Delta Airlines 2013 Annual Report Download - page 42
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Salaries and Related Costs . The increase in salaries and related costs is primarily due to employee pay increases, increases in pension
expense and other benefits.
During the June 2012 quarter, we reached an agreement with ALPA that increases pay and benefits for our pilots. Our pilots and substantially
all other employees received base pay increases on July 1, 2012 and received additional increases on January 1, 2013. These increases are
designed both to recognize changes to the profit sharing program described below and to accelerate the planned 2013 pay increase for non-pilot
employees.
Aircraft Maintenance Materials and Outside Repairs. Aircraft maintenance materials and outside repairs consists of costs associated with
maintenance of aircraft used in our operations and maintenance sales to third parties by our MRO services business. The increase in maintenance
costs is primarily due to the cyclical timing of maintenance events on our fleet. Additionally, maintenance cost increased as we accelerated
certain maintenance events into 2012, resulting in a lower total cost for those activities, and completed maintenance initiatives to improve our
operational reliability.
Passenger Commissions and Other Selling Expenses. The decrease in passenger commissions and other selling expenses is primarily due to
lower booking fees and international commission rates, partially offset by increases in sales.
Contracted Services. Contracted services expense decreased year-over-year due primarily to the impact of severe winter storms on our
operations in the March 2011 quarter.
Profit Sharing. Our broad based employee profit sharing program provides that, for each year in which we have an annual pre-tax profit, as
defined by the terms of the program, we will pay a specified portion of that profit to employees. In determining the amount of profit sharing, the
terms of the program specify the exclusion of special items, such as MTM adjustments and restructuring and other items, from pre-tax profit.
During the June 2012 quarter, our profit sharing program was modified so that we will pay 10% of profits on the first $2.5 billion of annual
profits effective with the plan year beginning January 1, 2013 compared to paying 15% of annual profits for the 2012 plan year. Under the
program, we will continue to pay 20% of annual profits above $2.5 billion.
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