Performance

• On Time Arrival: up 7.3 points to 87.3%
• Completion Factor: up 2.8 points to 99.6%
• DOT Baggage: up 31%.
• DOT Customer Complaints: down 53%.

Revenue Environment

• Operating revenue: up 9% or $665M on 3% lower capacity than March 2011 quarter.
• Traffic: up 1%
• Load Factor: up 3.3 points to 79.7%
• Passenger Revenue: up 10% or $651M
• PRASM: up 14%
• Yield: up 9%
• Cargo: down 2% or $6M with lower cargo yields partially offset by higher volumes.
• Other Revenue: up 2% or $21M from higher 3rd party maintenance revenue.

Cash

• Unrestricted Liquidity: $5.7B
  with $3.9B in cash and short-term investments and $1.8B in an undrawn revolving credit.
• Cash From Operations: $947M from strong advance ticket sales.
• Capital Expenditures: $350M including $300M in aircraft, parts and modifications.

Debt

• Debt and Capital Lease Payments: $450M including $40M early retirement of debt.
• Adjusted Net Debt: $12.2B. On track to reach $10B in 2013.

Fuel

• Fuel: expenses up 14% or $250M but offset by $45M in fuel hedge gain and reduced consumption.
• Fuel Price: average $3.28/gal but $3.11/gal after fuel hedging.

Operating Expenses

• Operating Expenses: up $80M as higher ancillary business expenses and employee costs were offset by the benefits of lower capacity and lower weather-related costs.
• CASM: excluding fuel up 3.6% on 3% lower capacity compared to 2011.
• CASM: including fuel and special items CASM up 6%.

Tax Man

• Tax Expense: up $75M as a result of prior year $71M benefit from tax credits.

Comment

• "Through our focus on free cash flow generation, Delta has now achieved a nearly $5 billion debt reduction in the past two years," said Paul Jacobson, Delta's chief financial officer. "We have also begun to make the necessary changes to achieve our targeted cost levels, which should accelerate our cash generation and de-levering."

The $163M Special Items

• $151 million in mark-to-market gains for fuel hedges settling in future periods;
• a $39 million gain associated with the exchange of slots at New Nork-LaGuardia and Washington-Reagan National; and
• a $27 million charge for fleet, facilities and other items.

Delta recorded special items totaling a $2 million gain in the March 2011 quarter, including:

• $29 million in mark-to-market gains for fuel hedges settling in future periods;
• a $7 million charge associated fleet retirements; and
• a $20 million loss on extinguishment of debt.
• an unmeasurable loss in the bad***ness goodwill of the DC-9 fleet as Newk moved to the fatted calf, 7ER, effects still being studied.