On a combined basis(3):

* Passenger revenue decreased 25%, or $2 billion, compared to the prior year period due to the global economic recession, the estimated $125 million to $150 million impact of the H1N1 virus and a 7% capacity reduction. Passenger unit revenue (PRASM) declined 20%, driven by a 19% decline in yield.
* Cargo revenue declined 54%, or $200 million, reflecting lower volume and yield due to the recession. Freighter capacity was 50% lower year over year, as Delta continues to reduce capacity to achieve its plan of discontinuing all freighter flying by the end of 2009.
* Other, net revenue grew 15%, or $123 million, primarily due to increased baggage fee revenue and improved terms from Delta's affinity card agreement with American Express.


Cost Discipline

In the June 2009 quarter, Delta's operating expense on a GAAP basis increased $413 million year over year. This increase is primarily due to the impact of the company's merger with Northwest Airlines, partially offset by lower fuel price in the June 2009 quarter, and a $1.2 billion intangibles impairment charge recorded in the June 2008 quarter. On a combined basis, excluding merger-related expenses and prior year special items, operating expense decreased $1.9 billion due to significantly lower fuel expense.



On a combined basis:

* Both consolidated and mainline unit cost (CASM(4)), excluding merger-related and fuel expenses and prior year special items, increased 2% year over year in the June 2009 quarter due to higher pension expense.
* Non-operating expenses excluding special items increased $99 million in the June 2009 quarter primarily due to non-cash debt discount amortization.

Liquidity Position

As of June 30, 2009, Delta had $5.4 billion in unrestricted liquidity, including $4.9 billion in cash, cash equivalents and short-term investments and $500 million available under an undrawn line of credit. Delta generated $834 million in cash from operations, and $509 million in free cash flow for the quarter.

Net investing activities during the quarter were $325 million. In addition, during the quarter, debt and capital lease payments totaled approximately $400 million, and the company issued $330 million in debt related to aircraft purchases.

"In a difficult economic environment, Delta generated $834 million of cash from operations in the June quarter, allowing us to fund our debt obligations, make investments in our business, and increase our liquidity position," said Hank Halter, chief financial officer. "In addition, the hard work of the Delta people in achieving merger synergies and their focus on cost discipline resulted in a consolidated non-fuel CASM increase of only 2% compared to the prior year on a 7% capacity reduction."

Merger with Northwest

Delta has achieved more than $200 million in synergy benefits from its merger with Northwest Airlines in the first half of 2009, and expects to generate at least $500 million in total synergies in 2009. Synergies achieved year to date have improved revenue from increased market share, Delta's affinity card agreement and alignment of frequent flyer programs. In addition, costs have been reduced through streamlined overhead, facilities and technology, elimination of dedicated freighter flying and supply chain savings.

The company is on track in its integration efforts and continues to expect it will achieve its Single Operating Certificate by the end of 2009. Recent achievements include:

* Announcing a transatlantic joint venture with Air France/KLM with an estimated $12 billion in annual revenue which will result in more flight choices, frequencies, convenient flight schedules, competitive fares and harmonized services for customers. When fully implemented in 2012, the joint venture is expected to generate approximately $200 million in annual incremental pre-tax profits for Delta;
* Using the Delta and Northwest fleets more effectively across the combined network by launching additional cross-fleeting markets, such as New York-JFK to Narita;
* Completing the integration and re-branding of more than 200 airports, or more than 80% of total stations;
* Beginning pilot and flight attendant training to prepare for single carrier operations;
* Harmonizing onboard products for both domestic and international service, including regional carriers; and
* Painting 120 pre-merger Northwest aircraft in Delta livery.

Fuel Price and Related Hedges

Delta hedged 76% of its fuel consumption for the June 2009 quarter, which drove $390 million in realized fuel hedge losses for the period. As a result, Delta's average fuel price(5) for the June 2009 quarter was $2.06 per gallon, which includes $0.33 per gallon associated with fuel hedge losses.

The table below represents the fuel hedges Delta had in place as of July 17, 2009:

3Q09 4Q09 2010
---- ---- ----
Call options 30% 22% 9%
Collars - - 1%
Swaps 22% 17% -
--- --- ---
Total 52% 39% 10%
--- --- ---
Downside participation 78% 83% 99%
Avg. crude call strike $75 $82 $71
Avg. crude swap $64 $62 -
All-in projected fuel price / gallon* $2.17 $2.05
Hedge loss/gallon included in
projected price $0.11 -


* Reflects crude and refining cost assumptions of $67.50 and $7.50,
respectively. In addition, projected fuel price includes tax and
transportation costs of $0.19/gallon, and call option premiums

September 2009 Quarter Guidance

Delta's projections for the September 2009 quarter are below. This guidance is presented on a combined basis(6).

3Q 2009 Forecast
----------------

Fuel price, including taxes and hedges $2.17
Operating margin 1% - 3%
Capital expenditures $270 million
Total liquidity as of Sept. 30, 2009 $5.0 billion



3Q 2009 Forecast
(compared to 3Q 2008)
--------------------

Consolidated unit costs - excluding
fuel expense Flat to up 2%
Mainline unit costs - excluding
fuel expense Up 1% - 3%

System capacity Down 4% - 5%
Domestic Down 3% - 4%
International Down 6% - 7%

Mainline capacity Down 5% - 7%
Domestic Down 4% - 6%
International Down 5% - 7%



Other Matters

Included with this press release are Delta's Consolidated Statements of Operations for the three and six months ended June 30, 2009 and 2008; a statistical summary for those periods; selected balance sheet data as of June 30, 2009 and Dec. 31, 2008; and a reconciliation of certain non-GAAP financial measures.


Endnotes

(1) Note A to the attached Consolidated Statements of Operations provides a reconciliation of non-GAAP financial measures used in this release and provides the reasons management uses those measures.

(2) Delta's financial results under generally accepted accounting principles (GAAP) include the results of Northwest Airlines for the periods following the completion of the merger, which occurred on Oct. 29, 2008. Unless otherwise indicated, Delta presents financial results on a GAAP basis which reflects both Delta and Northwest financial results for the June 2009 quarter, but only Delta standalone results for the June 2008 quarter. The company also presents financial and operating information on a "combined basis", which management believes is more meaningful for comparing year-over-year performance. The combined basis compares Delta's GAAP results for the June 2009 quarter to the combined results of Delta and Northwest for the June 2008 quarter.

(3) Combined financial information includes the combined results of Delta and Northwest for the June 2008 quarter.

(4) Delta excludes from mainline unit cost expenses for aircraft maintenance and staffing services which it provides to third parties because these expenses are not related to the generation of a seat mile. Similarly, Delta excludes from passenger unit revenues, and includes in other revenue, revenues received for providing aircraft maintenance and staffing services to third parties, freighter operations and MLT. Management believes these classifications provide a more consistent and comparable reflection of Delta's mainline operations.

(5) Delta's June 2009 quarter average fuel price of $2.06 per gallon reflects the consolidated cost per gallon for mainline and regional operations, including contract carrier operations, net of fuel hedge impact.

(6) Year-over-year guidance comparisons assume the 2008 financial information for the applicable periods include Delta and Northwest results for the entire period, excluding special items and out-of-period fuel hedge losses.



Three Months Ended June 30,
---------------------------
2009 2008 2008
---- ---- ----
GAAP Combined GAAP
---- -------- ----

Consolidated operating expense 6,999 10,474 6,586
Less regional carriers
operating expense (1,452) (1,846) (1,344)
------ ------ ------
Mainline operating expense 5,547 8,628 5,242
===== ===== =====
Mainline CASM 10.96 cents 15.70 cents 15.93 cents
Transactions with third
parties and other (including
fuel) (0.34) (0.62) (0.41)
----- ----- -----
Mainline CASM excluding items
not related to generation of
a seat mile 10.62 cents 15.08 cents 15.52 cents
Items excluded:
Impairment of goodwill and
other assets - (3.18) (3.63)
Restructuring and merger-
related items (0.11) (0.24) (0.32)
MTM adjustments to fuel
hedges settling in future
periods - 0.46 -
-- ---- --
Mainline CASM excluding
special items 10.51 cents 12.12 cents 11.57 cents
Fuel expense and related
taxes (excluding fuel
related to transactions
with third parties) (3.31) (5.06) (4.69)
----- ----- -----
Mainline CASM excluding
fuel expense and related
taxes and special items 7.20 cents 7.06 cents 6.88 cents
==== ==== ====

ASMs 50,605 54,960 32,902
====== ====== ======