Financial Highlights - 2012 Compared to 2011

Our net income for 2012 was $1.0 billion, or $1.19 per diluted share. Total operating revenue increased $1.6 billion, or 4%, over 2011, primarily due to higher passenger revenue due to yield improvement. Fuel expense, including our contract carriers under capacity purchase agreements, increased due to a 6% increase in our average price per gallon, despite a 2% decrease in consumption.

Passenger revenue increased $1.6 billion due to a 5% year over year improvement in passenger mile yield on flat traffic, while capacity declined 2%. Passenger revenue per available seat mile ("PRASM") increased 7% over 2011, reflecting higher revenue under corporate travel contracts and improvements in our products and services.

Total operating expense increased $1.4 billion over 2011, driven primarily by higher fuel expense and salaries and related costs. Our fuel expense increased $468 million (including our contract carriers under capacity purchase agreements) compared to 2011 due to a 6% increase in our average price per gallon, despite a 2% decrease in consumption. During 2012, we recorded losses of $66 million due to changes in the fair value of our fuel hedge portfolio. Excluding mark-to-market adjustments recorded in periods other than the settlement period ("MTM adjustments"), our average fuel price for the year was $3.26 per gallon, compared to $3.05 per gallon for 2011.

Our consolidated operating cost per available seat mile ("CASM") for 2012 increased 6% to $14.97 cents, primarily reflecting increased fuel price. For 2012, CASM-Ex was $8.92 cents, or 5% higher than 2011. The non-GAAP financial measures used in this section are defined in "Supplemental Information" below.

Company Initiatives

Strengthening the Balance Sheet

We will continue to focus on cash flow generation with the goal of further strengthening our balance sheet. We finished 2012 with $5.2 billion in unrestricted liquidity (consisting of cash, cash equivalents, short-term investments and undrawn revolving credit facility capacity). During 2012, we generated $2.5 billion in cash from operating activities, and reduced debt by $1.1 billion and funded capital expenditures while maintaining a solid liquidity position.

Structural Cost Initiatives

We implemented a $1 billion structural cost initiatives program. These initiatives are designed to improve our cost efficiency while maintaining our operational performance and revenue generation and include:

•Domestic fleet restructuring to retire older, less efficient aircraft from our fleet;
•Maintenance redesign focusing on improving our processes and resource management;
•Distribution platforms to increase the use of cost effective and value-added distribution channels such as delta.com;
•Staffing efficiency to generate higher productivity levels through technology and improved staffing models; and
•Other costs to improve network efficiency and to reduce transportation expense.

We anticipate realizing the benefits of the structural cost initiatives in 2013, with CASM-Ex growth moderating in the second half of 2013, and the benefits of the initiatives increasing through 2015.

Domestic Fleet Restructuring

Domestic fleet restructuring is a key part of our structural cost initiatives, and is focused on lowering unit costs while investing in our fleet to enhance the customer experience. We are restructuring our domestic fleet by reducing our 50-seat regional flying and replacing other older, less cost effective aircraft with newer, more efficient aircraft. Recent agreements with SkyWest Airlines, Inc., Pinnacle Airlines, Inc. and Bombardier Aerospace have produced a path for us to eliminate more than 200 50-seat aircraft. We are replacing these aircraft and older B-757-200 aircraft with more efficient and customer preferred CRJ-900, B-717-200 and B-737-900ER aircraft.

In 2012, we entered into an agreement with Bombardier Aerospace to purchase 40 CRJ-900 aircraft with 12 deliveries this year and 28 in 2014. Also in 2012, we finalized agreements with Southwest Airlines and The Boeing Company ("Boeing") to lease 88 B-717-200 aircraft. Delivery of the aircraft will begin later this year, with 16 aircraft scheduled to enter our fleet. We will receive 36 aircraft deliveries in each of 2014 and 2015. These B-717-200 aircraft are 110-seat aircraft and will feature new, fully upgraded interiors, with 12 First Class seats, 15 Economy Comfort seats and in-flight WiFi throughout the cabin.

In 2011, we entered into an agreement with Boeing to purchase 100 new fuel efficient B-737-900ER aircraft. We will add these aircraft to our fleet between this year and 2018, primarily replacing older B-757-200 aircraft. We expect the B-737-900ER to offer an industry leading customer experience, including expanded carry-on baggage space and a spacious cabin. Additionally, we continue to increase our MD-90 fleet with previously owned aircraft that offer a lower total cost of ownership.

As we restructure our fleet and assess our fleet plans, we will continue to evaluate older, retiring aircraft and related equipment for changes in depreciable life, impairment and lease termination costs. By 2015, we expect to reduce our 50-seat aircraft fleet to 125 aircraft. The associated retirement of aircraft will result in material lease termination and other charges over this period. We expect to benefit from reduced future maintenance cost and improved operational and fuel efficiency that we will experience over the life of the new aircraft.

Oil Refinery Acquisition

Jet fuel costs have continued to increase in recent years, making fuel expense our single largest expense. Because global demand for jet fuel and related products is increasing at the same time that jet fuel refining capacity is decreasing in the U.S. (particularly in the Northeast), the refining margin reflected in the prices we pay for jet fuel has increased. We purchased an oil refinery as part of our strategy to mitigate the increasing cost of the refining margin we are paying.

Acquisition

In June 2012, Monroe acquired the Trainer refinery and related assets located near Philadelphia, Pennsylvania from Phillips 66, which had shut down operations at the refinery. Monroe invested $180 million to acquire the refinery. Monroe received a $30 million grant from the Commonwealth of Pennsylvania. The acquisition includes pipelines and terminal assets that will allow the refinery to supply jet fuel to our airline operations throughout the Northeastern U.S., including our New York hubs at LaGuardia and JFK.

Because the products and services of Monroe's refinery operations are discrete from our airline services, segment results are prepared for our airline segment and our refinery segment. Financial information on our segment reporting can be found in Note 2 of the Notes to the Consolidated Financial Statements.

Refinery Operations and Strategic Agreements

The facility is capable of refining 185,000 barrels of crude oil per day. BP is the primary supplier of crude oil used by the refinery under a three year agreement. We are also exploring other sources of crude oil supply, such as bringing supply to the refinery by rail from the Bakken oil field in North Dakota. We have increased the refinery's jet fuel capacity through capital improvements. The refinery's remaining production consists of gasoline, diesel and refined products ("non-jet fuel products"). Under a multi-year agreement, we are exchanging a significant portion of the non-jet fuel products with Phillips 66 for jet fuel to be used in our airline operations. Substantially all of the remaining production of non-jet fuel products is being sold to BP under a long-term buy/sell agreement effectively exchanging those non-jet fuel products for jet fuel. Our agreement with Phillips 66 requires us to deliver specified quantities of non-jet fuel products and they are required to deliver jet fuel to us. If we or Phillips 66 do not have the specified quantity and type of product available, the delivering party is required to procure any such shortage to fulfill its obligation under the agreement. Substantially all of the refinery's expected production of non-jet fuel products is included in these agreements. Refinery Start-Up

During the December 2012 quarter, fuel production increased at the refinery. However, Superstorm Sandy negatively impacted the refinery start up, slowing production and lowering efficiency levels. The refinery recorded a $63 million net loss for the quarter.

New York Strategy

Strengthening our position in New York City continues to be an important part of our network strategy. As discussed below, key components of this strategy are operating a domestic hub at LaGuardia and creating a state-of-the-art facility at JFK. In May 2012, we announced new and expanded service to 10 popular leisure destinations (in addition to the service expansion discussed below) in the Caribbean, Bermuda and Florida from LaGuardia and JFK. These flights began operating in the December quarter of 2012.

LaGuardia. During December 2011, we closed transactions with US Airways where we received takeoff and landing rights (each a "slot pair") at LaGuardia in exchange for slot pairs at Reagan National. This exchange allows us to operate a new domestic hub at LaGuardia. We have increased capacity at LaGuardia by 42% since March 2012, adding 100 new flights and a total of 26 new destinations. The first phase of new flights began on March 25 and the second phase commenced on July 11. We currently operate about 260 daily flights between LaGuardia and 60 cities, more than any other airline.

We are also investing more than $160 million in a renovation and expansion project at LaGuardia to enhance the customer experience. In December 2012, we opened the connector linking Terminals C and D and in September 2012 we opened a new SkyClub in Terminal C. Ongoing investments include expanded security lanes and a baggage handling system in both terminals as well as an expanded SkyClub in Terminal D.

JFK. While our expanded LaGuardia schedule is focused on providing industry-leading domestic service, we are optimizing our international and trans-continental flight schedule at JFK to facilitate convenient connections for our passengers and improve coordination with our SkyTeam alliance partners.

At JFK, we currently operate domestic flights primarily at Terminal 2 and international flights at Terminal 3 and, to a lesser extent, Terminal 4. Our five-year $1.2 billion renovation project at JFK, which began in 2010, is on schedule. The expansion and enhancement of Terminal 4, which includes the construction of nine new international gates, is expected to be open in the spring of 2013. Upon completion of the Terminal 4 expansion, we will relocate our operations from Terminal 3 to Terminal 4, proceed with the demolition of Terminal 3 and thereafter conduct coordinated flight operations from Terminals 2 and 4. Once our project is complete, we expect that passengers will benefit from an enhanced customer experience and improved operational performance, including reduced taxi times and better on-time performance.

Alliances and Equity Investments

We have made long-term investments in other airlines that give us the ability to increase our network scale and produce revenue improvements. We invested in GOL and Aeromexico because they operate in Latin America's two largest markets, Brazil and Mexico, respectively. Pending regulatory approval, we also agreed to buy 49% of Virgin Atlantic, currently held by Singapore Airlines, for $360 million. We also entered into a joint venture agreement with Virgin Atlantic with respect to operations on non-stop routes between the United Kingdom and North America. We and Virgin Atlantic will file an application with the U.S. Department of Transportation for U.S. antitrust immunity with respect to the joint venture.

Pilot Agreement

During the June 2012 quarter, we reached an agreement with the Air Line Pilots Association, International ("ALPA") to modify the existing collective bargaining agreement covering Delta's pilots. The agreement, which was ratified by the pilots in June 2012, provides career growth opportunities as well as pay and benefits improvements for our pilots including increases to base pay and changes to our profit sharing program. The agreement, which becomes amendable on December 31, 2015, will also provide Delta with productivity gains and support our domestic fleet restructuring.

Results of Operations - 2012 Compared to 2011

Operating Revenue
                             Year Ended December 31,        Increase    % Increase
(in millions)                    2012             2011     (Decrease)   (Decrease)
Passenger:
Mainline                $      25,237           $ 23,843  $     1,394       6  %
Regional carriers               6,570              6,414          156       2  %
Total passenger revenue        31,807             30,257        1,550       5  %
Cargo                             990              1,027          (37 )    (4 )%
Other                           3,873              3,831           42       1  %
Total operating revenue $      36,670           $ 35,115  $     1,555       4  %


                                                                                     Increase (Decrease)
                                                                               vs. Year Ended December 31, 2011
                                Year Ended       Passenger
(in millions)               December 31, 2012     Revenue    RPMs (Traffic)   ASMs (Capacity)  Passenger Mile Yield    PRASM     Load Factor
Domestic                    $         14,050        7 %            1  %             -  %                6 %              7 %      0.8       pts
Atlantic                               5,645        1 %           (4 )%            (7 )%                5 %              9 %      2.8       pts
Pacific                                3,645       10 %            6  %             3  %                3 %              7 %      2.6       pts
Latin America                          1,897        8 %            6  %             3  %                1 %              5 %      2.7       pts
Total mainline                        25,237        6 %            1  %            (1 )%                5 %              7 %      1.7       pts
Regional carriers                      6,570        2 %           (4 )%            (5 )%                7 %              8 %      0.7       pts
Total passenger revenue     $         31,807        5 %            -  %            (2 )%                5 %              7 %      1.7       pts

Passenger Revenue. Passenger revenue increased $1.6 billion, or 5%, due to an improvement in the passenger mile yield of 5%, on a 2% decline in capacity. Passenger mile yield and unit revenue increased due to fare increases, higher revenue under corporate travel contracts and improvements in our products and services.

International mainline passenger revenue increased $520 million. In early 2011, we faced industry overcapacity in the transatlantic market and in connection with our joint venture partners, AirFrance-KLM and Alitalia, we reduced capacity in underperforming markets during the second half of 2011 and in 2012. As a result, Atlantic PRASM was up 9%, driven by a 5% increase in yield on a 7% decrease in capacity. Pacific passenger revenue increased 10% on a 3% and 6% increase in capacity and traffic, respectively. These results reflect Pacific market improvement, as demand returned to levels seen prior to the March 2011 earthquake and tsunami in Japan. Latin America passenger revenue increased 8% on a 3% and 6% increase in capacity and traffic, respectively.

Operating Expense
                                              Year Ended December 31,      Increase    % Increase
(in millions)                                    2012           2011      (Decrease)   (Decrease)
Aircraft fuel and related taxes             $      10,150   $    9,730   $       420          4  %
Salaries and related costs                          7,266        6,894           372          5  %
Contract carrier arrangements                       5,647        5,470           177          3  %
Aircraft maintenance materials and outside
repairs                                             1,955        1,765           190         11  %
Passenger commissions and other selling
expenses                                            1,590        1,682           (92 )       (5 )%
Contracted services                                 1,566        1,642           (76 )       (5 )%
Depreciation and amortization                       1,565        1,523            42          3  %
Landing fees and other rents                        1,336        1,281            55          4  %
Passenger service                                     732          721            11          2  %
Profit sharing                                        372          264           108         41  %
Aircraft rent                                         272          298           (26 )       (9 )%
Restructuring and other items                         452          242           210      NM(1)
Other                                               1,592        1,628           (36 )       (2 )%
Total operating expense                     $      34,495   $   33,140   $     1,355          4  %

(1) NM - not meaningful

Fuel Expense. Including contract carriers under capacity purchase agreements, fuel expense increased $468 million because of a 6% increase in our average price per gallon, despite a 2% decrease in consumption. The table below presents fuel expense, gallons consumed and our average price per gallon, including the impact of fuel hedge losses of $66 million during the year ended December 31, 2012:

                                                  Year Ended December 31,     Increase    % Increase
(in millions, except per gallon data)                 2012          2011     (Decrease)   (Decrease)
Aircraft fuel and related taxes                  $      10,150   $  9,730   $      420
Aircraft fuel and related taxes included within
contract carrier arrangements                            2,101      2,053           48
Total fuel expense                               $      12,251   $ 11,783   $      468        4  %

Total fuel consumption (gallons)                         3,769      3,856          (87 )     (2 )%
Average price per gallon                         $        3.25   $   3.06   $     0.19        6  %

The table below shows the impact of hedging and the refinery on fuel expense and average price per gallon:

                                                                                     Average Price Per Gallon
                                                                                 Year Ended December
                                       Year Ended December 31,     Increase              31,
(in millions, except per gallon data)      2012          2011     (Decrease)        2012       2011      Increase
Fuel purchase cost                    $      12,122   $ 12,203   $     (81 )    $     3.23   $  3.17   $     0.06
Refinery impact                                  63          -          63            0.01         -         0.01
Fuel hedge losses (gains)                        66       (420 )       486            0.01     (0.11 )       0.12
Total fuel expense                    $      12,251   $ 11,783   $     468      $     3.25   $  3.06   $     0.19
MTM adjustments                                  27        (26 )        53            0.01     (0.01 )       0.02
Total fuel expense, adjusted          $      12,278   $ 11,757   $     521      $     3.26   $  3.05   $     0.21

Fuel Purchase Cost. Fuel purchase cost is based on the market price for jet fuel at airport locations.

Refinery Impact. The refinery results include the impact on fuel expense of self-supply from the production of the refinery and from refined products exchanged with Phillips 66 and BP. As described in Note 2 of the Notes to the Consolidated Financial Statements, to the extent that we account for exchanges of refined products as non-monetary transactions, we include the results of those transactions within fuel expense.

Fuel Hedge Losses (Gains) and MTM Adjustments. During the year ended December 31, 2012, our fuel hedge losses of $66 million included $27 million of MTM adjustments. These MTM adjustments are based on market prices as of the end of the reporting period for contracts settling in future periods. Such market prices are not necessarily indicative of the actual future value of the underlying hedge in the contract settlement period. The losses for MTM adjustments are reflected in the table above to calculate an effective fuel cost for the period.

We adjust fuel expense for these items to arrive at a more meaningful measure of fuel cost. Our average price per gallon, adjusted (a non-GAAP financial measure as defined in "Supplemental Information" below) was $3.26 for the year ended December 31, 2012.

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.

Restructuring and Other Items. Due to the nature of amounts recorded within restructuring and other items, a year-over-year comparison is not meaningful. For a discussion of charges recorded in restructuring and other items, see Note 16 of the Notes to the Consolidated Financial Statements.

Results of Operations - 2011 Compared to 2010

Operating Revenue
                             Year Ended December 31,
(in millions)                    2011             2010     Increase    % Increase
Passenger:
Mainline                $      23,843           $ 21,408  $    2,435       11 %
Regional carriers               6,414              5,850         564       10 %
Total passenger revenue        30,257             27,258       2,999       11 %
Cargo                           1,027                850         177       21 %
Other                           3,831              3,647         184        5 %
Total operating revenue $      35,115           $ 31,755  $    3,360       11 %


                                                                                 Increase (Decrease)
                                                                           vs. Year Ended December 31, 2010
                                Year Ended                                                            Passenger
(in millions)               December 31, 2011   Passenger Revenue  RPMs (Traffic)   ASMs (Capacity)   Mile Yield   PRASM   Load Factor
Domestic                    $         13,175            11 %             -  %            (1 )%           11 %        11 %    0.4    pts
Atlantic                               5,578             9 %            (1 )%             2  %           10 %         7 %   (2.1 )  pts
Pacific                                3,326            20 %             4  %            10  %           15 %         9 %   (4.7 )  pts
Latin America                          1,764            13 %             -  %             -  %           13 %        13 %   (0.6 )  pts
Total mainline                        23,843            11 %             -  %             1  %           11 %        10 %   (1.0 )  pts
Regional carriers                      6,414             9 %            (2 )%            (2 )%           12 %        12 %    0.1    pts
Total passenger revenue     $         30,257            11 %             -  %             1  %           11 %        10 %   (0.9 )  pts

Mainline Passenger Revenue. Mainline passenger revenue increased primarily due to an improvement in the passenger mile yield from fare increases implemented in response to higher fuel prices and from higher revenue under corporate travel contracts.

• Domestic. Domestic mainline passenger revenue increased 11% due to an 11% improvement in PRASM on a 1% decline in capacity. The improvement in PRASM reflects higher passenger mile yield driven by fare increases.

• International. International mainline passenger revenue increased 13% due to a 9% improvement in PRASM on a 4% capacity increase. Passenger mile yield increased 12%, reflecting increased business and leisure travel and increased fares, including fuel surcharges. Atlantic passenger revenue increased 9% due to a 7% increase in PRASM. We and the industry faced overcapacity in the Atlantic, particularly in early 2011, which prevented us from increasing ticket prices sufficiently to cover higher fuel prices. Pacific passenger revenue increased 20% on a 10% capacity increase. Pacific passenger mile yield increased 15% due to a stronger revenue environment, partially offset by the negative impact from the March 2011 earthquake and tsunami in Japan. Latin America passenger revenue increased 13%, benefiting from a 13% higher passenger mile yield driven by fare increases.

Regional carriers. Passenger revenue from regional carriers increased 9% due to an 12% improvement in PRASM on a 2% decline in capacity. Passenger mile yield . . .