Delta Airlines 2011 Annual Report Download - page 35
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Operating Expense
Year Ended December 31, Increase
(Decrease) % Increase
(Decrease)
(in millions) 2011 2010
Aircraft fuel and related taxes $ 9,730 $ 7,594 $ 2,136 28 %
Salaries and related costs 6,894 6,751 143 2 %
Contract carrier arrangements 5,470 4,305 1,165 27 %
Aircraft maintenance materials and outside repairs 1,765 1,569 196 12 %
Passenger commissions and other selling expenses 1,682 1,509 173 11 %
Contracted services 1,642 1,549 93 6 %
Depreciation and amortization 1,523 1,511 12 1 %
Landing fees and other rents 1,281 1,281 — — %
Passenger service 721 673 48 7 %
Aircraft rent 298 387 (89) (23)%
Profit sharing 264 313 (49) (16)%
Restructuring and other items 242 450 (208) (46)%
Other 1,628 1,646 (18) (1)%
Total operating expense $ 33,140 $ 29,538 $ 3,602 12 %
On July 1, 2010, we sold Compass and Mesaba, our wholly-owned subsidiaries, to Trans States and Pinnacle, respectively. Upon the closing of these
transactions, we entered into new or amended long-term capacity purchase agreements with Compass, Mesaba and Pinnacle. Prior to these sales, expenses
related to Compass and Mesaba as our wholly-owned subsidiaries were reported in the applicable expense line items. Subsequent to these sales, expenses
related to Compass and Mesaba are reported as contract carrier arrangements expense.
Fuel Expense. Including contract carriers under capacity purchase agreements, fuel expense increased $2.9 billion on flat consumption. The table below
presents fuel expense, gallons consumed, and our average price per fuel gallon, including the impact of fuel hedge activity:
Year Ended December 31, Increase
(Decrease) % Increase
(Decrease)
(in millions, except per gallon data) 2011 2010
Aircraft fuel and related taxes $ 9,730 $ 7,594 $ 2,136
Aircraft fuel and related taxes included within contract carrier arrangements 2,053 1,307 746
Total fuel expense $ 11,783 $ 8,901 $ 2,882 32%
Total fuel consumption (gallons) 3,856 3,823 33 1%
Average price per fuel gallon $ 3.06 $ 2.33 $ 0.73 31%
Fuel expense increased primarily due to higher unhedged fuel prices, partially offset by an improvement in net fuel hedge results. The table below shows
the impact of hedging on fuel expense and average price per fuel gallon:
Average Price Per Gallon
Year Ended December 31, Increase
(Decrease) Year Ended December 31, Increase
(Decrease)
(in millions, except per gallon data) 2011 2010 2011 2010
Fuel purchase cost $ 12,203 $ 8,812 $ 3,391 $ 3.17 $ 2.31 $ 0.86
Fuel hedge (gains) losses (420) 89 (509) (0.11) 0.02 (0.13)
Total fuel expense $ 11,783 $ 8,901 $ 2,882 $ 3.06 $ 2.33 $ 0.73
Mark-to-market adjustments for fuel hedges recorded in periods other than the
settlement period
(26) — (26) (0.01) — (0.01)
Total fuel expense, adjusted $ 11,757 $ 8,901 $ 2,856 $ 3.05 $ 2.33 $ 0.72
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