DELTA AIR LINES INC /DE/ FORM 10-K (Annual Report) Filed 02/15/08 for the Period Ending 12/31/07 Address HARTSFIELD ATLANTA INTL AIRPORT 1030 DELTA BLVD ATLANTA, GA 30354-1989 Telephone 4047152600 CIK 0000027904 Symbol DAL SIC Code 4512 - Air Transportation, Scheduled Industry Airline Sector Transportation Fiscal Year 12/31 http://www.edgar-online.com © Copyright 2015, EDGAR Online, Inc. All Rights Reserved. Distribution and use of this document restricted under EDGAR Online, Inc. Terms of Use. Table of Contents Index to Financial Statements UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2007 or TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 1-5424 DELTA AIR LINES, INC. (Exact name of registrant as specified in its charter) Delaware 58 -0218548 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) Post Office Box 20706 Atlanta, Georgia 30320 -6001 (Address of principal executive offices) (Zip Code) Registrant’s telephone number, including area code: (404) 715-2600 Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered Common Stock, par value $0.0001 per share New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes No Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer Accelerated filer Non -accelerated filer Smaller reporting company (Do not check if a smaller reporting company) Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant as of June 30, 2007 was approximately $4.7 billion. Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes No On January 31, 2008, there were outstanding 292,217,061 shares of the registrant’s common stock. This document is also available on our website at http://investor.delta.com/edgar.cfm. Documents Incorporated By Reference Part III of this Form 10-K incorporates by reference certain information from the registrant’s definitive Proxy Statement for its Annual Meeting of Stockholders to be held on June 3, 2008 to be filed with the Securities and Exchange Commission. Table of Contents Index to Financial Statements TABLE OF CONTENTS Page Forward -Looking Information 1 Other Information 1 PART I ITEM 1. BUSINESS 2 General Description 2 Airline Operations 2 Fuel 4 Competition 5 Frequent Flyer Program 5 Regulatory Matters 5 Employee Matters 8 Executive Officers 9 Additional Information 9 ITEM 1A. RISK FACTORS 10 Risk Factors Relating to Delta 10 Risk Factors Relating to the Airline Industry 13 ITEM 1B. UNRESOLVED STAFF COMMENTS 15 ITEM 2. PROPERTIES 15 Flight Equipment 15 Ground Facilities 16 ITEM 3. LEGAL PROCEEDINGS 17 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 19 PART II ITEM 5. MARKET FOR REGISTRANT ’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES 20 ITEM 6. SELECTED FINANCIAL DATA 23 ITEM 7. MANAGEMENT ’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 26 Background 26 Combined Financial Results of the Predecessor and Successor 26 Overview of Combined 2007 Results 26 Business Initiatives 27 Fresh Start Adjustments 28 Share -Based Compensation Expense 29 Accounting Adjustments 29 Reclassifications 29 Sale of ASA 30 Combined Results of Operations —2007 Compared to 2006 30 Results of Operations —2006 Compared to 2005 34 Financial Condition and Liquidity 37 Contractual Obligations 39 Application of Critical Accounting Policies 42 Market Risks Associated with Financial Instruments 46 Glossary of Defined Terms 47 i Table of Contents Index to Financial Statements Page ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 48 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 48 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 48 ITEM 9A. CONTROLS AND PROCEDURES 48 ITEM 9B. OTHER INFORMATION 50 PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE OF THE REGISTRANT 50 ITEM 11. EXECUTIVE COMPENSATION 50 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS 50 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE 50 ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES 50 PART IV ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES 51 Signatures 52 Exhibit Index 53 Index to Consolidated Financial Statements F-1 ii Table of Contents Index to Financial Statements Forward-Looking Information Statements in this Form 10-K (or otherwise made by us or on our behalf) that are not historical facts, including statements about our estimates, expectations, beliefs, intentions, projections or strategies for the future, may be “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from historical experience or our present expectations. For examples of such risks and uncertainties, please see the cautionary statements contained in “Risk Factors Relating to Delta” and “Risk Factors Relating to the Airline Industry” in “Item 1A. Risk Factors” of this Form 10-K. All forward-looking statements speak only as of the date made, and we undertake no obligation to publicly update or revise any forward-looking statements to reflect events or circumstances that may arise after the date of this report. Other Information 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 U.S. Bankruptcy Code (the “Bankruptcy Code”) in the U.S. Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”). On April 25, 2007, the Bankruptcy Court approved the Debtors’ Joint Plan of Reorganization (the “Plan of Reorganization”). On April 30, 2007 (the “Effective Date”), the Debtors emerged from bankruptcy. On the Effective Date, we adopted fresh start reporting in accordance with American Institute of Certified Public Accountants’ Statement of Financial Position 90-7, “Financial Reporting by Entities in Reorganization under the Bankruptcy Code” (“SOP 90-7”). The adoption of fresh start reporting resulted in our becoming a new entity for financial reporting purposes. Accordingly, the Consolidated Financial Statements on or after May 1, 2007 are not comparable to the Consolidated Financial Statements prior to that date. References in this Form 10-K to “Successor” refer to Delta on or after May 1, 2007, after giving effect to (1) the cancellation of Delta common stock issued prior to the Effective Date; (2) the issuance of new Delta common stock and certain debt securities in accordance with the Plan of Reorganization; and (3) the application of fresh start reporting. References to “Predecessor” refer to Delta prior to May 1, 2007. For purposes of discussion on our results for the year ended December 31, 2007 in this Form 10-K, we combined the results of operations for the four months ended April 30, 2007 of the Predecessor with the eight months ended December 31, 2007 of the Successor. Additional information about our Chapter 11 proceedings is available on the Internet at www.delta.com/restructure. Bankruptcy Court filings, claims information and our Plan of Reorganization are available at www.deltadocket.com. These websites are not incorporated into this Form 10-K. Unless otherwise indicated, the terms “Delta,” the “Company,” “we,” “us,” and “our” refer to Delta Air Lines, Inc. and its subsidiaries. 1 Table of Contents Index to Financial Statements PART I ITEM 1. BUSINESS General Description We are a major air carrier that provides scheduled air transportation for passengers and cargo throughout the U.S. and around the world. We offered customers service to more destinations than any other global airline, with Delta and Delta Connection carrier service to 321 destinations in 58 countries in January 2008. We have added more international capacity than any other major U.S. airline since January 2006 and are the leader across the Atlantic with flights to 36 trans-Atlantic markets.