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Delta Air Lines Annual Report, Year Ended Jun 30, 1997

Filing Date
Filed September 29, 1997
Period End
June 30, 1997
Security
DAL
In the record · 2016–202610-K1210-Q338-K210

DAL filed 12 annual reports (10-K), 33 quarterly reports (10-Q) and 210 current reports (8-K) between 2016 and 2026.

  1. Leadership change8-K · Oct ’17Oct ’17
  2. Material agreement8-K · Oct ’19Oct ’19
  3. Material agreement8-K · Nov ’21Nov ’21
  4. Leadership change8-K · Dec ’25Dec ’25

01—Abstract

Summary

Summary of the 10-K filed September 29, 1997. Cited figures are marked; the original filing is the authoritative source.

Delta Air Lines, Inc. reported fiscal 1997 (year ended June 30, 1997) net income of $854 milliona, or $11.30 primary and $11.01 fully diluted income per common share, compared with $156 million ($1.42 per share) in fiscal 1996.

Operating revenues rose 9% to $13.59 billion and operating income increased to $1.53 billionb from $463 million. Fiscal 1997 results include $52 million of pretax restructuring and other non-recurring charges tied to the realignment of transatlantic and European operations, while fiscal 1996 included $829 million of such charges, largely a $452 million writedown of the L-1011 fleet. Excluding these items, net income was $886 million, and operating income was $1.6 billion.

Passenger revenue grew 8% on a 10% increase in revenue passenger miles, while the system passenger mile yield declined 2% amid low-fare competition. Cash from operations was $2.04 billionc, and capital spending totaled $1.6 billion on flight equipment and $350 million on ground property. Shareholders' equity rose to $3.0 billion, and long-term debt and capital lease obligations including current maturities were $2.1 billion, or 41% debt and 59% equity.

Delta reached a March 1997 understanding with The Boeing Company covering 106 firm aircraft orders and additional options, with estimated future aircraft and related commitments of $5.9 billiond. Management also changed in August 1997, when Leo F. Mullin became President and Chief Executive Officer following Ronald W.

Allen's retirement. The filing notes several risks, including fuel price exposure (a one-cent change in jet fuel price affects annual fuel expense by about $26 million), a pending Transport Workers Union organizing application covering about 8,000 Fleet Service employees, and an ongoing ValuJet antitrust lawsuit.

02—Key points

Key Highlights

  1. Fiscal 1997 net income of $854 million ($11.01 fully diluted per share) versus $156 million in fiscal 1996; excluding non-recurring charges, net income was $886 million.
  2. Operating revenues increased 9% to $13.59 billion, driven by an 8% rise in passenger revenue and a 10% increase in revenue passenger miles.
  3. Passenger mile yield declined 2% as Delta used more competitive pricing and faced low-fare carriers; the March 1997 reimposition of the transportation excise tax also weighed on domestic yield.
  4. Operating income of $1.53 billion compared with $463 million in fiscal 1996, which included $829 million of restructuring and non-recurring charges.
  5. Cash from operations of $2.04 billion funded $1.6 billion of flight equipment investment, $379 million of share repurchases, and $196 million of debt and capital lease payments.
  6. Boeing understanding of March 1997 provides 106 firm aircraft orders and additional options; future aircraft and related commitments are estimated at $5.9 billion.
  7. Leo F. Mullin became President and CEO on August 14, 1997, succeeding Ronald W. Allen, who retired effective July 31, 1997.

03—Questions

Frequently Asked Questions

  1. How profitable was Delta in fiscal 1997?

    Delta reported net income of $854 million, or $11.30 primary and $11.01 fully diluted income per common share, up from $156 million in fiscal 1996. Net income excluding restructuring and other non-recurring charges was $886 million, or $11.42 fully diluted per share.

  2. What drove the increase in revenue?

    Operating revenues rose 9% to $13.59 billion. Passenger revenue increased 8% to $12.51 billion, reflecting a 10% increase in revenue passenger miles, partly offset by a 2% decline in passenger mile yield. Other revenue rose 67% to $531 million, mainly from SkyMiles joint marketing programs and code-share arrangements.

  3. What are the main cost and risk exposures disclosed?

    Aircraft fuel expense rose 18% to $1.72 billion as the average fuel price rose 13% to 66.28 cents per gallon. A one-cent change in the average annual jet fuel price would change fuel expense by about $26 million. Salaries and related costs rose 6% to $4.44 billion. Delta also cited low-fare competition and a pending union organizing application covering about 8,000 Fleet Service employees.

  4. What fleet and capital spending plans did Delta disclose?

    Delta invested $1.6 billion in flight equipment and $350 million in ground property during fiscal 1997. Under its March 1997 Boeing understanding, Delta plans to reduce aircraft family types from six to three, remove all L-1011 aircraft from transatlantic service by the end of fiscal 1998, and estimates aircraft and related commitments of $5.9 billion, subject to definitive purchase agreements.

  5. What legal and leadership developments were reported?

    A ValuJet lawsuit alleging antitrust violations related to a La Guardia slot lease continues, and the District Court denied Delta's renewed summary judgment motion on the remaining Section 2 Sherman Act claims on August 14, 1997. Delta says it intends to defend the case vigorously. Leo F. Mullin became President and Chief Executive Officer on August 14, 1997, after Ronald W. Allen retired effective July 31, 1997.

04—Continue

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