Delta Airlines 2006 Annual Report Download - page 39

Restructuring, asset writedowns, pension settlements and related items, net.For 2005, restructuring, asset writedowns, pension settlements and related
items, net totaled an $888 million charge consisting of the following:
•Pension Curtailment Charge.A $447 million curtailment charge related to our Pilot Plan and Non-pilot Plan. This charge relates to the freeze of
service accruals under the Pilot Plan effective December 31, 2004 and the impact of the planned reduction of 6,000 to7,000 jobs announced in
November 2004 on the Non-pilot Plan (see Note 10 of the Notes to the Consolidated Financial Statements).
•Pension Settlements.$388 million in settlement chargesprimarily related to the Pilot Plan due to a significant increase in pilot retirements and
lump sum distributions from plan assets (see Note 10 of the Notes to the Consolidated Financial Statements).
•Workforce Reduction.A $46 million charge relatedto our decision in 2005 to reduce staffing by approximately 7,000 to 9,000 jobs by December
2007, which has been substantially completed. This charge was offset by a net $3 million reduction in accruals associated with prior year
workforce reduction programs.
•Asset Charges.A $10 million charge relatedto the removal from service of six B-737-200 aircraft prior to their lease expiration dates.
For 2004, restructuring, asset writedowns, pension settlements and related items, net totaled a $41 million gain consisting of the following:
•Elimination of Retiree Healthcare Subsidy.A $527 million gain related to our decision to eliminate the company provided healthcare coverage
subsidy for employeeswho retire after January 1, 2006 (see Note 10 of the Notes to the Consolidated Financial Statements).
•Pension Settlements.$251 million in settlement charges related to the Pilot Plan due to a significant increase in pilot retirements and lump sum
distribution from plan assets (see Note 10 of the Notes to the Consolidated Financial Statements).
•Workforce Reduction.A $194 million charge related to our decision to reduce staffing by approximately 6,000 to 7,000 jobs by December 2005.
This charge includedcharges of $152 million related to special termination benefits and $42 million related to employee severance (see Note 10
of the Notes to the Consolidated Financial Statements).
•Asset Charges.A $41 million aircraft impairment charge related to our agreement to sell eight owned MD-11 aircraft. In October 2004, we sold
these aircraft andrelated inventory to a third party for $227 million.
Other.The increase in other operating expense primarily reflects a 13% rise due to the increase of incremental costs associated with our SkyMiles
frequent flyer program and a 5% increase from higher fuel taxes. These increases were partially offset by the impact of our sale of ASA. For additional
information regarding our SkyMiles frequent flyer program, see Note 2 of the Notes to the Consolidated Financial Statements.
Other (Expense) Income
Other expenses, net for 2005 increased 42% to $974 million, compared to $684 million for 2004. This change is substantially attributable to a 25%, or
$208 million, increase in interest expense in 2005 and a gain from sale of investments which we recognized in 2004.
Interest expense increased primarily due to a 31% increase from higher levels of debt outstanding and higher interest rates as well as a 10% rise due to
additional interest related to the reclassification of certain aircraft leases from operating leases to capital leases as a result of renegotiations during the
December 2004 quarter (see discussion of aircraft rent expense above). These increases were offset by a 15% decrease due to the accounting treatment of
certain interest charges under our Chapter 11 proceedings in accordance with SOP 90-7.
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