business plan is intended to make Delta a simpler, more efficient and customer focused airline with an improved financial
condition. As part of our Chapter 11 reorganization, we are seeking $3 billion in annual financial benefits (revenue enhancements and
cost reductions) by the end of 2007 from revenue and network improvements; savings to be achieved through the Chapter 11
restructuring process; and reduced Mainline employee cost. This amount is in addition to the $5 billion in annual financial benefits we
are on schedule to achieve by the end of 2006, as compared to 2002, under the transformation plan we announced in 2004.
Components of the $3 billion in annual financial benefits we are seeking by the end of 2007 include:
Revenue and Network Productivity Improvements. Our business plan targets $1.1 billion in benefits to be realized annually through
revenue and network productivity improvements. Key initiatives include:
• achieving financial benefits from the simplification of our aircraft fleet, including retiring four fleet types by the end of
2006, two of which we retired in January 2006;
• right-sizing capacity to better meet customer demand, including utilizing smaller aircraft in domestic operations,
resulting in a reduction of domestic Mainline capacity by 15-20% as compared to 2005 due to over-capacity in the
U.S. market;
• growing international presence by shifting wide-body aircraft from domestic to international operations, resulting in an
increase of approximately 20% in international capacity in 2006 as compared to 2005 to pursue routes with greater
profit potential; and
• increasing point-to-point flying and right-sizing and simplifying our domestic hubs to achieve a greater local traffic
mix.
In-Court Restructuring. Our business plan includes a target of $970 million of cost reductions to be realized annually through in-
court restructuring initiatives such as debt relief, lease and facility savings,
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