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DELTA AIR LINES INC /DE/ (DAL)
10-K
Annual report pursuant to section 13 and 15(d)
Filed on 02/10/2012
Filed Period 12/31/2011

Table of contents

  • Page 1
    DELTA AIR LINES INC /DE/ (DAL) 10-K Annual report pursuant to section 13 and 15(d) Filed on 02/10/2012 Filed Period 12/31/2011

  • Page 2
    ...OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 001-5424 DELTA AIR LINES, INC. (Exact name of registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation or organization) Post Office Box 20706 Atlanta, Georgia (Address of principal executive offices...

  • Page 3

  • Page 4
    ... General Frequent Flyer Program Other Businesses Distribution and Expanded Product Offerings Fuel Competition Regulatory Matters Employee Matters Executive Officers of the Registrant Additional Information ITEM 1A. RISK FACTORS Risk Factors Relating to Delta Risk Factors Relating to the Airline...

  • Page 5
    ITEM 9A. CONTROLS AND PROCEDURES ITEM 9B. OTHER INFORMATION 86 88

  • Page 6
    Page PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE OF THE REGISTRANT ITEM 11. EXECUTIVE COMPENSATION ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS 88 88 88 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, ...

  • Page 7
    ... Relating to Delta" and "Risk Factors Relating to the Airline Industry" in "Item 1A. Risk Factors" of this Form 10-K, other than risks that could apply to any issuer or offering. All forward-looking statements speak only as of the date made, and we undertake no obligation to publicly update or...

  • Page 8
    ... can include codesharing, reciprocal frequent flyer program benefits, shared or reciprocal access to passenger lounges, joint promotions, common use of airport gates and ticket counters, ticket office co-location and other marketing agreements. These alliances often present opportunities in other...

  • Page 9
    ... traffic to our route system by serving passengers primarily in smalland medium-sized cities. These arrangements enable us to increase the number of flights we have available in certain locations and to better match capacity with demand. Approximately 21% of our passenger revenue in 2011 was related...

  • Page 10
    ... of revenue miles flown on Delta were from award travel. Other Businesses Cargo Through the strength of our global network, our cargo operations are able to connect all of the world's major freight gateways. We generate cargo revenues in domestic and international markets primarily through the use...

  • Page 11
    ... customers. Our plan is to provide our customers with opportunities to purchase what they value, such as first class upgrades, economy comfort seating, WiFi access and SkyClub passes. We also expect to benefit from increased traffic on delta.com through a combination of advertising revenue and sales...

  • Page 12
    ... alliance (among American Airlines, British Airways, Qantas and others) have significantly increased competition in international markets. The adoption of liberalized Open Skies Aviation Agreements with an increasing number of countries around the world, including in particular the Open Skies...

  • Page 13
    ... from time to time. The U.S. government has negotiated "open skies" agreements with many countries, which allow unrestricted access between the U.S. and the foreign markets. These agreements include separate agreements with the European Union and Japan. Certain of our international route authorities...

  • Page 14
    ... in 2012, are required to purchase emissions allowances if the airline exceeds the number of free allowances allocated to it under the ETS. We expect that this system will impose significant costs on our operations in the European Union. Numerous countries, including the U.S., and airline groups...

  • Page 15
    ... Group Approximate Number of Active Employees Represented Union Date on which Collective Bargaining Agreement Becomes Amendable Delta Pilots Delta Flight Superintendents (Dispatchers) Comair Pilots Comair Maintenance Employees Comair Flight Attendants 10,850 340 790 280 550 ALPA December 31, 2012...

  • Page 16
    ... 2007; President of Delta and Chief Executive Officer Northwest Airlines, Inc. (October 2008-December 2009); President and Chief Financial Officer of Delta (September 2007-October 2008); Executive Vice President and Chief Financial Officer of Delta (July 2005-September 2007); Chief Financial Officer...

  • Page 17
    ... asset returns and changes in interest rates, neither of which is in the control of Delta. We estimate that our funding requirement for our defined benefit pension plans, which are governed by ERISA and have been frozen for future accruals, is approximately $700 million in 2012. Estimates of pension...

  • Page 18
    ... agreements. Employee strikes and other labor-related disruptions may adversely affect our operations. Our business is labor intensive, utilizing large numbers of pilots, flight attendants, aircraft maintenance technicians, ground support personnel and other personnel. As of December 31, 2011...

  • Page 19
    ... who use credit cards. Our primary credit card processing agreements provide that no holdback of receivables or reserve is required except in certain circumstances, including if we do not maintain a required level of unrestricted cash. If circumstances were to occur that would allow American Express...

  • Page 20
    ... increase the potential for greater loss of revenue and higher costs. In addition, demand for air travel is typically higher in the June and September quarters, particularly in international markets, because there is more vacation travel during these periods than during the remainder of the year...

  • Page 21
    ... to routes, fares, schedules (both timing and frequency), services, products, customer service and frequent flyer programs. Our domestic operations are subject to competition from both traditional network and discount carriers, some of which may have lower costs than we do and provide service at...

  • Page 22
    ... of certain airport security procedures and imposes security requirements on airports and airlines, most of which are funded by a per ticket tax on passengers and a tax on airlines. The federal government has on several occasions proposed a significant increase in the per ticket tax and has...

  • Page 23
    ...) and the aircraft hull. The coverage currently extends through September 30, 2012, and we expect the coverage to be further extended. The withdrawal of government support of airline war-risk insurance would require us to obtain war-risk insurance coverage commercially, if available. Such commercial...

  • Page 24
    ... Flight Equipment During 2011 , we (1) entered into an agreement with Boeing to purchase 100 B-737-900ER aircraft; (2) purchased 12 previously owned MD-90 aircraft and one previously leased B-767-300 aircraft; and (3) leased six MD-90 aircraft and one B-757-200 aircraft. Our active aircraft fleet...

  • Page 25
    ... to pay debt service on special facility bonds issued to finance their construction. We also lease marketing, ticketing and reservations offices in certain locations for varying terms. In recent years, some airports have increased or sought to increase the rates charged to airlines to levels that...

  • Page 26
    ... the December 2010 quarter, we began a redevelopment project at JFK, where we currently operate primarily at Terminal 2 for domestic flights and Terminal 3 for international flights under leases with the Port Authority of New York and New Jersey ("Port Authority"). We estimate this project will cost...

  • Page 27
    ... passengers on flights during the period from Feb 2009 to the present who are allegedly entitled to compensation under EU Regulation 261 because their flight was cancelled or delayed by more than 3 hours. Plaintiffs allege that Delta has incorporated a duty to pay this compensation into its contract...

  • Page 28
    ... PURCHASES OF EQUITY SECURITIES Market Information Our common stock is listed on the New York Stock Exchange. The following table sets forth for the periods indicated the highest and lowest sales price for our common stock as reported on the NYSE. Common Stock High Low Fiscal 2011 First Quarter...

  • Page 29
    ..., SkyWest, Inc., Southwest Airlines Company, TAM S.A., United Continental Holdings, Inc. and US Airways Group, Inc. Issuer Purchases of Equity Securities We withheld the following shares of common stock to satisfy tax withholding obligations during the December 2011 quarter from the distributions...

  • Page 30
    ... of fresh start reporting. References to "Predecessor" refer to Delta prior to May 1, 2007. The following tables are derived from our audited consolidated financial statements, and present selected financial and operating data for the (1) years ended December 31, 2011, 2010, 2009 and 2008 of the...

  • Page 31
    ... 2011 2010 2009 2008 Eight Months Ended December 31, 2007 Predecessor Four Months Ended April 30, 2007 Revenue passenger miles (millions) Available seat miles (millions) Passenger mile yield Passenger revenue per available seat mile Operating cost per available seat mile Passenger load factor Fuel...

  • Page 32
    ...-bed seats in the BusinessElite cabin of our B-777 and B-767-400ER aircraft during 2011. Due to the success of our Economy Comfort product, which we began offering during the 2011 summer on long-haul international flights, we are expanding Economy Comfort throughout our mainline and regional fleet...

  • Page 33
    ... domestic service, our schedule at JFK is being optimized in 2012 for international and trans-continental flights, as well as improved coordination with our SkyTeam alliance partners. At JFK, we currently operate domestic flights primarily at Terminal 2 and international flights at Terminal 3 and...

  • Page 34
    ... $65 million due to an increase in the volume of ticket change fees. These increases were partially offset by $90 million in lower baggage fee revenue, resulting from an increase in bag fees waived for premium customers and customers under our co-brand credit card agreement with American Express. 28

  • Page 35
    ... gallon: Average Price Per Gallon Year Ended December 31, Increase (Decrease) 2011 2010 Year Ended December 31, Increase (Decrease) 2011 2010 (in millions, except per gallon data) Fuel purchase cost Fuel hedge (gains) losses Total fuel expense Mark-to-market adjustments for fuel hedges recorded in...

  • Page 36
    ...to costs associated with increased maintenance sales to third parties by our MRO services business, reflected in other revenue above. Passenger commissions and other selling expenses. Credit card and sales commissions increased in conjunction with the 11% increase in passenger revenue. Aircraft rent...

  • Page 37
    ... in business travel and an increase in fares. International Passenger Revenue. International passenger revenue increased 22% from a 21% increase in PRASM and a 2.4 point increase in load factor on a 1% increase in capacity. The passenger mile yield increased 17%, reflecting an increase in demand for...

  • Page 38
    ... price per fuel gallon, including the impact of fuel hedge activity: Year Ended December 31, (in millions, except per gallon data) 2010 2009 Increase (Decrease) % Increase (Decrease) Aircraft fuel and related taxes Aircraft fuel and related taxes included within contract carrier arrangements Total...

  • Page 39
    ... the increase in revenue. Profit sharing. We recorded $313 million related to our broad-based employee profit sharing plans for 2010. We did not record any profit sharing expense in 2009. Our broad-based profit sharing plans provide that, for each year in which we have an annual pre-tax profit (as...

  • Page 40
    ... benefit pension plans during 2011 and 2010, respectively. We estimate the funding requirements under these plans will total approximately $700 million in 2012. Advance Purchase of SkyMiles. In 2008, we entered into a multi-year extension of our American Express agreements and received $1.0 billion...

  • Page 41
    ... and (2) $675 million received for the sale of SkyMiles. Cash provided by operating activities was reduced by $313 million in profit sharing payments related to 2010 and other working capital changes. Cash provided by operating activities totaled $2.8 billion for 2010, primarily reflecting...

  • Page 42
    ... Obligations by Year (1) (in millions) 2012 2013 2014 2015 2016 Thereafter Total Long-term debt (see Note 7) Principal amount Interest payments Contract carrier obligations (see Note 9) Operating lease payments (see Note 8) Employee benefit obligations (see Note 10) Aircraft purchase commitments...

  • Page 43
    ..., regional air carriers with which we have contract carrier agreements and airlines that participate in the SkyMiles Program, as well as through participating companies such as credit card companies, hotels and car rental agencies. We also sell mileage credits to non-airline businesses, customers...

  • Page 44
    ... annual goodwill impairment test in the December 2011 quarter. Key Assumptions. The key assumptions in our impairment tests include (1) our projected revenues, expenses and cash flows, (2) an estimated weighted average cost of capital, (3) assumed discount rates depending on the asset and (4) a tax...

  • Page 45
    ... whether impairments exist for aircraft used in operations, we group assets at the fleet-type level (the lowest level for which there are identifiable cash flows) and then estimate future cash flows based on projections of capacity, passenger mile yield, fuel costs, labor costs and other relevant...

  • Page 46
    ... the investment programs and their records of achieving such returns historically. We also expect to receive a premium for investing in less liquid private markets. We review our rate of return on plan asset assumptions annually. Our annual investment performance for one particular year does not, by...

  • Page 47
    ... taxes. Management believes the volatility in fuel prices impacts the comparability of year-over-year financial performance. Ancillary businesses . Ancillary businesses are not related to the generation of a seat mile. These businesses include aircraft maintenance and staffing services we provide...

  • Page 48
    ...during a reporting period, excluding aircraft fuel and related taxes, ancillary businesses, profit sharing, restructuring and other items and MTM adjustments for fuel hedges recorded in periods other than the settlement period. Passenger Load Factor - A measure of utilized available seating capacity...

  • Page 49
    ...hedge portfolio from time to time in response to margin posting requirements. For the year ended December 31, 2011, aircraft fuel and related taxes, including our contract carriers under capacity purchase agreements, accounted for $11.8 billion, or 36%, of our total operating expense, including $420...

  • Page 50
    ...dollar. To manage exchange rate risk, we execute both our international revenue and expense transactions in the same foreign currency to the extent practicable. From time to time, we may also enter into foreign currency option and forward contracts. At December 31, 2011, we had open foreign currency...

  • Page 51
    ... DATA INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Report of Independent Registered Public Accounting Firm Consolidated Balance Sheets - December 31, 2011 and 2010 Consolidated Statements of Operations for the years ended December 31, 2011, 2010 and 2009 Consolidated Statements of Cash...

  • Page 52
    ... REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Delta Air Lines, Inc. We have audited the accompanying consolidated balance sheets of Delta Air Lines, Inc. (the Company) as of December 31, 2011 and 2010, and the related consolidated statements of operations...

  • Page 53
    ... leases Air traffic liability Accounts payable Frequent flyer deferred revenue Accrued salaries and related benefits Taxes payable Other accrued liabilities Total current liabilities Noncurrent Liabilities: Long-term debt and capital leases Pension, postretirement and related benefits Frequent flyer...

  • Page 54
    Total liabilities and stockholders' (deficit) equity The accompanying notes are an integral part of these Consolidated Financial Statements. 47 $ 43,499 $ 43,188

  • Page 55
    ... Statements of Operations Year Ended December 31, (in millions, except per share data) 2011 2010 2009 Operating Revenue: Passenger: Mainline Regional carriers Total passenger revenue Cargo Other Total operating revenue Operating Expense: Aircraft fuel and related taxes Salaries and related costs...

  • Page 56
    ...assets Air traffic liability Frequent flyer deferred revenue Accounts payable and accrued liabilities Other assets and liabilities Other, net Net cash provided by operating activities Cash Flows From Investing Activities: Property and equipment additions: Flight equipment, including advance payments...

  • Page 57
    The accompanying notes are an integral part of these Consolidated Financial Statements. 49

  • Page 58
    ... the merger with Northwest (Treasury shares withheld for payment of taxes, $4.55 per share)(1) Shares of common stock issued and compensation expense associated with equity awards (Treasury shares withheld for payment of taxes, $6.77 per share)(1) Stock options exercised Balance at December 31, 2009...

  • Page 59
    ... may include codesharing, reciprocal frequent flyer program benefits, shared or reciprocal access to passenger lounges, joint promotions, common use of airport gates and ticket counters, ticket office co-location and other marketing agreements. We have received antitrust immunity for certain...

  • Page 60
    ... Accounts receivable primarily consist of amounts due from credit card companies from the sale of passenger airline tickets, customers of our aircraft maintenance and cargo transportation services and other companies for the purchase of mileage credits under our SkyMiles Program. We provide...

  • Page 61
    ...payments are made to the applicable government agency or operating carrier. Frequent Flyer Program The SkyMiles Program offers incentives to travel on Delta. This program allows customers to earn mileage credits by flying on Delta, regional air carriers with which we have contract carrier agreements...

  • Page 62
    .... Sale of Mileage Credits. Customers may earn mileage credits through participating companies such as credit card companies, hotels and car rental agencies with which we have marketing agreements to sell mileage credits. Our contracts to sell mileage credits under these marketing agreements have...

  • Page 63
    ... whether impairments exist for aircraft used in operations, we group assets at the fleet-type level (the lowest level for which there are identifiable cash flows) and then estimate future cash flows based on projections of capacity, passenger mile yield, fuel costs, labor costs and other relevant...

  • Page 64
    ... in our market capitalization, (2) an increase in fuel prices, (3) declining passenger mile yields, (4) lower passenger demand as a result of the weakened U.S. and global economy, (5) interruption to our operations due to an employee strike, terrorist attack, or other reasons, (6) changes to the...

  • Page 65
    ... flight equipment are carried at moving average cost and charged to operations as consumed. An allowance for obsolescence is provided over the remaining useful life of the related fleet for spare parts expected to be available at the date aircraft are retired from service. We also provide allowances...

  • Page 66
    ... on the maturity dates, underlying commodities and strike prices of the option contracts. Swap contracts are valued under the income approach using a discounted cash flow model based on data either readily observable or derived from public markets. Discount rates used in these valuations ranged...

  • Page 67
    ... in pension, postretirement, and related benefits. For additional information regarding benefit plan assets, see Note 10. December 31, 2011 (in millions) Total Level 1 Level 2 Level 3 Valuation Technique Total Level 1 December 31, 2010 Level 2 Level 3 Valuation Technique Common stock U.S. Non...

  • Page 68
    ... table shows the changes in our benefit plan assets classified in Level 3: (in millions) Private Equity Real Estate Hedge Funds Common Stock Fixed Income Total Balance at January 1, 2010 Actual return on plan assets: Related to assets still held at the reporting date Related to assets sold during...

  • Page 69
    ... contracts on aircraft fuel and related taxes on our Consolidated Statements of Operations: Year Ended December 31, (in millions) 2011 2010 2009 Effective portion reclassified from accumulated other comprehensive loss to earnings Market adjustments for changes in fair value Gain (loss) recorded...

  • Page 70
    .... To manage exchange rate risk, we execute both our international revenue and expense transactions in the same foreign currency to the extent practicable. From time to time, we may also enter into foreign currency option and forward contracts. These foreign currency exchange contracts are designated...

  • Page 71

  • Page 72
    ... is secured with restricted cash collateral. NOTE 4. JFK REDEVELOPMENT During 2010, we began a redevelopment project at John F. Kennedy International Airport ("JFK"). At JFK, we currently operate domestic flights primarily at Terminal 2 and international flights at Terminal 3 under leases with...

  • Page 73
    .... The balance of the project costs will be provided by Port Authority passenger facility charges, Transportation Security Administration funding, and our contributions. Our future rental payments will vary based on our share of total passenger and baggage counts at Terminal 4, the number of gates...

  • Page 74
    ... Japan have agreed on plans for a limited number of additional slots at these airports. The substantial number of slots we hold at Tokyo Narita Airport, combined with limited-entry rights we hold in other countries, enables us to operate a hub at Tokyo serving the Asia-Pacific region. We currently...

  • Page 75
    ...-term debt. In 2010, we amended our 2008 American Express agreement. The amendments, among other things, (1) provide that Cardholders may check their first bag for free on every Delta flight through June 2013 ("Baggage Fee Waiver Period"), (2) changed the SkyMiles Usage Period to a three-year period...

  • Page 76
    ...in installments from 2012 to 2031 (3) Total secured debt American Express - Advance Purchase of SkyMiles (4) Other unsecured debt, due in installments from 2012 to 2035 Total unsecured debt Total secured and unsecured debt Unamortized discount, net Total debt Less: current maturities Total long-term...

  • Page 77
    ... of the Senior Secured Notes (described below) have equal rights to payment and the Pacific Collateral. During 2011, we refinanced and amended the Pacific Routes Term Facility to, among other things, (1) reduce the interest rate, (2) extend the maturity date from September 2013 to March 2016 and...

  • Page 78
    ... shows our availability under revolving credit facilities as of December 31, 2011: (in millions) December 31, 2011 Revolving Credit Facility, due 2016 Pacific Routes Revolving Facility, due 2013 Bank Revolving Credit Facility, due 2012 Total availability under revolving credit facilities $ 1,225...

  • Page 79
    ... SkyMiles by American Express (see Note 6). As described in the table below, we amortize these adjustments over the remaining maturities of the respective debt to amortization of debt discount, net on our Consolidated Statements of Operations. During the years ended December 31, 2011, 2010 and 2009...

  • Page 80
    ...) 2011 2010 Total debt at par value Unamortized discount, net Net carrying amount Fair value $ $ $ 13,797 (737) 13,060 13,600 $ $ $ 15,442 (935) 14,507 15,400 NOTE 8. LEASE OBLIGATIONS We lease aircraft, airport terminals, maintenance facilities, ticket offices and other property and equipment...

  • Page 81
    ...: current obligations under capital leases Long-term capital lease obligations Operating Leases Years Ending December 31, (in millions) Delta Lease Payments (1) Contract Carrier Aircraft Lease Payments(2) $ 221 196 168 155 163 323 1,226 (489) 737 (6) (117) $ 614 Total 2012 2013 2014 2015 2016...

  • Page 82
    ... cost of fuel, labor, maintenance, insurance, catering, property tax and landing fees. Accordingly, our actual payments under these agreements could differ materially from the minimum fixed obligations set forth in the table below. Years Ending December 31, (in millions) Amount (1) 2012 2013 2014...

  • Page 83
    ... effect on our Consolidated Financial Statements. Credit Card Processing Agreements Our VISA/MasterCard and American Express credit card processing agreements provide that no cash reserve ("Reserve") is required, and no withholding of payment related to receivables collected will occur, except...

  • Page 84
    ... Group Approximate Number of Active Employees Represented Union Date on which Collective Bargaining Agreement Becomes Amendable Delta Pilots Delta Flight Superintendents (Dispatchers) Comair Pilots Comair Maintenance Employees Comair Flight Attendants 10,850 340 790 280 550 ALPA December 31, 2012...

  • Page 85
    ...and retirees and their eligible family members. Defined Benefit Pension Plans. We sponsor defined benefit pension plans for eligible employees and retirees. These plans are closed to new entrants and frozen for future benefit accruals. The Pension Protection Act of 2006 allows commercial airlines to...

  • Page 86
    ... Benefits Year Ended December 31, 2010 2009 Service cost Interest cost Expected return on plan assets Amortization of prior service benefit Recognized net actuarial loss (gain) Settlements Special termination benefits Net periodic cost Defined contribution plan costs Total cost Assumptions...

  • Page 87
    ...We review our rate of return on plan asset assumptions annually. Our annual investment performance for one particular year does not, by itself, significantly influence our evaluation. The investment strategy for our defined benefit pension plan assets is to utilize a diversified mix of global public...

  • Page 88
    ... countries. These plans did not have a material impact on our Consolidated Financial Statements in any period presented. Profit Sharing Program Our broad based employee profit sharing program provides that, for each year in which we have an annual pre-tax profit, as defined, we will pay a specified...

  • Page 89
    ...) 2011 2010 Deferred tax assets: Net operating loss carryforwards Pension, postretirement and other benefits AMT credit carryforward Deferred revenue Rent expense Reorganization items, net Other Valuation allowance Total deferred tax assets Deferred tax liabilities: Depreciation Debt valuation...

  • Page 90
    ... of and changes to unrecognized tax benefits on our Consolidated Balance Sheets: (in millions) 2011 2010 2009 Unrecognized tax benefits at beginning of period Gross increases-tax positions in prior period Gross decreases-tax positions in prior period Gross increases-tax positions in current period...

  • Page 91
    ... withhold shares of Delta common stock to cover employees' portion of required tax withholdings when employee equity awards are issued or vest. These shares are valued at cost, which equals the market price of the common stock on the date of issuance or vesting. The weighted average cost of shares...

  • Page 92
    ... and performance assessments. We are managed as a single business unit that provides air transportation for passengers and cargo. This allows us to benefit from an integrated revenue pricing and route network. Our flight equipment forms one fleet, which is deployed through a single route scheduling...

  • Page 93
    ... OTHER ITEMS The following table shows charges recorded in restructuring and other items on our Consolidated Statements of Operations: Year Ended December 31, (in millions) 2011 2010 2009 Facilities and fleet Severance and related costs Intangible asset impairments (see Note 5) Gain on divestiture...

  • Page 94
    ...for our merger with Northwest Airlines in 2008, would have been issued under Northwest's Plan of Reorganization. Similarly, the calculation of basic loss per share for the year ended December 31, 2009 assumes there was outstanding at January 1, 2009, 50 million shares of Delta common stock we agreed...

  • Page 95
    ... as of December 31, 2011 to ensure that material information was accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Changes in Internal Control During the three...

  • Page 96
    ... with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Delta Air Lines, Inc. as of December 31, 2011 and 2010, and the related consolidated statements of operations, stockholders' (deficit) equity, and cash flows for each of the...

  • Page 97
    ... provides information about the number of shares of common stock that may be issued under the 2007 Plan, Delta's only equity compensation plan, as of December 31, 2011 . Plan Category (a) No. of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (b) Weighted-Average...

  • Page 98
    ... the financial statements required by this item that are included in this Form 10-K: Report of Independent Registered Public Accounting Firm Consolidated Balance Sheets-December 31, 2011 and 2010 Consolidated Statements of Operations for the years ended December 31, 2011, 2010 and 2009 Consolidated...

  • Page 99
    ..., thereunto duly authorized, on the 10th day of February, 2012. DELTA AIR LINES, INC. By: /s/ Richard H. Anderson Richard H. Anderson Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below on the 10th day of February...

  • Page 100
    ... 2010 between JFK International Air Terminal LLC and Delta Air Lines, Inc. (Filed as Exhibit 10.4 to Delta's Annual Report on Form 10-K for the year ended December 31, 2010).* Supplemental Agreement No. 13 to Purchase Agreement Number 2022, dated August 24, 2011, between The Boeing Company and Delta...

  • Page 101
    ...31, 2010).* Delta Air Lines, Inc. 2012 Management Incentive Plan. 10.17 10.18(a) Delta Air Lines, Inc. Merger Award Program (Filed as Exhibit 10.20(a) to Delta's Annual Report on Form 10-K for the year ended December 31, 2008).* 10.18(b) Model Award Agreement for Delta Air Lines, Inc. Merger Award...

  • Page 102
    ...Award Agreement for Non-Qualified Stock Options Granted to Directors under the Northwest Airlines Corporation 2007 Stock Incentive Plan (Filed as Exhibit 10.6 to Northwest's Quarterly Report on Form 10-Q for the quarter ended March 31, 2008).* 10.23 Form of Offer of Employment dated October 31, 2008...

  • Page 103
    ...-14(a)/15d-14(a) Certification of Chief Executive Officer. Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer. Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act 2002. _____ * Incorporated by reference. ** Portions of this...

  • Page 104
    ..., Inc. ("Delta" or the "Company") that is intended to closely: (a) link pay and performance by providing management employees with a compensation opportunity based on Delta's achieving key business objectives; and (b) align the interests of management employees with the Company's other employees and...

  • Page 105
    ... may receive Restricted Stock as specified in the Participant's Award Agreement (the " Restricted Stock"). Grant Date. The Grant Date of the Restricted Stock will be determined by the Committee in accordance (ii) with the Company's Equity Award Grant Policy, as in effect from time to time, and...

  • Page 106
    ... whether the Participant is considered as a retiree for purposes of any other program, plan or policy of the Company, for purposes of the 2012 LTIP, the Participant's employment shall be considered to have been terminated by the Company for Cause. Change in Control. Notwithstanding the forgoing and...

  • Page 107
    ... amount of the payout for the Performance Award if it is paid in cash; and B = the closing price of a Share on the New York Stock Exchange on the later of (1) date that the Committee approves the payouts, if any, of the Performance Awards to the Executive Officer Participants following the Committee...

  • Page 108
    ... 2012 and ending on and including December 31, 2013. (B) Average Annual Operating Income Margin. (1) The " Average Annual Operating Income Margin" for Delta and each member of the Industry Composite Group shall be calculated by using the subject company's Operating Income and Total Operating Revenue...

  • Page 109
    ... total number of Shares of Common Stock outstanding on December 30, 2011 multiplied by $8.09 (the closing price of a Share of Common Stock on the New York Stock Exchange on that date), which value shall remain constant during the Performance Period; provided, however, in the event that the Company...

  • Page 110
    ... member of the Industry Composite Group (an " Airline Merger"), Average Annual Operating Income Margin for such company will be calculated on a combined basis as if the Airline Merger had occurred on January 1, 2012. (E) Vesting/Performance Measures. The payment, if any, a Participant will receive...

  • Page 111
    ... = the Participant's target Performance Award as of the Grant Date; and T = the number of calendar months from January 1, 2012 to the date of such Termination of Employment (rounded up for any partial month). Thereafter, the Participant will be eligible to receive a payment, if any, in cash based on...

  • Page 112
    ... is employed by an Affiliate at the time the Company sells or otherwise divests itself of such Affiliate) on or after a Change in Control but prior to the second anniversary of such Change in Control, the Participant's outstanding Performance Award shall immediately become vested at the target level...

  • Page 113
    ...as practicable after any RSUs become vested, the Company shall pay to Participant in cash a lump sum amount equal to the number of RSUs vesting multiplied by the closing price of a Share of Common Stock on the NYSE on the vesting date or, if the Common Stock was not traded on the NYSE on the vesting...

  • Page 114
    ... price of the Option is the closing price of a Share on the New York Stock Exchange on the Grant Date. (iv ) Agreement. Exercise Period. The exercise period of the Option shall be specified in the Participant's Award (v) Change in Exercisability and Exercise Period upon Termination of Employment...

  • Page 115
    ...or special travel benefits provided to a Participant as a result of his or her initial employment with Delta or any Affiliate and (iv) the elimination of post-retirement coverage under the Company's executive life insurance program. (b) For purposes of the 2012 LTIP, "Retirement" means a Termination...

  • Page 116
    ... ") that is intended to closely: (a) link pay and performance by providing management employees with a compensation opportunity based on Delta's achieving key business plan goals in 2012; and (b) align the interests of management employees with the Company's other employees and stakeholders. The MIP...

  • Page 117
    (b) Performance Measures . The performance measures used will be one or more of financial ("Financial Performance "), operational ("Operational Performance "), revenue ("Revenue Performance "), leadership effectiveness ("Leadership Effectiveness Performance ") and individual 1

  • Page 118
    ...Operational Performance, Revenue Performance, Leadership Effectiveness Performance and/or Individual Performance based on the Participant's employment level, as follows: Performance Measures and Weighting Employment Level % of Target MIP Award allocated to Financial Performance (B) (A) CEO President...

  • Page 119
    ... Financial, Operational, Revenue, Leadership Effectiveness, and Individual Performance, are based on the achievement of the target performance level with respect to each applicable performance measure (except that Financial Performance also requires a payout under the Profit Sharing Program for 2012...

  • Page 120
    ... Available Seat Miles of all members of the Industry Group. " Total Operating Revenue" means, for Delta and each member of the Industry Group, the applicable company's total operating revenue for a calendar year based on its regularly prepared and publically available statements of operations...

  • Page 121
    ... Total Operating Revenue divided by Available Seat Miles. (d) Leadership Effectiveness Performance Measure. The Leadership Effectiveness Performance measure (applicable to Participants who are Vice Presidents or Senior Vice Presidents (other than any Executive Officer Participants) for 2012 will...

  • Page 122
    B = the closing price of a Share on the New York Stock Exchange on the later of (1) the date that the Committee approves the payouts, if any, to the Executive Officer Participants under the MIP following the Committee's certification of the achievement of the required performance measures as ...

  • Page 123
    ... 1, 2013 due to either (1) a Termination of Employment by the Company without Cause, or (2) for any other reason that entitles such Participant to benefits under the Delta Air Lines, Inc. 2009 Officer and Director Severance Plan (the " Severance Plan"). Subject to the Participant's execution of...

  • Page 124
    ...Payment" means the result of the following formula: W Ã- Z/12, where: W = the Participant's Target MIP Award; and Z = the number of calendar months the Participant was actively employed by Delta during 2012 in a MIP-eligible position, rounded up for any partial month. (b) Other Changes in Employment...

  • Page 125
    ... she provides appropriate evidence that he or she is entitled to an exception to the five-year limit on uniformed service as set forth in USERRA. 9. Treatment of Payments Under Benefit Plans or Programs. MIP payments, which for an Executive Officer Participant who receives MIP Restricted Stock means...

  • Page 126
    ... president or more senior officer level Participant has engaged in fraud or misconduct that caused, in whole or in part, the need for a required restatement of Delta's financial statements filed with the Securities and Exchange Commission, the Committee will review all incentive compensation awarded...

  • Page 127
    ...metrics used to calculate performance will be performance reports provided by each Delta Connection carrier on a daily basis and validated by Delta Connection Performance Management. All domestic and international Delta Connection carrier system operations subject to capacity purchase agreements and...

  • Page 128
    ...as a tax exempt welfare benefit plan for purposes of providing welfare benefits, including but not limited to, long term disability benefits, to non pilot employees of the Company. The D&S Plan and its accompanying trust are subject to the compensation limit of Section 505(b) of the Internal Revenue...

  • Page 129
    ... Administration Section 3.1. Plan Administration. The Company, acting through its Vice President - Global HR Services and Labor Relations (or, if from time to time no such position exists, then acting through its highest ranking officer who is primarily responsible for the Company's employee benefit...

  • Page 130
    ... Participant the right to be retained in the service of the Company for any time or period, including any time the Plan Participant may be receiving benefits hereunder. Section 4.3. Nonassignability of Benefits. No benefit payable under this Restoration Plan may be assigned, encumbered or subject to...

  • Page 131
    ... Chief Executive Officer Delta Air Lines, Inc. World Headquarters Atlanta, Georgia 30320 Dear Richard: As a result of the merger between Delta Air Lines, Inc. ("Delta") and Northwest Airlines, Inc. ("Northwest"), Delta will honor the obligations under the Management Compensation Agreement dated June...

  • Page 132
    ... The Company will also reimburse you for the cost of any applicable Medicare Part B or D premiums. Post retirement dental coverage will be reasonably provided through an individual policy on terms consistent with the current Delta dental benefit provided to employees as of the date of this agreement...

  • Page 133
    ..., Executive seeks services from a provider who is then a Non-Network provider, but who in 2012 is a Network Provider, the benefits noted under the Non-Network column shall be provided. Provided however, in any event, the Medicare Reimbursement Rate to be used for purposes of determining the level of...

  • Page 134
    ... services, basic restorative services, major restorative services, and orthodontic services. DABHP Comprehensive Dental Option Benefits 2012 Dental Benefit Annual Maximum Benefit Annual Deductible Preventive Services Coverage $2,000 per person $60 Individual/$240 Family 100% of Plan Payment...

  • Page 135
    .... The Company will also reimburse you for the cost of any applicable Medicare Part B or D premiums. Post retirement dental coverage will be reasonably provided through an individual policy on terms consistent with the current Delta dental benefit provide to employees as of the date of this agreement...

  • Page 136
    ... for all applicable state, local and federal taxes on this medical and dental coverage. If any change in either the law regarding health benefits or the form or way in which Delta provides such benefits materially impacts the future benefits contemplated by this letter, Delta will reasonably...

  • Page 137
    ..., Executive seeks services from a provider who is then a Non-Network provider, but who in 2012 is a Network Provider, the benefits noted under the Non-Network column shall be provided. Provided however, in any event, the Medicare Reimbursement Rate to be used for purposes of determining the level of...

  • Page 138
    ..., and orthodontic services. DABHP Comprehensive Dental Option Benefits 2012 Dental Benefit Annual Maximum Benefit Annual Deductible Preventive Services Basic Restorative Services (Such as fillings, extractions, root canals, periodontal procedures) Major Restorative Services (Such as crowns, bridges...

  • Page 139
    ... assets and (b) $1.1 billion in primarily non-cash merger-related charges relating to the issuance or vesting of employee equity awards in connection with our merger with Northwest. Includes a $1.2 billion non-cash gain for reorganization items. For the years ended December 31, 2009 and 2008...

  • Page 140
    ...2011 NAME OF SUBSIDIARY JURISDICTION OF INCORPORATION OR ORGANIZATION Aero Assurance Ltd. Comair, Inc. Comair Holdings, LLC Comair Services, Inc. DAL Global Services, LLC DAL Moscow, Inc. Delta Air Lines and Pan American World Airways -Unterstutzungskasse GMBH Delta Air Lines Dublin Limited Delta...

  • Page 141
    ...pertaining to Northwest Airlines Corporation 2007 Stock Incentive Plan, and Registration Statement No. 333-167811 on Form S-3 pertaining to Pass Through Certificates; (2) (3) (4) (5) of our reports dated February 10, 2012, with respect to the consolidated financial statements of Delta Air Lines...

  • Page 142
    ... and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in Delta's internal control over financial reporting. February 10, 2012 /s/ Richard H. Anderson Richard H. Anderson Chief Executive Officer

  • Page 143
    ... report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in Delta's internal control over financial reporting. February 10, 2012 /s/ Hank Halter Hank Halter Senior Vice President and Chief Financial Officer

  • Page 144
    ... the date hereof with the Securities and Exchange Commission of the Annual Report on Form 10-K of Delta Air Lines, Inc. ("Delta") for the fiscal year ended December 31, 2011 (the "Report"). Each of the undersigned, the Chief Executive Officer and the Senior Vice President and Chief Financial Officer...