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<SEC-DOCUMENT>0000950144-03-003858.txt : 20030327
<SEC-HEADER>0000950144-03-003858.hdr.sgml : 20030327
<ACCEPTANCE-DATETIME>20030327104554
ACCESSION NUMBER:		0000950144-03-003858
CONFORMED SUBMISSION TYPE:	10-K
PUBLIC DOCUMENT COUNT:		9
CONFORMED PERIOD OF REPORT:	20021231
FILED AS OF DATE:		20030327

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			DELTA AIR LINES INC /DE/
		CENTRAL INDEX KEY:			0000027904
		STANDARD INDUSTRIAL CLASSIFICATION:	AIR TRANSPORTATION, SCHEDULED [4512]
		IRS NUMBER:				580218548
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		10-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-05424
		FILM NUMBER:		03619717

	BUSINESS ADDRESS:	
		STREET 1:		HARTSFIELD ATLANTA INTL AIRPORT
		STREET 2:		1030 DELTA BLVD
		CITY:			ATLANTA
		STATE:			GA
		ZIP:			30354-1989
		BUSINESS PHONE:		4047152600

	MAIL ADDRESS:	
		STREET 1:		P.O. BOX 20706
		STREET 2:		DEPT 981
		CITY:			ATLANTA
		STATE:			GA
		ZIP:			30320-6001

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	DELTA AIR CORP
		DATE OF NAME CHANGE:	19660908
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-K
<SEQUENCE>1
<FILENAME>g81186e10vk.txt
<DESCRIPTION>DELTA AIR LINES, INC.
<TEXT>
<PAGE>

   -----------------------------------------------------------------------------
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                                   UNITED STATES
                        SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, D.C. 20549

                               ---------------------

                                     FORM 10-K

<Table>
<C>        <S>
   [X]     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
           SECURITIES EXCHANGE ACT OF 1934

           FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002

                                  OR


   [  ]    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
           SECURITIES EXCHANGE ACT OF 1934

</Table>

                         COMMISSION FILE NUMBER 1-5424

                             DELTA AIR LINES, INC.
             (Exact name of registrant as specified in its charter)

<Table>
<S>                                            <C>
                   DELAWARE                                      58-0218548
       (State or other jurisdiction of                        (I.R.S. Employer
        incorporation or organization)                      Identification No.)

            POST OFFICE BOX 20706                                30320-6001
               ATLANTA, GEORGIA                                  (Zip Code)
   (Address of principal executive offices)
</Table>

              Registrant's telephone number (including area code):
                                 (404) 715-2600

          Securities registered pursuant to Section 12(b) of the Act:

<Table>
<Caption>
                                                               NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS                                                WHICH REGISTERED
<S>                                                            <C>
Common Stock, par value $1.50 per share.....................   New York Stock Exchange
Preferred Stock Purchase Rights.............................   New York Stock Exchange
8 1/8% Notes Due July 1, 2039...............................   New York Stock Exchange
</Table>

          Securities registered pursuant to Section 12(g) of the Act:

                                      NONE

    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 [X]    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 an accelerated filer (as
defined in Rule 12b-2 of the Act).  Yes [X]    No [ ]
    The aggregate market value of the voting and non-voting common equity held
by non-affiliates of the registrant as of June 28, 2002, was approximately $2.46
billion.
    On February 28, 2003, there were outstanding 123,416,897 shares of the
registrant's common stock.

                      DOCUMENTS INCORPORATED BY REFERENCE

    Parts I, II and IV of this Form 10-K incorporate by reference certain
information from the registrant's 2002 Annual Report to Shareowners. Parts II
and III of this Form 10-K incorporate by reference certain information from the
registrant's definitive Proxy Statement dated March 25, 2003, for its Annual
Meeting of Shareowners to be held on April 25, 2003.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
                              DELTA AIR LINES, INC.

Forward-Looking Information

Statements in this Form 10-K (or otherwise made by Delta or on Delta's behalf)
which are not historical facts, including statements about Delta's 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 Delta's present expectations. Factors that could cause these differences
include, but are not limited to:

1.       The many effects on Delta and the airline industry from the terrorist
         attacks on the United States on September 11, 2001, including the
         following:

         -        The adverse impact of the terrorist attacks on the demand for
                  air travel;

         -        The change in Delta's operations and higher costs resulting
                  from, and customer reaction to, new airline and airport
                  security directives;

         -        The availability and cost of war and terrorism risk and other
                  insurance for Delta;

         -        Potential declines in the values of the aircraft in Delta's
                  fleet or facilities and any related asset impairment charges;

2.       The availability to Delta of financing on commercially reasonable
         terms, which may be influenced by, among other things, airline
         bankruptcies, the creditworthiness of the airline industry in general
         and Delta in particular, and actions by credit rating agencies;

3.       Continued geopolitical uncertainty, including additional terrorist
         activity and/or war with Iraq;

4.       General economic conditions, both in the United States and in our
         markets outside the United States;

5.       The willingness of customers to travel generally, and with Delta
         specifically, which could be affected by factors such as Delta's and
         the industry's safety record and geopolitical uncertainty;

6.       Competitive factors in our industry, such as airline bankruptcies, the
         airline pricing environment, the growth of low-cost carriers,
         international alliances, codesharing programs, capacity decisions by
         competitors and mergers and acquisitions;

7.       Outcomes of negotiations on collective bargaining agreements and other
         labor issues;

8.       Changes in the availability or cost of aircraft fuel or fuel hedges;


<PAGE>

9.       Disruptions to operations due to adverse weather conditions and air
         traffic control-related constraints;

10.      Actions by the United States or foreign governments, including the
         Federal Aviation Administration and other regulatory agencies; and

11.      The outcome of Delta's litigation.

Caution should be taken not to place undue reliance on Delta's forward-looking
statements, which represent Delta's views only as of the date of this Form 10-K,
and which Delta has no current intention to update.


                                       2
<PAGE>

                                     PART I

ITEM 1.  BUSINESS

General Description

         Delta Air Lines, Inc. ("Delta" or the "Company") is a major air carrier
that provides scheduled air transportation for passengers and cargo throughout
the United States and around the world. As of February 1, 2003, Delta (including
its wholly owned subsidiaries Atlantic Southeast Airlines, Inc. ("ASA") and
Comair, Inc. ("Comair")) served 219 domestic cities in 47 states, the District
of Columbia, Puerto Rico and the U.S. Virgin Islands, as well as 48 cities in 32
countries. Delta is managed as a single business unit.

         Based on calendar 2002 data, Delta is the second-largest airline in
terms of passengers carried, and third-largest as measured by operating revenues
and revenue passenger miles flown. Delta is the largest U.S. airline across the
transatlantic, offering the most daily flight departures, serving the largest
number of nonstop markets and carrying more passengers than any other U.S.
airline.

         For the year ended December 31, 2002, passenger revenues accounted for
93% of Delta's consolidated operating revenues. Cargo revenues and other sources
accounted for 7% of the Company's consolidated operating revenues for that
period. In 2002, Delta's operations in North America, the Atlantic, Latin
America and the Pacific accounted for 81%, 14%, 4% and 1%, respectively, of its
consolidated operating revenues.

         Delta is incorporated under the laws of the State of Delaware. Its
principal executive offices are located at Hartsfield Atlanta International
Airport in Atlanta, Georgia. Delta's telephone number is (404) 715-2600, and its
Internet address is "www.delta.com".

         Delta makes available free of charge on its website its Annual Report
on Form 10-K, its Quarterly Reports on Form 10-Q, its Current Reports on Form
8-K and amendments to those reports as soon as reasonably practicable after they
are filed with the Securities and Exchange Commission.

Business Environment

         Since the terrorist attacks on September 11, 2001, Delta and the
airline industry have faced unprecedented challenges. The industry has
experienced substantial revenue declines and cost increases, creating
industry-wide liquidity issues which have resulted in two major airlines filing
for bankruptcy. Information on these subjects is set forth under "Business
Environment" on pages 13-15 of Delta's 2002 Annual Report to Shareowners, and is
incorporated by reference.


                                       3
<PAGE>

Airline Operations

         An important characteristic of Delta's route network is its four hub
airports in Atlanta, Cincinnati, Dallas/Ft. Worth and Salt Lake City. Each of
these hub operations includes Delta flights that gather and distribute traffic
from markets in the geographic region surrounding the hub to other major cities
and to other Delta hubs. Delta's hub and spoke system also provides passengers
with access to Delta's principal international gateways in Atlanta and New York
- - John F. Kennedy International Airport ("JFK"). As briefly discussed below,
other key characteristics of Delta's route network include its alliances with
foreign airlines; the Delta Connection Program; the Delta Shuttle; Song(TM),
Delta's new low-fare service which will begin operations in April 2003; and
Delta's proposed marketing alliance with Continental Airlines and Northwest
Airlines.

         International Alliances. Delta has formed bilateral and multilateral
marketing alliances with foreign airlines to improve Delta's access to
international markets. These arrangements can include codesharing, frequent
flyer benefits, shared or reciprocal access to passenger lounges, joint
advertising and other marketing agreements.

         Delta's international codesharing agreements enable Delta to market and
sell seats to an expanded number of international destinations. Under
codesharing arrangements, Delta and the foreign carriers publish their
respective airline designator codes on a single flight operation, thereby
allowing Delta and the foreign carrier to offer joint service with one aircraft
rather than operating separate services with two aircraft. These arrangements
typically allow Delta to sell seats on the foreign carrier's aircraft that are
marketed under Delta's "DL" designator code and permit the foreign airline to
sell seats on Delta's aircraft that are marketed under the foreign carrier's
two-letter designator code. As of March 1, 2003, Delta has codeshare
arrangements in effect with Aerolitoral, Aeromexico, Air France (and certain of
Air France's affiliated carriers operating flights beyond Paris), Air Jamaica,
Alitalia, British European, China Southern, CSA Czech Airlines, El Al Israel
Airlines, Korean Air, Royal Air Maroc and South African Airways.

         Delta, Aeromexico, Air France, Alitalia, CSA Czech Airlines and Korean
Air are members of the SkyTeam international airline alliance. SkyTeam links the
route networks of the member airlines, providing opportunities for increased
connecting traffic while offering enhanced customer service through mutual
codesharing arrangements, reciprocal frequent flyer and lounge programs and
coordinated cargo operations. In 2002, Delta, its European SkyTeam partners and
Korean Air received antitrust immunity from the U.S. Department of
Transportation ("DOT"). The grant of antitrust immunity enables Delta and its
immunized partners to offer a more integrated route network, and develop common
sales, marketing and discount programs for customers.

         Delta Connection Program. The Delta Connection program is Delta's
regional carrier service, which feeds traffic to Delta's route system through
contracts with regional air carriers that operate flights serving passengers in
small and medium-sized cities. It enables Delta to increase the number of
flights in certain locations, to better match capacity with demand and to
preserve its presence in smaller markets.


                                       4
<PAGE>

         Delta has contractual arrangements with six regional carriers to
operate regional jet and turboprop aircraft using Delta's "DL" code. ASA and
Comair are wholly owned subsidiaries of Delta which operate all of their flights
under Delta's code. Delta has agreements with Atlantic Coast Airlines ("ACA"),
SkyWest Airlines ("SkyWest"), Chautauqua Airlines ("Chautauqua") and American
Eagle ("Eagle"), which operate some of their flights using Delta's code. For
information regarding Delta's agreements with ACA, SkyWest and Chautauqua, see
Note 9 of the Notes to the Consolidated Financial Statements on pages 48-50 of
Delta's 2002 Annual Report to Shareowners, which is incorporated by reference.

         Delta's contract with Eagle, which is limited to certain flights
operated to and from the Los Angeles International Airport, is structured as a
revenue proration agreement. The Delta-Eagle prorate arrangement establishes a
fixed dollar or percentage division of revenues for tickets sold to passengers
traveling on connecting flight itineraries.

         Delta Shuttle. The Delta Shuttle is the Company's high-frequency
service targeted to Northeast business travelers. It provides nonstop, hourly
service between New York - La Guardia Airport (Marine Air Terminal) and both
Boston - Logan International Airport and Washington, D.C. - Ronald Reagan
National Airport.

         Song. On January 29, 2003, Delta announced a new low-fare operation,
Song, that will primarily offer flights between cities in the Northeast United
States and Florida leisure destinations. Delta plans to operate the initial Song
flight in April 2003 and increase operations by October 2003 to 144 daily
flights using a fleet of 36 Boeing 757 aircraft. Song is designed to assist
Delta in competing more effectively with low-fare airlines in leisure markets
through a combination of larger aircraft, high frequency flights, advanced
in-flight entertainment technology and innovative product offerings. Song will
replace Delta Express, the Company's existing low-fare, leisure-oriented
service.

         Delta-Continental-Northwest Marketing Alliance. On August 22, 2002,
Delta entered into a marketing alliance with Continental Airlines and Northwest
Airlines which includes mutual codesharing, reciprocal frequent flyer and
airport lounge access arrangements. Delta's marketing relationship with
Continental and Northwest is designed to permit the carriers to retain their
separate identities and route networks while increasing the number of domestic
and international connecting passengers using the three carriers' route
networks. The implementation of the marketing alliance is subject to a number of
conditions, including approvals which have been obtained from the Delta and
Northwest pilot groups; review by the U.S. Department of Justice ("DOJ") and the
DOT; and the consent of certain of the international airline partners of the
three airlines. The DOJ reviewed the alliance arrangement pursuant to its
authority to enforce the antitrust laws and determined not to challenge the
alliance in January 2003 following the carriers' decision to accept certain DOJ
conditions. The DOT completed its initial review of the marketing arrangements
in January 2003 and proposed six conditions for the alliance. On February 28,
2003, after consultations with the DOT, the carriers submitted a proposal in
which they accepted three of the DOT's conditions and proposed alternative
language for three other conditions. On March 3, 2003, the DOT issued a notice
stating that it would consider the carriers' proposed language and reach a
decision within 30 days on whether the alternate conditions are satisfactory.
The current expectation is that the carriers should be in a position to



                                       5
<PAGE>

complete the DOT review process and obtain the international airline partner
consents in order to begin implementation of their marketing alliance during
2003.

Factors that Impact Demand for Air Travel

         Demand for air travel is affected by various factors, including
economic conditions, fare levels, terrorism fears, international hostilities,
airport security measures, seasonality and weather conditions. In addition,
demand for air travel at particular airlines may be impacted from time to time
by, among other things, actual or threatened disruptions to operations due to
labor issues. In general, demand for air travel is higher in the June and
September quarters, particularly in international markets, because there is more
vacation travel during these periods than during the remainder of the year. Due
to these and other factors, operating results for an interim period are not
necessarily indicative of operating results for an entire year, and operating
results for an historical period are not necessarily indicative of operating
results for a future period.

Regulatory Matters

         The DOT and the Federal Aviation Administration ("FAA") exercise
regulatory authority over air transportation in the United States. The DOT has
authority to issue certificates of public convenience and necessity required for
airlines to provide domestic air transportation. An air carrier which the DOT
finds "fit" to operate is given unrestricted authority to operate domestic air
transportation (including the carriage of passengers and cargo). Except for
constraints imposed by Essential Air Service regulations, which are applicable
to certain small communities, airlines may terminate service to a city without
restriction.

         The DOT has jurisdiction over certain economic and consumer protection
matters such as unfair or deceptive practices or methods of competition,
advertising, denied boarding compensation, baggage liability and disabled
passenger transportation. The DOT also has authority to review certain joint
venture agreements between major carriers. The FAA has primary responsibility
for matters relating to air carrier flight operations, including airline
operating certificates, control of navigable air space, flight personnel,
aircraft certification and maintenance, and other matters affecting air safety.

         Authority to operate international routes and international codesharing
arrangements are regulated by the DOT and by the foreign governments involved.
International route awards are also subject to the approval of the President of
the United States for conformance with national defense and foreign policy
objectives.

         The Transportation Security Administration, which became a division of
the Department of Homeland Security on March 1, 2003, is responsible for certain
civil aviation security matters, including passenger and baggage screening at
U.S. airports.


                                       6
<PAGE>

         Delta is also subject to various other federal, state, local and
foreign laws and regulations. The DOJ has jurisdiction over airline competition
matters. The U.S. Postal Service has authority over certain aspects of the
transportation of mail. Labor relations in the airline industry are generally
governed by the Railway Labor Act. Environmental matters are regulated by
various federal, state, local and foreign governmental entities.

Fares and Rates

         Airlines are permitted to set ticket prices in most domestic and
international city pairs without governmental regulation, and the industry is
characterized by significant price competition. Certain international fares and
rates are subject to the jurisdiction of the DOT and the governments of the
foreign countries involved. Most of Delta's tickets are sold by travel agents,
and fares are subject to commissions, overrides and discounts paid to travel
agents, brokers and wholesalers.

Route Authority

         Delta's flight operations are authorized by certificates of public
convenience and necessity and, to a limited extent, by exemptions issued by the
DOT. The requisite approvals of other governments for international operations
are provided by bilateral agreements with, or permits or approvals issued by,
foreign countries. Because international air transportation is governed by
bilateral or other agreements between the United States and the foreign country
or countries involved, changes in United States or foreign government aviation
policies could result in the alteration or termination of such agreements,
diminish the value of Delta's international route authorities or otherwise
affect Delta's international operations. Bilateral agreements between the United
States and various foreign countries served by Delta are subject to
renegotiation from time to time.

         Certain of Delta's international route and codesharing authorities are
subject to periodic renewal requirements. Delta requests extension of these
authorities when and as appropriate. While the DOT usually renews temporary
authorities on routes where the authorized carrier is providing a reasonable
level of service, there is no assurance of this result. Dormant route authority
may not be renewed in some cases, especially where another U.S. carrier
indicates a willingness to provide service.

Competition

         Delta faces significant competition with respect to domestic and
international routes, services and fares. All domestic routes served by Delta
are subject to competition from both new and existing carriers, and service over
virtually all of Delta's domestic routes is highly competitive. On most domestic
and international routes, the Company competes with at least one, and usually
more than one, scheduled passenger airline. Delta also competes with all-cargo
carriers, charter airlines and, particularly on its shorter routes, with surface
transportation.


                                       7
<PAGE>

         The continuing growth of low-cost carriers in the United States places
significant competitive pressures on Delta and other network carriers. A number
of low-cost carriers, including Southwest Airlines, AirTran Airways and JetBlue
Airways, are offering increased seat capacity in Delta's markets. Delta's
ability to compete effectively with low-cost carriers depends, in part, on its
ability to achieve operating costs per available seat mile ("unit costs") that
are competitive with those carriers. Delta's unit costs are higher than those of
Southwest, AirTran and JetBlue.

         International marketing alliances formed by domestic and foreign
carriers, such as the Star Alliance (among United Airlines, Lufthansa German
Airlines and others), the oneworld alliance (among American Airlines, British
Airways and others) and the Wings Alliance (between Northwest Airlines and
KLM-Royal Dutch Airlines), have significantly increased competition in
international markets. Through marketing and codesharing arrangements with U.S.
carriers, foreign carriers have obtained access to interior U.S. passenger
traffic. Similarly, U.S. carriers have increased their ability to sell
international transportation such as transatlantic services to and beyond
European cities through alliances with international carriers.

         The airline industry is characterized by substantial price competition.
If price reductions are not offset by increases in traffic or changes in the mix
of traffic that improve Delta's passenger mile yield, Delta's operating results
will be adversely impacted.

         Delta regularly monitors competitive developments in the airline
industry, and evaluates its strategic alternatives. These strategic alternatives
include, among other things, internal growth, codesharing arrangements,
marketing alliances, joint ventures, and mergers and acquisitions. Delta's
evaluations involve internal analysis and, where appropriate, discussions with
third parties.

Airport Access

         Operations at three major U.S. airports and certain foreign airports
served by Delta are regulated by governmental entities through "slot"
allocations. Each slot represents the authorization to land at, or take off
from, the particular airport during a specified time period.

         In the United States, the FAA currently regulates slot allocations at
JFK and La Guardia Airport in New York and Ronald Reagan National Airport in
Washington, D.C. Delta's operations at those three airports generally require
slot allocations. Under legislation enacted by Congress, slot rules will be
phased out at JFK and La Guardia Airport by 2007.

        Delta currently has sufficient slot authorizations to operate its
existing flights, and has generally been able to obtain slots to expand its
operations and to change its schedules. There is no assurance, however, that
Delta will be able to obtain slots for these purposes in the future because,
among other reasons, slot allocations are subject to changes in governmental
policies.


                                       8
<PAGE>

Possible Legislation or DOT Regulation

         A number of Congressional bills and proposed DOT regulations have been
considered in recent years to address airline competition issues. Some of these
proposals would require large airlines with major operations at certain airports
to divest or make available to other airlines slots, gates, facilities and other
assets at those airports. Other measures would limit the service or pricing
responses of major carriers that appear to target new entrant airlines. In
addition, concerns about airport congestion issues have caused the DOT and FAA
to consider various proposals for access to certain airports, including
"congestion-based" landing fees and programs that would regularly withdraw slots
from existing carriers and reallocate those slots (either by lottery or auction)
to the highest bidder or to carriers with little or no current presence at such
airports. These proposals, if enacted, could negatively impact Delta's existing
services and its ability to respond to competitive actions by other airlines.

Worldspan

         Delta owns 40% of WORLDSPAN, L.P. ("Worldspan"), a Delaware limited
partnership which operates and markets a computer reservation system ("CRS") and
related systems for the travel industry. Northwest Airlines and American
Airlines own 34% and 26%, respectively, of Worldspan.

         On March 3, 2003, Delta, Northwest and American entered into an
agreement to sell their equity interests in Worldspan to a third party. The
completion of this transaction is subject to financing, governmental and
regulatory approvals and other customary closing conditions, the satisfaction of
which cannot be guaranteed.

         CRS services are used primarily by travel agents to book airline,
hotel, car rental and other travel reservations and issue airline tickets. The
CRS industry is highly competitive. CRS services are provided by several
companies in the United States and worldwide. In the United States, other CRS
competitors are SABRE, Galileo International and AMADEUS. CRS vendors are
subject to regulations promulgated by the DOT and certain foreign governments.

Orbitz

         Delta owns approximately 18% of Orbitz, LLC ("Orbitz"), a Delaware
limited liability company which operates an online travel agency that offers
travel services to consumers and business customers via the Internet. American
Airlines, Continental Airlines, Northwest Airlines and United Airlines also hold
ownership interests in Orbitz.

         Consumers use online travel agents for making reservations and
purchasing airline tickets, hotel rooms, rental cars and travel-related
products. The three largest online travel agents in the United States are
Expedia, Travelocity and Orbitz. Online travel agents compete with one another,
with airline websites, with traditional travel agents and with other travel
service providers for travel-related reservations and bookings.


                                       9
<PAGE>

Fuel

         Delta's results of operations can be significantly impacted by changes
in the price and availability of aircraft fuel. The following table shows
Delta's aircraft fuel consumption and costs for 2000-2002.
<TABLE>
<CAPTION>
                                                                                                 Percent of Total
                         Gallons Consumed            Cost (1)            Average Price               Operating
      Year                  (Millions)              (Millions)          Per Gallon(1)                Expenses
                         ----------------           ----------          --------------           ----------------
      <S>                <C>                        <C>                 <C>                      <C>
      2000                    2,922                  $ 1,969                67.38(cent)              13%
      2001                    2,649                    1,817                68.60                    12
      2002                    2,514                    1,683                66.94                    12
</TABLE>

- -------------

(1)      Net of fuel hedge gains under Delta's fuel hedging program.

         Aircraft fuel expense decreased 7% in 2002 compared to 2001. Total
gallons consumed decreased 5% mainly due to capacity reductions. The average
fuel price per gallon fell 2% to 66.94(cent). Delta's fuel cost is shown net of
fuel hedge gains of $136 million for 2002 and $299 million for 2001.
Approximately 56% and 58% of Delta's aircraft fuel requirements were hedged
during 2002 and 2001, respectively.

         Delta's aircraft fuel purchase contracts do not provide material
protection against price increases or for assured availability of supplies. The
Company purchases most of its aircraft fuel from petroleum refiners under
contracts which establish the price based on various market indices. Delta also
purchases aircraft fuel on the spot market, from off-shore sources and under
contracts which permit the refiners to set the price and give the Company the
right to terminate upon short notice if the price is unacceptable.

         Delta periodically enters into heating and crude oil derivative
contracts to manage the risk associated with changes in aircraft fuel prices.
Information regarding Delta's fuel hedging program is set forth under "Aircraft
Fuel Price Risk" on pages 23-24, and in Notes 3 and 4 of the Notes to the
Consolidated Financial Statements on pages 39-41, of Delta's 2002 Annual Report
to Shareowners, and is incorporated by reference.

        Although Delta is currently able to obtain adequate supplies of jet
fuel, it is not possible to predict the future availability or price of aircraft
fuel. Political disruptions in oil producing countries, changes in government
policy concerning aircraft fuel production, transportation or marketing, changes
in aircraft fuel production capacity, environmental concerns and other
unpredictable events may result in fuel supply shortages and fuel price
increases in the future.

Employee Matters

         Railway Labor Act. Delta's relations with labor unions in the United
States are governed by the Railway Labor Act. Under the Railway Labor Act, a
labor union seeking to represent an unrepresented craft or class of employees is
required to file with the National Mediation Board ("NMB") an application
alleging a representation dispute, along with authorization cards signed by at
least 35% of the employees in that craft or class. The NMB then investigates the
dispute


                                       10
<PAGE>

and, if it finds the labor union has obtained a sufficient number of
authorization cards, conducts an election to determine whether to certify the
labor union as the collective bargaining representative of that craft or class.
Under the NMB's usual rules, a labor union will be certified as the
representative of the employees in a craft or class only if more than 50% of
those employees vote for union representation.

         Under the Railway Labor Act, a collective bargaining agreement between
an airline and a labor union does not expire, but instead becomes amendable as
of a stated date. Either party may request the NMB to appoint a federal mediator
to participate in the negotiations for a new or amended agreement. If no
agreement is reached in mediation, the NMB may determine, at any time, that an
impasse exists and offer binding arbitration. If either party rejects binding
arbitration, a 30-day "cooling off" period begins. At the end of this 30-day
period, the parties may engage in "self help," unless the President of the
United States appoints a Presidential Emergency Board ("PEB") to investigate and
report on the dispute. The appointment of a PEB maintains the "status quo" for
an additional 60 days. If the parties do not reach agreement during this period,
the parties may then engage in "self help." "Self help" includes, among other
things, a strike by the union or the imposition of proposed changes to the
collective bargaining agreement by the airline. Congress and the President have
the authority to prevent "self help" by enacting legislation which, among other
things, imposes a settlement on the parties.

        Collective Bargaining. At December 31, 2002, Delta, ASA and Comair had a
total of 75,100 full-time equivalent employees. Approximately 18% of these
employees are represented by unions. The following table presents certain
information concerning the union representation of domestic employees of Delta,
ASA and Comair.

<TABLE>
<CAPTION>
                                                                                                AMENDABLE DATE OF
                                 APPROXIMATE NUMBER OF                                        COLLECTIVE BARGAINING
      EMPLOYEE GROUP             EMPLOYEES REPRESENTED                   UNION                      AGREEMENT
- ---------------------------- -----------------------------  --------------------------------- -------------------------
<S>                          <C>                            <C>                                <C>
Delta Pilots                              7,930             Air Line Pilots Association,       May 1, 2005
                                                            International
- ---------------------------- ----------------------------- --------------------------------- -------------------------
Delta Flight                                190             Professional Airline Flight        December 31, 2004
Superintendents                                             Control Association
- ---------------------------- ----------------------------- --------------------------------- -------------------------
ASA Pilots                                1,520             Air Line Pilots Association,       September 15, 2002
                                                            International
- ---------------------------- ----------------------------- --------------------------------- -------------------------
ASA Flight Attendants                       775             Association of Flight              September 26, 2003
                                                            Attendants
- ---------------------------- ----------------------------- --------------------------------- -------------------------
ASA Flight Dispatchers                       70             Professional Airline Flight        April 18, 2006
                                                            Control Association
- ---------------------------- ----------------------------- --------------------------------- -------------------------
Comair Pilots                             1,530             Air Line Pilots Association,       May 21, 2006
                                                            International
- ---------------------------- ----------------------------- --------------------------------- -------------------------
Comair Maintenance                          430             International Association of       May 31, 2004
Employees                                                   Machinists and Aerospace
                                                            Workers
- ---------------------------- ----------------------------- --------------------------------- -------------------------
Comair Flight Attendants                    770             International Brotherhood of       July 19, 2007
                                                            Teamsters
- ---------------------------- ----------------------------- --------------------------------- -------------------------
</TABLE>

         ASA is in collective bargaining negotiations with the Air Line Pilots
Association, International, which represents ASA's approximately 1,520 pilots.
The outcome of these collective bargaining negotiations cannot presently be
determined.


                                       11
<PAGE>

         Labor unions are engaged in organizing efforts to represent various
groups of employees of Delta, ASA and Comair who are not represented for
collective bargaining purposes. The outcome of these organizing efforts cannot
presently be determined.

         Pilot Furloughs. The collective bargaining agreement between Delta and
the Air Line Pilots Association, International ("ALPA"), the union representing
Delta pilots, generally provides that no pilot on the seniority list as of July
1, 2001 will be furloughed unless the furlough is caused by a circumstance
beyond Delta's control, as defined in that agreement. In April 2002, an
arbitrator upheld Delta's right to furlough up to 1,400 pilots on the basis that
the September 11, 2001 terrorist attacks and the resulting reduction in
passenger traffic constituted a circumstance beyond Delta's control as set out
in the collective bargaining agreement. The arbitrator retained jurisdiction
over this matter to consider any issues that might arise regarding the Company's
plans to continue the furloughs, or its obligation to implement reasonable
mechanisms for recalling furloughed pilots, if the conditions existing as of
September 11, 2001 were ameliorated to an extent that exceeded Delta's original
expectations. On February 13, 2003, the arbitrator issued a supplemental
opinion, ruling (1) that furloughs will be capped at 1,060, the number of pilots
currently furloughed; (2) that Delta will not have to begin recalling any of the
existing furloughed pilots until system traffic exceeds pre-September 11, 2001
levels; and (3) that the recall schedule will be subject to the Company's
training capacity. While this ruling will result in the retention of some pilots
in excess of its needs, Delta believes the ruling will not have a material
adverse effect on Delta.

Environmental Matters

         The Airport Noise and Capacity Act of 1990 (the "ANCA") recognizes the
rights of operators of airports with noise problems to implement local noise
abatement procedures so long as such procedures do not interfere unreasonably
with interstate or foreign commerce or the national air transportation system.
It generally provides that local noise restrictions on Stage 3 aircraft first
effective after October 1, 1990, require FAA approval. While Delta has had
sufficient scheduling flexibility to accommodate local noise restrictions in the
past, Delta's operations could be adversely impacted if locally-imposed
regulations become more restrictive or widespread.

         The United States Environmental Protection Agency (the "EPA") is
authorized to regulate aircraft emissions. Delta's aircraft comply with the
applicable EPA standards.

         In February 1998, the EPA and the FAA signed a Memorandum of Agreement
("MOA") to develop a voluntary process with the airline industry to reduce
emissions that lead to ozone formation. The MOA includes a proposal with a
voluntary engine modification program to reduce emissions from aircraft engines.
As a result of the MOA, air carriers, the EPA, the FAA and local and state
regulators are evaluating potential options for emission reductions from airport
activities, including aircraft engine emissions reductions and
alternative-fueled ground service equipment, but no conclusion or agreement has
been reached. In addition to the MOA, Delta has agreed to reduce emissions at
certain airports by utilizing alternative-fueled ground service equipment.


                                       12
<PAGE>

         In April 2001, Miami-Dade County filed a lawsuit, which is titled
Miami-Dade County, Florida v. Advance Cargo Services, Inc., et al., in Florida
Circuit Court against 17 defendants, including Delta, alleging responsibility
for past and future environmental cleanup costs at the Miami International
Airport. The County also provided notice to over 200 other potentially
responsible parties seeking to recover past and future cleanup costs. The County
is continuing to investigate and remediate various environmental conditions at
the airport. At this time, it is not possible to reasonably estimate Delta's
potential exposure in this matter due to a number of issues, including
uncertainties regarding the contamination at the airport, the extent of
remediation required and the County's potential recovery from responsible
parties. Delta is vigorously defending the lawsuit.

         Delta has been identified by the EPA as a potentially responsible party
(a "PRP") with respect to certain Superfund Sites, and has entered into consent
decrees regarding some of these sites. Delta's alleged disposal volume at each
of these sites is small when compared to the total contributions of all PRPs at
each site. Delta is aware of soil and/or ground water contamination present on
its current or former leaseholds at several domestic airports; to address this
contamination, the Company has a program in place to investigate and, if
appropriate, remediate these sites. Delta believes that the resolution of these
matters will not have a material adverse effect on its consolidated financial
statements.

Frequent Flyer Program

         Delta has a frequent flyer program, the SkyMiles(R) program, offering
incentives to increase travel on Delta. This program allows participants to earn
mileage for travel awards by flying on Delta, Delta Connection carriers and
participating airlines. Mileage credit may also be earned by using certain
services offered by program partners such as credit card companies, hotels, car
rental agencies, telecommunication services and internet services. In addition,
Delta has programs under which individuals and companies may purchase mileage
credits. Delta reserves the right to terminate the program with six months
advance notice, and to change the program's terms and conditions at any time
without notice.

         Mileage credits can be redeemed for free or upgraded air travel on
Delta and participating airline partners, for membership in Delta's Crown Room
Club and for other program partner awards. Travel awards are subject to certain
transfer restrictions and capacity-controlled seating. In some cases, blackout
dates may apply. Miles earned prior to May 1, 1995 do not expire so long as
Delta has a frequent flyer program. Miles earned or purchased on or after May 1,
1995 will not expire as long as, at least once every three years, the
participant (1) takes a qualifying flight on Delta or a Delta Connection
carrier; (2) earns miles through one of Delta's program partners; or (3) redeems
miles for any program award.

        Delta accounts for its frequent flyer program obligations by recording a
liability for the estimated incremental cost of travel awards the Company
expects to be redeemed. The estimated incremental cost associated with a travel
award does not include any contribution to overhead or profit. Such incremental
cost is based on Delta's system average cost per passenger for fuel, food and
other direct passenger costs. Delta does not record a liability for mileage
earned by participants who have not reached the level to become eligible for a
free travel award. Delta believes this is appropriate because the large majority
of these participants are not expected to


                                       13
<PAGE>

earn a travel award. Delta does not record a liability for the expected
redemption of miles for non-travel awards since the cost of these awards to
Delta is negligible.

         Delta estimated the potential number of round-trip travel awards
outstanding under its frequent flyer program to be 13.7 million, 13.1 million
and 12.2 million at December 31, 2002, 2001 and 2000, respectively. Of these
travel awards, Delta expected that approximately 10.0 million, 9.6 million, and
9.2 million, respectively, would be redeemed. At December 31, 2002, 2001 and
2000, Delta had recorded a liability for these awards of $228 million, $226
million and $199 million, respectively. The difference between the round-trip
awards outstanding and the awards expected to be redeemed is the estimate, based
on historical data, of awards which will (1) never be redeemed; or (2) be
redeemed for something other than award travel.

         Frequent flyer program participants flew 2.8 million, 2.4 million and
2.3 million award round-trips on Delta in 2002, 2001 and 2000, respectively.
These round-trips accounted for approximately 9%, 8% and 7% of the total
passenger miles flown for 2002, 2001 and 2000, respectively. Delta believes that
the relatively low percentage of passenger miles flown by SkyMiles members
traveling on program awards and the restrictions applied to travel awards
minimize the displacement of revenue passengers.

Civil Reserve Air Fleet Program

         Delta participates in the Civil Reserve Air Fleet ("CRAF") program,
which permits the U.S. military to use the aircraft and crew resources of
participating U.S. airlines during airlift emergencies, national emergencies or
times of war. Delta has agreed to make available under the CRAF program, during
the period October 1, 2002 through September 30, 2003, up to 100% of its
international range aircraft. As of March 27, 2003, the following number of
Delta aircraft are available for CRAF activation:

<TABLE>
<CAPTION>


                                                    Number of
                                                  International            Number of
                                                    Passenger             Aeromedical                Total
                Description of Event                Aircraft               Aircraft                 Aircraft
  Stage         Leading to Activation               Allocated              Allocated                by Stage
- ---------       ---------------------------       -------------          --------------             --------
<S>             <C>                               <C>                    <C>                        <C>
      I         Minor Crisis                            3                Not Applicable                3

      II        Major Theater Conflict                  11                     19                     30

     III        Total National Mobilization             37                     35                     72
</TABLE>

On February 8, 2003, the CRAF program was activated at Stage I. Delta
anticipates no material impact on its operations as a result of this activation.



                                       14
<PAGE>


ITEM 2.  PROPERTIES

Flight Equipment

         Information relating to Delta's aircraft fleet is set forth under
"Delta's Aircraft Fleet" on page 70, and in Notes 7 and 9 of the Notes to the
Consolidated Financial Statements on pages 47-50, of Delta's 2002 Annual Report
to Shareowners, and is incorporated by reference.

Ground Facilities

         Delta leases most of the land and buildings that it occupies. The
Company's largest aircraft maintenance base, various computer, cargo, flight
kitchen and training facilities and most of its principal offices are located at
or near Hartsfield Atlanta International Airport in Atlanta, Georgia, on land
leased from the City of Atlanta generally under long-term leases. Delta owns a
portion of its principal offices, its Atlanta reservations center and other
improved and unimproved real property in Atlanta, as well as a limited number of
radio transmitting and receiving sites and certain other facilities.

         Delta leases ticket counter and other terminal space, operating areas
and air cargo facilities in most of the airports which it serves. These leases
generally run for periods of less than one year to thirty years or more, and
often contain provisions for periodic adjustment of lease rates. At most
airports which it serves, Delta has entered into use agreements which provide
for the non-exclusive use of runways, taxiways, and other facilities; landing
fees under these agreements normally are based on the number of landings and
weight of aircraft. The Company also leases aircraft maintenance facilities at
certain airports; these leases generally require Delta to pay the cost of
providing, operating and maintaining such facilities. In addition to its Atlanta
maintenance base, Delta's other major aircraft maintenance facilities are
located at Cincinnati/Northern Kentucky International Airport, Dallas/Ft. Worth
International Airport and Salt Lake City International Airport. Delta leases
marketing, ticket and reservations offices in certain major cities which it
serves; these leases are generally for shorter terms than the airport leases.
Additional information relating to Delta's ground facilities is set forth in
Note 7 of the Notes to the Consolidated Financial Statements on page 47 of
Delta's 2002 Annual Report to Shareowners, and is incorporated by reference.

        In recent years, some airports have increased or sought to increase the
rates charged to airlines to levels that, in the airlines' opinion, are
unreasonable. The extent to which such charges are limited by statute or
regulation and the ability of airlines to contest such charges has been subject
to litigation and to administrative proceedings before the DOT. If the
limitations on such charges are relaxed, or the ability of airlines to challenge
such charges is restricted, the rates charged by airports to airlines may
increase substantially.

         The City of Atlanta, with the support of Delta and other airlines, has
begun a ten year capital improvement program (the "CIP") at Hartsfield Atlanta
International Airport. Implementation of the CIP should increase the number of
flights that may operate at the airport and reduce flight delays. The CIP
includes, among other things, a new approximately 9,000 foot full-service runway
(targeted for completion in May 2006), related airfield improvements, additional
terminal and gate capacity, new cargo and other support facilities and roadway
and


                                       15
<PAGE>

other infrastructure improvements. If fully implemented, the CIP is currently
estimated to cost approximately $5.4 billion. The CIP runs through 2010, with
individual projects scheduled to be constructed at different times. A
combination of federal grants, passenger facility charge revenues, increased
user rentals and fees, and other airport funds are expected to be used to pay
CIP costs directly and through the payment of debt service on bonds. There is no
assurance the CIP will be implemented on schedule and within budget, or that it
will be fully implemented. Failure to implement certain portions of the CIP in a
timely manner could adversely impact Delta's operations at Hartsfield Atlanta
International Airport.

         During 2001, Delta entered into lease and financing agreements with the
Massachusetts Port Authority ("Massport") for the redevelopment and expansion of
Terminal A at Boston's Logan International Airport. The completion of this
project will enable Delta to consolidate all of its domestic operations at that
airport into one location. Construction began in the June 2002 quarter and is
scheduled to be completed during 2005. Project costs will be funded with $498
million in proceeds from Special Facilities Revenue Bonds issued by Massport on
August 16, 2001. Delta agreed to pay the debt service on the bonds under a
long-term lease agreement with Massport and issued a guarantee to the bond
trustee covering the payment of the debt service on the bonds. Additional
information about these bonds is set forth in Note 6 of the Notes to the
Consolidated Financial Statements on pages 43-46 of Delta's 2002 Annual Report
to Shareowners, and is incorporated by reference.

ITEM 3.  LEGAL PROCEEDINGS

         In Re Northwest Airlines, et al. Antitrust Litigation. In June 1999,
two purported class action antitrust lawsuits were filed in the U.S. District
Court for the Eastern District of Michigan against Delta, US Airways, Northwest
Airlines and the Airlines Reporting Corporation, an airline-owned company that
operates a centralized clearinghouse for travel agents to report and account for
airline ticket sales.

         In the first case, the plaintiffs allege, among other things: (1) that
the defendants and certain other airlines conspired with Delta in violation of
Section 1 of the Sherman Act to restrain competition and assist Delta in fixing
and maintaining anticompetitive prices for air passenger service to and from its
Atlanta and Cincinnati hubs; and (2) that Delta violated Section 2 of the
Sherman Act by exercising monopoly power to establish such prices in an
anticompetitive or exclusionary manner. The complaint asserts that, for purposes
of plaintiffs' damages claims, the purported plaintiff class consists of all
persons who purchased a Delta full-fare ticket between June 11, 1995 and the
present on routes (1) that start or end at Delta's hubs in Atlanta or
Cincinnati; (2) on which Delta has over a 50% market share; (3) that are longer
than 150 miles; and (4) that have total annual traffic of over 30,000
passengers.

         In the second case, the plaintiffs assert similar allegations and
claims under Sections 1 and 2 of the Sherman Act with respect to US Airways'
pricing practices at its Pittsburgh and Charlotte hubs ("US Airways Hubs"). The
complaint asserts, among other things, that Delta, the other defendants and
certain other airlines conspired with US Airways to restrain competition and
assist US Airways in fixing and maintaining prices for air passenger service to
and from the US Airways Hubs.


                                       16
<PAGE>

         In both cases, plaintiffs have requested a jury trial, and are seeking
in their complaints injunctive relief; costs and attorneys' fees; and
unspecified damages, to be trebled under the antitrust laws. In May 2002, the
District Court granted the plaintiffs' motion for class action certification and
denied the airlines' motions for summary judgment. The U.S. Court of Appeals for
the Sixth Circuit refused to hear the airlines' interlocutory appeal of the
District Court's order granting class action certification. The trial for this
lawsuit has not yet been scheduled.

         Hall, et al. v. United Airlines, et al. In January 2002, a travel agent
in North Carolina filed an amended purported class action lawsuit against
numerous airlines, including Delta, in the U.S. District Court for the Eastern
District of North Carolina on behalf of all travel agents in the United States
which sold tickets from September 1, 1997 to the present on any of the defendant
airlines. The lawsuit alleges that Delta and the other airline defendants
conspired to fix travel agent commissions in violation of Section 1 of the
Sherman Act. The plaintiff, who has requested a jury trial, is seeking in its
complaint injunctive relief; costs and attorneys' fees; and unspecified damages,
to be trebled under the antitrust laws.

         In September 2002, the District Court granted the plaintiff's motion
for class action certification, certifying a class consisting of all travel
agents in the United States, Puerto Rico and the U.S. Virgin Islands which sold
tickets on the defendant airlines between 1997 and 2002. In December 2002, the
airline defendants filed motions for summary judgment which are pending before
the District Court. The trial of this lawsuit is scheduled to begin in September
2003. Similar litigation alleging violations under Canadian competition law is
pending against Delta and other airlines in Canada.

         Albany Travel Company, et al. v. Orbitz LLC, et al. In April 2002, six
travel agencies filed a purported class action lawsuit in the U.S. District
Court for the Central District of California against Delta, American Airlines,
United Airlines and Orbitz, LLC on behalf of an alleged nationwide class of
traditional travel agents. The lawsuit alleges that the defendants violated
Sections 1 and 2 of the Sherman Act by conspiring (1) to prevent travel agents
from acting as effective competitors in the distribution of airline tickets to
passengers; and (2) to monopolize the distribution of common carrier air travel
in the United States. The plaintiffs, who have requested a jury trial, are
seeking in their complaint injunctive relief; costs and attorneys' fees; and
unspecified damages, to be trebled under the antitrust laws. The District Court
granted the airlines' motion to stay this lawsuit pending a final judgment in
the Hall v. United Airlines case described above because both lawsuits involve
substantially similar claims.

         All Direct Travel, Inc., et al. v. Delta Air Lines, et al. Two travel
agencies have filed a purported class action lawsuit against Delta in the U.S.
District Court for the Central District of California on behalf of all travel
agencies from which Delta has demanded payment for breach of the agencies'
contractual and fiduciary duties to Delta in connection with Delta ticket sale
transactions during the period from September 20, 1997 to the present. The
lawsuit alleges that Delta's conduct (1) violates the Racketeer Influenced and
Corrupt Organizations Act of 1970; and (2) creates liability for unjust
enrichment. The plaintiffs, who have requested a jury trial, are seeking in
their complaint injunctive and declaratory relief; costs and attorneys fees; and
unspecified treble damages.


                                       17
<PAGE>

         In January 2003, the District Court denied the plaintiffs' motion for
class action certification. Plaintiffs have filed a petition for review of this
order with the U.S. Court of Appeals for the Ninth Circuit, which has not yet
decided whether to permit this interlocutory appeal. Delta has filed with the
District Court a motion for summary judgment which is pending. The trial of this
lawsuit is scheduled to begin in November 2003.

         Power Travel International, Inc., et al. v. American Airlines, et al.
In August 2002, a travel agency filed a purported class action lawsuit in New
York state court against Delta, American Airlines, Continental Airlines,
Northwest Airlines, United Airlines and JetBlue Airways, on behalf of an alleged
nationwide class of U.S. travel agents. JetBlue has been dismissed from the
case, and the remaining defendants removed the action to the U.S. District Court
for the Southern District of New York. The lawsuit alleges that the defendants
breached their contracts with and their duties of good faith and fair dealing to
U.S. travel agencies when these airlines discontinued the payment of published
base commissions to U.S. travel agencies at various times beginning in March
2002. The plaintiffs' complaint seeks unspecified damages, as well as
declaratory and injunctive relief. The defendants have filed a motion to dismiss
this lawsuit, which is pending before the District Court. Similar litigation
involving contract claims alleged under the agency agreements applicable to
Canadian travel agents is pending against Delta and other airlines in Canada.

         Jeans v. Delta Air Lines, Inc. In May 2000, an individual filed an
amended class action lawsuit against Delta in the Circuit Court of Jackson
County, Missouri on behalf of all persons who relinquished their seats on an
overbooked Delta flight in exchange for a travel voucher that may be redeemed
for a round-trip, economy class Delta ticket. The complaint asserts claims for
fraud, breach of contract and unjust enrichment. It alleges, among other things,
that Delta failed to disclose that it limits the number of seats on each flight
that may be obtained by redeeming travel vouchers. The plaintiff, who has
requested a jury trial, is seeking unspecified damages. In January 2003, the
Circuit Court granted Delta's motion for summary judgment dismissing the
plaintiff's claims. The plaintiff has appealed to the Missouri Court of Appeals.

         Multidistrict Pilot Retirement Plan Litigation. During the June 2001
quarter, the Delta Pilots Retirement Plan ("Retirement Plan") and related
non-qualified pilot retirement plans sponsored and funded by Delta were named as
defendants in five purported class action lawsuits filed in federal district
courts in California, Massachusetts, Ohio, New Mexico and New York. The
complaints (1) seek to assert claims on behalf of a class consisting of certain
groups of retired and active Delta pilots; (2) allege that the calculation of
the retirement benefits of the plaintiffs and the class violated the Retirement
Plan and the Internal Revenue Code; and (3) seek unspecified damages. In October
2001, the Judicial Panel on Multidistrict Litigation granted Delta's motion to
transfer these cases to the U.S. District Court for the Northern District of
Georgia for coordinated pretrial proceedings. Discovery in these cases is
proceeding.

                                      * * *


                                       18
<PAGE>

         An adverse decision in any of these cases could result in substantial
damages against Delta. Delta is vigorously defending these lawsuits. Although
the ultimate outcome of these matters cannot be predicted with certainty,
management believes that the resolution of these actions will not have a
material adverse effect on Delta's consolidated financial statements.

         For a discussion of certain environmental matters, see "ITEM 1.
Business - Environmental Matters" on pages 12-13 of this Form 10-K.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         Not Applicable.

EXECUTIVE OFFICERS OF THE REGISTRANT

         Certain information concerning Delta's executive officers follows.
Unless otherwise indicated, all positions shown are with Delta. There are no
family relationships between any of Delta's executive officers.


Leo F. Mullin              Chairman of the Board and Chief Executive Officer,
                           January 2000 to date; Chairman of the Board,
                           President and Chief Executive Officer, October 1999
                           to January 2000; President and Chief Executive
                           Officer, August 1997 to October 1999. Mr. Mullin was
                           Vice Chairman of Unicom Corporation and its principal
                           subsidiary, Commonwealth Edison Company, from 1995 to
                           August 1997. He was an executive of First Chicago
                           Corporation from 1981 to 1995, serving as that
                           company's President and Chief Operating Officer from
                           1993 to 1995. Age 60.

Frederick W. Reid          President and Chief Operating Officer, May 2001 to
                           date; Executive Vice President and Chief Marketing
                           Officer, July 1998 to May 2001. Mr. Reid was an
                           executive of Lufthansa German Airlines from 1991 to
                           June 1998, serving as President and Chief Operating
                           Officer from April 1997 to June 1998, as Executive
                           Vice President from 1996 to March 1997, and as Senior
                           Vice President, The Americas, from 1991 to 1996. Age
                           52.

M. Michele Burns           Executive Vice President and Chief Financial Officer,
                           August 2000 to date; Senior Vice President - Finance
                           and Treasurer, February 2000 to August 2000; Vice
                           President - Finance and Treasurer, September 1999 to
                           February 2000; Vice President - Corporate Tax,
                           January 1999 to September 1999. Ms. Burns was a
                           partner at Arthur Andersen LLP from 1991 to January
                           1999. Age 45.


                                       19
<PAGE>

Robert L. Colman           Executive Vice President - Human Resources, October
                           1998 to date. Mr. Colman was an executive of General
                           Electric Corporation from October 1993 to October
                           1998, serving as Vice President - Human Resources for
                           General Electric Aircraft Engines Business. Age 57.

Vicki B. Escarra           Executive Vice President and Chief Marketing Officer,
                           May 2001 to date; Executive Vice President - Customer
                           Service, July 1998 to May 2001; Senior Vice President
                           - Airport Customer Service, November 1996 through
                           June 1998; Vice President - Airport Customer Service,
                           August 1996 through October 1996; Vice President -
                           Reservation Sales and Distribution Planning, May 1996
                           through July 1996; Vice President - Reservation
                           Sales, November 1994 to May 1996. Age 50.

                                     PART II


ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

         Information required by this item is set forth in Note 12 of the Notes
to the Consolidated Financial Statements on pages 55-57, and under "Common
Stock" and "Market Prices and Dividends" on page 69, of Delta's 2002 Annual
Report to Shareowners, and on page 30 of Delta's Proxy Statement dated March 25,
2003, and is incorporated by reference.

ITEM 6.  SELECTED FINANCIAL DATA

         Information required by this item is set forth on page 68 of Delta's
2002 Annual Report to Shareowners, and is incorporated by reference.

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITION AND RESULTS OF OPERATIONS

         Information required by this item is set forth under "Management's
Discussion and Analysis of Financial Condition and Results of Operations" on
pages 13-25, and in the related "Glossary of Defined Terms" on page 12, of
Delta's 2002 Annual Report to Shareowners, and is incorporated by reference.

                                       20

<PAGE>


ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

        Information required by this item is set forth under "Market Risks
Associated With Financial Instruments" on pages 23-24, and in Notes 1, 2, 3 and
4 of the Notes to the Consolidated Financial Statements on pages 31-41 of
Delta's 2002 Annual Report to Shareowners, and is incorporated by reference.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         Information required by this item is set forth on pages 26-67 of
Delta's 2002 Annual Report to Shareowners, and is incorporated by reference.

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

         The Audit Committee of Delta's Board of Directors annually considers
and recommends to the Board the selection of Delta's independent auditors. As
recommended by the Audit Committee, the Board of Directors on March 6, 2002
decided to no longer engage Arthur Andersen LLP ("Andersen") as Delta's
independent auditors and engaged Deloitte & Touche LLP to serve as Delta's
independent auditors for 2002. The appointment of Deloitte & Touche LLP as
independent auditors for 2002 was ratified by Delta's shareowners at the 2002
annual meeting.

         Andersen's reports on Delta's consolidated financial statements for the
2001 and 2000 fiscal years did not contain an adverse opinion or disclaimer of
opinion, nor were they qualified or modified as to uncertainty, audit scope or
accounting principles.

         During Delta's 2001 and 2000 fiscal years and through March 27, 2002
(the date of Delta's Form 10-K for the year ended December 31, 2001), there were
no disagreements with Andersen on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure which,
if not resolved to Andersen's satisfaction, would have caused them to make
reference to the subject matter in connection with their report on Delta's
consolidated financial statements for such years; and there were no reportable
events, as listed in Item 304(a)(1)(v) of SEC Regulation S-K.

         Delta provided Andersen with a copy of the foregoing disclosures.
Attached as Exhibit 16 to this Form 10-K is a copy of Andersen's letter dated
March 27, 2002 stating its agreement with such statements.


                                       21
<PAGE>

         During Delta's 2001 and 2000 fiscal years and through March 6, 2002,
Delta did not consult Deloitte & Touche LLP with respect to the application of
accounting principles to a specified transaction, either completed or proposed,
or the type of audit opinion that might be rendered on Delta's consolidated
financial statements, or any other matters or reportable events listed in Items
304(a)(2)(i) and (ii) of SEC Regulation S-K.

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         Information required by this item is set forth under "Certain
Information About Nominees" on pages 5-6, and under "Section 16 Beneficial
Ownership Reporting Compliance" on page 50, of Delta's Proxy Statement dated
March 25, 2003, and is incorporated by reference. Certain information regarding
executive officers is contained in Part I of this Form 10-K.

ITEM 11. EXECUTIVE COMPENSATION

         Information required by this item is set forth under "Compensation of
Directors" on pages 9-10, under "Compensation Committee Interlocks and Insider
Participation" on page 10, and on pages 19-29, of Delta's Proxy Statement dated
March 25, 2003, and is incorporated by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
         MANAGEMENT AND RELATED STOCKHOLDER MATTERS

         Information required by this item is set forth under "Beneficial
Ownership of Securities" on pages 10-12, and under "Equity Compensation Plan
Information" on page 30, of Delta's Proxy Statement dated March 25, 2003, and is
incorporated by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         Not applicable.

ITEM 14. CONTROLS AND PROCEDURES

         Based on their evaluation of Delta's disclosure controls and procedures
conducted within 90 days of the date of filing this report on Form 10-K, Delta's
Chairman of the Board and Chief Executive Officer and its Executive Vice
President and Chief Financial Officer have concluded that Delta's disclosure
controls and procedures are effective in timely alerting them to material
information required to be included in this report on Form 10-K. There were no
significant changes in Delta's internal controls or in other factors that could
significantly affect these controls subsequent to the date of their evaluation.


                                       22
<PAGE>

                                     PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a)(1), (2). The financial statements and schedule required by this item are
listed in the Index to Consolidated Financial Statements and Schedules on page
24 of this Form 10-K.

         (3). The exhibits required by this item are listed in the Exhibit Index
on pages 34-37 of this Form 10-K. The management contracts and compensatory
plans or arrangements required to be filed as an exhibit to this Form 10-K are
listed as Exhibits 10.6 to 10.20 in the Exhibit Index.

(b). During the quarter ended December 31, 2002, Delta filed a Current Report on
Form 8-K dated October 15, 2002 regarding its financial results for the
September 2002 quarter. This Form 8-K was filed under Item 5 - Other Events and
Regulation FD Disclosure.


                                       23
<PAGE>

            INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES

INDEPENDENT AUDITORS' REPORT - Incorporated by reference to page 66 of Delta's
2002 Annual Report to Shareowners.

COPY OF REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS - Incorporated by reference to
page 67 of Delta's 2002 Annual Report to Shareowners.

CONSOLIDATED FINANCIAL STATEMENTS - All of which are incorporated by reference
to Delta's 2002 Annual Report to Shareowners:

Consolidated Balance Sheets - December 31, 2002 and 2001

Consolidated Statements of Operations for the years ended December 31, 2002,
2001 and 2000

Consolidated Statements of Cash Flows for the years ended December 31, 2002,
2001 and 2000

Consolidated Statements of Shareowners' Equity for the years ended December 31,
2002, 2001 and 2000

Notes to the Consolidated Financial Statements

COPY OF REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULE

SCHEDULE SUPPORTING FINANCIAL STATEMENTS:

Schedule
 Number
- --------
   II           Valuation and Qualifying Accounts for the years ended December
                31, 2001 and 2000. The required information for the year ended
                December 31, 2002 is included in Note 21 of the Notes to the
                Consolidated Financial Statements on page 64 of Delta's 2002
                Annual Report to Shareowners, and is incorporated by reference.

All other schedules have been omitted as not applicable.


                                       24
<PAGE>

         THE FOLLOWING IS A COPY OF THE AUDIT REPORT PREVIOUSLY ISSUED BY ARTHUR
         ANDERSEN LLP IN CONNECTION WITH DELTA'S ANNUAL REPORT ON FORM 10-K FOR
         THE YEAR ENDED DECEMBER 31, 2001. THIS AUDIT REPORT HAS NOT BEEN
         REISSUED BY ARTHUR ANDERSEN LLP.


              REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULE


To Delta Air Lines, Inc.:

We have audited, in accordance with auditing standards generally accepted in the
United States, the consolidated financial statements included in Delta Air
Lines, Inc.'s annual report to shareowners incorporated by reference in this
Form 10-K and have issued our report thereon dated January 23, 2002. Our audits
were made for the purpose of forming an opinion on those statements taken as a
whole. The schedule listed in the accompanying index is the responsibility of
the company's management, is presented for purposes of complying with the
Securities and Exchange Commission's rules, and is not part of the basic
financial statements. The schedule has been subjected to the auditing procedures
applied in the audits of the basic financial statements and, in our opinion,
fairly states in all material respects the financial data required to be set
forth therein in relation to the basic consolidated financial statements taken
as a whole.



/s/ ARTHUR ANDERSEN LLP



Atlanta, Georgia
January 23, 2002


                                       25
<PAGE>

                                                                     SCHEDULE II

                              DELTA AIR LINES, INC.
                        VALUATION AND QUALIFYING ACCOUNTS
                      FOR THE YEAR ENDED DECEMBER 31, 2001

                              (Amounts in Millions)

<TABLE>
<CAPTION>
                 Column A                          Column B                     Column C                Column D          Column E

                                                                               Additions
                                                                     -----------------------------
                                                  Balance at         Charged to   Charged to Other                       Balance at
                                                 Beginning of        Costs and       Accounts-         Deductions-         End of
                Description                         Period           Expenses        Describe           Describe           Period
- ------------------------------------------       ------------        -----------------------------     -----------       ----------
<S>                                              <C>                 <C>          <C>                 <C>                <C>
DEDUCTION (INCREASE) IN THE
BALANCE SHEET FROM THE ASSET TO
WHICH IT APPLIES:
     Allowance for uncollectible accounts
        receivable                                    $ 31             $ 18              -               $(6) (a)          $  43

RESERVE FOR RESTRUCTURING AND
OTHER NONRECURRING CHARGES:                           $ 56             $115              -               (50) (b)          $ 121
</TABLE>

(a)      Represents write-off of accounts considered to be uncollectible, less
         collections.

(b)      Represents payments made.


                                       26
<PAGE>

                                                                     SCHEDULE II

                              DELTA AIR LINES, INC.
                        VALUATION AND QUALIFYING ACCOUNTS
                      FOR THE YEAR ENDED DECEMBER 31, 2000

                              (Amounts in Millions)
                                    <TABLE>
<CAPTION>
                 Column A                          Column B                     Column C                Column D          Column E

                                                                               Additions
                                                                     -----------------------------
                                                  Balance at         Charged to   Charged to Other                       Balance at
                                                 Beginning of        Costs and       Accounts-         Deductions-         End of
                Description                         Period           Expenses        Describe           Describe           Period
- ------------------------------------------       ------------        -----------------------------     -----------       ----------
<S>                                              <C>                 <C>          <C>                  <C>               <C>

DEDUCTION (INCREASE) IN THE
BALANCE SHEET FROM THE ASSET
TO WHICH IT APPLIES:
     Allowance for uncollectible accounts
       receivable                                     $ 39               $ 15            -              $ (23)(a)           $ 31

RESERVE FOR RESTRUCTURING AND
OTHER NONRECURRING CHARGES:                           $ 41               $ 22            -              $ (7) (b)           $ 56
</TABLE>

(a)      Represents write-off of accounts considered to be uncollectible, less
         collections.

(b)      Represents payments made.


                                       27
<PAGE>

                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, on the 27th day of
March, 2003.



                                                   DELTA AIR LINES, INC.



                                                   By: /s/ Leo F. Mullin
                                                       -------------------------
                                                       Leo F. Mullin
                                                       Chairman of the Board and
                                                       Chief Executive Officer

         Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below on the 27th day of March, 2003 by the
following persons on behalf of the registrant and in the capacities indicated.



         Signature                                       Title
- -----------------------------        -------------------------------------------



Edward H. Budd*                               Director
- -----------------------------
Edward H. Budd



/s/ M. Michele Burns                         Executive Vice President and
- -----------------------------                   Chief Financial Officer
M. Michele Burns                      (Principal Financial Officer and Principal
                                                  Accounting Officer)



George M.C. Fisher*                           Director
- -----------------------------
George M.C. Fisher



David R. Goode*                               Director
- ------------------------------
David R. Goode



Gerald Grinstein*                             Director
- -----------------------------
Gerald Grinstein


                                       28
<PAGE>

<TABLE>
<CAPTION>
                   Signature                                                            Title
- ------------------------------------------------                 -------------------------------------------------
<S>                                                              <C>



James M. Kilts*                                                                       Director
- ------------------------------------------------
James M. Kilts



/s/ Leo F. Mullin                                                 Chairman of the Board and Chief Executive Officer
- -------------------------------------------------                           (Principal Executive Officer)
Leo F. Mullin



John F. Smith, Jr.*                                                                   Director
- ------------------------------------------------
John F. Smith, Jr.



Joan E. Spero*                                                                        Director
- ------------------------------------------------
Joan E. Spero



Andrew J. Young*                                                                      Director
- ------------------------------------------------
Andrew J. Young



*By:       /s/ Leo F. Mullin                                                      Attorney-In-Fact
           ------------------------------------
           Leo F. Mullin
</TABLE>


                                       29
<PAGE>

                                 CERTIFICATIONS


I, Leo F. Mullin, certify that:

         1.       I have reviewed this annual report on Form 10-K of Delta Air
Lines, Inc. for the fiscal year ended December 31, 2002;

         2.       Based on my knowledge, this Form 10-K does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
Form 10-K;

         3.       Based on my knowledge, the financial statements, and other
financial information included in this Form 10-K, fairly present in all material
respects the financial condition, results of operations and cash flows of Delta
as of, and for, the periods presented in this Form 10-K;

         4.       Delta's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for Delta and have:

                  (a)      designed such disclosure controls and procedures to
ensure that material information relating to Delta, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this Form 10-K is being prepared;

                  (b)      evaluated the effectiveness of Delta's disclosure
controls and procedures as of a date within 90 days prior to the filing date of
this Form 10-K (the "Evaluation Date"); and

                  (c)      presented in this Form 10-K our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date.

         5.       Delta's other certifying officer and I have disclosed, based
on our most recent evaluation, to Delta's auditors and the Audit Committee of
Delta's Board of Directors (or persons performing the equivalent function):

                  (a)      all significant deficiencies in the design or
operation of internal controls which could adversely affect Delta's ability to
record, process, summarize and report financial data and have identified for
Delta's auditors any material weaknesses in internal controls; and

                  (b)      any fraud, whether or not material, that involves
management or other employees who have a significant role in Delta's internal
controls.


                                       30
<PAGE>


         6.       Delta's other certifying officer and I have indicated in this
Form 10-K whether there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

Date:  March 27, 2003.



                                               /s/ Leo F. Mullin
                                               -------------------------
                                               Leo F. Mullin
                                               Chairman of the Board and
                                               Chief Executive Officer


                                       31
<PAGE>

                                 CERTIFICATIONS

I, M. Michele Burns, certify that:

         1.       I have reviewed this annual report on Form 10-K of Delta Air
Lines, Inc. for the fiscal year ended December 31, 2002;

         2.       Based on my knowledge, this Form 10-K does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
Form 10-K;

         3.       Based on my knowledge, the financial statements, and other
financial information included in this Form 10-K, fairly present in all material
respects the financial condition, results of operations and cash flows of Delta
as of, and for, the periods presented in this Form 10-K;

         4.       Delta's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for Delta and have:

                  (a)      designed such disclosure controls and procedures to
ensure that material information relating to Delta, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this Form 10-K is being prepared;

                  (b)      evaluated the effectiveness of Delta's disclosure
controls and procedures as of a date within 90 days prior to the filing date of
this Form 10-K (the "Evaluation Date"); and

                  (c)      presented in this Form 10-K our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date.

         5.       Delta's other certifying officer and I have disclosed, based
on our most recent evaluation, to Delta's auditors and the Audit Committee of
Delta's Board of Directors (or persons performing the equivalent function):

                  (a)      all significant deficiencies in the design or
operation of internal controls which could adversely affect Delta's ability to
record, process, summarize and report financial data and have identified for
Delta's auditors any material weaknesses in internal controls; and

                  (b)      any fraud, whether or not material, that involves
management or other employees who have a significant role in Delta's internal
controls.


                                       32
<PAGE>

         6.       Delta's other certifying officer and I have indicated in this
Form 10-K whether there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

Date:  March 27, 2003.


                                                    /s/ M. Michele Burns
                                                    ----------------------------
                                                    M. Michele Burns
                                                    Executive Vice President and
                                                    Chief Financial Officer


                                       33
<PAGE>

                                 EXHIBIT INDEX

         3.1.     Delta's Certificate of Incorporation (Filed as Exhibit 3.1 to
Delta's Quarterly Report on Form 10-Q for the quarter ended September 30,
1998).*

         3.2.     Delta's By-Laws.

         4.1.     Rights Agreement dated as of October 24, 1996, between Delta
and First Chicago Trust Company of New York, as Rights Agent, as amended by
Amendment No. 1 thereto dated as of July 22, 1999 (Filed as Exhibit 1 to Delta's
Form 8-A/A Registration Statement dated November 4, 1996, and Exhibit 3 to
Delta's Amendment No. 1 to Form 8-A/A Registration Statement dated July 30,
1999).*

         4.2.     Certificate of Designations, Preferences and Rights of Series
B ESOP Convertible Preferred Stock and Series D Junior Participating Preferred
Stock (Filed as part of Exhibit 3.1 of this Form 10-K).*

         4.3.     Indenture dated as of March 1, 1983, between Delta and The
Citizens and Southern National Bank, as trustee, as supplemented by the First
and Second Supplemental Indentures thereto dated as of January 27, 1986 and May
26, 1989, respectively (Filed as Exhibit 4 to Delta's Registration Statement on
Form S-3 (Registration No. 2-82412), Exhibit 4(b) to Delta's Registration
Statement on Form S-3 (Registration No. 33-2972), and Exhibit 4.5 to Delta's
Annual Report on Form 10-K for the year ended June 30, 1989).*

         4.4.     Third Supplemental Indenture dated as of August 10, 1998,
between Delta and The Bank of New York, as successor trustee, to the Indenture
dated as of March 1, 1983, as supplemented, between Delta and The Citizens and
Southern National Bank of Florida, as predecessor trustee (Filed as Exhibit 4.5
to Delta's Annual Report on Form 10-K for the year ended June 30, 1998).*

         4.5.     Indenture dated as of April 30, 1990, between Delta and The
Citizens and Southern National Bank of Florida, as trustee (Filed as Exhibit
4(a) to Amendment No. 1 to Delta's Registration Statement on Form S-3
(Registration No. 33-34523)).*

         4.6.     First Supplemental Indenture dated as of August 10, 1998,
between Delta and The Bank of New York, as successor trustee, to the Indenture
dated as of April 30, 1990, between Delta and The Citizens and Southern National
Bank of Florida, as predecessor trustee (Filed as Exhibit 4.7 to Delta's Annual
Report on Form 10-K for the year ended June 30, 1998).*

         4.7.     Indenture dated as of May 1, 1991, between Delta and The
Citizens and Southern National Bank of Florida, as Trustee (Filed as Exhibit 4
to Delta's Registration Statement on Form S-3 (Registration No. 33-40190)).*


                                       34
<PAGE>

         4.8.     Indenture dated as of December 14, 1999, between Delta and The
Bank of New York, as Trustee, relating to $500 million of 7.70% Notes due 2005,
$500 million of 7.90% Notes due 2009 and $1 billion of 8.30% Notes due 2029.
(Filed as Exhibit 4.2 to Delta's Registration Statement on Form S-4
(Registration No. 333-94991)).*

         4.9.     Reimbursement Agreement dated as of May 1, 2000, among Delta,
Certain Banks and Commerzbank AG, New York Branch, as Letter of Credit Fronting
Bank and Agent, as amended by the First Amendment thereto dated as of November
9, 2001 (Filed as Exhibit 4.2 to Delta's Form 10-Q for the quarter ended June
30, 2002).*

         4.10.    Second Amendment dated as of September 24, 2002, to
Reimbursement Agreement dated as of May 1, 2000, as amended, by and among Delta,
Certain Banks and Commerzbank AG, New York Branch, as Letter of Credit Fronting
Bank and Agent (Filed as Exhibit 4.1 to Delta's Current Report on Form 8-K dated
September 27, 2002).*

         4.11.    Note Purchase Agreement dated February 22, 1990, among the
Delta Family-Care Savings Plan, as Issuer, Delta, as Guarantor, and Various
Lenders relating to the Guaranteed Serial ESOP Notes (Filed as Exhibit 10 to
Delta's Current Report on Form 8-K dated April 25, 1990).*

         4.12.    Amendment No. 1 dated July 27, 1999, to the Note Purchase
Agreement dated February 22, 1990, among the Delta Family-Care Savings Plan, as
Issuer, Delta, as Guarantor, and Various Lenders relating to the Guaranteed
Serial ESOP Notes (Filed as Exhibit 4.11 to Delta's Annual Report on Form 10-K
for the year ended June 30, 1999).*

         Delta is not filing any other instruments evidencing any indebtedness
because the total amount of securities authorized under any single such
instrument does not exceed 10% of the total assets of Delta and its subsidiaries
on a consolidated basis. Copies of such instruments will be furnished to the
Securities and Exchange Commission upon request.

         10.1.    Sixth Amended and Restated Limited Partnership Agreement of
WORLDSPAN, L.P. dated as of April 30, 1993 (Filed as Exhibit 10.6 to Delta's
Annual Report on Form 10-K for the year ended June 30, 1993).*

         10.2.    Purchase Agreement No. 2022 between The Boeing Company and
Delta relating to Boeing Model 737-632/-732/-832 Aircraft (Filed as Exhibit 10.3
to Delta's Quarterly Report on Form 10-Q for the quarter ended March 31,
1998).*/**

         10.3.    Purchase Agreement No. 2025 between The Boeing Company and
Delta relating to Boeing Model 767-432ER Aircraft (Filed as Exhibit 10.4 to
Delta's Quarterly Report on Form 10-Q for the quarter ended March 31, 1998).*/**

         10.4.    Letter Agreements related to Purchase Agreements No. 2022
and/or No. 2025 between The Boeing Company and Delta (Filed as Exhibit 10.5 to
Delta's Quarterly Report on Form 10-Q for the quarter ended March 31, 1998).*/**

         10.5.    Aircraft General Terms Agreement between The Boeing Company
and Delta (Filed as Exhibit 10.6 to Delta's Quarterly Report on Form 10-Q for
the quarter ended March 31, 1998).*/**


                                       35
<PAGE>

         10.6.    Delta 2000 Performance Compensation Plan (Filed as Appendix A
to Delta's Proxy Statement dated September 15, 2000).*

         10.7.    Forms of Executive Retention Protection Agreements for
Executive Officers and Senior Vice Presidents (Filed as Exhibit 10.16 of Delta's
Annual Report on Form 10-K for the year ended June 30, 1997).*

         10.8.    Employment Agreement dated as of November 29, 2002, between
Delta and Leo F. Mullin.

         10.9.    Letter Agreement dated June 5, 1998, between Delta and
Frederick W. Reid concerning Mr. Reid's employment with Delta (Filed as Exhibit
10.20 to Delta's Annual Report on Form 10-K for the year ended June 30, 1998).*

         10.10.   Letter Agreement dated September 17, 1998, between Delta and
Robert L. Colman concerning Mr. Colman's employment with Delta (Filed as Exhibit
10 to Delta's Quarterly Report on Form 10-Q for the quarter ended September 30,
1998).*

         10.11.   Letter Agreement dated May 28, 2002, supplementing the Letter
Agreement dated September 17, 1998, between Delta and Robert L. Colman
concerning Mr. Colman's employment with Delta (Filed as Exhibit 10.3 to Delta's
Quarterly Report on Form 10-Q for the quarter ended June 30, 2002).*

         10.12.   2002 Delta Excess Benefit Plan (Filed as Exhibit 10.1 to
Delta's Quarterly Report on Form 10-Q for the quarter ended March 31, 2002).*

         10.13.   2002 Delta Supplemental Excess Benefit Plan (Filed as Exhibit
10.2 to Delta's Quarterly Report on Form 10-Q for the quarter ended March 31,
2002).*

         10.14.   Form of Excess Benefit Agreement between Delta and its
officers (Filed as Exhibit 10.3 to Delta's Quarterly Report on Form 10-Q for the
quarter ended March 31, 2002).*

         10.15.   Delta's 2002 Retention Program (Filed as Exhibit 10.1 to
Delta's Quarterly Report on Form 10-Q for the quarter ended June 30, 2002).*

         10.16.   Delta's Executive Life Insurance Program, including forms of
agreements entered into as of July 1, 2002 between Delta and its officers (Filed
as Exhibit 10 to Delta's Form 10-Q for the quarter ended September 30, 2002).*

         10.17.   Directors' Deferred Compensation Plan, as amended (Filed as
Exhibit 10.1 to Delta's Quarterly Report on Form 10-Q for the quarter ended
March 31, 2001).*

         10.18.   Directors' Charitable Award Program (Filed as Exhibit 10.3 to
Delta's Quarterly Report on Form 10-Q for the quarter ended September 30,
1997).*


                                       36
<PAGE>

         10.19.   Delta's Non-Employee Directors' Stock Plan (Filed as Exhibit
4.5 to Delta's Registration Statement on Form S-8 (Registration No. 33-65391)).*

         10.20.   Delta's Non-Employee Directors' Stock Option Plan, as amended
(Filed as Exhibit 10.2 to Delta's Quarterly Report on Form 10-Q for the quarter
ended March 31, 2001).*

         12.      Statement regarding computation of ratio of earnings to fixed
charges for the years ended December 31, 2002, 2001, 2000, 1999 and 1998.

         13.      Portions of Delta's 2002 Annual Report to Shareowners.

         16.      Letter from Arthur Andersen LLP dated March 27, 2002 to the
Securities and Exchange Commission (Filed as Exhibit 16 to Delta's Form 10-K for
the year ended December 31, 2001).*

         21.      Subsidiaries of the Registrant.

         23.      Consent of Deloitte & Touche LLP.

         24.      Powers of Attorney.

         99.1     Certification pursuant to Section 1350 of Chapter 63 of Title
18 of the United States Code by Delta's Chairman of the Board and Chief
Executive Officer and its Executive Vice President and Chief Financial Officer
with respect to Delta's Annual Report on Form 10-K for the year ended December
31, 2002.

- ---------------------------
  * Incorporated by reference.
**  Portions of this exhibit have been omitted and filed separately with the
Securities and Exchange Commission pursuant to Delta's request for confidential
treatment.



                                       37

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-3.2
<SEQUENCE>3
<FILENAME>g81186exv3w2.txt
<DESCRIPTION>EX-3.2 DELTA'S BY-LAWS
<TEXT>
<PAGE>
                                                                     EXHIBIT 3.2

                                   BY-LAWS OF

                              DELTA AIR LINES, INC.

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
BY-LAWS
ARTICLE      SECTION  SUBJECT                                           PAGE
- -------      -------  -------                                           ----
<S>          <C>      <C>                                               <C>
   I                  NAME, INCORPORATION AND LOCATION OF OFFICES....    4
             1.1      Name and Incorporation.........................    4
  II                  CAPITAL STOCK..................................    4
             2.1      Amount and Class Authorized....................    4
             2.2      Stock Certificates.............................    4
             2.3      Transfer Agents and Registrars.................    4
             2.4      Transfers of Stock.............................    4
             2.5      Lost or Destroyed Certificates.................    5
             2.6      No Preemptive Rights...........................    5
  III                 MEETINGS OF STOCKHOLDERS.......................    5
             3.1      Annual Meeting.................................    5
             3.2      Special Meetings...............................    6
             3.3      Notices of Meetings............................    6
             3.4      Record Date....................................    6
             3.5      Quorum and Adjournment.........................    6
             3.6      Voting Rights and Proxies......................    6
             3.7      Presiding Officer..............................    7
             3.8      List of Stockholders Entitled To Vote..........    7
  IV                  BOARD OF DIRECTORS.............................    7
             4.1      Power and Authority............................    7
             4.2      Number, Nomination and Election of Directors...    7
           4.2.1      Eligibility, Tenure and Vacancies..............    8
             4.3      Regular Meetings of the Board of Directors.....    8
             4.4      Special Meetings...............................    9
             4.5      Committees Appointed by the Board..............    9
             4.6      Meetings of Committees Appointed by the Board      9
             4.7      Quorum and Voting..............................    9
             4.8      Meeting by Conference Telephone................    9
             4.9      Action Without Meeting.........................   10
            4.10      Compensation...................................   10
   V                  OFFICERS.......................................   10
             5.1      Election, Qualification, Tenure and
                      Compensation...................................   10
             5.2      Chief Executive Officer........................   10
             5.3      Chairman of the Board..........................   10
             5.4      President......................................   11
             5.5      Vice Chairman of the Board.....................   11
             5.6      Absence or Disability of Chairman and President   11
             5.7      Secretary......................................   11
             5.8      Assistant Secretaries..........................   11
             5.9      Comptroller....................................   11
            5.10      Treasurer......................................   12
            5.11      Assistant Treasurers...........................   12
            5.12      Bonds..........................................   12
  VI         6.1      CORPORATE SEAL.................................   12
  VII        7.1      FISCAL YEAR....................................   12
 VIII                 DIVIDENDS......................................   12
             8.1      $1.50 Par Value Common Stock...................   12
             8.2      Record Date for Payment of Dividends...........   13
</TABLE>


                                       2

<PAGE>

<TABLE>
<CAPTION>
BY-LAWS
ARTICLE      SECTION  SUBJECT                                           PAGE
- -------      -------  -------                                           ----
<S>          <C>      <C>                                               <C>
  IX                  FINANCIAL TRANSACTIONS AND EXECUTION OF
                      INSTRUMENTS IN WRITING.........................   13
             9.1      Depositories...................................   13
             9.2      Withdrawals and Payments.......................   13
             9.3      Evidence of Indebtedness and Instruments under
                      Seal...........................................   13
   X                  BOOKS AND RECORDS..............................   13
            10.1      Location.......................................   13
            10.2      Inspection.....................................   14
  XI                  TRANSACTIONS WITH OFFICERS AND DIRECTORS.......   14
            11.1      Validation.....................................   14
  XII       12.1      AMENDMENT, REPEAL OR ALTERATION................   14
EMERGENCY BY-LAWS....................................................   14
</TABLE>


                                       3

<PAGE>

                                   BY-LAWS OF

                              DELTA AIR LINES, INC.

                                   ARTICLE I.
                   NAME, INCORPORATION AND LOCATION OF OFFICES

SECTION 1.1 NAME AND INCORPORATION.

         The name of this corporation is DELTA AIR LINES, INC. It is
incorporated under the laws of Delaware in perpetuity.

                                   ARTICLE II.

                                  CAPITAL STOCK

SECTION 2.1 AMOUNT AND CLASS AUTHORIZED.

         Until otherwise provided by amendment to its Certificate of
Incorporation, the authorized capital stock of the corporation shall consist of
470,000,000 shares, of which 450,000,000 shall be common stock of the par value
of $1.50 per share and 20,000,000 shall be preferred stock of the par value of
$1.00 per share. Shares of such authorized $1.50 par value common stock, in
addition to the shares now outstanding, up to the authorized maximum of
450,000,000 shares, may be issued at such times, and from time to time, and may
be sold for such considerations, not less than the par value thereof, as shall
be fixed and determined by the board of directors. Shares of such authorized
preferred stock up to the authorized maximum of 20,000,000 shares may be issued
at such times, and from time to time, in such series and with such rights,
including voting rights, preferences, and limitations, and may be sold for such
considerations, not less than the par value thereof, as shall be fixed and
determined by the board of directors.

SECTION 2.2 STOCK CERTIFICATES.

         Certificates evidencing the stock of the corporation shall be in such
forms as shall be authorized and approved by the board of directors. Such
certificates shall be signed by the chairman of the board, the president or a
vice president and by the secretary or an assistant secretary of the
corporation, and the seal of the corporation shall be affixed thereto. The seal
of the corporation and any or all the signatures on such certificate may be
facsimile engraved, stamped or printed.

         If any officer, transfer agent or registrar who has signed, or whose
facsimile signature has been used on, a certificate has ceased to be an officer,
transfer agent or registrar or if any officer who has signed has had a change in
title before the certificate is delivered, such certificate may nevertheless be
issued and delivered by the corporation as though the officer, transfer agent or
registrar who signed or whose facsimile signature shall have been used had not
ceased to be such officer, transfer agent or registrar or such officer had not
had such change in title.

SECTION 2.3 TRANSFER AGENTS AND REGISTRARS.

         The board of directors may appoint transfer agents and co-transfer
agents and registrars and co-registrars for the stock of the corporation and, if
it so elects, may appoint a single agency to serve as both transfer agent and
registrar, and may require all certificates evidencing stock to bear the
signature or signatures of any of them.

SECTION 2.4 TRANSFERS OF STOCK.

         Transfers of stock of the corporation shall be made only on the books
of the corporation by the registered holder thereof in person or by attorney
thereunto duly authorized in writing. Powers of attorney to transfer stock of
the corporation shall be filed with the duly authorized transfer agent of the
corporation, when appointed, and the certificates evidencing the stock to be
transferred shall be surrendered to such transfer agent for cancellation, and
shall be cancelled by it at the time of transfer.


                                       4

<PAGE>
         Until transfer shall have been made as provided above, possession of a
certificate evidencing stock of the corporation shall not vest any ownership of
such certificate, or of the stock evidenced thereby, in any person other than
the person in whose name said stock stands registered on the books of the
corporation and the corporation shall be entitled to treat the holder of record
of any share or shares of stock as the holder thereof in fact and shall not be
bound to recognize any equitable or other claim to or interest in any such share
or shares on the part of any other person, whether or not it shall have express
or other notice thereof. Notwithstanding the foregoing, the corporation shall
have the power and is authorized to effect through the duly authorized transfer
agent and registrar or otherwise transfers of stock of the corporation to
various states or appropriate state authorities when applicable state laws of
escheat or abandonment so require.

SECTION 2.5 LOST OR DESTROYED CERTIFICATES.

         In case of the loss or destruction of an outstanding certificate of
stock, another certificate for a like number of shares may be issued in place of
the lost or destroyed certificate upon proof satisfactory to the board of
directors or its delegate, and upon payment of the expenses, if any, incident to
the issuance of such new certificate; provided, however, that the board of
directors or its delegate, if it sees fit, may require that such lost or
destroyed certificate be established as by the laws of Delaware in such cases
made and provided, and further provided that, any provision of law to the
contrary notwithstanding, the board of directors or its delegate may require the
owner of such lost or destroyed certificate, or the legal representative of such
owner, to give the corporation a bond sufficient, in the opinion of the board of
directors or its delegate, to indemnify the corporation against and hold it
harmless from any and all loss, damage, liability and claims (whether or not
such claims be meritorious) on account of and with respect to such lost or
destroyed certificate and the stock evidenced thereby and the issuance or
establishment of such new certificate.

SECTION 2.6 NO PREEMPTIVE RIGHTS.

         No holder of any stock of the corporation which shall at any time be
outstanding shall have any preemptive rights to subscribe for or purchase
additional shares of stock of the corporation of any class which at any time may
be authorized or issued.

                                  ARTICLE III.

                            MEETINGS OF STOCKHOLDERS

SECTION 3.1 ANNUAL MEETING.

         The annual meeting of stockholders shall be held on the fourth Thursday
in April of each year or at such other time as the board of directors shall
specify, at such place, either within or without the State of Delaware, as may
be designated by the board of directors from time to time, for the purpose of
electing directors and for the transaction of only such other business as is
properly brought before the meeting in accordance with these By-Laws.

         To be properly brought before the meeting, business must be either (a)
specified in the notice of meeting (or any supplement thereto) given by or at
the direction of the board, (b) otherwise properly brought before the meeting by
or at the direction of the board, or (c) otherwise properly brought before the
meeting by a stockholder. In addition to any other applicable requirements, for
business to be properly brought before an annual meeting by a stockholder, the
stockholder must have given timely notice thereof in writing to the secretary of
the corporation. To be timely, a stockholder's notice shall be delivered to or
mailed and received at the principal executive offices of the corporation not
less than 90 days nor more than 120 days prior to the anniversary date of the
immediately preceding annual meeting of stockholders; provided that if the board
calls the annual meeting for a date that is not within 30 days before or after
such anniversary date, notice by the stockholder to be timely must be so
delivered or mailed and received not later than the close of business on the
10th business day following the day on which the board gave such notice or made
such public disclosure of the date of the annual meeting, whichever first
occurs. Such stockholder's notice to the secretary shall set forth as to each
matter the stockholder proposes to bring before the annual meeting (i) a brief
description of the business desired to be brought before the annual meeting and
the reasons for conducting such business at the annual meeting, (ii) the name
and record address of the stockholder proposing such business, (iii) the class
and number of shares of capital stock of the corporation which are beneficially
owned by the stockholder, and (iv) any material interest of the stockholder in
such business.

         Notwithstanding anything in the By-Laws to the contrary, no business
shall be conducted at the annual meeting except in accordance with the
procedures set forth in this Article III, provided, that nothing in this Article
III shall be deemed to preclude discussion by any stockholder of any business
properly brought before the annual meeting.



                                       5

<PAGE>

         If business is not properly brought before the meeting in accordance
with the provisions of this Article III, the Presiding Officer at an annual
meeting shall so declare to the meeting and any such business not properly
brought before the meeting shall not be transacted.

SECTION 3.2 SPECIAL MEETINGS.

         Special meetings of the stockholders shall be held at such times, and
at such places, either within or without the State of Delaware, as shall be
designated in the notice of call of the meeting, and may be called by the
chairman of the board or the president at any time and must be called by the
chairman of the board or the president whenever requested in writing by a
majority of the board of directors.

SECTION 3.3 NOTICES OF MEETINGS.

         Written or printed notices of every annual or special meeting of the
stockholders shall be mailed to each stockholder of record at the close of
business on the record date hereinafter provided for, at the address shown on
the stock book of the corporation or its transfer agents, not less than ten nor
more than sixty days prior to the date of such meeting. Notices of special
meetings shall briefly state or summarize the purpose or purposes of such
meetings, and no business except that specified in the notice shall be
transacted at any special meeting. It shall not be necessary that notices of
annual meetings specify the business to be transacted at such annual meetings,
and any business of the corporation may be transacted at any annual meeting of
the stockholders to the extent not prohibited by applicable law, the Certificate
of Incorporation or these By-Laws.

SECTION 3.4 RECORD DATE.

         It shall not be necessary to close the stock transfer books of the
corporation for the purpose of determining the stockholders entitled to notice
of and to participate in and vote at any meeting of the stockholders. In lieu of
closing the stock transfer books of the corporation, and for all purposes that
might be served by closing the stock transfer books, the board of directors may
fix and declare a date not less than ten days nor more than sixty days prior to
the date of any annual or special meeting as the record date for the
determination of stockholders entitled to notice of and to participate in and
vote at such meeting of the stockholders and any adjournment thereof; and the
corporation and its transfer agents may continue to receive and record transfers
of stock after any record date as so provided. In any such case, such
stockholders, and only such stockholders as shall have been stockholders of
record at the close of business on the record date shall be entitled to notice
and to participate in and vote at any such meeting of the stockholders,
notwithstanding any transfers of stock which may have been made on the books of
the corporation or its transfer agents after such record date.

SECTION 3.5 QUORUM AND ADJOURNMENT.

         Except as otherwise provided or required by law, by the Certificate of
Incorporation or by these By-Laws, a quorum at any meeting of the stockholders
shall consist of the holders of shares representing a majority of the number of
votes entitled to be cast by the holders of all shares of stock then outstanding
and entitled to vote, present in person or by proxy. If a quorum is not present
at any duly called meeting, the Presiding Officer or the holders of a majority
of the votes present may adjourn the meeting from day to day, or to a fixed
date, without notice other than announcement at the meeting, but no other
business may be transacted until a quorum is present; provided, however, that
any meeting at which directors are to be elected shall be adjourned only from
day to day until such directors have been elected, and further provided that
those who attend the second of such adjourned meetings, although less than a
quorum as fixed hereinabove, shall nevertheless constitute a quorum for the
purpose of electing directors.

         The stockholders present at a duly organized meeting at which a quorum
is present at the outset may continue to do business until adjournment,
notwithstanding the withdrawal of enough stockholders to result in less than a
quorum or the refusal of any stockholder present to vote.

         The Presiding Officer may in his discretion defer voting on any
proposed action and adjourn any meeting of the stockholders until a later date,
provided such actions are otherwise permitted by law and are not inconsistent
with the Certificate of Incorporation or other provisions of these By-Laws.

SECTION 3.6 VOTING RIGHTS AND PROXIES.

         At all meetings of stockholders, whether annual or special, the holder
of each share of common stock which is then outstanding and entitled to vote
shall be entitled to one vote for each share held and the holder of each share
of any series of preferred stock which is then outstanding shall be entitled to
such voting rights, if any, and such number of votes, as shall be specified in
the resolution or resolutions of the board of directors providing for the
issuance of such series. Stockholders may vote at all such meetings in person or
by proxy duly authorized in writing or by a transmission


                                       6

<PAGE>

permitted by law filed in accordance with the procedures established for the
meeting. Any copy, facsimile telecommunication or other reliable reproduction of
the writing or transmission created pursuant to this section may be substituted
or used in lieu of the original writing or transmission for any and all purposes
for which the original writing or transmission could be used, provided that such
copy, facsimile telecommunication or other reproduction shall be a complete
reproduction of the entire original writing or transmission. Directors shall be
elected by a plurality of the votes cast in an election for such directors.
Except as otherwise specifically provided by law, by the Certificate of
Incorporation or by these By-Laws, a majority of the valid votes present shall
be necessary and sufficient to decide any question which shall come before any
meeting of the stockholders. In case of any challenge of the right of a given
stockholder to vote in person or by proxy, the Presiding Officer hereinafter
provided for shall be authorized to make the appropriate determination, and his
decision shall be final.

SECTION 3.7 PRESIDING OFFICER.

         All meetings of the stockholders shall be presided over by the chairman
of the board or, in the absence or disability of the chairman, by the president,
or in his absence or disability, by the vice chairman, if any, or, in his
absence or disability, by the senior director (in terms of length of service on
the board of directors) present.

SECTION 3.8 LIST OF STOCKHOLDERS ENTITLED TO VOTE.

         A complete list of the stockholders entitled to vote, arranged in
alphabetical order and indicating the number of shares held by each, shall be
prepared by the secretary and shall be available at the place where any
stockholders' meeting is being held, and shall be open to the examination of any
stockholder for any proper purpose during the whole of such meeting.

                                   ARTICLE IV.

                               BOARD OF DIRECTORS

SECTION 4.1 POWER AND AUTHORITY.

         All of the corporate powers of this corporation shall be vested in and
the business, property and affairs of the corporation shall be managed by, or
under the direction of, the board of directors; and the board of directors shall
be, and hereby is, fully authorized and empowered to exercise all of the powers
of the corporation and to do, and to authorize, direct and regulate the doing
of, any and all things which the corporation has the lawful right to do which
are not by statute, the Certificate of Incorporation or these By-Laws expressly
directed or required to be exercised or done by the stockholders.

SECTION 4.2 NUMBER, NOMINATION AND ELECTION OF DIRECTORS.

         The board of directors shall consist of not less than five nor more
than nineteen directors. The members of the board of directors shall be elected
by the stockholders at the annual meeting of stockholders, or at a duly convened
adjournment thereof or at a special meeting of stockholders duly called and
convened for that purpose, provided, however, that only persons who are
nominated in accordance with the following procedures shall be eligible for
election as directors. Nominations of persons for election to the board of the
corporation at the annual meeting or a duly convened adjournment thereof may be
made by or at the direction of the board of directors, by any nominating
committee or person appointed by the board, or by any stockholder of the
corporation entitled to vote for the election of directors at the meeting or a
duly convened adjournment thereof who complies with the notice procedures set
forth in this Article IV. Such nominations, other than those made by or at the
direction of the board, or by any nominating committee or person appointed by
the board, shall be made pursuant to timely notice in writing to the secretary
of the corporation. To be timely, a stockholder's notice shall be delivered to
or mailed and received at the principal executive offices of the corporation not
less than 90 days nor more than 120 days prior to the anniversary date of the
immediately preceding annual meeting of stockholders; provided that if the board
calls the annual meeting for a date that is not within 30 days before or after
such anniversary date, notice by the stockholder to be timely must be so
delivered or mailed and received not later than the close of business on the
10th business day following the day on which the board gave such notice or made
such public disclosure of the date of the meeting, whichever first occurs. Such
stockholder's notice to the secretary shall set forth (a) as to each person whom
the stockholder proposes to nominate for election or re-election as a director,
(i) the name, age, business address and residence address of the person, (ii)
the principal occupation or employment of the person, (iii) the class and number
of shares of capital stock of the corporation which are beneficially owned by
the person and (iv) any other information relating to the person that is
required to be


                                       7

<PAGE>

disclosed in solicitations for proxies for election of directors pursuant to
Rule 14a under the Securities Exchange Act of 1934, as amended; and (b) as to
the stockholder giving the notice, (i) the name and record address of the
stockholder and (ii) the class and number of shares of capital stock of the
corporation which are beneficially owned by the stockholder. The corporation may
require any proposed nominee to furnish such other information as may reasonably
be required by the corporation to determine the qualifications of such proposed
nominee to serve as director of the corporation. No person shall be eligible for
election as a director of the corporation unless nominated in accordance with
the procedures set forth herein.

         If a nomination is made that is not in accordance with the foregoing
procedure, the Presiding Officer at an annual meeting shall so declare to the
meeting and the defective nomination shall be disregarded.

SECTION 4.2.1 ELIGIBILITY, TENURE AND VACANCIES.

         A nomination to serve as a director shall be accepted and votes cast
for a nominee shall be counted only if the secretary has received, at least
thirty days before the annual or a special meeting of stockholders, a statement
signed by the nominee advising that he or she consents to being a nominee and,
if elected, intends to serve as a director, and further provided that:

         (a) Directors who are full-time employees of the company shall resign
         from the board coincident with their retirement from full-time
         employment.

         (b) The age limit for directors not covered by subparagraph (a), above,
         or who, after resigning from the board upon retirement from full-time
         employment are re-elected to the board, shall be seventy-two, and such
         directors shall retire from the board as of the date and time of the
         annual meeting of stockholders which next follows their attainment of
         age seventy-two.

Each member of the board of directors shall hold office from the time of his
election and qualification until the next annual meeting of the stockholders and
until his successor shall have been elected and qualified; provided, however,
that any member of the board of directors may be removed from such office by the
stockholders at any time, with or without cause, at any meeting of the
stockholders, duly called for such purpose, by the vote of holders of a majority
of the outstanding voting power entitled to vote thereon, in which event a
successor may be elected by the stockholders at such meeting or at any
subsequent meeting of the stockholders duly called for such purpose.

         The number of members of the board of directors may be increased or
decreased at any time and from time to time to not less than five nor more than
nineteen members by resolution adopted by the board of directors and in such
event, and in the event any vacancy on the board of directors shall occur by
death, resignation, retirement, disqualification or otherwise, additional or
successor members of the board of directors may be elected by majority vote of
the remaining members of the board of directors, although such majority is less
than a quorum, or by a plurality of the votes cast at a meeting of stockholders,
and each director so elected shall hold office until the expiration of the term
of office of the director whom he has replaced or until his successor is elected
and qualified.

         Any director may resign at any time upon written notice to the
corporation.

SECTION 4.3 REGULAR MEETINGS OF THE BOARD OF DIRECTORS.

         The first organizational meeting of each newly-elected board shall be
held at such time and place, either within or without the State of Delaware, as
shall be fixed by the outgoing board of directors at or before its last regular
meeting preceding the annual meeting of the stockholders, and no notice of such
meeting shall be necessary to the newly-elected directors in order to constitute
the meeting legally, provided that a majority of the whole board shall be
present, and further provided that such newly-elected board may meet at such
other place and time as shall be fixed by the consent in writing of all of the
said directors.

         At such organizational meeting the board, by a vote of a majority of
all of the members thereof, shall elect a chairman from among its members. The
chairman shall preside over all meetings of the board of directors, if present,
and shall have such other powers and perform such other duties as may be
assigned to him by the board from time to time. In his capacity as chairman of
the board he shall not necessarily be an officer of the corporation but he shall
be eligible to serve, in addition, as an officer pursuant to Section 5.1 of
these By-Laws.

         All meetings of the directors shall be presided over by the chairman of
the board or, in his absence or disability, by the chief executive officer of
the corporation if he is a member of the Board or, in his absence or disability,
by the president if he is a member of the Board or, in his absence or
disability, by the vice chairman, if any, or, in his absence or disability, by
the senior director (in terms of length of service on the board of directors)
present.

         Regular meetings of the board of directors shall be held during the
months of January, July and October, on such dates and at such places as the
board by resolution or, failing such resolution, as the chairman of the board
or, during his absence or disability, the president or the secretary of the
corporation may determine, and if not previously specified in a board
resolution, each director shall be advised in writing of the date, place and
time of each such meeting at least two days in advance, unless such notice be
waived in writing.


                                       8

<PAGE>

SECTION 4.4 SPECIAL MEETINGS.

         Special meetings of the board of directors shall be held at such time
and place, within or without the State of Delaware, as shall be designated in
the call and notice of the meeting; and may be called by the chairman of the
board, or in his absence or disability by the president or the secretary of the
company, at any time, and must be called by the chairman, or in his absence or
disability by the president or the secretary of the corporation, whenever so
requested in writing by three or more members of the board. Notices of special
meetings shall be given to each member of the board not less than twenty-four
hours before the time at which each such meeting is to convene. Such notices may
be given by telephone or by any other form of written or verbal communication.
It shall not be necessary that notices of special meetings state the purposes or
the objects of the meetings, and any business which may come before any duly
called and convened special meeting of the board may be transacted at such
meeting.

         The members of the board of directors, before or after any meeting of
the board, may waive notice thereof and, if all members of the board be present
in person at any meeting or waive notice of the meeting, the fact that proper
notice of the meeting was not given shall not in any way affect the validity of
the meeting or the business transacted at the meeting.


SECTION 4.5 COMMITTEES APPOINTED BY THE BOARD.

         A majority of the whole board may from time to time appoint (a)
committees of the board, the membership of which shall consist entirely of board
members and (b) other committees, the membership of which may be either a
mixture of board and non-board members or entirely non-members of the board. All
committees so appointed shall elect a chairman and keep regular minutes of their
meetings and transactions and such minutes shall be accessible to all members of
the board at all reasonable times.

         No such committee shall have the power or authority to amend the
Certificate of Incorporation (except that a committee may, to the extent
authorized in a resolution of the board of directors providing for the issuance
of shares of stock, fix the designations and any of the preferences or rights of
such shares relating to dividends, redemption, dissolution, any distribution of
assets of the corporation or the conversion into, or the exchange of such shares
for, shares of any other class or classes or any other series of the same or any
other class or classes of stock of the corporation or fix the number of shares
of any series of stock or authorize the increase or decrease of the shares of
any series); to adopt an agreement of merger or consolidation; to recommend to
the stockholders the sale, lease or exchange of all or substantially all of the
corporation's property and assets; to recommend to the stockholders a
dissolution of the corporation or a revocation of a dissolution; to amend the
By-Laws of the corporation; or, unless a resolution of the board of directors,
the By-Laws or the Certificate of Incorporation expressly so provides, to
declare a dividend or authorize the issuance of stock.

SECTION 4.6 MEETINGS OF COMMITTEES APPOINTED BY THE BOARD.

         Meetings of any committee appointed by the Board shall be called by the
secretary or any assistant secretary of the corporation (or, in the case of
committees appointed by the board whose membership does not consist exclusively
of board members, by such employee of the corporation as has been designated
pursuant to By-Law 5.7 to record the votes and the minutes of such committee)
upon the request of the chairman of the committee, the chairman of the Board,
the chief executive officer of the corporation, or any two members of the
committee. Notice of each such meeting shall be given in the same manner
specified in Section 4.4 for special meetings of the board of directors.

SECTION 4.7 QUORUM AND VOTING.

         A majority of the members of the board of directors shall be present at
any meeting of the board in order for there to constitute a quorum. One half of
the members of any committee appointed by the board shall be present at any
meeting of the board or such committee in order to constitute a quorum. A
majority of the members present at any duly constituted meeting of the board or
such committee may decide any question which properly may come before the
meeting, unless a different vote is specifically required by these By-Laws, the
Certificate of Incorporation or applicable law.


SECTION 4.8 MEETING BY CONFERENCE TELEPHONE.

         Members of the board of directors or any committee appointed by the
board may participate in a meeting by means of conference telephone or similar
communications equipment whereby all persons participating in the meeting can
hear each other, and participation in such meeting in such manner shall
constitute presence in person at such meeting.

         Notwithstanding the notice provisions of Sections 4.3, 4.4 and 4.6
above, participation in a meeting by means of conference telephone by a member
of the board of directors or a committee appointed by the board shall constitute
waiver of notice of the meeting by such director.


                                       9

<PAGE>

SECTION 4.9 ACTION WITHOUT MEETING.

         Any action required or permitted to be taken at any meeting of the
board of directors or any committee appointed by the board may be taken without
a meeting if all of the directors or all of the members of such a committee, as
the case may be, consent thereto in writing and the writing or writings are
filed with the minutes of proceedings of the board of directors or of such
committee.

SECTION 4.10 COMPENSATION.

         A director shall receive such reasonable compensation for his services
as a director or as a member of a committee appointed by the board of directors
(including service as chairman of the board or as chairman of a committee of the
board) as may be fixed from time to time by the board of directors and shall be
reimbursed for his reasonable expenses, if any, in attending any meeting of the
board of directors or such a committee. A director shall not be barred from also
serving the corporation in any other capacity and receiving reasonable
compensation therefor.

                                   ARTICLE V.

                                    OFFICERS

SECTION 5.1 ELECTION, QUALIFICATION, TENURE AND COMPENSATION.

         The officers of the corporation shall be elected by the board of
directors and shall include a president, one or more vice presidents (one or
more of whom may be designated as an executive vice president or senior vice
president), a secretary, a comptroller, a treasurer and such other officers,
including a vice chairman, as from time to time the board of directors shall
deem necessary or desirable. At the discretion of the board, the chairman of the
board may also be elected under the same title as an officer of the corporation.

         The chairman of the board (and the vice chairman, if any) shall be
members of the board of directors.

         Unless otherwise provided by the board of directors, each officer shall
hold office from the time of his election until his successor shall have been
elected and qualified, provided, however (except as otherwise provided in a
contract duly authorized by the board of directors), any officer may be removed
from office by the board of directors at any time, with or without cause, and
any officer may resign at any time upon written notice to the corporation. Any
two offices may be united in any one person, provided that no person shall act
in more than one capacity in any one transaction.

         The compensation of all officers shall be fixed and determined by the
board of directors or pursuant to its delegated authority.

         From time to time the board of directors, or its delegates, may appoint
such other agents, for such terms and with such rights, powers and authorities,
on such conditions, subject to such limitations and restrictions and at such
compensation as shall seem right and proper to it or them, and any such agent
may be removed from office by the board of directors or its delegates at any
time, with or without cause.

SECTION 5.2 CHIEF EXECUTIVE OFFICER.

         From time to time the board of directors shall designate by resolution
either the chairman of the board, if elected as an officer of the corporation,
or the president to act as the chief executive officer of the corporation. The
chief executive officer shall have responsibility for the active and general
management of the corporation and such authorities and duties as are usually
incident to the office of chief executive officer and as from time to time shall
be specified by the board of directors. He shall prescribe the duties of all
subordinate officers, agents and employees of the company to the extent not
otherwise prescribed by the Certificate of Incorporation, the By-Laws or the
board of directors. Such designation shall continue in full force and effect
until modified or rescinded by further resolution of the board.

SECTION 5.3 CHAIRMAN OF THE BOARD.

         The chairman of the board shall preside over all meetings of the board
of directors and the stockholders of the corporation. He shall have such other
authorities and duties as are usually incident to the office of chairman of the
board and as from time to time shall be specifically directed by the board of
directors. Except where by law the signature of the president is required, the
chairman of the board shall possess the same power as the president to sign all
certificates, contracts and other instruments of the corporation which may be
authorized by the board of directors. During the absence or disability of the
president, if the chairman has been elected as an officer of the corporation he


                                       10

<PAGE>

shall exercise all of the powers and discharge all of the duties of the
president. If the chairman has not been elected as an officer of the
corporation, then the provisions of Section 5.6 shall apply.

SECTION 5.4 PRESIDENT.

         Subject to the powers and duties hereinbefore delegated to the chairman
of the board, and to the powers and duties hereinbefore delegated to the chief
executive officer if the chairman of the board is designated by the board of
directors to act as chief executive officer, the president shall direct the
operations of the company. He shall have such other authorities and duties as
are usually incident to the office of president and as, from time to time, shall
be specifically directed by the board of directors. During the absence or
disability of the chairman, the president shall exercise all of the powers and
discharge all of the duties of the chairman.

SECTION 5.5 VICE CHAIRMAN OF THE BOARD.

         The vice chairman of the board, if any, who shall be an officer of the
corporation, shall have such specific powers, duties and authority, and shall
perform such administrative and executive duties as, from time to time, may be
assigned by the board of directors, or the chief executive officer.

SECTION 5.6 ABSENCE OR DISABILITY OF CHAIRMAN AND PRESIDENT.

         In the absence or disability of both the chairman of the board if he
has been elected an officer of the corporation, and the president, or in the
absence or disability of the president if the chairman has not been elected as
an officer of the corporation, the vice chairman, if any, or if there is no vice
chairman, an officer previously designated in writing by the chief executive
officer or, in the absence of such designation, an officer designated by the
board of directors, shall exercise all of the powers and discharge all of the
duties of the said officer or officers until one or both return to active duty
or until the board of directors authorizes another person or persons to act in
their capacities.

SECTION 5.7 SECRETARY.

         The secretary or an assistant secretary shall record the votes and the
minutes, in books to be kept for that purpose, of all meetings of the
stockholders, of the board of directors, and of those committees of the board of
directors whose membership is confined to members of the board, provided,
however, that in the absence of the secretary and the assistant secretaries the
chairman of any such meeting may designate another officer of the company to act
as secretary of that meeting. Any employee of the corporation may be designated
by committees which are appointed by the board, but whose membership is not
confined to members of the board, to record the votes and minutes of the
proceedings of such committees in books to be kept for that purpose. The
secretary or an assistant secretary shall give or cause to be given, notice of
all meetings of the stockholders, the board of directors and committees of the
board of directors. The secretary and assistant secretaries shall keep in safe
custody the seal of the corporation and shall affix the same to any instrument
requiring it and, when required, it shall be attested by his signature or by the
signature of an assistant secretary. In the absence or disability of the
secretary and all assistant secretaries, the seal may be affixed and the
instrument attested by any vice president. The secretary also shall perform such
other duties as may be assigned to him by the board of directors, or the chief
executive officer.

SECTION 5.8 ASSISTANT SECRETARIES.

         In the absence or disability of the secretary, an assistant secretary,
if specifically designated and directed by the chairman of the board or the
president, shall perform the prescribed duties and functions of the secretary.
The assistant secretaries also shall have such specific powers and authorities
and shall perform such other duties and functions as from time to time may be
assigned by the board of directors, or the chief executive officer.

SECTION 5.9 COMPTROLLER.

         The comptroller shall cause to be kept full and accurate books and
accounts of all assets, liabilities and transactions of the corporation. The
comptroller shall establish and administer an adequate plan for the control of
operations, including systems and procedures required to properly maintain
internal controls on all financial transactions of the corporation. The
comptroller shall prepare, or cause to be prepared, statements of the financial
condition of the corporation and proper profit and loss statements covering the
operations of the corporation and such other and additional financial
statements, if any, as the chief executive officer or the board of directors
from time to time shall require. The comptroller also shall perform such other
duties as may be assigned to him by the board of directors, or the chief
executive officer.


                                       11

<PAGE>

SECTION 5.10 TREASURER.

         The treasurer shall be responsible for the custody and care of all the
funds and securities of the corporation and shall cause to be kept full and
accurate books and records of account of all receipts and disbursements of the
corporation. The treasurer shall cause all money and other valuable effects of
the corporation to be deposited in the name and to the credit of the corporation
in such depositories as shall be designated from time to time by the board of
directors. He shall disburse the funds of the corporation as may be ordered by
the board of directors, or the chief executive officer. The treasurer also shall
perform such other duties as may be assigned to him by the board of directors,
or the chief executive officer.

SECTION 5.11 ASSISTANT TREASURERS.

         In the absence or disability of the treasurer, an assistant treasurer,
if any, or any other officer of the corporation, if specifically designated and
directed by the chairman of the board or the president, shall perform the
prescribed duties and functions of the treasurer. Any such assistant treasurer
also shall have such specific powers and authorities and shall perform such
other duties and functions as from time to time shall be assigned by the board
of directors, or the chief executive officer of the corporation.

SECTION 5.12 BONDS.

         Any officer or agent of the corporation shall furnish to the
corporation such bond or bonds, with security for the faithful performance of
his duties, as from time to time may be required by the board of directors.

                                   ARTICLE VI.

                                 CORPORATE SEAL

SECTION 6.1 CORPORATE SEAL.

         The corporate seal shall have inscribed thereon the name of the
corporation, the word "SEAL" and the word "Delaware". Said seal may be used by
causing it or a facsimile thereof to be impressed or affixed or reproduced or
otherwise.

                                  ARTICLE VII.

                                   FISCAL YEAR

SECTION 7.1 FISCAL YEAR.

         The fiscal year of the corporation shall commence on the first day of
January of each calendar year and shall end on the thirty-first day of December
of such year.

                                  ARTICLE VIII.

                                    DIVIDENDS

SECTION 8.1 $1.50 PAR VALUE COMMON STOCK.

         Dividends may be paid on the $1.50 par value common stock of the
corporation in such amounts and at such times as the board of directors shall
determine.


                                       12

<PAGE>

SECTION 8.2 RECORD DATE FOR PAYMENT OF DIVIDENDS.

         It shall not be necessary to close the stock transfer books of the
corporation for the purpose of determining the stockholders entitled to receive
payment of any dividend on the stock of the corporation; but in lieu of closing
the stock transfer books, and for all purposes that might be served by closing
the stock transfer books, the board of directors, in declaring any dividend on
the common stock, shall fix either the date on which the dividend is declared or
a date between that date and the date on which the dividend is to be paid as the
record date for determining stockholders entitled to receive payment of said
dividend; and the corporation and its transfer agents may continue to receive
and record transfers of stock after the record date so fixed and determined but,
in any such case, such stockholders and only such stockholders as shall have
been stockholders of record at the close of business on the record date so fixed
and determined by the board of directors shall be entitled to receive payment of
said dividend, notwithstanding any transfer of any stock which may have been
made on the books of the corporation or its transfer agents after said record
date.

                                   ARTICLE IX.

                     FINANCIAL TRANSACTIONS AND EXECUTION OF
                             INSTRUMENTS IN WRITING

SECTION 9.1 DEPOSITORIES.

         The funds and securities of the corporation shall be deposited, in the
name of and to the credit of the corporation, in such banks, trust companies and
other financial institutions as shall from time to time be determined and
designated by the board of directors or its delegate.


SECTION 9.2 WITHDRAWALS AND PAYMENTS.

         All checks and orders for the withdrawal or payment of funds of the
corporation, shall be signed in the name of the corporation in such manner and
form and by such officer, officers or other employees as from time to time may
be authorized and provided by the board of directors or its delegate. Facsimile
signatures may be used when authorized by the board or its delegate.

         It shall be the duty of the secretary, an assistant secretary or the
corporation's official in charge of internal auditing to certify to the
designated depositories of the funds and securities of the corporation the names
and signatures of the officers and other employees of the corporation who, from
time to time, are authorized to sign checks, drafts or orders for the withdrawal
of funds and/or securities. No check, drafts or order for the withdrawal or
payment of funds of the corporation shall be signed in blank.

SECTION 9.3 EVIDENCE OF INDEBTEDNESS AND INSTRUMENTS UNDER SEAL.

         Unless otherwise authorized by the board of directors, all notes,
bonds, and other evidences of indebtedness of the corporation, and all deeds,
indentures, contracts and other instruments in writing required to be executed
under the seal of the corporation, shall be signed in the name and on behalf of
the corporation by the chairman of the board, the president, the vice chairman,
if any, or a vice president of the corporation and shall be attested by the
secretary or an assistant secretary.

                                   ARTICLE X.

                                BOOKS AND RECORDS

SECTION 10.1 LOCATION.

         The books, accounts and records of the corporation, except as may be
otherwise required by the laws of the State of Delaware, may be kept outside of
the State of Delaware, at such place or places as the board of directors may
from time to time appoint.


                                       13

<PAGE>

SECTION 10.2 INSPECTION.

         Except as otherwise required by law, the board of directors or its
delegate shall determine whether and to what extent the books, accounts and
records of the corporation, or any of them other than the stock books, shall be
open to the inspection of the stockholders.

                                   ARTICLE XI.

                    TRANSACTIONS WITH OFFICERS AND DIRECTORS

SECTION 11.1 VALIDATION.

         Contracts and all other transactions, including but not limited to
purchases and sales, by and between this corporation and one or more of its
officers or directors, or by and between this corporation and any firm,
partnership, association or corporation of which one or more of the officers or
directors of this corporation shall be members, partners, officers or directors
or in which one or more of the officers or directors of this corporation shall
be interested, shall be valid, binding and enforceable, and shall not be
voidable by this corporation or its stockholders notwithstanding the
participation of any such interested director in any meeting of the board of
directors of this corporation at which such contract or other transaction shall
be considered, acted upon or authorized, and notwithstanding the participation
of any such interested officer or director in the making or performance of such
contract or transaction, if the material facts of such interest shall be
disclosed to or be known by the members of the board of directors of this
corporation who shall be present at the meeting of said board at which such
contract or transaction, and such participation therein, shall be authorized or
approved and if the board in good faith authorizes the contract or transaction
by the affirmative votes of a majority of the disinterested directors, even
though the disinterested directors be less than a quorum.

                                  ARTICLE XII.

                         AMENDMENT, REPEAL OR ALTERATION

SECTION 12.1 AMENDMENT, REPEAL OR ALTERATION.

         These By-Laws may be amended, repealed or altered, in whole or in part,
by a majority of the valid votes cast at any duly convened regular annual
meeting of the stockholders or at any duly convened special meeting of
stockholders when such object shall have been announced in the call and notice
of the meeting. These By-Laws also may be amended, repealed or altered by vote
of a majority of the whole board of directors at any duly convened meeting of
the board of directors; provided, however, that any such action of the board of
directors may be repealed by the stockholders. The repeal of any such action of
the board of directors by the stockholders, however, shall not invalidate or in
anywise affect the validity of any act or thing done in reliance upon said
action of the board of directors.

                                EMERGENCY BY-LAWS

                            ADOPTED OCTOBER 27, 1967

         Subject to repeal or change by the stockholders, and notwithstanding
any different provision contained in the Delaware Corporation Law or in the
Certificate of Incorporation or By-Laws of this corporation, the following
emergency by-laws shall be operative in any emergency arising from an attack on
the United States or on a locality in which the corporation conducts its
business or customarily holds meetings of its board of directors or
stockholders, or during any atomic or nuclear disaster or during the existence
of any catastrophe or other similar emergency condition as a result of which a
quorum of the board of directors cannot readily be convened for action.

                  1. In the event of emergency or disaster as described above,
         an emergency board of directors shall forthwith assume direction and
         control of the affairs of the corporation.

                  2. Such emergency board of directors shall consist of all
         living directors, and meetings of the emergency board may be called by
         the chairman of the board, the president, the vice chairman or the
         secretary or, in the event of the death or inability of any of the four
         to act, by any surviving director with the capacity and ability to act.


                                       14

<PAGE>

                  3. To the extent possible, notice of emergency board meetings
         shall be given in each instance to each known living member of the
         board at his last known business address, either orally or in writing
         delivered personally or by mail, telegraph, telephone or radio, or by
         publication; provided however, that if notice by such means is
         impossible insofar as specific individual directors are concerned, then
         the person calling the meeting shall give such directors such notice as
         is reasonably possible under the circumstances.

                  4. At any properly called meeting of the emergency board a
         quorum shall not be necessary, and the acts of a majority of the
         members of the emergency board present shall be and shall constitute
         the acts of the emergency board.

                  5. During its existence, the emergency board shall have the
         following powers:

         (a) To appoint officers and agents of the corporation and to determine
         their compensation and duties;

         (b) To borrow money and to issue bonds, notes or other obligations and
         evidence of indebtedness therefor;

         (c) To determine questions of general policy with respect to the
         business of the corporation;

         (d) To call stockholders' meetings; and

         (e) To take all actions and to do all things necessary to preserve the
         corporation as an operating entity, and to direct and control its
         affairs and operations, until the regular board of directors has been
         reconstituted, either by the passage of time, by action of the
         stockholders, or otherwise in accordance with law.

                  6. No officer, director or employee acting in accordance with
         these emergency by-laws shall be liable to the corporation or its
         stockholders with respect to action taken under power granted herein
         except for willful misconduct.

                  7. As soon as reasonably possible following the creation of an
         emergency board of directors, if it appears clear that such action is
         required because of the number of directors killed or indefinitely
         incapacitated, the emergency board shall call a regular or special
         meeting of the stockholders of the corporation for the election of a
         new board of directors, or otherwise to reconstitute the board, and
         upon the election and qualification or reconstitution of such board,
         the emergency board established pursuant to these emergency by-laws
         shall cease and terminate and the direction and control of the affairs
         of the corporation shall vest in such new or reconstituted board of
         directors.

                  8. To the extent not inconsistent with these emergency
         by-laws, the regular by-laws of the corporation shall remain in effect
         during the emergency.


                                       15


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.8
<SEQUENCE>4
<FILENAME>g81186exv10w8.txt
<DESCRIPTION>EX-10.8 EMPLOYMENT AGREEMENT DATED 11/29/02
<TEXT>
<PAGE>
                                                                  EXHIBIT 10.8


                               EMPLOYMENT AGREEMENT



      EMPLOYMENT AGREEMENT dated as of November 29, 2002 (the "Effective Date"),
by and between Delta Air Lines, Inc., a Delaware corporation (the "Company"),
and Leo F. Mullin ("Executive");

      WHEREAS, Executive currently serves as Chairman of the Board of Directors
of the Company (the "Board") and is currently employed as Chief Executive
Officer of the Company pursuant to the terms of an employment agreement dated as
of August 14, 1997 by and between the Company and Executive (the "Old Employment
Agreement");

      WHEREAS, the Board desires to continue to employ Executive as Chief
Executive Officer of the Company, and Executive desires to accept such continued
employment; and

      WHEREAS, the Company and Executive desire to enter into an agreement (this
"Agreement") embodying the new terms of such continued employment;

      NOW THEREFORE, in consideration of the mutual covenants and agreements of
the parties set forth in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto, intending to be legally bound, agree as follows (certain
capitalized terms used herein being defined in Article 9):

                                   ARTICLE 1
                                TERM OF AGREEMENT

      Section 1.01.  Term. The term of this Agreement shall commence on the
Effective Date and shall expire on December 31, 2007 (such term, together with
any extension pursuant to Section 1.02, referred to hereinafter as the
"Agreement Term").

      Section 1.02.  Automatic Extension Upon Change In Control. In the event
that a Change in Control occurs during the Agreement Term as then in effect,
upon the effective date of such Change in Control the Agreement Term shall
automatically
<PAGE>
be extended by such period, if any, such that after such extension the Agreement
Term shall not be less than 36 months following the effective date of such
Change in Control (such 36 month period referred to hereinafter as the "Change
Period").

                                   ARTICLE 2
                                POSITION; DUTIES

      Section 2.01.  Position. The Company shall continue to employ Executive as
Chief Executive Officer of the Company pursuant to the terms of this Agreement.
In addition, the Company shall use its best efforts to ensure Executive's
continued election as a member of the Board. Executive shall have such duties
and authority as shall be determined from time to time by the Board; provided
that such duties shall be consistent with the positions assigned to him pursuant
to this Section 2.01.

      Section 2.02.  Performance of Duties. While Executive is employed by the
Company hereunder, Executive shall devote substantially all of his business time
and best efforts to the business and affairs of the Company and the performance
of his duties under this Agreement. Subject to the foregoing, Executive shall
not be precluded from (i) continuing to serve on such boards of directors of
business corporations and/or charitable organizations as to which the Board
shall have given its prior written consent, which consent shall not be withheld
unreasonably; provided, however, that such consent shall not be necessary with
respect to Executive's continued service on the board of directors of BellSouth
Corporation and Johnson & Johnson; (ii) engaging in community affairs or
charitable activities (other than serving on the boards of directors of
charitable organizations, as to which clause (i) shall control), and (iii)
managing his personal investments and affairs.

                                   ARTICLE 3
                                  COMPENSATION

      Section 3.01.  Base Salary. While Executive is employed by the Company
hereunder, the Company shall pay Executive a base salary (the "Base Salary") at
the annual rate of not less than $795,000, payable in accordance with the usual
payment practices of the Company. Executive's Base Salary shall be subject to
review for increase annually and Executive shall be entitled to such increases
in his Base Salary, if any, as may be determined from time to time in the sole
discretion of the Board or the Personnel & Compensation Committee of the Board
(the "Compensation Committee").



                                       2
<PAGE>
      Section 3.02.  Incentive Compensation Awards. (a) With respect to each
Fiscal Year beginning with the Fiscal Year ending December 31, 2002 during
which Executive is employed hereunder, Executive shall be eligible to receive in
addition to his Base Salary an annual incentive compensation award (the "Annual
Award") for services rendered during such Fiscal Year, subject to the terms and
conditions of the Company's annual incentive compensation plan as in effect from
time to time. The amount of the Annual Award, if any, with respect to any Fiscal
Year shall be based upon performance targets and award levels determined by the
Compensation Committee in its sole discretion, in accordance with the Company's
annual incentive compensation plan as in effect from time to time; provided that
for each Fiscal Year ending after December 31, 2002 the award levels with
respect to Executive shall be established in such a manner as to provide
Executive with the opportunity to earn an award of at least 150% of his Base
Salary for such Fiscal Year, assuming performance at a target level, with a
maximum award opportunity of 300% of Base Salary for such Fiscal Year; provided,
further, however that the Annual Award shall in no event exceed the applicable
award limit under the governing shareholder approved incentive compensation
plan.

      (b) In addition to the Annual Awards described above, Executive shall be
eligible to receive such additional bonuses as may be awarded by the
Compensation Committee in its sole discretion.

      Section 3.03.  Employee Benefits. While Executive is employed by the
Company hereunder, Executive (and, to the extent applicable, his eligible family
members, as defined in the applicable plan or policy) shall be entitled to
participate (or to receive benefits equivalent to such participation), on terms
no less favorable than the terms offered to other senior executives of the
Company, in any group and/or executive life, hospitalization or disability
insurance plan, health program, vacation policy, pension, profit sharing, ESOP,
401(k) and similar benefit plans (qualified, non-qualified and supplemental) and
other fringe benefits of the Company, including free and reduced-rate travel,
automobile allowance, club memberships and dues, and similar programs, as in
effect from time to time.

      Section 3.04.  Supplemental Pension Benefits. Executive shall be entitled
to receive from the Company the supplemental retirement benefit (the
"Supplemental Retirement Benefit") under and in accordance with the terms of the
Excess Benefit Agreement dated as of March 15, 2002 by and between the Company
and Executive, as the same may be amended by the parties from time to time (the
"Excess Benefit Agreement").

      Section 3.05.  Business Expenses. The Company shall reimburse promptly
such of Executive's travel, entertainment and other business expenses as are
reasonably and necessarily incurred by Executive in the performance of his
duties while

                                       3
<PAGE>
employed hereunder, in accordance with the Company's policies as in effect from
time to time.

      Section 3.06.  Stock Incentive Awards. (a) Executive shall receive stock
incentive awards in accordance with the terms of the award agreement(s) attached
hereto as Exhibits A, B and C (such stock incentive awards referred to
hereinafter collectively as the "Renewal Award").

      (b) Executive shall be eligible to receive any additional equity-based
incentive awards, including additional options and restricted stock unit awards,
as may be granted by the Compensation Committee in its sole discretion.

                                   ARTICLE 4
                            TERMINATION OF EMPLOYMENT

      Section 4.01.  Without Cause; For Good Reason. In the event that
Executive's employment is terminated during the Agreement Term, other than by
reason of death, and other than during the Change Period or within one year
prior to, and in anticipation of, a Change in Control, (i) by the Company other
than for Cause or Disability or (ii) by Executive with Good Reason, Executive
shall be entitled to receive from the Company the benefits described in
Paragraphs (a) through (f) below (the "Severance Benefits"):

      (a) The Company shall pay Executive a lump sum, in cash, equal to
Executive's earned but unpaid Base Salary and other earned but unpaid cash
entitlements for the period through and including the date of termination of
Executive's employment, including unused earned and accrued vacation pay and
unreimbursed business expenses. In addition, with respect to the period through
and including the date of termination of Executive's employment, Executive shall
be entitled to any other benefits earned or accrued and payable under any other
employee benefit plans and arrangements maintained by the Company, in accordance
with the terms of such plans and arrangements, except as modified herein (such
amounts and benefits described in this Paragraph (a) referred to hereinafter as
the "Accrued Benefits").

      (b) The Company shall pay Executive a lump sum, in cash, equal to three
times the sum of Executive's Reference Salary and Reference Incentive
Compensation Award; provided, that if as of the date of Executive's termination
of employment pursuant to this Section 4.01, there remain less than three years
in the Agreement Term, the three times multiplier shall be reduced to a
fraction, the numerator of which is the number of whole months remaining in
the Agreement Term as of the date of Executive's termination of employment (the
"Remaining

                                       4
<PAGE>
Months") and the denominator of which is 36, provided, further, however, that in
no event shall such fraction be less than 1.

      (c) The Company shall pay Executive a lump sum, in cash, equal to the
amount of his Annual Award payable for the Fiscal Year in which occurs the
termination of his employment, calculated assuming performance at the target
level and prorated to reflect the portion of such Fiscal Year elapsed through
the date of termination of his employment. The amount of the payment under this
Paragraph (c) shall be reduced by the amount, if any, previously paid with
respect to such Fiscal Year under Section 5.01(i).

      (d) Executive (and, to the extent applicable, his eligible family members)
shall continue to be eligible, for the lesser of (i) 36 months from the date of
such termination of Executive's employment and (ii) the greater of (A) 12 months
and (B) the balance of the Agreement Term, to participate in the benefit plans
and fringe benefits (other than any qualified or nonqualified retirement plans)
in which Executive and his eligible family members were entitled to participate
under Section 3.03 immediately prior to termination of Executive's employment,
including, but not limited to, any life insurance or survivor benefit
arrangements in effect at such time. If continued participation pursuant to this
Section 4.01(d) is not permitted under the terms of one or more of the
applicable benefit plans and programs, the Company shall, in lieu of continued
participation as to those benefits, pay Executive a lump sum, in cash, equal to
the present value (as of the date of the termination of his employment) of such
continued participation. In determining present value for this purpose, all
terms applicable to Executive under such benefit plans and fringe benefits
immediately prior to the date of termination of his employment (including the
level of premiums, if any, payable by Executive) shall be taken into account.

      (e) On and after the first to occur of (i) the third anniversary of
Executive's termination of employment and (ii) the expiration of the Agreement
Term (but in no event prior to the first anniversary of Executive's termination
of employment), he shall be treated as a retired senior executive of the Company
for purposes of all benefit plans and arrangements of the Company (other than
retirement plans) providing for retiree benefits. For purposes of determining
any service-related premiums owed by Executive with respect to any such retiree
benefits, all years of service with which Executive is credited for purposes of
calculating the Supplemental Retirement Benefit shall be taken into account. If
such participation is not permitted under the terms of one or more of the
applicable benefit plans and programs, the Company shall, in lieu of such
participation as to those benefits, pay Executive a lump sum, in cash, equal to
the present value (as of the third anniversary of the termination of his
employment or as of the later of the expiration of the Agreement Term or the
first anniversary of his employment, as applicable) of such participation. In
determining present


                                       5
<PAGE>
value for this purpose, all terms applicable to Executive under such retiree
benefit plans (including the level of premiums, if any, payable by Executive)
shall be taken into account.

      (f) For purposes of calculating the Supplemental Retirement Benefit,
Executive shall be credited with additional years of service credit in an amount
equal to the lesser of (i) three years and (ii) the Remaining Months, provided,
however, that Executive shall be credited with at least one additional year of
service credit; provided further, however, that Executive's years of service
credit shall not exceed the maximum years of service credited under the Excess
Benefit Agreement.

      The Severance Benefits (other than those described in Paragraph (f) and
the first sentence of each of Paragraphs (d) and (e) above) shall be paid or
provided to Executive as soon as practicable following the date of termination
of Executive's employment, but in no event later than 30 days from the date of
such termination of employment.

      Section 4.02.  For Cause; Without Good Reason. In the event Executive's
employment shall be terminated by the Company for Cause or by Executive other
than for Good Reason, the Company shall have no further obligations to Executive
hereunder, other than for Accrued Benefits. Notwithstanding any other provision
of this Agreement to the contrary, Executive shall not be liable to the Company
for breach of this Agreement as a result of termination of his employment other
than for Good Reason, provided Executive has furnished the Company at least 60
days prior written notice of such termination.

      Section 4.03.  Death or Disability. In the event of Executive's death or
termination by the Company for Disability during the Agreement Term, the Company
shall have no further obligations to Executive or his legal representatives
hereunder, other than for Accrued Benefits.

      Section 4.04.  Return of Materials. Executive agrees that upon termination
of his employment hereunder for any reason, he shall return to the Company
immediately all memoranda, books, papers, plans, information, letters and other
data, and all copies thereof or therefrom, in any way relating to the business
of the Company or any of its affiliates, except that he may retain personal
notes, notebooks and diaries. Executive further agrees that he shall not retain
or use for his account at any time any trade name, trademark, service mark or
other proprietary business designation used or owned in connection with the
business of the Company or any of its affiliates.


                                       6
<PAGE>
                                   ARTICLE 5
                 OBLIGATIONS OF COMPANY ON CHANGE IN CONTROL

      Section 5.01.  Payment of Performance-Based Awards. In the event that a
Change in Control occurs during the Agreement Term and while Executive is
employed by the Company, the Company shall promptly thereafter pay Executive the
sum of (i) the Reference Incentive Compensation Award, prorated to reflect the
portion of the Fiscal Year elapsed through the date of the Change in Control,
and (ii) the Reference Long-Term Award, for each performance period that
includes the date of the Change in Control under any long-term incentive plan
maintained by the Company, prorated to reflect the portion of such performance
period elapsed through the date of the Change in Control. The amounts referred
to in clauses (i) and (ii) above shall be calculated, and paid in the form of
cash or shares of Company stock, in accordance with the terms of the applicable
award agreements. The payment under this Section 5.01 shall discharge all
liabilities of the Company to Executive under the Company's annual and long-term
incentive plans and programs, and under this Agreement, with respect to
performance-based incentive compensation (other than stock options and stock
appreciation rights) for the periods referred to in clauses (i) and (ii) above.

      Section 5.02.  Stock Options, Stock Appreciation Rights and
Non-Performance-Based Awards. In the event that a Change in Control occurs
during the Agreement Term and while Executive is employed by the Company, all
outstanding stock options, stock appreciation rights, restricted stock (if not
performance-based), and other non-performance-based awards held by Executive
pursuant to the provisions of the Stock Incentive Plan or any successor plan
shall become immediately vested, nonforfeitable and exercisable as of the date
of the Change in Control.

      Section 5.03.  Additional Severance Benefits. In the event Executive's
employment is terminated under circumstances described in clauses (i) or (ii) of
Section 4.01 either (I) during the Change Period; or (II) within one year prior
to, and in anticipation of, a Change in Control, then, as of the later of the
date of termination of Executive's employment and the Change in Control,
Executive shall be entitled to the payments and benefits provided under Section
4.01 with the following changes:

      (a) Section 4.01(b) shall be applied without giving effect to the proviso
included in such Section. The payment under this Section 5.03(a) shall be
reduced, if Executive's employment has been terminated in anticipation of a
Change in Control as described in clause (II) above, by the total payment (if
any) made to Executive under Section 4.01(b) between the date of termination of
Executive's employment and the date of payment under this Section 5.03(a).


                                       7
<PAGE>
      (b) Section 4.01(d) shall be applied (x) without giving effect to clause
(ii) of such Section (therefore continuing Executive's eligibility to
participate in applicable benefit plans and fringe benefits, to the extent
permitted, for a period of 36 months) and (y) eliminating the reference to life
insurance or survivor benefits coverage and any free or reduced rate flight or
other travel benefits or privileges to which Executive would otherwise be
entitled under Section 4.01(d) (which are dealt with in paragraphs (d) and (e)
below). For purposes of computing amounts payable under Section 4.01(d) (as
modified by the foregoing sentence), the present value referred to in such
Section shall be determined by the actuarial firm acting as actuary for the
Qualified Pension Plan at such time (the "Actuarial Firm") on the basis of such
assumptions as the Actuarial Firm determines to be reasonable. In the event that
the Actuarial Firm is serving as actuary for the Person effecting the Change in
Control or is otherwise unavailable, Executive may appoint another nationally
recognized actuarial firm to make the determinations required hereunder (which
actuarial firm shall then be referred to as the Actuarial Firm hereunder). The
Actuarial Firm shall provide its determination and detailed supporting
calculations to both the Company and Executive within fifteen business days of
the receipt of notice from Executive that a termination, or (if later) a Change
in Control, has occurred giving rise to the right to benefits under this Section
5.03, or such earlier time as is requested by the Company. All fees and expenses
of the Actuarial Firm shall be borne solely by the Company. If Executive's
employment has been terminated in anticipation of a Change in Control as
described in clause (II) above, and the Company has paid Executive the cash
present value of any coverage or benefits (other than life insurance or survivor
benefits coverage, or free or reduced rate flight or other travel benefits or
privileges) to which Executive or his eligible family members would otherwise
have been entitled under Section 4.01(d), the payments otherwise due Executive
under this Section 5.03(b) shall be reduced by the total amount of such cash
present value so paid to Executive.

      (c) In lieu of any continued life insurance or survivor benefits coverage
or participation to which Executive would otherwise be entitled under Section
4.01(d), for a period of three years following the date of Executive's
termination of employment, Executive shall continue to be eligible to
participate in any life insurance or survivor benefit arrangements on the same
terms as in effect immediately preceding such termination of employment. If
Executive's employment has been terminated in anticipation of a Change in
Control as described in clause (II) above and the Company has paid Executive the
cash present value of any life insurance or survivor benefits coverage or
participation to which Executive or his eligible family members became entitled
under Section 4.01(d), any payments or benefits otherwise due Executive under
this Section 5.03(c) shall be reduced by the total amount of such cash present
value so paid to Executive.



                                       8
<PAGE>

      (d) In lieu of any free or reduced rate flight or other travel benefits or
privileges to which Executive would otherwise be entitled under Section 4.01(d),
but without limitation upon any retiree flight privileges for which Executive
may otherwise qualify, Executive and Executive's spouse, for the remainder of
their respective lives, and Executive's dependent children, for so long as they
are under age 18 (or under age 23 if a full-time student), shall be entitled to
free system-wide flight privileges on Company flights to any location which the
Company serves. Such privileges shall entitle Executive, Executive's spouse and
Executive's dependent children to unlimited positive space (or space available,
at Executive's option) first-class tickets, but Executive's dependent children
shall not be entitled to first-class privileges if under age 8; provided further
that all of such flight privileges shall otherwise be subject to the same
conditions and restrictions as pertain from time to time to the flight
privileges generally provided by the Company to its retirees. If Executive's
employment has been terminated in anticipation of a Change in Control as
described in clause (II) above and the Company has paid Executive the cash
present value of any free or reduced rate flight or other benefits or privileges
to which Executive or his eligible family members became entitled under Section
4.01(d), any payments otherwise due Executive under this Section 5.03 shall be
reduced by the total amount of such cash present value so paid to Executive.

      (e) Section 4.01(e) shall be applied on and after the third anniversary of
Executive's termination of Employment and if Executive has earned at least ten
years of continuous service under the Qualified Pension Plan as of the date of
termination of employment (after crediting Executive with three additional years
of service credit) the Company shall pay Executive a lump sum, in cash, equal to
the present value (as of the date of the termination of employment) of any
premium imposed solely because of early retirement.

      (f) If Executive's employment has terminated in anticipation of a Change
in Control as described in clause (II), above, the Company shall pay Executive
the amount that would have been payable to him under Section 5.01 had the Change
in Control occurred as of the date of termination of his employment; provided,
however, that the payment under this Section 5.03(f) shall be reduced by any
payments previously made to Executive under the Company's annual and long-term
incentive plans and programs, and under this Agreement, with respect to
performance-based incentive compensation (other than stock options and stock
appreciation rights) for the periods referred to in clauses (i) and (ii) of
Section 5.01.

      Section 5.04.  Definition of Disability. After the occurrence of a Change
in Control, the term "Disability," as used in Article 4, shall mean Long-Term
Disability, as such term is defined in the Disability Plan.


                                       9
<PAGE>
                                   ARTICLE 6
                              CERTAIN TAX PAYMENTS

      Section 6.01.  Gross-Up Payment. In the event Executive becomes entitled
to benefits under Section 4.01 or Article 5 hereof, the Company shall pay to
Executive an additional lump sum payment (the "Gross-Up Payment"), in cash,
equal to the sum of the amounts, if any, described in paragraphs (a) and (b)
below:

      (a) Executive shall be entitled under this paragraph to the sum of (i) the
present value of all of Executive's applicable federal, state and local taxes
arising due to payments or coverage provided under Section 4.01(d) or 4.01(e),
to the extent such payments or coverage are provided in respect of benefits or
coverage which, if provided to Executive while employed by the Company, would
not have been taxable to Executive, and (ii) an additional amount such that
after payment by Executive of all of Executive's applicable federal, state and
local taxes on such additional amount, Executive will retain an amount
sufficient to pay the total of Executive's applicable federal, state and local
taxes arising due to the payment required pursuant to clause (i) above. For
purposes of clause (i) above, present value shall be determined using the
appropriate "applicable federal rate" promulgated by the Treasury Department
under Code Section 1274(d) for the month in which the Gross-Up Payment is made,
assuming that all taxes will be paid on the due date therefore (without regard
to extensions).

      (b) If any portion of the Severance Benefits or any other payment under
this Agreement, or under any other agreement with or plan of the Company,
including but not limited to stock options and other long-term incentives (in
the aggregate "Total Payments") would be subject to the excise tax imposed by
Section 4999 of the Code or any interest or penalties with respect to such
excise tax (such excise tax, together with any such interest and penalties, are
hereinafter collectively referred to as the "Excise Tax"), then Executive shall
be entitled under this paragraph to an additional amount such that after payment
by Executive of all of Executive's applicable federal, state and local taxes,
including any Excise Tax, imposed upon such additional amount, Executive will
retain an amount sufficient to pay the Excise Tax imposed on the Total Payments.

      The amounts payable under this Section 6.01 shall be paid by the Company
as soon as practicable (but in no event more than 30 days) after the occurrence
of the events giving rise to Executive's right to benefits under Section 4.01 or
Article 5.

      Section 6.02.  Determinations. In the event of a Change in Control, all
determinations required to be made under this Article 6, including the amount of
the Gross-Up Payment, whether a payment is required under Paragraph (b) of
Section 6.01, and the assumptions to be used in determining the Gross-Up


                                       10
<PAGE>
Payment, shall be made by Deloitte & Touche (the "Accounting Firm") which shall
provide detailed supporting calculations both to the Company and Executive
within twenty business days of the receipt of notice from Executive that there
has been an event giving rise to the right to benefits under Article 5, or such
earlier time as is requested by the Company. In the event that the Accounting
Firm is serving as accountant or auditor for a Person effecting the Change in
Control or is otherwise unavailable, Executive may appoint another nationally
recognized accounting firm to make the determinations required hereunder (which
accounting firm shall then be referred to as the Accounting Firm hereunder). All
fees and expenses of the Accounting Firm shall be borne solely by the Company.

      Section 6.03.  Subsequent Redeterminations. Executive agrees (unless
requested otherwise by the Company) to use reasonable efforts to contest in good
faith any subsequent determination by the Internal Revenue Service that
Executive owes an amount of Excise Tax greater than the amount previously
determined under this Article 6; provided, that Executive shall be entitled to
reimbursement by the Company of all fees and expenses reasonably incurred by
Executive in contesting such determination. In the event the Internal Revenue
Service or any court of competent jurisdiction determines that Executive owes an
amount of Excise Tax that is either greater or less than the amount previously
taken into account and paid under this Article 6, the Company shall promptly pay
to Executive, or Executive shall promptly repay to the Company, as the case may
be, the amount of such excess or shortfall. In the case of any payment that the
Company is required to make to Executive pursuant to the preceding sentence (a
"Later Payment"), the Company shall also pay to Executive an additional amount
such that after payment by Executive of all of Executive's applicable federal,
state and local taxes on such additional amount, Executive will retain an amount
sufficient to pay the total of Executive's applicable federal, state and local
taxes arising due to the Later Payment. In the case of any repayment of Excise
Tax that Executive is required to make to the Company pursuant to the second
sentence of this Section 6.03, Executive shall also repay to the Company the
amount of any additional payment received by Executive from the Company in
respect of applicable federal, state and local taxes on such repaid Excise Tax,
to the extent Executive is entitled to a refund of (or has not yet paid) such
federal, state or local taxes.

                                   ARTICLE 7
                           SUCCESSORS AND ASSIGNMENTS

      Section 7.01.  Successors. The Company will require any successor (whether
by reason of a Change in Control, direct or indirect, by purchase, merger,
consolidation, or otherwise) to all or substantially all of the business and/or
assets

                                       11
<PAGE>
of the Company to expressly assume and agree to perform the obligations under
this Agreement in the same manner and to the same extent that the Company would
be required to perform them if no such succession had taken place.

      Section 7.02.  Assignment by Executive. This Agreement shall inure to the
benefit of and be enforceable by Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees, and
legatees. If Executive should die while any amount is owed but unpaid to
Executive hereunder, all such amounts, unless otherwise provided herein, shall
be paid to Executive's devisee, legatee, or other designee, or if there is no
such designee, to Executive's estate. Executive's rights hereunder shall not
otherwise be assignable.

                                   ARTICLE 8
                                  MISCELLANEOUS

      Section 8.01.  Notices. Any notice required to be delivered hereunder
shall be in writing and shall be addressed

      if to the Company, to:

            Delta Air Lines, Inc.
            Hartsfield Atlanta International Airport
            Post Office Box 20706
            Atlanta, GA 30320-2534
            Attention: General Counsel;

      if to Executive, to Executive's last known address as reflected on the
      books and records of the Company, with a copy to:


            Vedder, Price, Kaufman & Kammholz
            222 North LaSalle Street, Suite 2600
            Chicago, Illinois 60601
            Attention: Robert J. Stucker

or such other address as such party may hereafter specify for the purpose by
written notice to the other party hereto. Any such notice shall be deemed
received on the date of receipt by the recipient thereof if received prior to 5
p.m. in the place of receipt and such day is a business day in the place of
receipt. Otherwise, any such notice shall be deemed not to have been received
until the next succeeding business day in the place of receipt.


                                       12
<PAGE>
      Section 8.02. Legal Fees and Expenses. The Company shall pay all legal
fees, costs of litigation, prejudgment interest, and other expenses which are
reasonably incurred by Executive in connection with the negotiation and
preparation of this Agreement or as a result of (i) the Company's refusal to
provide benefits or other amounts in accordance herewith, (ii) the Company's (or
any third party's) contesting the validity, enforceability, or interpretation of
the Agreement, (iii) any conflict between the parties pertaining to this
Agreement, (iv) Executive's contesting any determination by the Internal Revenue
Service pursuant to Section 6.03, or (v) Executive's pursuing any claim under
Section 8.18. Notwithstanding the foregoing, in the case of any such fees,
costs, interest or other expenses incurred prior to a Change in Control,
Executive shall be entitled to payment hereunder only if Executive is successful
to a material degree in the contest or dispute giving rise thereto.

      Section 8.03. Calculation of Taxes. For purposes of any provision of this
Agreement requiring the payment by the Company of Executive's applicable
federal, state and local taxes with respect to any benefit or payment provided
for hereunder, such federal, state and local taxes shall be computed at the
maximum marginal rates, taking into account the effect of any loss of personal
exemptions resulting from receipt by Executive of such benefit or payment.

      Section 8.04. Arbitration. Executive and, unless a Change in Control shall
have occurred, the Company shall have the right and option to elect (in lieu of
litigation) to have any dispute or controversy arising under or in connection
with this Agreement settled by arbitration, conducted before a panel of three
arbitrators sitting in a location selected by Executive within 50 miles from the
location of his job with the Company, in accordance with the rules of the
American Arbitration Association then in effect. Executive's or the Company's
election to arbitrate, as herein provided, and the decision of the arbitrators
in that proceeding, shall be binding on the Company and Executive. Judgment may
be entered on the award of the arbitrator in any court having jurisdiction. All
expenses of such arbitration, including the fees and expenses reasonably
incurred by Executive, shall be borne by the Company.

      Section 8.05. Unfunded Agreement. Except to the extent otherwise provided
in Section 3.04 and Article 5, the obligations of the Company under this
Agreement represent an unsecured, unfunded promise to pay benefits to Executive
and/or Executive's beneficiaries, and shall not entitle Executive or such
beneficiaries to a preferential claim to any asset of the Company.

      Section 8.06. Covenants; Confidential Information. (a) Executive shall
hold in a fiduciary capacity for the benefit of the Company all secret or
confidential information, knowledge or data relating to the Company, or any of
its subsidiaries, affiliates

                                       13
<PAGE>
and businesses, which shall have been obtained by Executive pursuant to his
employment by the Company or any of its subsidiaries and affiliates and which
shall not have become public knowledge (other than by acts by Executive or his
representatives in violation of this Agreement). After termination of
Executive's employment with the Company, Executive shall not, without the prior
written consent of the Company, communicate or divulge any such information,
knowledge or data to anyone other than the Company and those designated by it.
After the occurrence of a Change in Control, in no event shall an asserted
violation of the provisions of this Section 8.06 constitute a basis for
deferring or withholding any amounts otherwise payable to Executive under this
Agreement.

      (b) Executive acknowledges and recognizes the highly competitive nature of
the business of the Company and its Affiliates and accordingly agrees that, in
consideration of the benefits and protections conferred under this Agreement,
during the term of Executive's employment with the Company and for 2 years
following the date of Executive's termination of employment, Executive shall
not, other than with the prior written consent of the Company, directly or
indirectly provide management or executive services (whether as a consultant,
advisor, officer or director) to any Person who is in direct and substantial
competition with the air transportation business of the Company or its
Subsidiaries.

      (c) During the term of Executive's employment with the Company and for 2
years following the date of Executive's termination of employment, Executive
shall not recruit, solicit or induce any nonclerical employee or employees of
the Company or its Affiliates to terminate their employment with, or otherwise
cease their relationship with, the Company or its affiliates or hire or assist
another person or entity to hire any nonclerical employee of the Company or its
affiliates or any person who within twelve months before had been a nonclerical
employee of the Company or its Affiliates.

      (d) If Executive breaches the non-competition covenant of paragraph (b)
above or the non-solicitation covenant of paragraph (c) above, (i) Executive
shall not be entitled to any further benefits under the Excess Benefit Agreement
and (ii) Executive shall repay to the Company in cash an amount equal to the
Liquidated Damages.

      (e) Because of the broad and extensive scope of the Company's air
transportation business, the restrictions contained in this provision are
intended to extend to management or executive services which are directly
related to the provision of air transportation services into, within or from the
United States, as no smaller geographical restrictions will adequately protect
the legitimate business interest of the Company. If any tribunal of competent
jurisdiction finds that any restriction contained in this Agreement is
unenforceable, such finding shall not affect the enforceability of any of the
other restrictions contained herein.


                                       14
<PAGE>

      (f) Executive acknowledges and agrees that the Company's remedies at law
for a breach or threatened breach of any of the provisions of this Section 8.06
would be inadequate and, in recognition of this fact, Executive agrees that, in
the event of such a breach or threatened breach, in addition to any remedies at
law, the Company, without posting any bond, shall be entitled to seek equitable
relief in the form of specific performance, temporary restraining order,
temporary or permanent injunction or any other equitable remedy which may then
be available.

      (g) Notwithstanding any other provisions of this Agreement, the provisions
of this Section 8.06 shall survive and remain in effect notwithstanding the
termination of this Agreement or any breach by the Company or Executive of any
other term of this Agreement.

      Section 8.07. Non-Exclusivity of Benefits. Unless specifically provided
herein, neither the provisions of this Agreement nor the benefits provided
hereunder shall reduce any amounts otherwise payable, or in any way diminish
Executive's rights as an employee of the Company, whether existing now or
hereafter, under any compensation and/or benefit plans (qualified or
nonqualified), programs, policies, or practices provided by the Company, for
which Executive may qualify. Vested benefits or other amounts which Executive is
or becomes otherwise entitled to receive under any plan, policy, practice, or
program of the Company (i.e., including, but not limited to, vested benefits
under the Qualified Pension Plan, the Retention Program and the Excess Benefit
Agreement, but excluding benefits under any broad-based severance plan), during,
at or subsequent to the date of termination of Executive's employment shall be
payable in accordance with such plan, policy, practice, or program except as
expressly modified by this Agreement.

      Section 8.08. Compensation Taken Into Account. Severance Benefits provided
hereunder (other than, to the extent applicable, amounts payable pursuant to
Sections 4.01(a), 4.01(c) and 5.01) shall not be considered for purposes of
determining Executive's benefits under any other plan or program of the Company
(including without limitation the Qualified Pension Plan and the Excess Benefit
Agreement).

      Section 8.09. Employment Status. Nothing herein contained shall interfere
with the Company's right to terminate Executive's employment with the Company at
any time, with or without Cause, subject to the Company's obligation to provide
such Severance Benefits and other amounts as may be required hereunder.

      Section 8.10. Mitigation. In no event shall Executive be obligated to seek
other employment or take any other action by way of mitigation of the amounts
payable to Executive under any of the provisions of this Agreement, nor shall
the amount of any payment hereunder be reduced by any compensation earned by
Executive as a result of employment by another employer.


                                       15
<PAGE>
      Section 8.11. No Set-Off. The Company's obligations to make all payments
and honor all commitments under this Agreement shall be absolute and
unconditional and shall not be affected by any circumstances including, without
limitation, any set-off, counterclaim, recoupment, defense or other right which
the Company may have against Executive, except that offsets for amounts
previously paid shall be permitted to the extent expressly provided in Sections
4.01(c) and 5.04.

      Section 8.12. Entire Agreement. Except as provided in Section 8.07, this
Agreement, together with the Exhibits hereto, represents the entire agreement
between the parties with respect to Executive's employment and/or severance
rights (including upon a Change in Control), and supersedes all prior
discussions, negotiations, and agreements concerning such rights, including, but
not limited to, the Old Employment Agreement and any prior severance agreement
made between Executive and the Company.

      Section 8.13. Tax Withholding. Notwithstanding anything in this Agreement
to the contrary, the Company shall withhold from any amounts payable under this
Agreement all federal, state, city, or other taxes as are legally required to be
withheld.

      Section 8.14. Waiver of Rights. The waiver by either party of a breach of
any provision of this Agreement shall not operate or be construed as a
continuing waiver or as a consent to or waiver of any subsequent breach hereof.

      Section 8.15. Severability. In the event any provision of this Agreement
shall be held illegal or invalid for any reason, the illegality or invalidity
shall not affect the remaining parts of this Agreement, and this Agreement shall
be construed and enforced as if the illegal or invalid provision had not been
included.

      Section 8.16. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Georgia without reference
to principles of conflict of laws.

      Section 8.17. Counterparts. This Agreement may be signed in several
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were on the same instrument.

      Section 8.18. Claim Review Procedure. If Executive is denied benefits
under this Agreement, Executive may request, in writing, a review of the denial
by the Company or its designee within 60 days of receiving written notice of the
denial. The Company shall respond in writing to a written request for review
within 90 days of receipt of such request. Neither the claim procedure set forth
in this Section 8.18 nor Executive's failure to adhere to such procedure shall
derogate
                                       16
<PAGE>
from Executive's right to enforce this Agreement through legal action, including
arbitration as provided in Section 8.04.

      Section 8.19. Indemnification. The Company shall indemnify Executive (and
Executive's legal representatives or other successors) to the fullest extent
permitted by the Certificate of Incorporation and By-Laws of the Company, as in
effect at such time or on the Effective Date, or by the terms of any
indemnification agreement between the Company and Executive, whichever affords
or afforded greater protection to Executive, and Executive shall be entitled to
the protection of any insurance policies the Company may elect to maintain
generally for the benefit of its directors and officers (and to the extent the
Company maintains such an insurance policy or policies, Executive shall be
covered by such policy or policies, in accordance with its or their terms, to
the maximum extent of the coverage available for any Company officer or
director), against all costs, charges and expenses whatsoever incurred or
sustained by Executive or Executive's legal representatives at the time such
costs, charges and expenses are incurred or sustained, in connection with any
action, suit or proceeding to which Executive (or Executive's legal
representatives or other successors) may be made a party by reason of
Executive's being or having been a director, officer or employee of the Company,
or any Subsidiary or Executive's serving or having served any other enterprise
as a director, officer, employee or fiduciary at the request of the Company.

                                    ARTICLE 9
                                   DEFINITIONS

      For purposes of this Agreement, the following terms shall have the
meanings set forth below.

      "Accounting Firm" has the meaning accorded such term in Section 6.02.

      "Accrued Benefits" has the meaning accorded such term in Section 4.01(a).

      "Actuarial Firm" has the meaning accorded such term in Section 5.03(b).

      "Affiliate" and "Associate" have the respective meanings accorded to such
terms in Rule 12b-2 under the Exchange Act as in effect on the Effective Date.

      "Agreement Term" has the meaning accorded such term in Section 1.01.

      "Annual Award" has the meaning accorded such term in Section 3.02(a).


                                       17
<PAGE>
      "Base Salary" means, at any time, the then-regular annual rate of pay
which Executive is receiving as annual salary.

      "Beneficial Ownership." A Person shall be deemed the "Beneficial Owner"
of, and shall be deemed to "beneficially own," securities pursuant to Rule 13d-3
under the Exchange Act as in effect on the Effective Date.

      "Board" has the meaning accorded such term in the second "Whereas" clause
of this Agreement.

      "Cause" means the occurrence of any one or more of the following:

      (a) A demonstrably willful and deliberate act or failure to act by
Executive (other than as a result of incapacity due to physical or mental
illness) which is committed in bad faith, without reasonable belief that such
action or inaction is in the best interests of the Company, and which action or
inaction is not remedied within fifteen business days of written notice from the
Company; or

      (b) Executive's conviction for committing an act of fraud, embezzlement,
theft, or any other act constituting a felony involving moral turpitude.

      Notwithstanding the foregoing, Executive shall not be deemed to have been
terminated for Cause unless and until there shall have been delivered to
Executive a copy of a resolution duly adopted by the affirmative vote (which
cannot be delegated) of not less than three-quarters of the entire membership of
the Board at a meeting of the Board called and held for such purpose (after
reasonable notice to Executive and an opportunity for Executive, together with
Executive's counsel, to be heard before the Board), finding that, in the good
faith opinion of the Board, Executive is guilty of conduct set forth above in
clauses (a) or (b) of this definition and specifying the particulars thereof in
detail.

      "Change in Control" means, and shall be deemed to have occurred upon, the
first to occur of any of the following events:

      (a) Any Person (other than an Excluded Person) acquires, together with all
Affiliates and Associates of such Person, Beneficial Ownership of securities
representing 20% or more of the combined voting power of the Voting Stock then
outstanding, unless such Person acquires Beneficial Ownership of 20% or more of
the combined voting power of the Voting Stock then outstanding solely as a
result of an acquisition of Voting Stock by the Company which, by reducing the
Voting Stock outstanding, increases the proportionate Voting Stock beneficially
owned by such Person (together with all Affiliates and Associates of such
Person) to 20% or more of the combined voting power of the Voting Stock then
outstanding; provided, that if a Person shall become the Beneficial Owner of 20%
or more of the combined voting power of the Voting Stock then outstanding by
reason of such Voting Stock acquisition by the Company and shall thereafter
become the Beneficial Owner of any additional Voting Stock which causes the
proportionate voting power of Voting Stock beneficially owned by such Person to
increase to 20% or more of the combined voting power of the Voting Stock


                                       18
<PAGE>
then outstanding, such Person shall, upon becoming the Beneficial Owner of such
additional Voting Stock, be deemed to have become the Beneficial Owner of 20% or
more of the combined voting power of the Voting Stock then outstanding other
than solely as a result of such Voting Stock acquisition by the Company;

      (b) During any period of two consecutive years (not including any period
prior to the Effective Date), individuals who at the beginning of such period
constitute the Board (and any new Director, whose election by the Board or
nomination for election by the Company's stockholders was approved by a vote of
at least two-thirds of the Directors then still in office who either were
Directors at the beginning of the period or whose election or nomination for
election was so approved), cease for any reason to constitute a majority of
Directors then constituting the Board;

      (c) A reorganization, merger or consolidation of the Company is
consummated, in each case, unless, immediately following such reorganization,
merger or consolidation, (i) more than 50% of, respectively, the then
outstanding shares of common stock of the corporation resulting from such
reorganization, merger or consolidation and the combined voting power of the
then outstanding voting securities of such corporation entitled to vote
generally in the election of directors is then beneficially owned, directly or
indirectly, by all or substantially all of the individuals and entities who were
the beneficial owners of the Voting Stock outstanding immediately prior to such
reorganization, merger or consolidation, (ii) no Person (but excluding for this
purpose any Excluded Person and any Person beneficially owning, immediately
prior to such reorganization, merger or consolidation, directly or indirectly,
20% or more of the voting power of the outstanding Voting Stock) beneficially
owns, directly or indirectly, 20% or more of, respectively, the then outstanding
shares of common stock of the corporation resulting from such reorganization,
merger or consolidation or the combined voting power of the then outstanding
voting securities of such corporation entitled to vote generally in the election
of directors and (iii) at least a majority of the members of the board of
directors of the corporation resulting from such reorganization, merger or
consolidation were members of the Board at the time of the execution of the
initial agreement providing for such reorganization, merger or consolidation; or

      (d) The shareholders of the Company approve (i) a complete liquidation or
dissolution of the Company or (ii) the sale or other disposition of all


                                       19
<PAGE>
or substantially all of the assets of the Company, other than to any corporation
with respect to which, immediately following such sale or other disposition, (A)
more than 50% of, respectively, the then outstanding shares of common stock of
such corporation and the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in the election of
directors is then beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the beneficial owners
of the Voting Stock outstanding immediately prior to such sale or other
disposition of assets, (B) no Person (but excluding for this purpose any
Excluded Person and any Person beneficially owning, immediately prior to such
sale or other disposition, directly or indirectly, 20% or more of the voting
power of the outstanding Voting Stock) beneficially owns, directly or
indirectly, 20% or more of, respectively, the then outstanding shares of common
stock of such corporation or the combined voting power of the then outstanding
voting securities of such corporation entitled to vote generally in the election
of directors and (C) at least a majority of the members of the board of
directors of such corporation were members of the Board at the time of the
execution of the initial agreement or action of the Board providing for such
sale or other disposition of assets of the Company.

      Notwithstanding the foregoing, in no event shall a "Change in Control" be
deemed to have occurred (i) as a result of the formation of a Holding Company or
(ii) with respect to Executive, if Executive is part of a "group," within the
meaning of Section 13(d)(3) of the Exchange Act as in effect on the Effective
Date, which consummates the Change in Control transaction. In addition, for
purposes of the definition of "Change in Control" a Person engaged in business
as an underwriter of securities shall not be deemed to be the "Beneficial Owner"
of, or to "beneficially own," any securities acquired through such Person's
participation in good faith in a firm commitment underwriting until the
expiration of forty days after the date of such acquisition.

      "Change Period" has the meaning accorded such term in Section 1.02.

      "COBRA" means the Consolidated Omnibus Budget Reconciliation Act of 1985,
as amended.

      "Code" means the Internal Revenue Code of 1986, as amended.

      "Company" has the meaning accorded such term in the introductory paragraph
of this Agreement.

      "Compensation Committee" has the meaning accorded such term in Section
3.01.

                                       20
<PAGE>
      "Disability" means, except to the extent modified pursuant to Section
5.04, Executive's inability due to physical or mental incapacity for a period of
six consecutive months or for an aggregate of nine months in any 18 consecutive
month period substantially to perform his duties hereunder.

      "Disability Plan" means the Delta Family-Care Disability and Survivorship
Plan (or any successor disability and/or survivorship plan adopted by the
Company), as in effect immediately prior to a Change in Control (subject to
changes in coverage levels applicable to all employees generally covered by such
Plan).

      "Earliest Retirement Date" means the earliest date, after the date of
termination of Executive's employment, as of which Executive would be eligible
to commence receiving retirement benefits under the Qualified Pension Plan.

      "Effective Date" has the meaning accorded such term in the introductory
paragraph of this Agreement.

      "Employee Grantor Trust" has the meaning accorded such term in the Excess
Benefit Agreement.

      "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.

      "Excess Benefit Agreement" has the meaning accorded such term in Section
3.04(a).

      "Exchange Act" means the Securities Exchange Act of 1934, as amended.

      "Excise Tax" has the meaning accorded such term in Section 6.01.

      "Excluded Person" means (i) the Company; (ii) any of the Company's
Subsidiaries; (iii) any Holding Company; (iv) any employee benefit plan of the
Company, any of its Subsidiaries or a Holding Company; or (v) any Person
organized, appointed or established by the Company, any of its Subsidiaries or a
Holding Company for or pursuant to the terms of any plan described in clause
(iv).

      "Executive" has the meaning accorded such term in the introductory
paragraph of this Agreement.

      "Fiscal Year" means a fiscal year of the Company.

      "Good Reason" means, other than by reason of the Company's compliance with
any legal, regulatory or corporate governance requirement, the occurrence of


                                       21
<PAGE>
any one or more of the following, unless Executive has expressly consented in
writing thereto:

      (a) The assignment to Executive of duties inconsistent with Executive's
authorities, duties, titles, responsibilities and status as an officer of the
Company, or a reduction or alteration in the nature or status of Executive's
authorities, duties, titles or responsibilities, from those in effect as of the
Effective Date and described in Section 2.01; other than an insubstantial and
inadvertent act that is remedied by the Company promptly after receipt of notice
thereof given by Executive;

      (b) The Company's requiring Executive to be based at a location in excess
of 50 miles from Executive's principal job location or office on the later of
(i) the Effective Date or (ii) immediately prior to the Reference Date; except
for required travel on the Company's business to an extent consistent with
Executive's business travel obligations on the later of (i) the Effective Date
or (ii) immediately prior to the Reference Date;

      (c) A reduction by the Company of Executive's Base Salary as in effect on
the later of (i) the Effective Date or (ii) the Reference Date (other than
pursuant to a reduction by a uniform percentage of the salary of all full-time
domestic employees of the Company who are not subject to a collective bargaining
agreement); or a reduction in Executive's short-term or long-term incentive
compensation opportunities under the executive incentive compensation plans of
the Company for which Executive is eligible as in effect on the later of (i) the
Effective Date or (ii) the Reference Date;

      (d) The failure by the Company to keep in effect compensation, retirement,
health and welfare benefits, or perquisite programs under which Executive
receives benefits substantially similar, in the aggregate, to the benefits under
such programs as exist on the later of (i) the Effective Date or (ii)
immediately prior to the Reference Date, or the failure of the Company to meet
the funding requirements, if any, of any such programs (other than pursuant to
an equivalent reduction in such benefits or pursuant to an equivalent failure to
meet the funding requirements of such programs applicable to all similarly
situated full-time domestic employees of the Company who are not subject to a
collective bargaining agreement);

      (e) Any material breach by the Company of its obligations under this
Agreement or any failure of a successor of the Company to assume and agree to
perform the Company's entire obligations under this Agreement, as required by
Article 7 herein, provided that such successor has received at least ten days
written notice from the Company or Executive of the requirements of Article 7;
or

                                       22
<PAGE>
      (f) Executive's ceasing to be Chairman of the Board.

      "Gross-Up Payment" has the meaning accorded such term in Section 6.01.

      "Holding Company" means an entity that becomes a holding company for the
Company or its businesses as a part of any reorganization, merger, consolidation
or other transaction, provided that the outstanding shares of common stock of
such entity and the combined voting power of the then outstanding voting
securities of such entity entitled to vote generally in the election of
directors is, immediately after such reorganization, merger, consolidation or
other transaction, beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Voting Stock outstanding immediately prior to such
reorganization, merger, consolidation or other transaction in substantially the
same proportions as their ownership, immediately prior to such reorganization,
merger, consolidation or other transaction, of such outstanding Voting Stock.

      "Later Payment" has the meaning accorded such term in Section 6.03.

      "Liquidated Damages" means the sum of (a) and (b) where:

      (a) equals the sum of (x) all contributions (if any) made by the Company
to the Employee Grantor Trust, (y) all payments (if any) made directly to the
Executive, his spouse, eligible family member or beneficiary under the Excess
Benefit Agreement and (z) all related amounts with respect to such contributions
or payments withheld by the Company for the purpose of satisfying tax
withholding requirements; and

      (b) equals the amount that would have been earned with respect to such
contributions or payments had such amounts been invested in an interest-bearing
account, compounded annually, using an annual interest rate equal to the sum of
(i) the prime rate as published in the Wall Street Journal on the date of such
contribution or payment was made to the trust and (ii) 2%.

      "Medical Plans" means the DeltaFlex and the Delta Family-Care Medical
Plans (or any successor medical plans adopted by the Company), as in effect
immediately prior to a Change in Control (subject to changes in coverage levels
applicable to all employees generally covered by such Plans).

      "Old Employment Agreement" has the meaning accorded such term in the
second "Whereas" clause of this Agreement.

      "Person" means an individual, corporation, partnership, association, trust
or any other entity or organization.


                                       23
<PAGE>
      "Qualified Pension Plan" means the Delta Family-Care Retirement Plan (or
any successor qualified defined benefit retirement plan adopted by the Company).

      "Reference Date" means the earlier to occur of (i) a Change in Control and
(ii) the date 90 days prior to the termination of Executive's employment.

      "Reference Incentive Compensation Award" means:

      (a) for purposes Section 5.01 hereof, the greater of the target annual
incentive compensation award or bonus (A) for the Company's most recently
completed Fiscal Year prior to the Change in Control and (B) for the Company's
Fiscal Year that includes the Change in Control.

      (b) for all other purposes hereunder, the greater of (A) the target annual
incentive compensation award or bonus most recently established prior to the
termination of Executive's employment and (B) the actual annual incentive
compensation award or bonus for the Company's most recently completed Fiscal
Year prior to the termination of employment.

      For purposes of both parts (a) and (b) of this definition, the "target
annual incentive compensation award or bonus" with respect to any Fiscal Year
shall be determined by multiplying the target salary percentage applicable to
Executive for such year by the Reference Salary.

      "Reference Long-Term Award" means, for each performance period that
includes the date of a Change in Control under a long-term incentive plan
maintained by the Company, the greater of (i) the actual award payable to
Executive for such performance period, calculated as if such performance period
had ended on the date of the Change in Control and (ii) the target award payable
to Executive for such performance period.

      "Reference Salary" means Executive's annual rate of Base Salary as in
effect upon the date of termination of Executive's employment or, in the event
of such a termination during the Change Period, immediately prior to the Change
in Control, if higher.

      "Remaining Months" has the meaning accorded such term in Section 4.01(b).

      "Renewal Award" has the meaning accorded such term in Section 3.06.

      "Retention Program" means the Company 2002 Retention Program.

      "Retirement Age" means Executive's age on January 1, 2008.



                                       24
<PAGE>
      "Severance Benefits" has the meaning accorded such term in Section 4.01.

      "Stock Incentive Plan" means the Company's 1989 Stock Incentive Plan and
the Company's 2000 Performance Compensation Plan.

      "Subsidiary" of any Person means any other Person of which securities or
other ownership interests having voting power to elect a majority of the board
of directors or other Persons performing similar functions are at the time
directly or indirectly owned by such Person.

      "Supplemental Retirement Benefit" has the meaning accorded such term in
Section 3.04(a).

      "Total Payments" has the meaning accorded such term in Section 6.01.

      "Voting Stock" means securities of the Company entitled to vote generally
in the election of members of the Board.


                                       25
<PAGE>
      IN WITNESS WHEREOF, the Company and Executive have executed this
Agreement, to be effective as of the day and year first written above.


EXECUTIVE                                  Delta Air Lines, Inc.

                                           By:
- ------------------------------                     -----------------------------
Leo F. Mullin                              Name:   Edward H. Budd
                                           Title:  Chairman, Personnel &
                                                   Compensation Committee


                                       26

<PAGE>
                                                                       EXHIBIT A


                    DELTA 2000 PERFORMANCE COMPENSATION PLAN
                   NON-QUALIFIED STOCK OPTION AWARD AGREEMENT

                               November 29, 2002

Leo F. Mullin
Chief Executive Officer

      The Delta 2000 Performance Compensation Plan (the "Plan"), is an incentive
compensation plan for officers and key employees of Delta Air Lines, Inc. (the
"Company") and its Subsidiaries. The Plan is administered by the Personnel &
Compensation Committee of the Company's Board of Directors (the "Committee").
The Committee has selected you to receive an award of a Non-Qualified Stock
Option, effective as of November 29, 2002, and has requested me, on behalf of
the Company, to provide this Agreement to you.

      In consideration of the mutual covenants herein contained and for other
good and valuable consideration, the Company and you, as an employee of the
Company or one or more of its Subsidiaries, hereby agree as follows:

1. Grant of Award; Acknowledgments; Capitalized Terms. The Company hereby grants
to you 450,000 Non-Qualified Stock Options (each a "Stock Option"). Each Stock
Option may be exercised for one share of Company common stock (an "Option
Share"). This award is in all respects made subject to the terms and conditions
of the Plan and, in the event of any conflict between the Plan and this
Agreement, the Plan shall control. You acknowledge that you (a) have had a full
and adequate opportunity to read this Agreement and the Plan; (b) agree to all
of the terms and conditions thereof for yourself, any designated beneficiary and
your heirs, executors, administrators or personal representatives; and (c) have
received, and had a full and adequate opportunity to read, the Prospectus
relating to the Plan. Capitalized terms which are used but not defined in this
Agreement shall have the meanings set forth in the Plan.

2. Option Exercise Price. The Option Exercise Price of the Stock Options covered
by this award shall be $13.50, the closing price of the Company common stock on
the New York Stock Exchange on the date of this award.

3. Exercise Period. Subject to the terms and conditions of the Plan and this
Agreement, 100% of the Stock Options shall become exercisable on the earlier of
(a) the first business day of January 2008 and (b) the occurrence of a Change in
Control, and shall be exercisable through and including November 28, 2012. In
the event your employment with the Company terminates prior to the earlier of
(a) December 31, 2007 and (b) the occurrence of a Change in Control, the


             This document constitutes part of a prospectus covering
     securities that have been registered under the Securities Act of 1933.
<PAGE>
Stock Options and all associated rights shall be forfeited at the time of such
termination of employment.


                                       2
<PAGE>
4. Definitions. For purposes of Paragraph 3 of this Agreement, (i) employment
with the Company includes employment with any Subsidiary of the Company; and
(ii) termination of employment with the Company means you are no longer an
employee of the Company or any of its Subsidiaries.

5. Stock Option Exercise Procedures. Subject to the terms and conditions of the
Plan and this Agreement, you (or, pursuant to Paragraph 7 of this Agreement, a
party acting on your behalf after your death) may exercise your Stock Options in
whole or, from time to time, in part pursuant to the procedures described in the
Prospectus relating to the Plan or as otherwise specified by the Company from
time to time. Payment of the full purchase price of the shares of Stock covered
by the exercise shall be made in the manner prescribed by the Committee from
time to time. If the Committee, in its sole discretion, shall determine that it
is appropriate to do so, such payment may be made in whole or in part by tender
of shares of unrestricted Stock, as set forth in Section 5 of the Plan, subject
to such requirements or procedures as the Committee may specify.

6. Tax Withholding. The Company may in its sole discretion withhold from the
shares of Company common stock issued to you a sufficient number of shares of
such stock based on its fair market value on the date of exercise to cover any
amounts which the Company is required to withhold to comply with withholding
requirements of federal, state, local or foreign tax laws, rules or regulations.
The fair market value for purposes of the second sentence of this paragraph
shall be as determined by the Committee.

7. Restrictions on Transferability. Your stock options are not transferable
otherwise than by will, by the laws of descent and distribution, or by a written
designation referred to in Section 8.5 of the Plan, and are exercisable during
your lifetime only by you. In the event that your Stock Options are to be
exercised by any person other than you, such person shall provide appropriate
proof of his or her right to exercise your Stock Options.

8. Federal Securities Law; Company Policies. You acknowledge that the federal
securities laws and/or the Company's policies regarding trading in its
securities may limit or restrict your right to buy or sell shares of Company
common stock, including, without limitation, sales of Company common stock to
exercise your Stock Options or sales of Company common stock acquired pursuant
to the exercise of your Stock Options. You agree to comply with such federal
securities law requirements and Company policies, as such laws and policies are
amended from time to time.

9. Miscellaneous

      a. Authority of the Committee. The Committee has the sole and complete
authority to construe and interpret the Plan and this Agreement. All
determinations of the Committee shall be final and conclusive for all purposes
and upon all persons. The Committee shall be under no


                                       3
<PAGE>
obligation to construe this Agreement or treat your Stock Options in a manner
consistent with the treatment provided with respect to other Stock Options or
Participants.

      b. No Rights as Shareholder. You will not have any rights to dividends nor
any other rights of a shareholder with respect to the Option Shares until the
Option Shares have been issued following a valid exercise of the Stock Option.

      c. Entire Agreement. This Agreement and the Plan constitute the entire
agreement between you and the Company with respect to the subject matter hereof.
This Agreement may not be amended except by a writing signed by the parties.

      This Agreement has been prepared in duplicate. Please note your acceptance
in the space provided therefor and return one original to the Vice President -
Global Rewards & Recognition (Dept. 959-ATG) for the Company's records.


                                       4
<PAGE>
      IN WITNESS WHEREOF, the Company, acting through the Committee, and you
have executed this Agreement, all as of the date first written above.

                                    DELTA AIR LINES, INC.


                                    By:
                                           -------------------------------------
                                           Edward H. Budd, Chairman
                                           Personnel & Compensation Committee

                                    PARTICIPANT

                                    --------------------------------------------
                                    Leo F. Mullin


                                       5
<PAGE>
                                                                       EXHIBIT B

                    DELTA 2000 PERFORMANCE COMPENSATION PLAN
                      RESTRICTED STOCK UNIT AWARD AGREEMENT

                               November 29, 2002

Leo F. Mullin
Chief Executive Officer

      The Delta 2000 Performance Compensation Plan (the "Plan"), is an incentive
compensation plan for officers and key employees of Delta Air Lines, Inc. (the
"Company") and its Subsidiaries. The Plan is administered by the Personnel &
Compensation Committee of the Company's Board of Directors (the "Committee").
The Committee has selected you to receive an award of restricted stock units,
effective as of November 29, 2002, and has requested me, on behalf of the
Company, to provide this Agreement to you.

      In consideration of the mutual covenants herein contained and for other
good and valuable consideration, the Company and you, as an employee of the
Company or one or more of its Subsidiaries, hereby agree as follows:

1. Grant of Award; Acknowledgments; Capitalized Terms. The Company hereby grants
to you 150,000 restricted stock units (each an "RSU"). Each RSU represents a
right to a payment equal to the value of one share of Company common stock (a
"Share") in the future. This award is in all respects made subject to the terms
and conditions of the Plan and, in the event of any conflict between the Plan
and this Agreement, the Plan shall control. This award represents a grant of an
"Other Equity Based Award" under the Plan. You acknowledge that you (a) have had
a full and adequate opportunity to read this Agreement and the Plan; (b) agree
to all of the terms and conditions thereof for yourself, any designated
beneficiary and your heirs, executors, administrators or personal
representatives; and (c) have received, and had a full and adequate opportunity
to read, the Prospectus relating to the Plan. Capitalized terms which are used
but not defined in this Agreement shall have the meanings set forth in the Plan.

2. Value. The value of one RSU on any given date will be equal to the closing
price of the Company common stock on the New York Stock Exchange as of such date
(or, in the event that no sale of the Company common stock takes place on the
New York Stock Exchange on such date, the closing price of such common stock on
the immediately preceding date).

3. Terms. Subject to the terms and conditions of the Plan and this Agreement,
you shall be entitled to receive (and the Company shall deliver to you) a
payment equal to the value of 100% of the Shares underlying the RSUs, on the
earlier of (a) the first business day of January 2008, subject to your continued
employment by the Company on December 31, 2007 and (b) the


             This document constitutes part of a prospectus covering
     securities that have been registered under the Securities Act of 1933.
<PAGE>
occurrence of a Change in Control, subject to your continued employment by the
Company on the date immediately preceding the Change in Control. Such payment
may, at the election of the Committee, be in cash or in Shares. In the event
your employment with the Company terminates prior to the date which immediately
precedes the earlier of (a) the first business day of January 2008 and (b) the
occurrence of a Change in Control, the RSUs and any and all associated rights
shall be forfeited at the time of such termination of employment.

4. Definitions. For purposes of Paragraph 3 of this Agreement, (i) employment
with the Company includes employment with any Subsidiary of the Company and (ii)
termination of employment with the Company means you are no longer an employee
of the Company or any of its Subsidiaries.

5. Tax Withholding. The Company may in its sole discretion withhold from the
payment to you hereunder a sufficient amount (in cash or Shares) to provide for
the payment of any taxes required to be withheld by federal, state, or local law
with respect to income resulting from such payment.

6. Restrictions on Transferability. Your RSUs are not transferable otherwise
than by will, by the laws of descent and distribution, or by a written
designation referred to in Section 8.5 of the Plan.

7. Federal Securities Law; Company Policies. You acknowledge that the federal
securities laws and/or the Company's policies regarding trading in its
securities may limit or restrict your right to buy or sell shares of Company
common stock, including, without limitation, sales of Company common stock
acquired in connection with your RSUs. You agree to comply with such federal
securities law requirements and Company policies, as such laws and policies are
amended from time to time.

8. Miscellaneous

      a. Authority of the Committee. The Committee has the sole and complete
authority to construe and interpret the Plan and this Agreement. All
determinations of the Committee shall be final and conclusive for all purposes
and upon all persons. The Committee shall be under no obligation to construe
this Agreement or treat your RSUs in a manner consistent with the treatment
provided with respect to other RSUs or Participants.

      b.    No Rights as Shareholder.  An RSU does not represent an equity
interest in the Company, and carries no voting rights.  You will not have any
rights of a shareholder with respect to the RSUs until the Shares have been
delivered to you.

      c. Dividends. To the extent dividends are paid on Shares while the RSUs
remain outstanding, you shall be credited with corresponding notional dividends
with respect to the RSUs. The notional dividends credited to you shall be
subject to the same restrictions applicable to the RSUs and shall be paid to you
in accordance with Sections 3 and 5 of this Agreement.


                                       2
<PAGE>
      d.    Entire Agreement.  This Agreement and the Plan constitute the
entire agreement between you and the Company with respect to the subject
matter hereof.  This Agreement may not be amended except by a writing signed
by the parties.

      This Agreement has been prepared in duplicate. Please note your acceptance
in the space provided therefor and return one original to the Vice President -
Global Rewards & Recognition (Dept. 959-ATG) for the Company's records.


                                       3
<PAGE>
      IN WITNESS WHEREOF, the Company, acting through the Committee, and you
have executed this Agreement, all as of the date first written above.

                                    DELTA AIR LINES, INC.


                                       By:
                                           -------------------------------------
                                           Edward H. Budd, Chairman
                                           Personnel & Compensation Committee

                                       PARTICIPANT

                                       -----------------------------------------
                                       Leo F. Mullin



                                       4
<PAGE>
                                                                       EXHIBIT C

                    DELTA 2000 PERFORMANCE COMPENSATION PLAN
                      RESTRICTED STOCK UNIT AWARD AGREEMENT

                                January [ ], 2004

Leo F. Mullin
Chief Executive Officer

      The Delta 2000 Performance Compensation Plan (the "Plan"), is an incentive
compensation plan for officers and key employees of Delta Air Lines, Inc. (the
"Company") and its Subsidiaries. The Plan is administered by the Personnel &
Compensation Committee of the Company's Board of Directors (the "Committee").
The Committee has selected you to receive an award of restricted stock units,
effective as of January [ ], 2004, and has requested me, on behalf of the
Company, to provide this Agreement to you.

      In consideration of the mutual covenants herein contained and for other
good and valuable consideration, the Company and you, as an employee of the
Company or one or more of its Subsidiaries, hereby agree as follows:

1. Grant of Award; Acknowledgments; Capitalized Terms. The Company hereby grants
to you 150,000 restricted stock units (each an "RSU"). Each RSU represents a
right to a payment equal to the value of one share of Company common stock (a
"Share") in the future. This award is in all respects made subject to the terms
and conditions of the Plan and, in the event of any conflict between the Plan
and this Agreement, the Plan shall control. This award represents a grant of an
"Other Equity Based Award" under the Plan. You acknowledge that you (a) have had
a full and adequate opportunity to read this Agreement and the Plan; (b) agree
to all of the terms and conditions thereof for yourself, any designated
beneficiary and your heirs, executors, administrators or personal
representatives; and (c) have received, and had a full and adequate opportunity
to read, the Prospectus relating to the Plan. Capitalized terms which are used
but not defined in this Agreement shall have the meanings set forth in the Plan.

2. Value. The value of one RSU on any given date will be equal to the closing
price of the Company common stock on the New York Stock Exchange as of such date
(or, in the event that no sale of the Company common stock takes place on the
New York Stock Exchange on such date, the closing price of such common stock on
the immediately preceding date).

3. Terms. Subject to the terms and conditions of the Plan and this Agreement,
you shall be entitled to receive (and the Company shall deliver to you) a
payment equal to the value of 100% of the Shares underlying the RSUs, on the
earlier of (a) the first business day of January 2008, subject to your continued
employment by the Company on December 31, 2007 and (b) the occurrence of a
Change in Control, subject to your continued employment by the Company on


       This document constitutes part of a prospectus covering securities
           that have been registered under the Securities Act of 1933.
<PAGE>
the date immediately preceding the Change in Control. Such payment may, at the
election of the Committee, be in cash or in Shares. In the event your employment
with the Company terminates prior to the date which immediately precedes the
earlier of (a) the first business day of January 2008 and (b) the occurrence of
a Change in Control, the RSUs and any and all associated rights shall be
forfeited at the time of such termination of employment.

4. Definitions. For purposes of Paragraph 3 of this Agreement, (i) employment
with the Company includes employment with any Subsidiary of the Company and (ii)
termination of employment with the Company means you are no longer an employee
of the Company or any of its Subsidiaries.

5. Tax Withholding. The Company may in its sole discretion withhold from the
payment to you hereunder a sufficient amount (in cash or Shares) to provide for
the payment of any taxes required to be withheld by federal, state, or local law
with respect to income resulting from such payment.

6. Restrictions on Transferability. Your RSUs are not transferable otherwise
than by will, by the laws of descent and distribution, or by a written
designation referred to in Section 8.5 of the Plan.

7. Federal Securities Law; Company Policies. You acknowledge that the federal
securities laws and/or the Company's policies regarding trading in its
securities may limit or restrict your right to buy or sell shares of Company
common stock, including, without limitation, sales of Company common stock
acquired in connection with your RSUs. You agree to comply with such federal
securities law requirements and Company policies, as such laws and policies are
amended from time to time.

8. Miscellaneous

      a. Authority of the Committee. The Committee has the sole and complete
authority to construe and interpret the Plan and this Agreement. All
determinations of the Committee shall be final and conclusive for all purposes
and upon all persons. The Committee shall be under no obligation to construe
this Agreement or treat your RSUs in a manner consistent with the treatment
provided with respect to other RSUs or Participants.

      b. No Rights as Shareholder. An RSU does not represent an equity interest
in the Company, and carries no voting rights. You will not have any rights of a
shareholder with respect to the RSUs until the Shares have been delivered to
you.

      c. Dividends. To the extent dividends are paid on Shares while the RSUs
remain outstanding, you shall be credited with corresponding notional dividends
with respect to the RSUs. The notional dividends credited to you shall be
subject to the same restrictions applicable to the RSUs and shall be paid to you
in accordance with Sections 3 and 5 of this Agreement.


                                       2
<PAGE>
      d. Entire Agreement. This Agreement and the Plan constitute the entire
agreement between you and the Company with respect to the subject matter hereof.
This Agreement may not be amended except by a writing signed by the parties.

      This Agreement has been prepared in duplicate. Please note your acceptance
in the space provided therefor and return one original to the Vice President -
Global Rewards & Recognition (Dept. 959-ATG) for the Company's records.


                                       3
<PAGE>
      IN WITNESS WHEREOF, the Company, acting through the Committee, and you
have executed this Agreement, all as of the date first written above.

                                    DELTA AIR LINES, INC.


                                       By:
                                           -------------------------------------
                                           Edward H. Budd, Chairman
                                           Personnel & Compensation Committee

                                       PARTICIPANT

                                       -----------------------------------------
                                       Leo F. Mullin


                                       4


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-12
<SEQUENCE>5
<FILENAME>g81186exv12.txt
<DESCRIPTION>EX-12 STATEMENT REGARDING COMPUTATION OF RATIO
<TEXT>
<PAGE>
                                                                               .
                                                                               .
                                                                               .
                                                                      EXHIBIT 12

DELTA AIR LINES, INC.
STATEMENT REGARDING COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(In millions, except ratios)

<TABLE>
<CAPTION>
                                                                   -------    -------    -------    -------    -------
                                                                   2002 (1)   2001 (1)    2000       1999       1998
                                                                   -------    -------    -------    -------    -------
<S>                                                                <C>        <C>        <C>        <C>        <C>

Earnings (loss):
              Earnings (loss) before income taxes and cumulative
              effect of accounting change                          $(2,002)   $(1,864)   $ 1,549    $ 2,093    $ 1,776

Add (deduct):
              Fixed charges from below                               1,340      1,204      1,079        831        703
              (Income)/loss from equity investees                      (41)        12        (59)       (30)       (15)
              Distributed income of equity investees                    40         70         32        100         --
              Interest capitalized                                     (15)       (32)       (45)       (48)       (40)
                                                                   -------    -------    -------    -------    -------

Earnings (loss) as adjusted                                        $  (678)   $  (610)   $ 2,556    $ 2,946    $ 2,424

Fixed charges:
              Interest expense                                     $   660    $   531    $   426    $   250    $   179
              Amortization of debt costs                                19         12          1         11          3
              Preference security dividend                              24         22         22         20         18
              Portion of rental expense representative of the
                interest factor                                        637        639        630        550        503
                                                                   -------    -------    -------    -------    -------

Total fixed charges                                                $ 1,340    $ 1,204    $ 1,079    $   831    $   703

Ratio of earnings to fixed charges                                   (0.51)     (0.51)      2.37       3.55       3.45
</TABLE>



(1)      Fixed charges exceeded our adjusted earnings (loss) by $2.0 billion and
         $1.8 billion for the years ended December 31, 2002 and 2001,
         respectively.




</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-13
<SEQUENCE>6
<FILENAME>g81186exv13.txt
<DESCRIPTION>EX-13 PORTIONS OF DELTA'S 2002 ANNUAL REPORT
<TEXT>
<PAGE>
                                                                     Exhibit 13

Glossary of Defined Terms

ABO - ACCUMULATED BENEFIT OBLIGATION - The actuarial present value of benefits
(whether vested or nonvested) attributed by the pension benefit formula, under
Delta's defined benefit pension plans, to employee service rendered before a
specified date and based on employee service length and compensation levels
prior to that date. The accumulated benefit obligation differs from the
projected benefit obligation in that it includes no assumption about future
compensation levels.

APBO - ACCUMULATED POSTRETIREMENT BENEFIT OBLIGATION - The actuarial present
value of benefits (other than pensions) attributed to employee service rendered
before a specified date under Delta's postretirement welfare benefit plans.

AIR TRAFFIC LIABILITY - A liability on Delta's Consolidated Balance Sheets that
represents amounts received for the sale of passenger tickets for which
services have not yet been provided. As the transportation service is provided
by Delta, the amount paid for the service is removed from air traffic liability
and is recognized as revenue.

ASM - AVAILABLE SEAT MILE - A measure of capacity which is calculated by
multiplying the total number of seats available for transporting passengers by
the total number of miles flown during a reporting period.

CARGO TON MILES - The total number of tons of cargo transported during a
reporting period, multiplied by the total number of miles cargo is flown.

CARGO TON MILE YIELD - The amount of cargo revenue earned per cargo ton mile
during a reporting period.

CASM - (OPERATING) COST PER AVAILABLE SEAT MILE - The amount of operating cost
incurred per available seat mile during a reporting period. Also referred to as
unit cost.

EETC - Enhanced equipment trust certificate. These certificates do not
represent obligations of Delta, but represent an undivided interest in a pass
through trust which has purchased equipment notes issued by Delta. The
equipment notes are full recourse obligations of Delta and are secured by
certain aircraft.

FUEL PRICE NEUTRALIZED CASM - The amount of operating cost incurred per
available seat mile during a reporting period, adjusting average fuel price per
gallon to equal the prior year.

NET DEBT-TO-CAPITAL RATIO - A measure of leverage which is calculated by
dividing net debt by total capitalization. Net debt includes short-term and
long-term debt, capital lease obligations and the present value of operating
lease obligations, reduced by cash and short-term investments. Capital includes
total debt and shareowners' equity, including Series B ESOP Convertible
Preferred Stock.

PASSENGER LOAD FACTOR - A measure of utilized available seating capacity, which
is calculated by dividing RPMs by ASMs for a reporting period.

PASSENGER MILE YIELD - The amount of passenger revenue earned per revenue
passenger mile during a reporting period.

PBO - PROJECTED BENEFIT OBLIGATION - The actuarial present value as of a date
of all benefits attributed by the pension benefit formula, under Delta's
defined benefit pension plans, to employee service rendered prior to that date.
The projected benefit obligation is measured using assumptions about future
compensation levels.

RASM - (OPERATING OR PASSENGER) REVENUE PER AVAILABLE SEAT MILE - The amount of
operating or passenger revenue earned per available seat mile during a
reporting period. Passenger RASM is also referred to as unit revenue.

RPM - REVENUE PASSENGER MILE - One revenue-paying passenger transported one
mile. RPMs are calculated by multiplying the number of revenue passengers by
the number of miles they are flown for the reporting period. Also referred to
as traffic.

SECTION 1110 - Section 1110 of the U.S. Bankruptcy Code enables a lessor or
secured creditor to a U.S. airline to repossess eligible equipment that secures
the lease or security interest 60 days after the airline files a petition for
bankruptcy protection, unless the airline cures the default and agrees to meet
its future obligations to the creditor under the lease or security agreement.


                                      12
<PAGE>
Management's Discussion and Analysis of Financial Condition and Results of
Operations


Results of Operations

BUSINESS ENVIRONMENT

Since September 11, 2001, Delta and the airline industry have faced
unprecedented challenges. Our industry has experienced substantial revenue
declines and cost increases, creating industry-wide liquidity issues which have
resulted in two major airlines filing for bankruptcy. The following discussion
was prepared as of March 12, 2003.

REVENUES

The depressed revenue environment is the result of various factors, including
(1) a sharp decline in high-yield business travel after the September 11, 2001
terrorist attacks; (2) industry capacity exceeding demand, which has resulted in
heavy fare discounting to stimulate demand; (3) a government-imposed passenger
security fee adopted after September 11, 2001, which we have not been able to
pass on to our customers because of the weak demand situation; and (4) a
reduction in traffic due to the real and perceived "hassle factor" resulting
from increased airport security measures. Additionally, our revenues have been
adversely impacted by the continuing weakness of the U.S. and world economies,
the growth of low-cost carriers and increased price-sensitivity in customers'
purchasing behavior.

The following table shows the change in our traffic, capacity and yield for the
year ended December 31, 2002, compared to the years ended December 31, 2001 and
2000:

<TABLE>
<CAPTION>
                           2002 vs. 2001(1)        2002 vs. 2000
                           ----------------        -------------
<S>                        <C>                    <C>
Traffic                         0%                     (10%)
Capacity(2)                    (4%)                     (9%)
Yield                          (5%)                    (13%)
</TABLE>

(1)      During 2001, our financial performance was materially adversely
         affected by (i) the September 11, 2001 terrorist attacks; (ii) the
         slowing U.S. and world economies; (iii) the cancellation of a
         substantial number of flights due to a job action by some Delta pilots
         and public concern over a possible strike by Delta pilots; and (iv) the
         Comair, Inc. (Comair) pilot strike, which resulted in Comair's
         suspension of operations between March 26, 2001 and July 1, 2001, and
         its gradual return to prestrike service levels following the strike.
(2)      We currently have 25 mainline aircraft that remain temporarily grounded
         as a result of capacity reductions implemented since September 11,
         2001.

Operating revenues in 2002 were $13.3 billion, a 4% decrease from $13.9 billion
in 2001 and a 21% decrease from $16.7 billion in 2000. We have announced
initiatives to mitigate revenue pressures, such as our plans to implement a
marketing agreement with Continental Airlines and Northwest Airlines, and the
launch in April 2003 of a low-fare carrier, Song. Because of the difficult
revenue environment, however, we do not expect significant improvement in our
revenues in 2003.

COSTS

Our cost pressures in 2002 included increases in (1) pension expense due
primarily to increased obligations resulting from declining interest rates, a
decrease in fair value of our pension plan assets, as well as scheduled pilot
pay increases; (2) interest expense primarily due to an increase in debt
outstanding; (3) war and terrorism risk insurance premiums; and (4) security
costs. These costs increased by a total of approximately $645 million from 2001
to 2002. In addition, aircraft fuel prices began to rise significantly beginning
in November 2002, reflecting both the Middle East uncertainty and the Venezuelan
political crisis.

To mitigate these cost pressures, we implemented cost savings initiatives after
September 11, 2001 and throughout 2002 which resulted in approximately $1
billion in savings in 2002. These initiatives included (1) a decrease in salary
expense related to our 2001 workforce reduction programs, partially offset by
pilot and mechanic rate increases; (2) a decrease in passenger commission
expense due to the elimination of travel agent base commissions for tickets sold
in the U.S. and Canada; and (3) declines in contract work, aircraft maintenance
materials volume, advertising expenditures, passenger service expense and
professional fees. While these savings were significant, and resulted in a net
decrease in unit costs compared to 2001, our unit cost remained higher than our
unit revenue.

During 2003, we expect pension, interest and fuel expenses to increase by
approximately $600 million to $800 million compared to 2002, not including the
impact of events outside our control, such as a war with Iraq or other
geopolitical risks. Assuming the Federal Aviation Administration (FAA) continues
to sell war and terrorism risk insurance to airlines at current rates and there
are no changes to our security requirements in 2003, we expect insurance and
security costs to remain relatively flat as compared to 2002. For additional
information on our war and terrorism risk insurance, see Note 19 of the Notes to
the Consolidated Financial Statements.

INITIATIVES

We believe it is essential for us to continue to reduce our costs. Accordingly,
we have initiated actions to reduce costs and capital expenditures in 2003 and
later years, with the goal of reducing non-fuel unit costs by 15% by the end of
2005. These initiatives include the following:

- -        Reducing staffing by up to an additional 8,000 jobs. We estimate that
         our workforce reduction programs announced in 2002 will result in
         approximately $350 million in annual


                                       13
<PAGE>

Management's Discussion and Analysis of Financial Condition and Results of
Operations


         savings, with $250 million being realized in 2003. Most of these job
         reductions will be complete by May 1, 2003. We recorded a pretax charge
         of $127 million in the December 2002 quarter related to these workforce
         reduction programs and expect to record a pretax charge of
         approximately $43 million in the March 2003 quarter for the associated
         cost of curtailing the pension and postretirement obligations for
         employees participating in these programs. See Notes 16 and 17 of the
         Notes to the Consolidated Financial Statements for additional
         information on this charge.

- -        Investing in technology to improve efficiencies. These initiatives
         include installing over 400 additional self-service kiosks in airports
         during 2003 and implementing an SAP inventory and supply chain
         management system.

- -        Utilizing our regional jet aircraft to decrease the average number of
         available seats per aircraft while increasing the number of flights in
         certain locations. This will allow us to better match capacity with
         demand.

- -        Modifying our employee benefits programs through a strategic benefits
         review. Beginning in 2003, we implemented changes to our healthcare
         benefits which we expect to offset rising healthcare costs in 2003 by
         approximately $80 million. In July 2003, we will begin the migration
         to a new cash balance pension plan, which we anticipate will result in
         cost savings of approximately $600 million over the next five years,
         including $120 million in 2003.

- -        Making significant changes to our fleet plan by (1) reducing costs
         through fleet simplification and (2) reducing capital expenditures in
         2003 and 2004 by deferring delivery of 31 aircraft, which will result
         in no scheduled mainline aircraft deliveries during this two-year
         period.

LIQUIDITY

Due to the depressed revenue environment and cost pressures, we borrowed $2.6
billion in 2002. The net proceeds from these transactions were primarily used to
finance aircraft and repay certain debt obligations. All of our borrowings in
2002 were secured by aircraft.

At February 28, 2003, we had cash and cash equivalents totaling $1.9 billion.
This reflects (1) the proceeds from our sale on January 30, 2003 of $392 million
principal amount of insured enhanced equipment trust certificates, which is due
in installments through January 2008 and is secured by 12 mainline aircraft
owned by us, and (2) our purchase on February 25, 2003, of a portion of
outstanding ESOP Notes for $74 million. We also have $500 million of liquidity
available under a secured credit facility which expires on August 21, 2003, and
unencumbered assets available for use in potential financing transactions.

We estimate that the value of our unencumbered aircraft assets at February 28,
2003 is approximately $3.6 billion, (excluding the aircraft that would secure
the $500 million secured credit facility described above), approximately $800
million of which consists of aircraft that are eligible under Section 1110.
Because this provision provides protection to lessors and creditors, and because
Section 1110 aircraft are generally newer, they are more desirable to lenders as
collateral in financing transactions than aircraft that are not eligible under
Section 1110.

The values of our unencumbered aircraft assets were derived by us from published
third-party estimates of the "base value" of similar aircraft using certain
assumptions and may not accurately reflect the current market value of the
aircraft. Base value is an estimate of the underlying economic value of an
aircraft based on historic and future value trends in a stable market
environment, while current market value is the value of the aircraft in the
actual market; both methods assume an aircraft is in average condition and in
its "highest and best use." Given the difficult business environment, there is
no assurance we would have access to financing using these aircraft as
collateral. In any event, the amount we could finance using these aircraft would
likely be significantly less than their base value.

As a result of our revenue and cost initiatives described above, we believe that
our cash flows from operations in 2003 will be sufficient to fund our daily
operations and non-fleet capital expenditures. This expectation reflects the
softness in traffic and advance bookings we are now experiencing as a result of
public concern over possible military action in Iraq. Because we cannot predict
either the occurrence or the scope and duration of events that are beyond our
control, the actual effect on our business of the current geopolitical risks may
differ materially from the level we have assumed.

We expect capital expenditures in 2003 to total approximately $1.5 billion,
including $1.0 billion for regional jet aircraft and $500 million for non-fleet
capital expenditures. We have available commitments from a third party to
provide long-term financing on a secured basis for a substantial portion of our
commitments for regional jet aircraft to be delivered through 2004.


                                       14
<PAGE>

We have approximately $700 million of current debt maturities and capital lease
obligations due in 2003, including $301 million under a Reimbursement Agreement
and related letters of credit that terminate on June 8, 2003 (see Note 6 of the
Notes to the Consolidated Financial Statements). We will also be required to pay
(1) $102 million related to additional letters of credit under the Reimbursement
Agreement mentioned above and (2) $250 million under a receivables
securitization agreement when it expires on March 31, 2003 (see Note 8 of the
Notes to the Consolidated Financial Statements). We are seeking to renew or
refinance the receivables and letter of credit facilities, but there is no
assurance we will be able to do so. In addition, our estimated pension funding
is approximately $80 million for 2003.

We expect to meet our obligations as they come due through available cash and
cash equivalents, investments, internally generated funds and borrowings under
existing and new financing transactions. We do not expect new financing
transactions to be available on an unsecured basis. While we expect secured
financing to be available to us on commercially reasonable terms, in the current
business environment access to financing cannot be assured. Failure to obtain
new financing could have a material adverse effect on our liquidity.

2003 RESULTS

Based on the difficult business environment discussed above, we anticipate our
net loss for the March 2003 quarter to be greater than our March 2002 quarter
net loss. We also expect to report a net loss for 2003. In addition, the
following significant external risks exist, which could adversely impact our
results of operations, our financial condition and our ability to access capital
markets for additional financing:

- -        The possibility of a war with Iraq and other geopolitical risks, which
         could have a material adverse impact on our results of operations and
         cash flows.

- -        Two major competitors, United and US Airways, are currently operating
         under bankruptcy protection. Historically, air carriers involved in
         reorganizations have undertaken substantial fare discounts in order to
         maintain cash flows and to enhance customer loyalty. Such fare
         discounting has lowered, and may continue to lower, yields for all
         airlines. Moreover, carriers operating in bankruptcy, or that
         successfully emerge from bankruptcy, may be able to achieve reduced
         costs which could place us at a competitive disadvantage.

- -        The possibility that other carriers may file for bankruptcy protection.

2002 Compared to 2001

NET INCOME (LOSS) AND EARNINGS (LOSS) PER SHARE (EPS)

We recorded a consolidated net loss of $1.3 billion ($10.44 diluted EPS) in
2002, compared to a consolidated net loss of $1.2 billion ($9.99 diluted EPS) in
2001.

OPERATING REVENUES

Operating revenues were $13.3 billion in 2002, decreasing 4% from $13.9 billion
in 2001. Passenger revenues fell 5% to $12.3 billion. RPMs were flat on a
capacity decline of 4%, while passenger mile yield decreased 5% to 12.08(cents).
The decreases in operating revenues, passenger revenues and passenger mile yield
from depressed 2001 levels reflect the continuing effects of the September 11
terrorist attacks on our business and other factors negatively impacting the
revenue environment, which are discussed in the Business Environment section of
Management's Discussion and Analysis on pages 13-15.

NORTH AMERICAN PASSENGER REVENUES

North American passenger revenues fell 6% to $10.0 billion. RPMs increased 1% on
a capacity decrease of 3%, while passenger mile yield decreased 7%. The decline
in passenger mile yield reflects the challenging revenue environment, including
significant fare discounting as well as a substantial reduction in high-yield
business traffic after the September 11 terrorist attacks.

INTERNATIONAL PASSENGER REVENUES

International passenger revenues decreased 2% to $2.3 billion. RPMs fell 2% on a
capacity decline of 7%, while passenger mile yield increased 1%. The decline in
our international capacity was primarily driven by reductions in our Pacific
operations due to weak demand.

CARGO AND OTHER REVENUES

Cargo revenues decreased 9% to $458 million. This reflects a 7% decline due to
FAA security measures adopted after September 11, 2001, that prohibit passenger
airlines from transporting mail weighing more than 16 ounces, which previously
represented approximately 50% of our mail business. The decline in cargo
revenues also reflects a 2% decrease due to lower domestic freight volumes and
yields. Cargo ton miles decreased 6% and cargo ton mile yield decreased 4%.
Other revenues increased 29% to $526 million, primarily reflecting a 12%
increase due to higher administrative service fees and a 12% increase due to
higher codeshare revenues.


                                       15
<PAGE>

Management's Discussion and Analysis of Financial Condition and Results of
Operations


OPERATING EXPENSES

Operating expenses for 2002 totaled $14.6 billion, decreasing 6% from $15.5
billion in 2001. Operating capacity decreased 4% to 142 billion ASMs. CASM fell
2% to 10.31(cents), while fuel price neutralized CASM fell 1% to 10.34(cents).
Operating expenses include asset writedowns, restructuring and related items,
net totaling a $439 million charge in 2002 and a $1.1 billion charge in 2001, as
well as Stabilization Act compensation of $34 million in 2002 and $634 million
in 2001 (see Notes 16 and 19, respectively, of the Notes to the Consolidated
Financial Statements). Excluding these items, operating expenses decreased 5% to
$14.2 billion, CASM fell 1% to 10.03(cents), and fuel price neutralized CASM
fell 1% to 10.06(cents).

Salaries and related costs totaled $6.2 billion in 2002, a 1% increase from $6.1
billion in 2001. This reflects a 6% increase from higher pension expense and a
5% increase due to higher salary and benefit rates, primarily for pilots and
mechanics. These increases were largely offset by decreases due to workforce
reductions implemented after we reduced capacity following September 11, 2001.

Aircraft fuel expense totaled $1.7 billion during 2002, a 7% decrease from $1.8
billion during 2001. Total gallons consumed decreased 5% mainly due to capacity
reductions. The average fuel price per gallon fell 2% to 66.94(cents). Our fuel
cost is shown net of fuel hedge gains of $136 million for 2002 and $299 million
for 2001. Approximately 56% and 58% of our aircraft fuel requirements were
hedged during 2002 and 2001, respectively. For additional information about our
fuel hedge contracts, see Note 4 of the Notes to the Consolidated Financial
Statements.

Depreciation and amortization expense fell 11% in 2002, reflecting a 6% decrease
due to a change in our asset base and a 5% decrease due to our adoption on
January 1, 2002, of Statement of Financial Accounting Standards (SFAS) No. 142,
"Goodwill and Other Intangible Assets" (SFAS 142). SFAS 142 requires that
goodwill and certain other intangible assets no longer be amortized (see Note 5
of the Notes to the Consolidated Financial Statements).

Contracted services expense declined 1% primarily due to a 4% decrease from
fewer contract workers across all workgroups, partially offset by a 3% increase
due to higher security costs. Landing fees and other rents rose 7%, of which 3%
was related to an increase in landing fee rates and 2% was due to lower costs in
2001 resulting from Comair's reduced operations in 2001 due to its pilot strike
and gradual return to previous levels of service after the strike. Aircraft
maintenance materials and outside repairs expense fell 11%, primarily reflecting
a reduction in maintenance volume and materials consumption due to the timing of
maintenance events. Aircraft rent expense decreased 4%, primarily due to lower
numbers of leased aircraft during the March, June and September 2002 quarters
resulting from our fleet simplification efforts. Other selling expenses fell
13%, of which 6% was due to lower costs associated with our mileage partnership
programs and 4% was due to reduced advertising and promotion spending.

Passenger commission expense declined 40%, primarily due to a change in our
commission rate structure. On March 14, 2002, we eliminated travel agent base
commissions for tickets sold in the U.S. and Canada. Passenger service expense
decreased 20%, primarily due to meal service reductions.

Asset writedowns, restructuring and related items, net totaled $439 million in
2002 compared to $1.1 billion in 2001. Our 2002 charge consists of $251 million
in asset writedowns, $127 million related to our 2002 workforce reduction
programs, $93 million for the temporary carrying cost of surplus pilots and
grounded aircraft, $30 million due to the deferred delivery of certain mainline
aircraft, $14 million for the closure of certain leased facilities and $3
million related to other items, partially offset by a $79 million reversal of
certain reserves. Our 2001 charge consists of $566 million related to our 2001
workforce reduction programs, $363 million from a decrease in value of certain
aircraft and other fleet-related charges, $160 million related primarily to
discontinued contracts, facilities and information technology projects and $30
million for the temporary carrying cost of surplus pilots and grounded aircraft.
See Note 16 of the Notes to the Consolidated Financial Statements for additional
information on these asset writedowns, restructuring and related items, net.

Stabilization Act compensation totaled $34 million in 2002 compared to $634
million in 2001, representing amounts we recognized as compensation in the
applicable period under the Air Transportation Safety and System Stabilization
Act (Stabilization Act). See Note 19 of the Notes to the Consolidated Financial
Statements for additional information.


                                       16
<PAGE>

Other operating expenses decreased 11% primarily due to declines in
miscellaneous expenses such as supplies, utilities, interrupted operation
expenses and professional fees, which were partially offset by a 19% increase in
expenses due to a rise in war and terrorism risk insurance rates.

OPERATING INCOME (LOSS) AND OPERATING MARGIN

We incurred an operating loss of $1.3 billion in 2002, compared to an operating
loss of $1.6 billion in 2001. Operating margin was (10%) and (12%) for 2002 and
2001, respectively. Excluding asset writedowns, restructuring and related items,
net, and Stabilization Act compensation discussed above, we incurred an
operating loss of $904 million in 2002, compared to an operating loss of $1.1
billion in 2001. Operating margin excluding these items was (7%) and (8%) for
2002 and 2001, respectively.

OTHER INCOME (EXPENSE)

Other expense totaled $693 million during 2002, compared to other expense of
$262 million in 2001. Included in these results are the following:

- -        A $127 million gain in 2001 on the sale of certain investments. This
         primarily relates to a $111 million gain on the sale of our equity
         interest in SkyWest, Inc., the parent company of SkyWest Airlines, and
         an $11 million gain from the sale of our equity interest in Equant,
         N.V., an international data network services company.

- -        A $39 million charge in 2002 compared to a $68 million gain in 2001 for
         fair value adjustments of financial instruments accounted for under
         SFAS No. 133, "Accounting for Derivative Instruments and Hedging
         Activities" (SFAS 133). This relates to derivative instruments we use
         in our fuel hedging program and to our equity warrants and other
         similar rights in certain companies.

- -        A $42 million charge for the extinguishment of debt and a $13 million
         loss for the reduction in value of certain investments in 2002.

The change in other income (expense) is also attributable to the following:

- -        Interest expense increased $147 million in 2002 compared to 2001,
         primarily due to higher levels of outstanding debt.

- -        Interest income decreased $53 million in 2002 due to lower interest
         rates and a lower average cash balance compared to 2001.

- -        Miscellaneous income, net was $1 million in 2002 compared to a $47
         million expense in 2001, due primarily to increased earnings from our
         equity investment in WORLDSPAN, L.P. (Worldspan), a computer
         reservations system partnership.

2001 Compared to 2000

NET INCOME (LOSS) AND EARNINGS (LOSS) PER SHARE

We recorded a consolidated net loss of $1.2 billion ($9.99 diluted EPS) in 2001
and consolidated net income of $828 million ($6.28 diluted EPS) in 2000.

OPERATING REVENUES

Operating revenues were $13.9 billion in 2001, decreasing 17% from $16.7 billion
in 2000. Passenger revenues fell 17% to $13.0 billion. RPMs declined 10% on a
capacity decrease of 5%, while passenger mile yield declined 8% to 12.74(cents).
These decreases were primarily the result of the effects of the terrorist
attacks on September 11, the slowing U.S. and world economies and pilot labor
issues at both Delta and Comair.

NORTH AMERICAN PASSENGER REVENUES

North American passenger revenues fell 19% to $10.6 billion. RPMs decreased 11%
on a capacity decrease of 6%, while passenger mile yield decreased 9%. These
decreases resulted from the September 11 terrorist attacks, the slowing economy
and pilot labor issues.

INTERNATIONAL PASSENGER REVENUES

International passenger revenues decreased 6% to $2.3 billion. RPMs fell 6%
mainly due to the terrorist attacks on September 11 and the slowing U.S. and
world economies. Passenger mile yield remained flat while capacity increased 2%,
reflecting our international expansion, particularly in Latin American markets.

CARGO AND OTHER REVENUES

Cargo revenues decreased 13% to $506 million. This reflects an 8% decline due to
lower mail revenues resulting from the implementation of new FAA restrictions on
mail and weak U.S. and world economies, and a 5% decrease due to a decline in
freight volumes, also resulting from the slowing U.S. and world economies. Cargo
ton miles decreased 15% and cargo ton mile yield increased 2%. Other revenues
decreased 18% to $409 million, primarily due to lower codeshare revenues,
resulting from the terrorist attacks on September 11 and the slowing U.S. and
world economies.


                                       17
<PAGE>

Management's Discussion and Analysis of Financial Condition and Results of
Operations


OPERATING EXPENSES

Operating expenses for 2001 totaled $15.5 billion, increasing 2% from $15.1
billion in 2000. Operating capacity decreased 5% to 148 billion ASMs. CASM rose
7% to 10.47(cents), and fuel price neutralized CASM grew 7% to 10.45(cents).
Operating expenses include asset writedowns, restructuring and related items,
net totaling a $1.1 billion charge in 2001 and a $108 million charge in 2000, as
well as Stabilization Act compensation of $634 million in 2001 (see Notes 16 and
19, respectively, of the Notes to the Consolidated Financial Statements).
Excluding these items, operating expenses remained flat at $15.0 billion, CASM
rose 5% to 10.14(cents), and fuel price neutralized CASM grew 5% to
10.12(cents).

Salaries and related costs increased 3% during 2001 to $6.1 billion, primarily
due to a rise in costs associated with a new collective bargaining agreement
between Delta and its pilots.

Aircraft fuel expense decreased 8% in 2001. Total gallons consumed decreased 9%
due primarily to a decrease in flights resulting from the September 11 terrorist
attacks and the Comair pilot strike, as well as fuel efficiencies realized from
our fleet renewal efforts. The average fuel price per gallon rose 2% to
68.60(cents). Our fuel cost is shown net of fuel hedge gains of $299 million for
2001 and $684 million for 2000. Approximately 58% and 67% of our aircraft fuel
requirements were hedged during 2001 and 2000, respectively. For additional
information about our fuel hedge contracts, see Note 4 of the Notes to the
Consolidated Financial Statements.

Depreciation and amortization expense rose 8% in 2001 due to the acquisition of
additional aircraft and ground equipment. Contracted services expense increased
5% resulting primarily from a 1% rise due to rate increases for building and
equipment maintenance and a 1% increase due to a rise in security costs. Landing
fees and other rents rose 1%. This change includes a 2% rise from increased
rates at various locations and a 2% decrease due to Comair's reduced operations
from its pilot strike. Aircraft maintenance materials and outside repairs
expense grew 11% due primarily to the timing of certain maintenance work.
Aircraft rent expense decreased 1% due to a decrease in the number of leased
aircraft.

Other selling expenses decreased 10% due to a lower volume of credit card
charges from lower revenue. Passenger commission expense declined 18%, primarily
as a result of lower passenger revenues. Passenger service expense decreased 1%.

Asset writedowns, restructuring and related items, net totaled $1.1 billion in
2001 compared to $108 million in 2000. Our 2001 charge is described on page 16.
Our 2000 charge consists of $86 million related to our decision to offer an
early retirement medical option program and $22 million from the closure of our
Pacific gateway in Portland, Oregon. See Note 16 of the Notes to the
Consolidated Financial Statements for additional information on these asset
writedowns, restructuring and related items, net.

Stabilization Act compensation totaled $634 million in 2001. This represents the
amount we recognized in 2001 as compensation under the Stabilization Act. See
Note 19 of the Notes to the Consolidated Financial Statements for additional
information.

Other operating expenses decreased 4% as a result of decreases in miscellaneous
expenses such as fuel-related taxes, interrupted trip expenses and professional
fees, which were partially offset by a 2% increase due to new uniform costs and
a 3% increase due to higher insurance expenses.

OPERATING INCOME (LOSS) AND OPERATING MARGIN

We incurred an operating loss of $1.6 billion in 2001, compared to operating
income of $1.6 billion in 2000. Operating margin was (12%) and 10% for 2001 and
2000, respectively. Excluding asset writedowns, restructuring and related items,
net and Stabilization Act compensation discussed above, we incurred an operating
loss of $1.1 billion in 2001, compared to operating income of $1.7 billion in
2000. Operating margin excluding these items was (8%) and 10% for 2001 and 2000,
respectively.

OTHER INCOME (EXPENSE)

Other expense totaled $262 million during 2001, compared to other expense of $88
million in 2000. Included in these results are the following:

- -        A $301 million gain in 2000 for the sale of certain investments. This
         includes a $73 million gain from the sale of 1.2 million shares
         of priceline.com, Incorporated (priceline) common stock and a $228
         million non-cash gain from the exchange of six million shares of
         priceline common stock for priceline preferred stock.

- -        A $127 million gain in 2001 on the sale of certain investments. This
         primarily relates to a $111 million gain on the sale of our equity
         interest in SkyWest, Inc., the parent company of SkyWest Airlines and
         an $11 million gain from the sale of our equity interest in Equant,
         N.V., an international data network services company.


                                       18
<PAGE>

- -        A $68 million gain in 2001 compared to a $159 million charge in 2000
         for fair value adjustments of financial instruments accounted for under
         SFAS 133. This relates to derivative instruments we use in our fuel
         hedging program and to our equity warrants and other similar rights in
         certain companies.

- -        A $16 million one-time, non-cash gain in 2000 related to our equity
         investment in Worldspan. This gain represents our share of Worldspan's
         favorable outcome in certain arbitration proceedings.

The change in other income (expense) is also attributable to the following:

- -        Interest expense increased $119 million in 2001 primarily due to higher
         levels of outstanding debt;

- -        Interest income decreased $34 million in 2001 primarily due to lower
         interest rates; and

- -        Miscellaneous expense, net was $47 million in 2001 compared to $27
         million in income in 2000 mainly due to a decrease in our equity
         earnings from Worldspan.

CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE

During 2000 we recorded a $164 million cumulative effect, non-cash charge ($100
million net of tax, or $0.77 diluted EPS) resulting from our adoption of SFAS
133 on July 1, 2000 (see Note 4 of the Notes to the Consolidated Financial
Statements).

Financial Condition and Liquidity

SOURCES AND USES OF CASH

2OO2

Cash and cash equivalents totaled $2.0 billion at December 31, 2002, compared to
$2.2 billion at December 31, 2001. For 2002, net cash provided by operations
totaled $285 million, including receipt of (1) a $472 million tax refund due to
a new tax law and (2) $112 million in compensation under the Stabilization Act.
Our cash flows from significant financing and investing activities are described
below.

Capital expenditures, including aircraft acquisitions made under seller
financing arrangements, were $2.0 billion during 2002 and included the
acquisition of four B-737-800, three B-767-400, one B-777-200, 34 CRJ-200 and
15 CRJ-700 aircraft.

Debt and capital lease obligations, including current maturities and short-term
obligations, totaled $10.9 billion at December 31, 2002, compared to $9.4
billion at December 31, 2001. During 2002, we entered into or amended the
following credit facilities to increase our liquidity (see Note 6 of the Notes
to the Consolidated Financial Statements):

- -        We issued a total of $1.4 billion of enhanced equipment trust
         certificates, which are secured by 17 B-737-800, one B-757-200, eight
         B-767-300ER and six B-767-400 aircraft. These financings are due in
         installments through January 2023. At December 31, 2002, there was $1.4
         billion outstanding under these financings.

- -        In addition to the enhanced equipment trust certificates described
         above, during 2002 we borrowed $1.2 billion, which is due in
         installments through June 2019 and is secured by 56 regional jet
         aircraft, five B-737-800 aircraft, three B-767-300ER aircraft and two
         B-767-300 aircraft. At December 31, 2002, there was $1.2 billion in
         borrowings outstanding under these financings. These transactions
         resulted in the termination of a $350 million short-term facility that
         we had entered into in January 2002.

- -        On January 31, 2002, we entered into a facility to finance, on a
         secured basis at the time of acquisition, certain future deliveries of
         regional jet aircraft. At December 31, 2002, total borrowings available
         to us under this facility, as amended, were $197 million, of which $31
         million was outstanding.

- -        On August 22, 2002, we amended and restated an existing credit facility
         to (1) extend the term from December 27, 2002 to August 21, 2003 and
         (2) reduce the maximum amount we may borrow under this agreement from
         $625 million to $500 million. Any borrowings under this facility will
         be secured by certain aircraft owned by us. At December 31, 2002, no
         borrowings were outstanding under this facility.

- -        In October 2002, we amended our unsecured letter of credit
         Reimbursement Agreement with Commerzbank AG and a group of banks to (1)
         eliminate the debt-to-equity ratio and secured debt covenants from that
         agreement and (2) add a covenant requiring us to maintain a minimum of
         $1 billion of unrestricted cash, cash equivalents and short-term
         investments as of the end of each month, beginning on October 31, 2002.
         The Reimbursement Agreement and the related letters of credit will
         terminate on June 8, 2003.

In addition, during 2002, we deferred delivery of the following 31 mainline
aircraft:


                                       19
<PAGE>

Management's Discussion and Analysis of Financial Condition and Results of
Operations


- -        five B-737-800 aircraft deferred from 2003 to 2006;

- -        23 B-737-800 aircraft deferred from 2004 to 2007;

- -        one B-777-200 aircraft deferred from 2004 to 2006; and

- -        two B-777-200 aircraft deferred from 2005 to 2006.

As a result of these deferrals, we have no mainline aircraft deliveries
scheduled in 2003 or 2004, which will reduce capital expenditures by
approximately $1.3 billion during that two-year period.

Shareowners' equity was $893 million at December 31, 2002 and $3.8 billion at
December 31, 2001. The decrease in our shareowners' equity is primarily due to
the $1.6 billion non-cash charge to equity related to our pension plans (see
Note 11 of the Notes to the Consolidated Financial Statements) and our
consolidated net loss in 2002. These items, as well as an increase in
outstanding debt, have caused our net debt-to-capital ratio, which includes
implied debt from operating leases, to increase to 94% at December 31, 2002 from
80% at December 31, 2001.

For additional information on our liquidity, see the Business Environment
section of Management's Discussion and Analysis on pages 13-15.

WORKING CAPITAL POSITION

As of December 31, 2002, we had negative working capital of $2.6 billion,
compared to negative working capital of $2.8 billion at December 31, 2001.
A negative working capital position is normal for us, typically due to our air
traffic liability and the fact that we primarily generate revenue by providing
air transportation through the utilization of property and equipment, which are
classified as long-term assets. Our negative working capital position also
reflects our losses over the past two years.

CREDIT RATINGS AND COVENANTS

At December 31, 2002, our senior unsecured long-term debt was rated Ba3 by
Moody's and BB- by Standard and Poor's. On February 18, 2003, Standard & Poor's
lowered their ratings on certain of our enhanced equipment trust certificates.
Both Moody's and Standard & Poor's outlooks for our long-term credit ratings are
negative. Our current credit ratings have negatively impacted our ability (1) to
issue unsecured debt, (2) to renew outstanding letters of credit that back
certain of our obligations and (3) to obtain certain financial instruments that
we use in our fuel hedging program. They have also increased the cost of our
financing transactions and the amount of collateral required for certain
financial instruments and insurance coverage. Subsequent to December 31, 2002,
our collateral requirements related to our workers' compensation insurance
increased by $55 million. As discussed in Note 8 of the Notes to the
Consolidated Financial Statements, we may be required to repurchase outstanding
receivables that we sold to a third party ($250 million at December 31, 2002) if
our senior unsecured long-term debt is rated either below Ba3 by Moody's or
below BB- by Standard & Poor's.

We have obtained from a third party unsecured letters of credit totaling $409
million relating to bonds issued by various municipalities to finance
construction at certain airport facilities leased to us. As discussed under
"Letter of Credit Enhanced Municipal Bonds" in Note 6 of the Notes to the
Consolidated Financial Statements, we will be required to accelerate the
repayment of these obligations if we do not extend those letters of credit prior
to their expiration on June 8, 2003.

The Reimbursement Agreement relating to the letters of credit described in the
above paragraph contains covenants that (1) require us to maintain a minimum of
$1 billion of unrestricted cash, cash equivalents and short-term investments at
the end of each month; (2) limit the amount of current debt and convertible
subordinated debt that we may have outstanding; and (3) limit our annual flight
equipment rental expense. It also provides that, upon the occurrence of a change
in control of Delta, we shall, at the request of the banks, deposit cash
collateral with the banks in an amount equal to all letters of credit
outstanding and other amounts we owe under the agreement. We are in compliance
with all of our financial covenants.

PRIOR YEARS
2001

Cash and cash equivalents totaled $2.2 billion at December 31, 2001. Net cash
provided by operations totaled $236 million during 2001, including $556 million
of compensation received under the Stabilization Act. Capital expenditures,
including aircraft acquisitions made under seller financing arrangements, were
$2.9 billion during 2001 and included the acquisition of 27 B-737-800, three
B-757-200, two B-767-300ER, six B-767-400, 23 CRJ-200 and four CRJ-100 aircraft.
Debt and capital lease obligations, including current maturities and short-term
obligations, totaled $9.4 billion at December 31, 2001. Of this amount, $2.3
billion of secured long-term debt was issued during the year.


                                       20
<PAGE>

2000

Cash, cash equivalents and short-term investments totaled $1.6 billion at
December 31, 2000. Net cash provided by operations totaled $2.9 billion during
2000. Capital expenditures were $4.1 billion during 2000 and included the
acquisition of 24 B-737-800, 12 B-757-200, seven B-767-300ER, 12 B-767-400, 11
CRJ-200, 19 CRJ-100 and seven ATR-72 aircraft. We also paid $232 million to
complete our acquisition of Comair Holdings, Inc. Debt and capital lease
obligations, including current maturities and short-term obligations, totaled
$6.0 billion at December 31, 2000. Of this amount, $1.9 billion of long-term
debt was issued during the year (including $1.5 billion of secured debt).

Financial Position

DECEMBER 31, 2002 COMPARED TO DECEMBER 31, 2001

This section discusses certain changes in our Consolidated Balance Sheets which
are not otherwise discussed in this Annual Report.

Prepaid expenses and other current assets increased by 23%, or $66 million,
primarily due to our recognition of an intangible asset in connection with the
recording of an additional minimum pension liability and an increase in prepaid
aircraft rent. Investments in debt and equity securities decreased 66%, or $63
million, primarily due to the partial exercise of our price-line warrants and
the sale of a portion of the related shares, as well as a decrease in fair value
of our equity securities. Restricted investments for the Boston airport terminal
project decreased 12%, or $58 million, due to the capitalization of project
expenditures and interest paid. Other noncurrent assets increased 47%, or $472
million, due to an increase in our deferred tax assets and our recognition of an
intangible asset in connection with the recording of an additional minimum
pension liability.

Taxes payable decreased 18%, or $187 million, primarily due to a decrease in
ticket, transportation and airport taxes payable for which payment was deferred
under the Stabilization Act until January 2002. Accrued salaries and benefits
increased 22%, or $244 million, primarily due to an increase in the number of
retired employees and employees on leave and severance programs.

Pension and related benefits increased $2.9 billion, primarily due to an
additional minimum pension liability recorded at December 31, 2002. For
additional information on our employee benefit plans, see Note 11 of the Notes
to the Consolidated Financial Statements.

CONTRACTUAL OBLIGATIONS

The following table provides a summary of our debt obligations, capital lease
obligations, operating lease payments, estimated future expenditures for
aircraft and engines and certain other material purchase obligations as of
December 31, 2002. This table excludes other obligations that we may have, such
as pension obligations (discussed in Note 11 of the Notes to the Consolidated
Financial Statements). The table also excludes information about our obligations
related to our contract carrier agreements (discussed below) due to the fact
that costs beyond 2003 are not reasonably estimable at this time.

<TABLE>
<CAPTION>
                                                           Contractual Payments Due by Period
                                   ----------------------------------------------------------------------------------
(in millions)                       Total        2003        2004        2005        2006        2007      After 2007
                                   -------      ------      ------      ------      ------      ------     ----------
<S>                                <C>          <C>         <C>         <C>         <C>         <C>        <C>
Debt(1)                            $10,740      $  666      $  623      $1,203      $  602      $  285      $ 7,361
Capital Lease Obligations(2)           172          40          31          24          16          15           46
Operating Lease Payments(3)         12,744       1,277       1,203       1,176       1,128       1,042        6,918
Estimated Future Expenditures
  for Aircraft and Engines(4)        5,027       1,024         672       1,191       1,281         859           --
Other Purchase Obligations              66          33          33          --          --          --           --
                                   -------      ------      ------      ------      ------      ------      ---------
Total                              $28,749      $3,040      $2,562      $3,594      $3,027      $2,201      $14,325
                                   =======      ======      ======      ======      ======      ======      =========
</TABLE>

(1)      These amounts are included on our Consolidated Balance Sheets. A
         portion of this debt is backed by letters of credit totaling $305
         million at December 31, 2002, which expire on June 8, 2003. See Note 6
         of the Notes to the Consolidated Financial Statements for additional
         information about our debt and related matters.
(2)      The present value of these obligations, excluding interest, is included
         on our Consolidated Balance Sheets. See Note 7 of the Notes to the
         Consolidated Financial Statements for additional information about our
         capital lease obligations.
(3)      Our operating lease obligations are described in Note 7 of the Notes to
         the Consolidated Financial Statements. A portion of these obligations
         is backed by letters of credit totaling $104 million at December 31,
         2002, which expire on June 8, 2003. See Note 6 of the Notes to the
         Consolidated Financial Statements for additional information about
         these letters of credit.
(4)      Our estimated future expenditures for aircraft and engines are
         discussed in Note 9 of the Notes to the Consolidated Financial
         Statements.


                                       21
<PAGE>

Management's Discussion and Analysis of Financial Condition and Results of
Operations


Our estimated pension funding is approximately $80 million for 2003 and between
$350 million and $450 million for 2004. These funding estimates are based on
various assumptions, including actual market performance of our plan assets and
future 30-year U.S. Treasury bond yields. Our 2004 estimate could change
significantly prior to the funding date and funding beyond 2004 is not
reasonably estimable at this time. Pension funding requirements are governed by
ERISA and subject to certain federal tax regulations. See Note 11 of the Notes
to the Consolidated Financial Statements for additional information about our
pension plans.

In addition, we have contractual obligations related to our contract carrier
agreements with SkyWest Airlines, Atlantic Coast Airlines and Chautauqua
Airlines. We estimate that our obligations under these contracts will total
approximately $780 million in 2003. Costs beyond 2003 under these agreements
will be impacted by certain variable operating costs that cannot be reasonably
determined at this time. See Note 9 of the Notes to the Consolidated Financial
Statements for additional information about these agreements.

OFF-BALANCE SHEET ARRANGEMENTS

SALE OF RECEIVABLES

We are a party to an agreement under which we sell a defined pool of our
accounts receivable, on a revolving basis, through a special-purpose, wholly
owned subsidiary to a third party. In accordance with accounting principles
generally accepted in the United States of America (GAAP), we do not consolidate
this subsidiary in our Consolidated Financial Statements. This agreement is
scheduled to terminate on March 31, 2003. If the agreement is not renewed prior
to this date, we will be required to repurchase outstanding receivables which
totaled $250 million at December 31, 2002. This amount is not included on our
Consolidated Balance Sheets. See Note 8 of the Notes to the Consolidated
Financial Statements for additional information about this agreement.

OTHER

LEGAL CONTINGENCIES

We are involved in legal proceedings relating to antitrust matters, employment
practices, environmental issues and other matters concerning our business. We
cannot reasonably estimate the potential loss for certain legal proceedings
because, for example, the litigation is in its early stages or the plaintiff
does not specify damages being sought. Although the ultimate outcome of these
matters cannot be predicted with certainty, we believe that the resolution of
these actions will not have a material adverse effect on our Consolidated
Financial Statements.

APPLICATION OF CRITICAL ACCOUNTING POLICIES

CRITICAL ACCOUNTING ESTIMATES

The preparation of financial statements in conformity with GAAP requires
management to make certain estimates and assumptions. We periodically evaluate
these estimates and assumptions, which are based on historical experience,
changes in the business environment and other factors that management believes
to be reasonable under the circumstances. Actual results may differ materially
from these estimates.

Rules proposed by the Securities and Exchange Commission define critical
accounting estimates as those accounting estimates which (1) require management
to make assumptions about matters that are highly uncertain at the time the
estimate is made and (2) would have resulted in material changes to our
Consolidated Financial Statements if different estimates, which we reasonably
could have used, were made. Our critical accounting estimates are briefly
described below. Additional information about these estimates and our
significant accounting policies are included in Notes 1, 5, 10 and 11 of the
Notes to the Consolidated Financial Statements.

GOODWILL

On January 1, 2002, we adopted SFAS 142, which addresses financial accounting
and reporting for goodwill and other intangible assets, including when and how
to perform impairment tests of recorded balances.

We have three reporting units that have assigned goodwill: Delta-mainline,
Atlantic Southeast Airlines, Inc. (ASA) and Comair. Quoted stock market prices
are not available for these individual reporting units. Accordingly, consistent
with SFAS 142, our methodology for estimating the fair value of each reporting
unit primarily considers discounted future cash flows. In applying this
methodology, we (1) make assumptions about each reporting unit's future cash
flows based on capacity, yield, traffic, operating costs and other relevant
factors and (2) discount those cash flows based on each reporting unit's
weighted average cost of capital. Changes in these assumptions may have a
material impact on our Consolidated Financial Statements.


                                       22
<PAGE>

INCOME TAX VALUATION ALLOWANCE

In accordance with SFAS No. 109, "Accounting for Income Taxes" (SFAS 109),
deferred tax assets should be reduced by a valuation allowance if it is more
likely than not that some portion or all of the deferred tax assets will not be
realized. In making this determination, we consider both positive and negative
evidence and make certain assumptions, including projections of taxable income.
Changes in these assumptions may have a material impact on our Consolidated
Financial Statements.

PENSION PLANS

We sponsor defined benefit pension plans (Plans) for eligible employees and
retirees. The impact of the Plans on our Consolidated Financial Statements as of
December 31, 2002 and 2001 and for each of the three years in the period ended
December 31, 2002 is presented in Note 11 of the Notes to the Consolidated
Financial Statements. We currently estimate that our defined benefit pension
expense in 2003 will be approximately $335 million. The effect of our Plans on
our Consolidated Financial Statements is subject to many assumptions. We believe
the most critical assumptions are (1) the weighted average discount rate; (2)
the rate of increase in future compensation levels; and (3) the expected
long-term rate of return on Plan assets.

We determine our weighted average discount rate on our measurement date
primarily by reference to annualized rates earned on high quality fixed income
investments and yield-to-maturity analysis specific to our estimated future
benefit payments. Lowering our discount rate (6.75% at September 30, 2002) by
0.5% would increase our accrued pension cost by approximately $730 million at
December 31, 2002 and increase our estimated pension expense in 2003 by
approximately $80 million.

Our rate of increase in future compensation levels is based primarily on labor
contracts currently in effect with our employees under collective bargaining
agreements and expected future pay rate increases for other employees.
Increasing our estimated rate of increase in future compensation levels (2.67%
at September 30, 2002) by 0.5% would increase our estimated pension expense in
2003 by approximately $40 million.

The expected long-term rate of return on our Plan assets is based primarily on
Plan-specific asset/liability investment studies performed by outside
consultants and recent and historical returns on our Plans' assets. Lowering our
expected long-term rate of return (9% at September 30, 2002) by 0.5% would
increase our estimated pension expense in 2003 by approximately $60 million.

MARKET RISKS ASSOCIATED WITH FINANCIAL INSTRUMENTS

We have market risk exposure related to aircraft fuel prices, stock prices,
interest rates and foreign currency exchange rates. Market risk is the potential
negative impact of adverse changes in these prices or rates on our Consolidated
Financial Statements. To manage the volatility relating to these exposures, we
periodically enter into derivative transactions pursuant to stated policies (see
Notes 3 and 4 of the Notes to the Consolidated Financial Statements). Management
expects adjustments to the fair value of financial instruments accounted for
under SFAS 133 to result in ongoing volatility in earnings and shareowners'
equity.

The following sensitivity analyses do not consider the effects of a decline in
demand for air travel, the economy as a whole or additional actions by
management to mitigate our exposure to a particular risk. For these and other
reasons, the actual results of changes in these prices or rates may differ
materially from the following hypothetical results.

AIRCRAFT FUEL PRICE RISK

Our results of operations may be significantly impacted by changes in the price
of aircraft fuel. To manage this risk, we periodically enter into heating and
crude oil derivative contracts to hedge a portion of our projected annual
aircraft fuel requirements. Heating and crude oil prices have a highly
correlated relationship to fuel prices, making these derivatives effective in
offsetting changes in the cost of aircraft fuel. We do not enter into fuel hedge
contracts for speculative purposes. These contracts are intended to reduce our
exposure to changes in aircraft fuel prices.

The following table shows our fuel hedging position based on instruments held at
December 31, 2002, as supplemented by fuel hedge contracts acquired through
March 12, 2003:

<TABLE>
<CAPTION>
                                      % of Projected
                                       Aircraft Fuel
                                       Requirements     Average Hedge
                                          Hedged       Price per Gallon
                                      --------------   ----------------
<S>                                   <C>              <C>
March 2003 Quarter                          77%             79.10(cents)
June 2003 Quarter                           78%             78.27(cents)
September 2003 Quarter                      52%             78.88(cents)
December 2003 Quarter                       36%             74.25(cents)
Year Ending December 31, 2003               61%             78.08(cents)
Year Ending December 31, 2004               10%             68.88(cents)

</TABLE>


                                       23
<PAGE>

Management's Discussion and Analysis of Financial Condition and Results of
Operations


The fair values of our heating and crude oil derivative instruments were $73
million at December 31, 2002 and $64 million at December 31, 2001. A 10%
decrease in the average annual price of heating and crude oil would have
decreased the fair values of these instruments by $70 million at December
31, 2002.

During 2002, aircraft fuel accounted for 12% of our total operating expenses.
Based on our projected aircraft fuel consumption of 2.4 billion gallons for
2003, a 10% rise in our jet fuel prices would increase our aircraft fuel expense
by approximately $46 million in 2003. This analysis includes the effects of fuel
hedging instruments in place at December 31, 2002.

For additional information regarding our aircraft fuel price risk management
program, see Note 4 of the Notes to the Consolidated Financial Statements.

EQUITY SECURITIES RISK

We hold equity-based interests, including warrants and other similar rights, in
certain companies, primarily priceline and Republic Airways Holdings, Inc.
(Republic). The estimated fair values and aggregate unrealized and unrecognized
losses from these investments were $31 million and $9 million, respectively, at
December 31, 2002. At December 31, 2001, the estimated fair values of our
equity-based interests totaled $81 million, with aggregate unrealized and
unrecognized losses of $3 million. The risk associated with these investments is
the potential loss in fair value resulting from a decrease in the price of the
issuer's common stock. Based on the fair value of these equity-based interests
at December 31, 2002, a 10% decline in the price of the underlying common stock
would decrease the fair value of these instruments by approximately $3 million.
For additional information regarding our equity-based interests, see Note 2 of
the Notes to the Consolidated Financial Statements.

INTEREST RATE RISK

Our exposure to market risk due to changes in interest rates primarily relates
to our long-term debt obligations and cash investment portfolio.

Market risk associated with our long-term debt is the potential change in fair
value resulting from a change in interest rates. A 10% decrease in average
annual interest rates would have increased the estimated fair value of our
long-term debt by approximately $395 million at December 31, 2002, and $373
million at December 31, 2001. To manage our interest rate exposure, we have
entered into two interest rate swap agreements. At December 31, 2002, the fair
value of these agreements was $21 million. A 10% increase in average annual
interest rates would have had an immaterial effect on the fair value of these
instruments at December 31, 2002. A 10% increase in average annual interest
rates would have had an approximately $17 million impact on our interest expense
in 2002. For additional information on our interest rate swap and long-term debt
agreements, see Notes 4 and 6 of the Notes to the Consolidated Financial
Statements.

Market risk associated with our cash portfolio is the potential change in
earnings resulting from a change in interest rates. Based on our average balance
of cash and cash equivalents during 2002, a 10% decrease in average annual
interest rates would have decreased our interest income by approximately $4
million.

FOREIGN CURRENCY EXCHANGE RATE RISK

We have limited revenues and expenses denominated in foreign currencies. As a
result, we are exposed to limited foreign currency exchange rate risk. The
majority of our exposure results from transactions denominated in the euro,
British pound and Canadian dollar. To manage exchange rate risk, we net foreign
currency revenues and expenses, to the extent practicable, to take advantage of
natural offsets. We may use foreign currency option and forward contracts with
maturities of up to 12 months to manage the remaining net exposure. We did not
have any of these instruments outstanding at December 31, 2002. Based on our
average annual net foreign currency positions during 2002, a 10% adverse change
in average annual foreign currency exchange rates would not have had a material
impact on our Consolidated Financial Statements.


                                       24
<PAGE>

Forward-Looking Information

Statements in this Annual Report (or otherwise made by Delta or on Delta's
behalf), which are not historical facts, including statements about Delta's
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 Delta's present expectations. Factors that could cause
these differences include, but are not limited to:

1.       The many effects on Delta and the airline industry from the terrorist
         attacks on the United States on September 11, 2001, including the
         following:

         -        The adverse impact of the terrorist attacks on the demand for
                  air travel;

         -        The change in Delta's operations and higher costs resulting
                  from, and customer reaction to, new airline and airport
                  security directives;

         -        The availability and cost of war and terrorism risk and other
                  insurance for Delta;

         -        Potential declines in the values of the aircraft in Delta's
                  fleet or facilities and any related asset impairment charges;

2.       The availability to Delta of financing on commercially reasonable
         terms, which may be influenced by, among other things, airline
         bankruptcies, the creditworthiness of the airline industry in general
         and Delta in particular, and actions by credit rating agencies;

3.       Continued geopolitical uncertainty, including additional terrorist
         activity and/or war with Iraq;

4.       General economic conditions, both in the United States and in our
         markets outside the United States;

5.       The willingness of customers to travel generally, and with Delta
         specifically, which could be affected by factors such as Delta's and
         the industry's safety record and geopolitical uncertainty;

6.       Competitive factors in our industry, such as airline bankruptcies, the
         airline pricing environment, the growth of low-cost carriers,
         international alliances, codesharing programs, capacity decisions by
         competitors and mergers and acquisitions;

7.       Outcomes of negotiations on collective bargaining agreements and other
         labor issues;

8.       Changes in the availability or cost of aircraft fuel or fuel hedges;

9.       Disruptions to operations due to adverse weather conditions and air
         traffic control-related constraints;

10.      Actions by the United States or foreign governments, including the FAA
         and other regulatory agencies; and

11.      The outcome of Delta's litigation.

Caution should be taken not to place undue reliance on Delta's forward-looking
statements, which represent Delta's views only as of March 12, 2003, and which
Delta has no current intention to update.


                                       25
<PAGE>

Consolidated Balance Sheets

December 31, 2002 and 2001

<TABLE>
<CAPTION>
Assets
(in millions)                                                                                  2002            2001
                                                                                             -------         -------
<S>                                                                                          <C>             <C>
CURRENT ASSETS:
Cash and cash equivalents                                                                    $ 1,969         $ 2,210
Restricted cash                                                                                  134              --
Accounts receivable, net of an allowance for uncollectible accounts of $33
  at December 31, 2002, and $43 at December 31, 2001                                             292             368
Income tax receivable                                                                            319              --
Expendable parts and supplies inventories, net of an allowance for obsolescence
  of $183 at December 31, 2002, and $139 at December 31, 2001                                    164             181
Deferred income taxes                                                                            668             518
Prepaid expenses and other                                                                       356             290
                                                                                             -------         -------
  Total current assets                                                                         3,902           3,567
                                                                                             -------         -------
PROPERTY AND EQUIPMENT:
Flight equipment                                                                              20,295          19,427
Accumulated depreciation                                                                      (6,109)         (5,730)
                                                                                             -------         -------
  Flight equipment, net                                                                       14,186          13,697
                                                                                             -------         -------
Flight and ground equipment under capital leases                                                 439             382
Accumulated amortization                                                                        (297)           (262)
                                                                                             -------         -------
  Flight and ground equipment under capital leases, net                                          142             120
                                                                                             -------         -------
Ground property and equipment                                                                  4,270           4,412
Accumulated depreciation                                                                      (2,206)         (2,355)
                                                                                             -------         -------
  Ground property and equipment, net                                                           2,064           2,057
                                                                                             -------         -------
Advance payments for equipment                                                                   132             223
                                                                                             -------         -------
  Total property and equipment, net                                                           16,524          16,097
                                                                                             -------         -------

OTHER ASSETS:
Investments in debt and equity securities                                                         33              96
Investments in associated companies                                                              174             180
Goodwill                                                                                       2,092           2,092
Operating rights and other intangibles, net of accumulated amortization
  of $172 at December 31, 2002, and $246 at December 31, 2001                                    102              94
Restricted investments for Boston airport terminal project                                       417             475
Other noncurrent assets                                                                        1,476           1,004
                                                                                             -------         -------
  Total other assets                                                                           4,294           3,941
                                                                                             -------         -------
Total assets                                                                                 $24,720         $23,605
                                                                                             =======         =======
</TABLE>


                                       26
<PAGE>

<TABLE>
<CAPTION>
Liabilities and Shareowners' Equity
(in millions, except share data)                                                                2002            2001
                                                                                               -------         -------
<S>                                                                                            <C>             <C>
CURRENT LIABILITIES:
Current maturities of long-term debt                                                           $   666         $   260
Short-term obligations                                                                              --             765
Current obligations under capital leases                                                            27              31
Accounts payable, deferred credits and other accrued liabilities                                 1,921           1,617
Air traffic liability                                                                            1,270           1,224
Taxes payable                                                                                      862           1,049
Accrued salaries and related benefits                                                            1,365           1,121
Accrued rent                                                                                       344             336
                                                                                               -------         -------
    Total current liabilities                                                                    6,455           6,403
                                                                                               -------         -------
NONCURRENT LIABILITIES:
Long-term debt                                                                                   9,576           7,781
Long-term debt issued by Massachusetts Port Authority (Note 6)                                     498             498
Capital leases                                                                                     100              68
Postretirement benefits                                                                          2,282           2,292
Accrued rent                                                                                       739             781
Deferred income taxes                                                                               --             465
Pension and related benefits                                                                     3,242             359
Other                                                                                               93             105
                                                                                               -------         -------
    Total noncurrent liabilities                                                                16,530          12,349
                                                                                               -------         -------
DEFERRED CREDITS:
Deferred gains on sale and leaseback transactions                                                  478             519
Deferred revenue and other credits                                                                 100             310
                                                                                               -------         -------
    Total deferred credits                                                                         578             829
                                                                                               -------         -------
COMMITMENTS AND CONTINGENCIES (NOTES 3, 4, 6, 7, 8 AND 9)
EMPLOYEE STOCK OWNERSHIP PLAN PREFERRED STOCK:
Series B ESOP Convertible Preferred Stock, $1.00 par value, $72.00 stated and
  liquidation value; 6,065,489 shares issued and outstanding at December 31,
  2002, and 6,278,210 shares issued and outstanding at December 31, 2001                           437             452
Unearned compensation under Employee Stock Ownership Plan                                         (173)           (197)
                                                                                               -------         -------
    Total Employee Stock Ownership Plan Preferred Stock                                            264             255
                                                                                               -------         -------
SHAREOWNERS' EQUITY:
Common stock, $1.50 par value; 450,000,000 shares authorized; 180,903,373 shares issued
  at December 31, 2002, and 180,890,356 shares issued at December 31, 2001                         271             271
Additional paid-in capital                                                                       3,263           3,267
Retained earnings                                                                                1,639           2,930
Accumulated other comprehensive income (loss)                                                   (1,562)             25
Treasury stock at cost, 57,544,168 shares at December 31, 2002, and 57,644,690
  shares at December 31, 2001                                                                   (2,718)         (2,724)
                                                                                               -------         -------
    Total shareowners' equity                                                                      893           3,769
                                                                                               -------         -------
Total liabilities and shareowners' equity                                                      $24,720         $23,605
                                                                                               =======         =======
</TABLE>



The accompanying notes are an integral part of these Consolidated Financial
Statements.


                                       27
<PAGE>
Consolidated Statements of Operations

For the years ended December 31, 2002, 2001 and 2000

<TABLE>
<CAPTION>
(in millions, except per share data)                                          2002           2001           2000
- ------------------------------------                                        --------       --------       --------
<S>                                                                         <C>            <C>            <C>
OPERATING REVENUES:
Passenger                                                                   $ 12,321       $ 12,964       $ 15,657
Cargo                                                                            458            506            583
Other, net                                                                       526            409            501
                                                                            --------       --------       --------
    Total operating revenues                                                  13,305         13,879         16,741
OPERATING EXPENSES:
Salaries and related costs                                                     6,165          6,124          5,971
Aircraft fuel                                                                  1,683          1,817          1,969
Depreciation and amortization                                                  1,148          1,283          1,187
Contracted services                                                            1,003          1,016            966
Landing fees and other rents                                                     834            780            771
Aircraft maintenance materials and outside repairs                               711            801            723
Aircraft rent                                                                    709            737            741
Other selling expenses                                                           539            616            688
Passenger commissions                                                            322            540            661
Passenger service                                                                372            466            470
Asset writedowns, restructuring and related items, net                           439          1,119            108
Stabilization Act compensation                                                   (34)          (634)            --
Other                                                                            723            816            849
                                                                            --------       --------       --------
    Total operating expenses                                                  14,614         15,481         15,104
OPERATING INCOME (LOSS)                                                       (1,309)        (1,602)         1,637
                                                                            --------       --------       --------
OTHER INCOME (EXPENSE):
Interest expense                                                                (646)          (499)          (380)
Interest income                                                                   36             89            123
Loss on extinguishment of ESOP Notes                                             (42)            --             --
Gain (loss) from sale of investments, net                                         (3)           127            301
Fair value adjustments of SFAS 133 derivatives                                   (39)            68           (159)
Miscellaneous income (expense), net                                                1            (47)            27
                                                                            --------       --------       --------
    Total other income (expense)                                                (693)          (262)           (88)
INCOME (LOSS) BEFORE INCOME TAXES AND CUMULATIVE EFFECT
  OF CHANGE IN ACCOUNTING PRINCIPLE                                           (2,002)        (1,864)         1,549
INCOME TAX BENEFIT (PROVISION)                                                   730            648           (621)
                                                                            --------       --------       --------
INCOME (LOSS) BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING
  PRINCIPLE, NET OF TAX                                                       (1,272)        (1,216)           928
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE,
  NET OF TAX OF $64 MILLION IN 2000                                               --             --           (100)
                                                                            --------       --------       --------
NET INCOME (LOSS)                                                             (1,272)        (1,216)           828
PREFERRED STOCK DIVIDENDS                                                        (15)           (14)           (13)
                                                                            --------       --------       --------
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREOWNERS                           $ (1,287)      $ (1,230)      $    815
                                                                            --------       --------       --------
BASIC EARNINGS (LOSS) PER SHARE BEFORE CUMULATIVE EFFECT
  OF CHANGE IN ACCOUNTING PRINCIPLE                                         $ (10.44)      $  (9.99)      $   7.39
                                                                            --------       --------       --------
BASIC EARNINGS (LOSS) PER SHARE                                             $ (10.44)      $  (9.99)      $   6.58
                                                                            --------       --------       --------
DILUTED EARNINGS (LOSS) PER SHARE BEFORE CUMULATIVE EFFECT
  OF CHANGE IN ACCOUNTING PRINCIPLE                                         $ (10.44)      $  (9.99)      $   7.05
                                                                            --------       --------       --------
DILUTED EARNINGS (LOSS) PER SHARE                                           $ (10.44)      $  (9.99)      $   6.28
                                                                            --------       --------       --------
</TABLE>

The accompanying notes are an integral part of these Consolidated Financial
Statements.


                                       28
<PAGE>

Consolidated Statements of Cash Flows

For the years ended December 31, 2002, 2001 and 2000

<TABLE>
<CAPTION>
(in millions)                                                                         2002           2001           2000
- --------------                                                                      --------       --------       --------
<S>                                                                                 <C>            <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)                                                                   $ (1,272)      $ (1,216)      $    828
Adjustments to reconcile net income (loss) to cash provided by
  operating activities:
    Cumulative effect of change in accounting principle                                   --             --            100
    Asset and other writedowns                                                           287            339             --
    Depreciation and amortization                                                      1,181          1,283          1,187
    Deferred income taxes                                                               (411)          (648)           396
    Fair value adjustments of SFAS 133 derivatives                                        39            (68)           159
    Pension, postretirement and postemployment expense in excess of
      (less than) payments                                                               177            419            (17)
    Loss on extinguishment of ESOP Notes                                                  42             --             --
    Dividends (less than) in excess of equity income                                      (3)            51            (28)
    Loss (gain) from sale of investments, net                                              3           (127)          (301)
Income tax benefit from exercise of stock options                                         --             --              5
Changes in certain current assets and liabilities:
    (Increase) decrease in receivables                                                  (243)            47             86
    Increase in restricted cash                                                         (134)            --             --
    (Increase) decrease in prepaid expenses and other current assets                     (35)            60             92
    Increase (decrease) in air traffic liability                                          46           (215)           (49)
    Increase in other payables, deferred credits and accrued liabilities                 675            274            395
Other, net                                                                               (67)            37             45
                                                                                    --------       --------       --------
      Net cash provided by operating activities                                          285            236          2,898

CASH FLOWS FROM INVESTING ACTIVITIES:
Property and equipment additions:
  Flight equipment, including advance payments                                          (922)        (2,321)        (3,426)
  Ground property and equipment, including technology                                   (364)          (472)          (634)
Decrease (increase) in restricted investments related to the Boston
  airport terminal project                                                                58           (485)            --
Decrease in short-term investments, net                                                    5            238            456
Proceeds from sales of flight equipment                                                  100             66            384
Proceeds from sales of investments                                                        24            286             73
Acquisitions of companies, net of cash acquired                                           --             --           (232)
Other, net                                                                               (10)            (8)           (17)
                                                                                    --------       --------       --------
      Net cash used in investing activities                                           (1,109)        (2,696)        (3,396)

CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on long-term debt and capital lease obligations                                (734)          (173)          (853)
Prepayment of long-term lease obligations                                                 --             --           (215)
Cash dividends                                                                           (39)           (40)           (40)
Issuance of long-term obligations                                                      2,554          2,335          1,867
Issuance of long-term debt by Massachusetts Port Authority                                --            498             --
(Payments on) proceeds from short-term obligations and notes payable, net             (1,144)           701            (51)
Issuance of common stock                                                                  --              2             33
Repurchase of common stock                                                                --             --           (502)
Payments on extinguishment of ESOP Notes                                                 (42)            --             --
Other, net                                                                               (12)           (17)            --
                                                                                    --------       --------       --------
      Net cash provided by financing activities                                          583          3,306            239
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS                                    (241)           846           (259)
Cash and cash equivalents at beginning of year                                         2,210          1,364          1,623
                                                                                    --------       --------       --------
Cash and cash equivalents at end of year                                            $  1,969       $  2,210       $  1,364
                                                                                    --------       --------       --------
SUPPLEMENTAL DISCLOSURE OF CASH PAID (REFUNDED) FOR:
Interest, net of amounts capitalized                                                $    569       $    490       $    410
Income taxes                                                                        $   (649)      $   (103)      $    131

NON-CASH TRANSACTIONS:
Aircraft delivered under seller-financing                                           $    705       $     77       $     --
Aircraft capital leases from sale and leaseback transactions                        $     52       $     --       $     --
</TABLE>

The accompanying notes are an integral part of these Consolidated Financial
Statements.


                                       29
<PAGE>

Consolidated Statements of Shareowners' Equity

For the years ended December 31, 2002, 2001 and 2000

<TABLE>
<CAPTION>
                                                                                              Accumulated
                                                                 Additional                       Other
                                                        Common     Paid-in       Retained     Comprehensive  Treasury
(in millions, except share data)                        Stock      Capital       Earnings     Income (Loss)    Stock        Total
- -------------------------------                         ------   ----------      --------     -------------  --------      -------
<S>                                                     <C>      <C>             <C>          <C>            <C>           <C>
BALANCE AT DECEMBER 31, 1999                             $270      $ 3,222       $ 3,377       $   266       $(2,227)      $ 4,908
COMPREHENSIVE INCOME:
   Net income                                              --           --           828            --            --           828
   Other comprehensive income                              --           --            --            94            --            94
                                                                                                                           -------
TOTAL COMPREHENSIVE INCOME (SEE NOTE 14)                                                                                       922
Dividends on common stock ($0.10) per share)               --           --           (12)           --            --           (12)
Dividends on Series B ESOP Convertible
   Preferred Stock allocated shares                        --           --           (13)           --            --           (13)
Issuance of 729,426 shares of common stock under
   dividend reinvestment and stock purchase plan
   and stock options ($44.86 per share(1))                  1           32            --            --            --            33
Repurchase of 10,626,104 common shares
   ($47.26 per share(1))                                   --           --            --            --          (502)         (502)
Income tax benefit from exercise of stock options          --            5            --            --            --             5
Transfers and forfeitures of 16,580 shares of
   common from Treasury under stock incentive
   plan ($52.61 per share(1))                              --           --            --            --             1             1
Other                                                      --            5            (4)           --            --             1
                                                         ----      -------       -------       -------       -------       -------
BALANCE AT DECEMBER 31, 2000                              271        3,264         4,176           360        (2,728)        5,343
                                                         ----      -------       -------       -------       -------       -------
COMPREHENSIVE LOSS:
   Net loss                                                --           --        (1,216)           --            --        (1,216)
   Other comprehensive loss                                --           --            --          (335)           --          (335)
                                                                                                                           -------
TOTAL COMPREHENSIVE LOSS (SEE NOTE 14)                     --           --            --            --            --        (1,551)
Dividends on common stock ($0.10 per share)                --           --           (12)           --            --           (12)
Dividends on Series B ESOP Convertible
   Preferred Stock allocated shares                        --           --           (14)           --            --           (14)
Issuance of 126,299 shares of common stock under
   dividend reinvestment and stock purchase plan
   and stock options ($38.10 per share(1))                 --            5            --            --            --             5
Transfers and forfeitures of 105,995 shares of
   common from Treasury under stock incentive
   plan ($37.10 per share(1))                              --           (4)           --            --             4            --
Other                                                      --            2            (4)           --            --            (2)
                                                         ----      -------       -------       -------       -------       -------
BALANCE AT DECEMBER 31, 2001                              271        3,267         2,930            25        (2,724)        3,769
                                                         ----      -------       -------       -------       -------       -------
COMPREHENSIVE LOSS:
   Net loss                                                --           --        (1,272)           --            --        (1,272)
   Other comprehensive loss                                --           --            --        (1,587)           --        (1,587)
                                                                                                                           -------
TOTAL COMPREHENSIVE LOSS (SEE NOTE 14)                                                                                      (2,859)
Dividends on common stock ($0.10 per share)                --           --           (12)           --            --           (12)
Dividends on Series B ESOP Convertible
   Preferred Stock allocated shares                        --           --           (15)           --            --           (15)
Issuance of 13,017 shares of common stock
   under stock purchase plan and stock options
   ($15.70 per share(1))                                   --           --            --            --            --            --
Forfeitures of 82,878 shares of common to
   Treasury under stock incentive plan
   ($27.31 per share(1))                                   --           --            --            --            (2)           (2)
Transfers of 183,400 shares of common from
   Treasury under stock incentive plan
   ($47.11 per share(1))                                   --           (5)           --            --             8             3
Other                                                      --            1             8            --            --             9
                                                         ----      -------       -------       -------       -------       -------
BALANCE AT DECEMBER 31, 2002                             $271      $ 3,263       $ 1,639       $(1,562)      $(2,718)      $   893
                                                         ====      =======       =======       =======       =======       =======
</TABLE>
(1) Average price per share

The accompanying notes are an integral part of these Consolidated Financial
Statements.


                                       30
<PAGE>
Notes to the Consolidated Financial Statements

Note 1. Summary of Significant Accounting Policies
BASIS OF PRESENTATION
Delta Air Lines, Inc. (a Delaware corporation) is a major air carrier that
provides air transportation for passengers and cargo throughout the U.S. and
around the world. Our Consolidated Financial Statements include the accounts of
Delta Air Lines, Inc. and our wholly owned subsidiaries, including ASA Holdings,
Inc. (ASA Holdings) and Comair Holdings, Inc. (Comair Holdings), collectively
referred to as Delta. ASA Holdings is the parent company of Atlantic Southeast
Airlines, Inc. (ASA), and Comair Holdings is the parent company of Comair, Inc.
(Comair). We completed our acquisitions of ASA Holdings and Comair Holdings in
April 1999 and in January 2000, respectively. We have eliminated all material
intercompany transactions in our Consolidated Financial Statements. These
Consolidated Financial Statements have been prepared in accordance with
accounting principles generally accepted in the United States of America (GAAP).
We have reclassified certain prior period amounts in our Consolidated Financial
Statements to be consistent with our current period presentation. The effect of
these reclassifications is not material.

We do not consolidate the financial statements of any company in which we have
an ownership interest of 50% or less unless we control that company. During
2002, 2001 and 2000, we did not control any company in which we had an ownership
interest of 50% or less.

CHANGE IN YEAR END
Effective December 31, 2000, we changed our year end from June 30 to December
31. Accordingly, this Annual Report includes audited Consolidated Balance Sheets
as of December 31, 2002 and 2001, and audited Consolidated Statements of
Operations, Cash Flows and Shareowners' Equity for the years ended December 31,
2002, 2001 and 2000.

USE OF ESTIMATES
We are required to make estimates and assumptions when preparing our
Consolidated Financial Statements in accordance with GAAP. These estimates and
assumptions affect the amounts reported in our financial statements and the
accompanying notes. Actual results could differ materially from those estimates.

NEW ACCOUNTING STANDARDS
On January 1, 2002, we adopted Statement of Financial Accounting Standards
(SFAS) No. 142, "Goodwill and Other Intangible Assets" (SFAS 142), which
addresses financial accounting and reporting for goodwill and other intangible
assets (see Note 5).

In June 2001, the Financial Accounting Standards Board (FASB) issued SFAS No.
143, "Accounting for Asset Retirement Obligations" (SFAS 143), which is
effective for fiscal years beginning after June 15, 2002. We adopted SFAS 143 on
January 1, 2003. The adoption of SFAS 143 did not have a material impact on our
Consolidated Financial Statements.

On January 1, 2002, we adopted SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-lived Assets" (SFAS 144), which supersedes previous accounting
and reporting standards for (1) testing for impairment or disposal of long-lived
assets and (2) the disposal of segments of a business. Our impairment charges
recorded during 2002 were determined in accordance with SFAS 144 (see Note 16).

On October 1, 2002, we adopted SFAS No. 145, "Rescission of FASB Statements No.
4, 44 and 64, Amendment of FASB Statement No. 13 and Technical Corrections"
(SFAS 145), which, among other things, (1) requires that gains and losses due to
the extinguishment of debt be classified as extraordinary items on the
Consolidated Statements of Operations only if certain criteria are met and (2)
amends the accounting for sale and leaseback transactions. In accordance with
SFAS 145, we recorded a $42 million loss on the extinguishment of ESOP Notes in
other income (expense) on our 2002 Consolidated Statement of Operations (see
Note 6).

In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated
with Exit or Disposal Activities" (SFAS 146), which supersedes previous
accounting and reporting standards for costs associated with exit or disposal
activities by requiring the related liability to be recognized and measured
initially at fair value when the liability is incurred. Under the previous
accounting


                                       31
<PAGE>

Notes to the Consolidated Financial Statements

and reporting standards, the liability for exit or disposal costs was recognized
at the date management committed to a plan. The adoption of SFAS 146 will impact
the timing of the recognition of liabilities related to future exit or disposal
activities and is effective for such activities that are initiated after
December 31, 2002.

In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation - Transition and Disclosure" (SFAS 148), which amends SFAS No. 123,
"Accounting for Stock Based Compensation" (SFAS 123), by revising the methods of
transition for a voluntary change to the fair value based method of accounting
for stock-based employee compensation. SFAS 148 also requires additional
disclosures in annual and interim financial statements related to stock-based
employee compensation. On December 31, 2002, we adopted SFAS 148 as it relates
to the additional disclosures required for registrants that account for employee
stock-based compensation under Accounting Principles Bulletin (APB) Opinion 25,
"Accounting for Stock Issued to Employees" (APB 25) and related interpretations.
For additional information, see our stock-based compensation policy in this Note
on page 36.

In November 2002, the FASB issued FASB Interpretation No. (FIN) 45, "Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others" (FIN 45), which expands the disclosures a
guarantor is required to provide in its annual and interim financial statements
regarding its obligations for certain guarantees. Disclosures are required to be
included in financial statements issued after December 15, 2002 (see Note 9).
FIN 45 also requires the guarantor to recognize a liability for the fair value
of an obligation assumed for guarantees issued or modified after December 31,
2002.

In January 2003, the FASB issued FIN 46, "Consolidation of Variable Interest
Entities" (FIN 46), which addresses how to identify variable interest entities
and the criteria that require a company to consolidate such entities in its
financial statements. FIN 46 is effective on February 1, 2003 for new
transactions and on July 1, 2003 for existing transactions. We are evaluating
the impact of FIN 46 on our Consolidated Financial Statements.

During 2000, we adopted SFAS No. 133, "Accounting for Derivative Instruments and
Hedging Activities" (SFAS 133), as amended (see Note 4 for additional
information), and SFAS No. 140, "Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities" (SFAS 140). The adoption of
SFAS 140 did not have a material impact on our Consolidated Financial
Statements.

CASH AND CASH EQUIVALENTS
We classify short-term, highly liquid investments with original maturities of
three months or less as cash and cash equivalents. These investments are
recorded at cost, which we believe approximates fair value.

Under our cash management system, we utilize controlled disbursement accounts
that are funded daily. Payments issued by us, which have not been presented to
the bank for payment, are recorded in accounts payable, deferred credits and
other accrued liabilities on our Consolidated Balance Sheets.

RESTRICTED ASSETS
We have restricted cash, which primarily relates to cash held as collateral to
support certain projected insurance obligations. At December 31, 2002,
restricted cash included in current assets on our Consolidated Balance Sheets
totaled $134 million.

We have restricted investments for the redevelopment and expansion of Terminal A
at Boston's Logan International Airport (see Note 6 for additional information
about this project). At December 31, 2002 and 2001, our restricted investments
included in other assets on our Consolidated Balance Sheets totaled $417 million
and $475 million, respectively.

DERIVATIVE FINANCIAL INSTRUMENTS
We account for derivative financial instruments in accordance with SFAS 133.
These derivative instruments include fuel hedge contracts, interest rate swap
agreements and equity warrants and other similar rights in certain companies
(see Note 4).

FUEL HEDGE CONTRACTS
Our fuel hedge contracts qualify as cash flow hedges under SFAS 133. We record
the fair value of our fuel hedge contracts on our Consolidated Balance Sheets
and regularly adjust the balances to reflect changes in the fair values of those
contracts.


                                       32
<PAGE>

Effective gains or losses related to the fair value adjustments of the fuel
hedge contracts are recorded in shareowners' equity as a component of
accumulated other comprehensive income (loss). These gains or losses are
recognized in aircraft fuel expense in the period in which the related aircraft
fuel purchases being hedged are consumed and when the fuel hedge contract is
settled. However, to the extent that the change in fair value of a fuel hedge
contract does not perfectly offset the change in the value of the aircraft fuel
being hedged, the ineffective portion of the hedge is immediately recognized as
a fair value adjustment of SFAS 133 derivatives in other income (expense) on our
Consolidated Statements of Operations. In calculating the ineffective portion of
our hedges under SFAS 133, we include all changes in the fair value attributable
to the time value component and recognize the amount in income during the life
of the contract. Prior to the adoption of SFAS 133, the fuel hedge gains or
losses that were netted against fuel expense included the total fuel-related
hedge premiums.

INTEREST RATE SWAP AGREEMENTS
Our interest rate swap agreements qualify as fair value hedges under SFAS 133.
We record the fair value of these interest rate swap agreements on our
Consolidated Balance Sheets and regularly adjust these amounts and the related
debt to reflect changes in their fair values. Net periodic interest rate swap
settlements are recorded as adjustments to interest expense in other income
(expense) on our Consolidated Statements of Operations.

EQUITY WARRANTS AND OTHER SIMILAR RIGHTS
We record our equity warrants and other similar rights in certain companies at
fair value at the date of acquisition in investments in debt and equity
securities on our Consolidated Balance Sheets. In accordance with SFAS 133, we
regularly adjust our Consolidated Balance Sheets to reflect the changes in the
fair values of the equity warrants and other similar rights, and recognize the
related gains or losses as fair value adjustments of SFAS 133 derivatives in
other income (expense) on our Consolidated Statements of Operations.

REVENUE RECOGNITION
PASSENGER REVENUES
We record sales of passenger tickets as air traffic liability on our
Consolidated Balance Sheets. Passenger revenues are recognized when we provide
the transportation, reducing the related air traffic liability. We periodically
evaluate the estimated air traffic liability and record any resulting
adjustments in the Consolidated Statements of Operations in the period that the
evaluations are completed.

We sell mileage credits in the SkyMiles(R) frequent flyer program to
participating partners such as credit card companies, hotels and car rental
agencies. A portion of the revenue from the sale of mileage credits is deferred
until the credits are redeemed for travel. For accounting purposes, we amortize
the deferred revenue on a straight-line basis over a 30-month period. The
majority of the revenue from the sale of mileage credits, including the
amortization of deferred revenue, is recorded in passenger revenue; the
remaining portion is recorded as an offset to other selling expenses.

CARGO REVENUES
Cargo revenues are recognized in our Consolidated Statements of Operations when
we provide the transportation.

OTHER, NET
We are party to codeshare agreements with certain foreign airlines. Under these
agreements, we sell seats on these airlines' flights, and they sell seats on our
flights, with each airline separately marketing its respective seats. The
revenue from our sale of codeshare seats flown by certain foreign airlines and
the direct costs incurred in marketing the codeshare flights are recorded in
other, net in operating revenues on our Consolidated Statements of Operations.
Our revenue from certain foreign airlines' sale of codeshare seats flown by us
is recorded in passenger revenue on our Consolidated Statements of Operations.

We record revenues under our contract carrier agreements, reduced by related
expenses, in other, net in operating revenues on our Consolidated Statements of
Operations (see Note 9).


                                       33
<PAGE>

Notes to the Consolidated Financial Statements

LONG-LIVED ASSETS

We record our property and equipment at cost and depreciate or amortize these
assets on a straight-line basis to their estimated residual values over their
respective estimated useful lives. Residual values for flight equipment range
from 5%-40% of cost. We also capitalize certain internal and external costs
incurred to develop internal-use software during the application stage; these
assets are included in ground property and equipment, net on our Consolidated
Balance Sheets. The estimated useful lives for major asset classifications are
as follows:

<TABLE>
<CAPTION>
Asset Classification                                   Estimated Useful Life
- --------------------                                   ---------------------
<S>                                                    <C>
Owned flight equipment                                      15-25 years
Flight and ground equipment under capital lease             Lease Term
Ground property and equipment                               3-30 years
</TABLE>

In accordance with SFAS 144, we record impairment losses on long-lived assets
used in operations when events and circumstances indicate the assets may be
impaired and the undiscounted cash flows estimated to be generated by those
assets are less than their carrying amounts. For long-lived assets held for
sale, we record impairment losses when the carrying amount is greater than
the fair value less the cost to sell. We discontinue depreciation of long-lived
assets once they are classified as held for sale.

To determine impairments for aircraft used in operations, we group assets at the
fleet type level (the lowest level for which there are identifiable cash flows)
and then estimate future cash flows based on projections of passenger yield,
fuel costs, labor costs and other relevant factors in the markets in which these
aircraft operate. If an impairment occurs, the amount of the impairment loss
recognized is the amount by which the carrying amount of the aircraft exceeds
the estimated fair value. Aircraft fair values are estimated by management using
published sources, appraisals and bids received from third parties, as
available.

GOODWILL AND OTHER INTANGIBLE ASSETS
Prior to our adoption of SFAS 142 on January 1, 2002, goodwill and other
intangible assets were amortized over their estimated useful lives (not to
exceed 40 years in the case of goodwill). Upon adoption of SFAS 142, we
discontinued the amortization of goodwill and other intangible assets with
indefinite useful lives. Instead, in accordance with SFAS 142, we now apply a
fair value-based impairment test to the net book value of goodwill and
indefinite-lived intangible assets on an annual basis and on an interim basis if
certain events or circumstances indicate that an impairment loss may have been
incurred. Intangible assets that have determinable useful lives continue to be
amortized on a straight-line basis over their remaining estimated useful lives.
Our leasehold and operating rights have definite useful lives and we will
continue to amortize these assets over their respective lease terms which range
from nine to 19 years.

SFAS 142 requires a two-step process in evaluating goodwill for impairment. The
first step requires the comparison of the fair value of each reporting unit to
its carrying value. We have identified three reporting units which have assigned
goodwill: Delta-mainline, ASA and Comair. Our methodology for estimating the
fair value of each reporting unit primarily considers discounted future cash
flows. If the fair value of a reporting unit exceeds its carrying value, then no
further testing is required. If the carrying value of a reporting unit exceeds
its fair value, however, a second step is required to determine the amount of
the impairment charge, if any. An impairment charge is recognized if the
carrying value of a reporting unit's goodwill exceeds its implied fair value.

We perform our impairment test for our indefinite-lived intangible assets by
comparing the fair value of each indefinite-lived intangible asset unit to its
carrying value. The fair value of the asset unit is estimated based on its
discounted future cash flows. We recognize an impairment charge if the carrying
value of the asset unit exceeds its estimated fair value.

The annual impairment test date for our goodwill and indefinite-lived intangible
assets is December 31 (see Note 5).

INTEREST CAPITALIZED
We capitalize interest on advance payments for the acquisition of new aircraft
and on construction of ground facilities as an additional cost of the related
assets. Interest is capitalized at our weighted average interest rate on
long-term debt or, if applicable, the


                                       34
<PAGE>

interest rate related to specific asset financings. Interest capitalization ends
when the equipment or facility is ready for service or its intended use.
Capitalized interest totaled $15 million, $32 million and $45 million for the
years ended December 31, 2002, 2001 and 2000, respectively.

EQUITY METHOD INVESTMENTS
We use the equity method to account for our 40% ownership interest in WORLD-
SPAN, L.P. (Worldspan), a computer reservations system partnership. Our equity
earnings from this investment totaled $43 million, $19 million and $59 million
for the years ended December 31, 2002, 2001 and 2000, respectively. We also
received cash dividends from Worldspan of $40 million, $70 million and $32
million for the years ended December 31, 2002, 2001 and 2000, respectively.
Worldspan provides computer reservation and related services for us, which
totaled approximately $180 million for the year ended December 31, 2002. At
December 31, 2002, we had a liability to Worldspan for $15 million which is
included in accounts payable, deferred credits and other accrued liabilities on
our Consolidated Balance Sheet.

We account for our 18% ownership interest in Orbitz, LLC (Orbitz), an on-line
travel agency, under the equity method. We use the equity method of accounting
for this investment because we believe we have the ability to exercise
significant influence, but not control, over the financial and operating
policies of Orbitz. This influence is evidenced by, among other things, our
right to appoint two of our senior officers to the 11 member Board of Managers
of Orbitz, which allows us to participate in Orbitz's financial and operating
decisions.

Our investments in Worldspan and Orbitz are recorded in investments in
associated companies on our Consolidated Balance Sheets.

INCOME TAXES
We account for deferred income taxes under the liability method in accordance
with SFAS No. 109, "Accounting for Income Taxes" (SFAS 109). Under this method,
we recognize deferred tax assets and liabilities based on the tax effects of
temporary differences between the financial statement and tax bases of assets
and liabilities, as measured by current enacted tax rates. A valuation allowance
is recorded to reduce deferred tax assets when determined necessary in
accordance with SFAS 109. Deferred tax assets and liabilities are recorded net
as current and noncurrent deferred income taxes on our Consolidated Balance
Sheets.

FREQUENT FLYER PROGRAM
We record an estimated liability for the incremental cost associated with
providing free transportation under our SkyMiles frequent flyer program when a
free travel award is earned. The liability is recorded in accounts payable,
deferred credits and other accrued liabilities on our Consolidated Balance
Sheets. It is adjusted periodically based on awards earned, awards redeemed,
changes in the SkyMiles program and changes in estimated incremental costs.

DEFERRED GAINS ON SALE AND LEASEBACK TRANSACTIONS
We amortize deferred gains on the sale and leaseback of property and equipment
under operating leases over the lives of these leases. The amortization of these
gains is recorded as a reduction in rent expense. Gains on the sale and
leaseback of property and equipment under capital leases reduce the carrying
value of the related assets.

MANUFACTURERS' CREDITS
We periodically receive credits in connection with the acquisition of aircraft
and engines. These credits are deferred until the aircraft and engines are
delivered, then applied on a pro rata basis as a reduction to the cost of the
related equipment.

MAINTENANCE COSTS
We record maintenance costs in operating expenses as they are incurred.

INVENTORIES
Inventories of expendable parts related to flight equipment are carried at cost
and charged to operations as consumed. An allowance for obsolescence for the
cost of these parts is provided over the remaining useful life of the related
fleet.


                                       35
<PAGE>

Notes to the Consolidated Financial Statements

ADVERTISING COSTS
We expense advertising costs as other selling expenses in the year incurred.
Advertising expense was $130 million, $153 million and $151 million for the
years ended December 31, 2002, 2001 and 2000, respectively.

COMMISSIONS
We record passenger commissions in prepaid expenses and other on our
Consolidated Balance Sheets when the related passenger tickets are sold.
Passenger commissions are recognized in operating expenses on our Consolidated
Statements of Operations when the transportation is provided and the related
revenue is recognized.

FOREIGN CURRENCY REMEASUREMENT
We remeasure assets and liabilities denominated in foreign currencies using
exchange rates in effect on the balance sheet date. Fixed assets and the related
depreciation or amortization charges are recorded at the exchange rates in
effect on the date we acquired the assets. Revenues and expenses denominated in
foreign currencies are remeasured using average exchange rates for all periods
presented. We recognize the resulting foreign exchange gains and losses as a
component of miscellaneous income (expense). These gains and losses are
immaterial for all periods presented.

STOCK-BASED COMPENSATION
We account for our stock-based compensation plans under the intrinsic value
method in accordance with APB 25 and related interpretations (see Note 12 for
additional information related to our stock-based compensation plans). No stock
option compensation expense is recognized in net income (loss) as all stock
options granted had an exercise price equal to the fair value of the underlying
common stock on the grant date.

The estimated fair values of stock options granted during the years ended
December 31, 2002, 2001 and 2000, were derived using the Black-Scholes model.
The following table includes the assumptions used in estimating fair values and
the resulting weighted average fair value of a stock option granted in the
periods presented:

<TABLE>
<CAPTION>
                                                                           Stock Options Granted
                                                                  --------------------------------------
Assumption                                                          2002          2001            2000
- ----------                                                        --------       --------       --------
<S>                                                               <C>            <C>            <C>
Risk-free interest rate                                                4.4%           5.8%           6.2%
Average expected life of stock options (in years)                      6.7            7.5            7.5
Expected volatility of common stock                                   38.9%          26.9%          26.9%
Expected annual dividends on common stock                         $   0.10       $   0.10       $   0.10
Weighted average fair value of a stock option granted             $      9       $     20       $     23
                                                                  --------       --------       --------
</TABLE>

The following table shows what our net income (loss) and earnings (loss) per
share would have been for the years ended December 31, 2002, 2001 and 2000, had
we accounted for our stock-based compensation plans under the fair value method
of SFAS 123 using the assumptions in the table above:

<TABLE>
<CAPTION>
(in millions, except per share data)                                2002            2001            2000
- ------------------------------------                              ---------       ---------       --------
<S>                                                               <C>             <C>             <C>
NET INCOME (LOSS):
As reported                                                       $  (1,272)      $  (1,216)      $    828
Deduct: total stock option compensation expense
  determined under the fair value based method, net of tax              (47)            (30)           (27)
                                                                  ---------       ---------       --------
As adjusted for the fair value method under SFAS 123              $  (1,319)      $  (1,246)      $    801
                                                                  =========       =========       ========
BASIC EARNINGS (LOSS) PER SHARE:
As reported                                                       $  (10.44)      $   (9.99)      $   6.58
As adjusted for the fair value method under SFAS 123              $  (10.82)      $  (10.23)      $   6.36
                                                                  ---------       ---------       --------
DILUTED EARNINGS (LOSS) PER SHARE:
As reported                                                       $  (10.44)      $   (9.99)      $   6.28
As adjusted for the fair value method under SFAS 123              $  (10.82)      $  (10.23)      $   6.07
                                                                  ---------       ---------       --------
</TABLE>


                                       36
<PAGE>

FAIR VALUE OF FINANCIAL INSTRUMENTS
We record our cash equivalents and short-term investments at cost, which we
believe approximates their fair values. The estimated fair values of other
financial instruments, including debt and derivative instruments, have been
determined using available market information and valuation methodologies,
primarily discounted cash flow analyses and the Black-Scholes model.

Note 2. Marketable and Other Equity Securities
PRICELINE.COM INCORPORATED (PRICELINE)
We are party to an agreement with priceline under which we (1) provide ticket
inventory that may be sold through priceline's Internet-based e-commerce system
and (2) received certain equity interests in priceline. We are required to
provide priceline access to unpublished fares.

2000
At January 1, 2000, our equity interests in priceline included (1) a warrant to
purchase up to 5.5 million shares of priceline common stock for $56.63 per share
(1999 Warrant) (see discussion below); (2) a right to exchange six million
shares of priceline common stock for six million shares of priceline convertible
preferred stock (Exchange Right); and (3) 7.2 million shares of priceline common
stock. During 2000, we (1) exercised the Exchange Right in full, receiving six
million shares of priceline Series A Convertible Preferred Stock (Series A
Preferred Stock); (2) sold 1.2 million shares of priceline common stock; and (3)
received 549,764 shares of priceline common stock as a dividend on the Series A
Preferred Stock. In our 2000 Consolidated Statement of Operations, we recognized
(1) a pretax gain of $301 million from the exercise of the Exchange Right and
the sale of priceline common stock and (2) other income of $14 million, pretax,
from the dividend.

The fair value of the 1999 Warrant on the date received was determined to be $61
million based on an independent third-party appraisal. This amount was
recognized in income ratably from November 1999 through November 2002.

On November 2, 2000, the 1999 Warrant was amended to reduce (1) the number of
shares underlying the warrant from 5.5 million to 4.7 million and (2) our per
share purchase price for those shares from $56.63 to $4.72 (Amended 1999
Warrant). The Amended 1999 Warrant became exercisable in full on January 1,
2001, and expires on November 17, 2004. The amendment of the 1999 Warrant did
not have a material impact on our Consolidated Financial Statements.

2001
On February 6, 2001, we and priceline agreed to restructure our investment in
priceline. We exchanged our six million shares of Series A Preferred Stock for
(1) 80,000 shares of priceline Series B Redeemable Preferred Stock (Series B
Preferred Stock) and (2) a warrant to purchase up to 26.9 million shares of
priceline common stock for $2.97 per share (2001 Warrant).

The Series B Preferred Stock (1) bears an annual per share dividend of
approximately 36 shares of priceline common stock; (2) has a liquidation
preference of $1,000 per share plus any dividends accrued or accumulated but not
yet paid (Liquidation Preference); (3) is subject to mandatory redemption on
February 6, 2007, at a price per share equal to the Liquidation Preference; and
(4) is subject to redemption in whole, at the option of us or priceline, if
priceline completes any of certain business combination transactions (Optional
Redemption).

Based on an independent third-party appraisal, at February 6, 2001, the fair
value of (1) the Series B Preferred Stock was estimated to be $80 million and
(2) the 2001 Warrant was estimated to be $46 million. The total fair value of
these securities equaled the carrying amount of the Series A Preferred Stock,
including its conversion feature and accumulated dividends on the date the
Series A Preferred Stock was exchanged for the Series B Preferred Stock and the
2001 Warrant. Accordingly, we did not recognize a gain or loss on this
transaction.


                                       37
<PAGE>

Notes to the Consolidated Financial Statements

As discussed above, the 2001 Warrant provides us with the right to purchase up
to an additional 26.9 million shares of priceline common stock for $2.97 per
share. We may exercise the 2001 Warrant, in whole or in part, at any time prior
to the close of business on February 6, 2007, unless all of the shares of Series
B Preferred Stock owned by us are redeemed in an Optional Redemption, in which
case we may not exercise the 2001 Warrant after the date of the Optional
Redemption. The exercise price may be paid by us only by the surrender of shares
of Series B Preferred Stock, valued at $1,000 per share.

The 2001 Warrant also provides that it will automatically be deemed exercised if
the closing sales price of priceline common stock exceeds $8.91 for 20
consecutive trading days. In that event, our rights in the shares of Series B
Preferred Stock necessary to pay the exercise price of the 2001 Warrant would
automatically be converted into the right to receive shares of priceline common
stock pursuant to the 2001 Warrant.

During 2001, we (1) exercised the 2001 Warrant in part to purchase 18.4 million
shares of priceline common stock, paying the exercise price by surrendering to
priceline 54,656 shares of Series B Preferred Stock; (2) sold 18.7 million
shares of priceline common stock; and (3) received 986,491 shares of priceline
common stock as a dividend on the Series B Preferred Stock. In our 2001
Consolidated Statement of Operations, we recognized (1) other income of $9
million, pretax, from the dividend and (2) a pretax gain of $4 million from the
exercise of the 2001 Warrant and the sale of priceline common stock.

2002
During 2002, we (1) exercised the 2001 Warrant in part to purchase 4.0 million
shares of priceline common stock, paying the exercise price by surrendering to
priceline 11,875 shares of Series B Preferred Stock; (2) sold 3.9 million shares
of priceline common stock; and (3) received 695,749 shares of priceline common
stock as dividends on the Series B Preferred Stock. In our 2002 Consolidated
Statement of Operations, we recognized (1) a pretax loss of $3 million from the
exercise of the 2001 Warrant and the sale of priceline common stock and (2)
other income of $2 million, pretax, from the dividends.

The following table represents our equity interests in priceline and their
respective carrying values at December 31, 2002 and 2001:

<TABLE>
<CAPTION>
                                                                      Number of Shares(1)              Carrying Values
                                                                     ---------------------          ---------------------
(in millions, except shares of Series B Preferred Stock)              2002           2001           2002             2001
- --------------------------------------------------------             ------         ------          -----           -----
<S>                                                                  <C>            <C>             <C>             <C>
Series B Preferred Stock                                             13,469         25,344          $  13           $  25
2001 Warrant                                                            4.5            8.5              3              31
Amended 1999 Warrant                                                    4.7            4.7             --              13
priceline common stock                                                  2.1            1.3              3               7
                                                                     ------         ------          -----           -----
</TABLE>

(1)      We have certain registration rights relating to shares of priceline
         common stock we acquire from the exercise of the Amended 1999 Warrant
         or the 2001 Warrant or receive as dividends on the Series B Preferred
         Stock.

The Series B Preferred Stock and priceline common stock are accounted for as
available-for-sale securities. In accordance with SFAS No. 115, "Accounting for
Certain Investments in Debt and Equity Securities" (SFAS 115), the Series B
Preferred Stock and the priceline common stock are recorded at fair value in
investments in debt and equity securities on our Consolidated Balance Sheets.
Any changes in fair value of these assets are recorded, net of tax, in
accumulated other comprehensive income (loss). The Series B Preferred Stock is
recorded at face value, which we believe approximates fair value. The warrants
are recorded at fair value in investments in debt and equity securities on our
Consolidated Balance Sheets and any changes in fair value are recorded in other
income (expense) on our Consolidated Statements of Operations in accordance with
SFAS 133.

REPUBLIC AIRWAYS HOLDINGS, INC. (REPUBLIC)
On June 7, 2002, we entered into a contract carrier agreement with Chautauqua
Airlines, Inc. (Chautauqua), a regional air carrier which is a subsidiary of
Republic (see Note 9). In conjunction with this agreement, we received from
Republic (1) a warrant to purchase up to 1.5 million shares of Republic common
stock for $12.50 per share (2002 Warrant); (2) a warrant to purchase up to 1.5
million shares of Republic common stock at a price per share equal to 95% of the
public offering price per share in Republic's initial public offering of common
stock (IPO Warrant); (3) the right to purchase up to 5% of the shares of common
stock that


                                       38
<PAGE>

Republic offers for sale in its initial public offering at a price per share
equal to the initial public offering price; and (4) the right to receive a
warrant to purchase up to an additional 60,000 shares of Republic common stock
for each additional aircraft Chautauqua operates for us above the 22 aircraft
under the original contract carrier agreement.

The 2002 Warrant is exercisable in whole or in part at any time until June 7,
2012. The fair value of the 2002 Warrant on the date received was approximately
$11 million, and will be recognized in income ratably over a five-year period.
The carrying value of the 2002 Warrant was approximately $10 million at December
31, 2002. The 2002 Warrant is accounted for in the same manner as the priceline
warrants described above.

The IPO Warrant is exercisable in whole or in part at any time (1) beginning on
the closing date of Republic's initial public offering of common stock and (2)
subject to earlier cancellation if the contract carrier agreement is terminated
in certain circumstances, ending on the tenth anniversary of that closing date.
We will record the fair value of the IPO Warrant on the closing date of
Republic's initial public offering of common stock.

The 2002 Warrant, the IPO Warrant and the shares of Republic common stock
underlying these securities are not registered under the Securities Act of 1933;
however, we have certain demand and piggyback registration rights relating to
the underlying shares of Republic common stock.

OTHER
Our equity interest in SkyWest, Inc., the parent company of SkyWest Airlines,
was classified as an available-for-sale equity security under SFAS 115. During
2001, we sold our equity interest in SkyWest, Inc. for $125 million and recorded
a pretax gain of $111 million. We recorded this gain in our 2001 Consolidated
Statement of Operations in gain (loss) from sale of investments, net.

During 2001, we also sold our remaining equity interest in Equant, N.V.
(Equant), an international data services company, recognizing a pretax gain of
$11 million. We recorded this gain in our 2001 Consolidated Statement of
Operations in gain (loss) from sale of investments, net.

Note 3. Risk Management
AIRCRAFT FUEL PRICE RISK
Our results of operations can be significantly impacted by changes in the price
of aircraft fuel. To manage this risk, we periodically purchase options and
other similar non-leveraged derivative instruments and enter into forward
contracts for the purchase of fuel. These contracts may have maturities of up to
36 months. We may hedge up to 80% of our expected fuel requirements on a
12-month rolling basis. See Note 4 for additional information about our fuel
hedge contracts. We do not enter into fuel hedge contracts for speculative
purposes.

INTEREST RATE RISK
Our exposure to market risk due to changes in interest rates primarily relates
to our long-term debt obligations and cash portfolio. Market risk associated
with our long-term debt relates to the potential change in fair value resulting
from a change in interest rates as well as the potential increase in interest we
would pay on variable rate debt. At December 31, 2002 and 2001, approximately
26% and 25%, respectively, of our total debt was variable rate debt. Market risk
associated with our cash portfolio relates to the potential change in our
earnings resulting from a decrease in interest rates.

From time to time, we may enter into interest rate swap agreements, provided
that the notional amount of these transactions does not exceed 50% of our
long-term debt. See Note 4 for additional information about our interest rate
swap agreements. We do not enter into interest rate swap agreements for
speculative purposes.


                                       39
<PAGE>

FOREIGN CURRENCY EXCHANGE RISK
We are subject to foreign currency exchange risk because we have revenues and
expenses denominated in foreign currencies, primarily the euro, the British
pound and the Canadian dollar. To manage exchange rate risk, we net foreign
currency revenues and expenses, to the extent practicable. From time to time, we
may also enter into foreign currency options and forward contracts with
maturities of up to 12 months. We did not have any foreign currency hedge
contracts at December 31, 2002. The fair value of our foreign currency hedge
contracts was not material at December 31, 2001. We do not enter into foreign
currency hedge contracts for speculative purposes.

CREDIT RISK
To manage credit risk associated with our aircraft fuel price, interest rate and
foreign currency exchange risk management programs, we select counterparties
based on their credit ratings and limit our exposure to any one counterparty
under defined guidelines. We also monitor the market position of these programs
and our relative market position with each counterparty. The credit exposure
related to these programs was not significant at December 31, 2002 and 2001.

Our accounts receivable are generated largely from the sale of passenger airline
tickets and cargo transportation services to customers. The majority
of these sales are processed through major credit card companies, resulting in
accounts receivable which are generally short-term in duration. We also have
receivables from the sale of mileage credits to partners, such as credit card
companies, hotels and car rental agencies, that participate in our SkyMiles
program. We believe that the credit risk associated with these receivables is
minimal and that the allowance for uncollectible accounts that we have provided
is sufficient.

SELF-INSURANCE RISK
We self-insure a portion of our losses from claims related to workers'
compensation, environmental issues, property damage, medical insurance for
employees and general liability. Losses are accrued based on an estimate of the
ultimate aggregate liability for claims incurred, using independent actuarial
reviews based on standard industry practices and our actual experience. A
portion of our projected workers' compensation liability is secured with
restricted cash collateral (see Note 1).

Note 4. Derivative Instruments
On July 1, 2000, we adopted SFAS 133, as amended. SFAS 133 requires us to record
all derivative instruments on our Consolidated Balance Sheets at fair value and
to recognize certain non-cash changes in these fair values in our Consolidated
Statements of Operations. SFAS 133 impacts the accounting for our fuel hedging
program, our interest rate hedging program and our holdings of equity warrants
and other similar rights in certain companies.

The impact of SFAS 133 on our Consolidated Statements of Operations is
summarized as follows:

<TABLE>
<CAPTION>
                                                                                      Income (Expense)
                                                                ------------------------------------------------------------
                                                                  FOR THE         For the       For the Six
                                                                YEAR ENDED       Year Ended     Months Ended     Cumulative
                                                                DECEMBER 31,    December 31,    December 31,       Effect
(in millions)                                                       2002            2001             2000       July 1, 2000
- -------------                                                   ------------    ------------    ------------    ------------
<S>                                                             <C>             <C>             <C>             <C>
Write-off of fuel hedge contract premiums                          $   --          $   --           $    --       $  (143)
Change in time value of fuel hedge contracts                          (23)             (1)                7            --
Ineffective portion of fuel hedge contracts                            13              (3)               (2)           16
Fair value adjustment of equity rights                                (29)             72              (164)          (37)
                                                                   ------          ------           -------       -------
Fair value adjustments of SFAS 133 derivatives, pretax                (39)             68              (159)         (164)
                                                                   ------          ------           -------       -------
Total, net of tax                                                  $  (25)         $   41            S  (97)      $  (100)
                                                                   ======          ======           =======       =======
</TABLE>


                                       40
<PAGE>

FUEL HEDGING PROGRAM
Because there is not a readily available market for derivatives in aircraft
fuel, we use heating and crude oil derivative contracts to manage our exposure
to changes in aircraft fuel prices. Changes in the fair value of these contracts
(fuel hedge contracts) are highly effective at offsetting changes in aircraft
fuel prices.

At December 31, 2002, our fuel hedge contracts had an estimated short-term fair
value of $68 million and an estimated long-term fair value of $5 million, with
unrealized gains of $29 million, net of tax, recorded in accumulated other
comprehensive income (loss). At December 31, 2001, our fuel hedge contracts had
an estimated short-term fair value of $55 million and an estimated long-term
fair value of $9 million, with unrealized gains of $25 million, net of tax,
recorded in accumulated other comprehensive income (loss). See Note 1 for
information about our accounting policy for fuel hedge contracts.

INTEREST RATE HEDGING PROGRAM
To manage our interest rate exposure, in July 2002, we entered into two interest
rate swap agreements relating to our (1) $300 million principal amount of
unsecured Series C Medium Term Notes due March 15, 2004, which pay interest at a
fixed rate of 6.65% per year and (2) $500 million principal amount of unsecured
Notes due December 15, 2005, which pay interest at a fixed rate of 7.70% per
year.

Under the first interest rate swap agreement, we are paying the London InterBank
Offered Rate (LIBOR) plus a margin per year and receiving 6.65% per year on a
notional amount of $300 million until March 15, 2004. Under the second
agreement, we are paying LIBOR plus a margin per year and receiving 7.70% per
year on a notional amount of $500 million until December 15, 2005.

At December 31, 2002, our interest rate swap agreements had an estimated
long-term fair value of $21 million which was recorded in other noncurrent
assets on our Consolidated Balance Sheets. In accordance with fair value hedge
accounting, we also recorded a $21 million increase to the carrying value of our
long-term debt. We did not have any interest rate swap agreements outstanding at
December 31, 2001. See Note 1 for information about our accounting policy for
interest rate swap agreements.

EQUITY WARRANTS AND OTHER SIMILAR RIGHTS
We own equity warrants and other similar rights in certain companies, primarily
Republic and priceline. The total fair value of these rights at December 31,
2002 and 2001, was $14 million and $48 million, respectively. See Notes 1 and 2
for information about our accounting policy for these rights and the significant
rights that we own, respectively.

Note 5. Goodwill and Intangible Assets
On January 1, 2002, we adopted SFAS 142, which requires that we discontinue the
amortization of goodwill and other intangible assets with indefinite useful
lives. Instead, we now apply a fair value-based impairment test to the net book
value of goodwill and indefinite-lived intangible assets. See Note 1 for
information about our accounting policy for the impairment tests of goodwill and
other intangible assets.


                                       41
<PAGE>

The adoption of SFAS 142 decreased our operating expenses on our Consolidated
Statements of Operations by approximately $60 million, net of tax, for the year
ended December 31, 2002, due to the discontinuance of amortization of goodwill
and indefinite-lived intangible assets. The following table reconciles our
reported net income (loss) and earnings (loss) per share to adjusted net income
(loss) and earnings (loss) per share as if the non-amortization provisions of
SFAS 142 had been applied to prior year periods:

<TABLE>
<CAPTION>
                                                                                                  For the Years Ended December 31,
                                                                                              --------------------------------------
(in millions, except per share data)                                                             2002           2001         2000
- ------------------------------------                                                          ---------      ---------     ---------
<S>                                                                                           <C>            <C>           <C>

Net income (loss) before cumulative effect of change in accounting principle                  $  (1,272)     $  (1,216)     $   928
Net income (loss)                                                                             $  (1,272)     $  (1,216)     $   828
                                                                                              ---------      ---------      -------
Add back: goodwill and international route amortization, net of tax                                  --             60          60
                                                                                              ---------      ---------      -------
Adjusted net income (loss) before cumulative effect of change in accounting principle         $  (1,272)     $  (1,156)     $   988
Adjusted net income (loss)                                                                    $  (1,272)     $  (1,156)     $   888
                                                                                              ---------      ---------      -------
BASIC EARNINGS PER SHARE:
Net income (loss) before cumulative effect of change in accounting principle                  $  (10.44)     $   (9.99)     $  7.39
Net income (loss)                                                                             $  (10.44)     $   (9.99)     $  6.58
                                                                                              ---------      ---------      -------
Add back: goodwill and international route amortization, net of tax                                  --           0.49         0.49
                                                                                              ---------      ---------      -------
Adjusted net income (loss) before cumulative effect of change in accounting principle         $  (10.44)     $   (9.50)     $  7.88
Adjusted net income (loss)                                                                    $  (10.44)     $   (9.50)     $  7.07
                                                                                              ---------      ---------      -------
DILUTED EARNINGS PER SHARE:
Net income (loss) before cumulative effect of change in accounting principle                  $  (10.44)     $   (9.99)     $  7.05
Net income (loss)                                                                             $  (10.44)     $   (9.99)     $  6.28
                                                                                              ---------      ---------      -------
Add back: goodwill and international route amortization, net of tax                                  --           0.49         0.46
                                                                                              ---------      ---------      -------
Adjusted net income (loss) before cumulative effect of change in accounting principle         $  (10.44)     $   (9.50)     $  7.51
Adjusted net income (loss)                                                                    $  (10.44)     $   (9.50)     $  6.74
                                                                                              ---------      ---------      -------
</TABLE>
During the March 2002 quarter, we completed the required initial test of
potential impairment of indefinite-lived intangible assets, other than goodwill;
that test indicated no impairment at the date of adoption of SFAS 142. The
following table presents information about our intangible assets, other than
goodwill, at December 31, 2002 and 2001:

<TABLE>
<CAPTION>
                                                            2002                               2001
                                              -------------------------------     -------------------------------
                                              GROSS CARRYING     ACCUMULATED      Gross Carrying     Accumulated
(in millions)                                     AMOUNT         AMORTIZATION         Amount         Amortization
- -------------                                 --------------     ------------     --------------     ------------
<S>                                           <C>                <C>              <C>                <C>
Amortized intangible assets:
    Leasehold and operating rights                 $  125           $  (86)           $  113           $  (81)
    Other                                               3               (1)                2               (1)
                                                   ------           ------            ------           ------
Total                                              $  128           $  (87)           $  115           $  (82)
                                                   ======           ======            ======           ======
</TABLE>

<TABLE>
<CAPTION>
                                                                 NET CARRYING                        Net Carrying
                                                                    AMOUNT                              Amount
                                                                 ------------                        ------------
<S>                                                              <C>                                 <C>
Unamortized intangible assets:
    International routes                                            $ 60                                 $ 60
    Other                                                              1                                    1
                                                                    ----                                 ----
Total                                                               $ 61                                 $ 61
                                                                    ====                                 ====
</TABLE>

During the June 2002 quarter, we completed our transitional goodwill impairment
test, which indicated no impairment at the date of adoption of SFAS 142. At
December 31, 2002, we performed the required annual impairment test of our
goodwill and indefinite-lived intangible assets, which also indicated no
impairment.


                                       42
<PAGE>
Note 6. Debt

The following table summarizes our debt at December 31, 2002 and 2001:

<TABLE>
<CAPTION>
(dollars in millions)                                                                                2002               2001
                                                                                                    -------            ------
<S>                                                                                                 <C>                <C>
SECURED(1)
Series 2000-1 Enhanced Equipment Trust Certificates
  7.38% Class A-1 due in installments from 2003 to May 18, 2010                                     $   274            $  308
  7.57% Class A-2 due November 18, 2010                                                                 738               738
  7.92% Class B due November 18, 2010                                                                   182               182
  7.78% Class C due November 18, 2005                                                                   239               239
  9.11% Class D due November 18, 2005                                                                   176                --
                                                                                                    -------            ------
                                                                                                      1,609             1,467
                                                                                                    -------            ------
Series 2001-1 Enhanced Equipment Trust Certificates
  6.62% Class A-1 due in installments from 2003 to March 18, 2011                                       262               300
  7.11% Class A-2 due September 18, 2011                                                                571               571
  7.71% Class B due September 18, 2011                                                                  207               207
  7.30% Class C due September 18, 2006                                                                  170               170
  6.95% Class D due September 18, 2006                                                                  150               150
                                                                                                    -------            ------
                                                                                                      1,360             1,398
                                                                                                    -------            ------
Series 2001-2 Enhanced Equipment Trust Certificates
  3.11% Class A due in installments from 2003 to December 18, 2011(2)                                   423               449
  4.31% Class B due in installments from 2003 to December 18, 2011(2)                                   254               282
  5.66% Class C due in installments from 2005 to December 18, 2011(2)                                    80                --
                                                                                                    -------            ------
                                                                                                        757               731
                                                                                                    -------            ------
Series 2002-1 Enhanced Equipment Trust Certificates
  6.72% Class G-1 due in installments from 2003 to January 2, 2023                                      587                --
  6.42% Class G-2 due July 2, 2012                                                                      370                --
  7.78% Class C due in installments from 2003 to January 2, 2012                                        169                --
                                                                                                    -------            ------
                                                                                                      1,126                --
                                                                                                    -------            ------
1.9%-5.9% Other aircraft financings due in installments from 2003 to June 19, 2019(2)                 1,555               506
                                                                                                    -------            ------
  Total secured debt                                                                                  6,407             4,102
                                                                                                    -------            ------
UNSECURED
1997 Bank Credit Agreement, paid in full and terminated on May 1, 2002                                   --               625
Massachusetts Port Authority Special Facilities Revenue Bonds
  5.0-5.5% Series 2001A due in installments from 2012 to 2027                                           338               338
  1.3%(2) Series 2001B due in installments from 2027 to January 1, 2031                                  80                80
  1.4%(2) Series 2001C due in installments from 2027 to January 1, 2031                                  80                80
8.10% Series C Guaranteed Serial ESOP Notes, due in installments from 2003 to 2009                       92               290
6.65% Medium-Term Notes, Series C, due March 15, 2004                                                   300               300
7.7% Notes due December 15, 2005                                                                        500               500
7.9% Notes due December 15, 2009                                                                        499               499
9.75% Debentures due May 15, 2021                                                                       106               106
Development Authority of Clayton County, loan agreement,
  3.2%(2)Series 2000A due June 1, 2029                                                                   65                65
  3.3%(2)Series 2000B due May 1, 2035                                                                   116               116
  3.3%(2) Series 2000C due May 1, 2033                                                                  120               120
8.3% Notes due December 15, 2029                                                                        925               925
8.125% Notes due July 1, 2039(3)                                                                        538               538
5.3% to 10.375% Other unsecured debt due 2003 to 2033                                                   574               620
                                                                                                    -------            ------
  Total unsecured debt                                                                                4,333             5,202
                                                                                                    -------            ------
Total debt                                                                                           10,740             9,304
                                                                                                    -------            ------
Less: current maturities                                                                                666             1,025
                                                                                                    -------            ------
  Total long-term debt                                                                              $10,074            $8,279
                                                                                                    =======            ======
</TABLE>

(1)      Our secured debt is secured by first mortgage liens on a total of 249
         aircraft (69 B-737-800, 32 B-757-200, two B-767-300, 28 B-767-300ER,
         six B-767-400, four B-777-200, 93 CRJ-100/200, 11 EMB-120 and four
         ATR-72) delivered new to us from March 1992 through December 2002.
         These aircraft had an aggregate net book value of approximately $7.0
         billion at December 31, 2002.

(2)      Our variable interest rate long-term debt is shown using interest rates
         in effect at December 31, 2002.

(3)      The 8.125% Notes due 2039 are redeemable by us, in whole or in part, at
         par on or after July 1, 2004.


                                       43

<PAGE>

Notes to the Consolidated Financial Statements

The fair value of our total debt was $9.5 billion and $8.9 billion at December
31, 2002 and 2001, respectively.

FUTURE MATURITIES

The following table summarizes the scheduled maturities of our debt at December
31, 2002, for the next five years and thereafter:

<TABLE>
<CAPTION>
Years Ending December 31,         Principal
(in millions)                      Amount
                                  ---------
<S>                               <C>
2003                               $   666
2004                                   623
2005                                 1,203
2006                                   602
2007                                   285
After 2007                           7,361
                                   -------
Total                              $10,740
                                   =======
</TABLE>

BOSTON AIRPORT TERMINAL PROJECT

During 2001, we entered into lease and financing agreements with the
Massachusetts Port Authority (Massport) for the redevelopment and expansion of
Terminal A at Boston's Logan International Airport. The completion of this
project will enable us to consolidate all of our domestic operations at that
airport into one location. Construction began in the June 2002 quarter and
is expected to be completed during 2005. Project costs will be funded with $498
million in proceeds from Special Facilities Revenue Bonds issued by Massport on
August 16, 2001. We agreed to pay the debt service on the bonds under a
long-term lease agreement with Massport and issued a guarantee to the bond
trustee covering the payment of the debt service on the bonds. For additional
information about these bonds, see "Massachusetts Port Authority Special
Facilities Revenue Bonds" on the table on page 43. Because we have issued a
guarantee of the debt service on the bonds, we have included the bonds, as well
as the related bond proceeds, on our Consolidated Balance Sheets. The bonds are
reflected in noncurrent liabilities and the related proceeds, which are held in
trust, are reflected as restricted investments in other assets on our
Consolidated Balance Sheets.

LETTER OF CREDIT ENHANCED MUNICIPAL BONDS

In June 2000, the Development Authority of Clayton County (Development
Authority) issued $301 million principal amount of bonds in three series with
scheduled maturities between 2029 and 2035. The proceeds of this sale were used
to refund bonds that had been issued to finance certain of our facilities at
Hartsfield Atlanta International Airport. The new bonds are secured by the
Development Authority's pledge of revenues derived by the Development Authority
under related loan agreements between us and the Development Authority. The
Development Authority bonds currently bear interest at a variable rate which is
determined weekly. The bonds may be tendered for purchase by their holders on
seven days notice. Subject to certain conditions, tendered bonds will be
remarketed at then prevailing interest rates.

Principal and interest on the bonds, and the payment of the purchase price of
bonds tendered for purchase, are presently paid under three irrevocable,
direct-pay letters of credit totaling $305 million issued by Commerzbank AG
under a Reimbursement Agreement between us and a group of banks (Reimbursement
Agreement).

There are also outstanding under the Reimbursement Agreement irrevocable
direct-pay letters of credit totaling $104 million relating to $102 million
principal amount of bonds issued by other municipalities to build certain
airport facilities leased to us. These bonds currently bear interest at a
variable rate, which is determined weekly, and may be tendered for purchase by
their holders on seven days notice. We pay the debt service on these bonds under
long-term lease agreements (see Note 7). The related letters of credit are
similar to the letters of credit relating to the Development Authority bonds.

In October 2002, we and the banks that are parties to the Reimbursement
Agreement amended that agreement to eliminate covenants that limited our secured
debt and debt-to-equity ratio. We took this action to increase our financial
flexibility and because we believed we would not be in compliance with the
debt-to-equity covenant at December 31, 2002, due to the


                                       44

<PAGE>

combined effect of (1) the anticipated need to record at December 31, 2002, a
substantial non-cash charge to equity relating to our defined benefit pension
plans (see Note 11); (2) our increased debt levels; and (3) our continuing
losses since 2001. In consideration for these changes, we:

- -        Agreed to comply with a new cash maintenance covenant that was added to
         the Reimbursement Agreement. See the Covenants and Change in Control
         Provisions section below.

- -        Agreed that the Reimbursement Agreement and the letters of credit
         issued thereunder would terminate on June 8, 2003. These letters of
         credit were originally scheduled to expire between June 8, 2003 and
         December 4, 2003.

- -        Terminated in October 2002 a reimbursement agreement with Bayerische
         Hypo-Und Vereinsbank AG and a group of banks (HVB Agreement) and the
         related letter of credit that supported our obligations with respect to
         the Series C Guaranteed Serial ESOP Notes (ESOP Notes). Several of the
         banks that are parties to the Reimbursement Agreement also participated
         in the HVB Agreement. The HVB Agreement was originally scheduled to
         expire on May 19, 2003. See the ESOP Notes section below.

The Reimbursement Agreement generally provides that, if there is a drawing under
a letter of credit to purchase bonds that have been tendered, we may convert our
repayment obligation to a loan that becomes due and payable on the earlier of
(1) the date the related bonds are remarketed or (2) June 8, 2003.

Unless the letters of credit issued under the Reimbursement Agreement are
extended in a timely manner, we will be required to purchase on June 3, 2003,
five days prior to the expiration of the letters of credit, the related $403
million principal amount of tax-exempt municipal bonds. In these circumstances,
we could seek, but there is no assurance we would be able, to (1) sell the bonds
without a letter of credit enhancement at then prevailing fixed interest rates
or (2) replace the expiring letters of credit with a new letter of credit from
an alternate credit provider and remarket the related bonds.

ESOP NOTES

We guarantee the ESOP Notes issued by the Delta Family-Care Savings Plan. The
holders of the ESOP Notes were entitled to the benefits of an unconditional,
direct-pay letter of credit issued under the HVB Agreement. Required payments of
principal, interest and make-whole premium amounts on the ESOP Notes were paid
under the letter of credit. As part of the amendment to the Reimbursement
Agreement discussed above, we terminated the HVB Agreement on October 21, 2002.

To effect the termination of the HVB Agreement, on September 30, 2002, we
provided the required advance notice of our decision to terminate early the
letter of credit issued under that agreement. As a result of this action, each
holder of the ESOP Notes had the right to require us to purchase its ESOP Notes
before the termination of the letter of credit. Some, but not all, of the
holders of the ESOP Notes exercised this right. On October 15, 2002, we
purchased ESOP Notes for $215 million, covering $169 million principal amount of
ESOP Notes, $4 million of accrued interest and $42 million of make-whole
premium. The $42 million loss recognized for the make-whole premium related to
this extinguishment of debt was recorded in other income (expense) on our
Consolidated Statements of Operations.

As a result of the termination of the letter of credit issued under the HVB
Agreement, the holders of the remaining $92 million principal amount of ESOP
Notes that we did not purchase on October 15, 2002, had the right to tender
their ESOP Notes for purchase by January 26, 2003. Some, but not all, of the
remaining holders of the ESOP Notes exercised this right. On January 26, 2003,
we incurred an obligation to purchase on February 25, 2003, ESOP Notes for $74
million, covering $57 million principal amount of ESOP Notes, $3 million of
accrued interest and $14 million of make-whole premium. The $14 million loss
recognized for the make-whole premium related to this extinguishment of debt
will be recorded during the March 2003 quarter in other income (expense) on our
Consolidated Statements of Operations. Subsequent to our purchase of these ESOP
Notes, $35 million principal amount of ESOP Notes is held by third parties.


                                       45

<PAGE>

Notes to the Consolidated Financial Statements

COVENANTS AND CHANGE IN CONTROL PROVISIONS

The Reimbursement Agreement, as amended, contains covenants that (1) require us
to maintain a minimum of $1 billion of unrestricted cash, cash equivalents and
short-term investments at the end of each month; (2) limit the amount of current
debt and convertible subordinated debt that we may have outstanding; and (3)
limit our annual flight equipment rental expense. It also provides that, upon
the occurrence of a change in control of Delta, we shall, at the request of the
banks, deposit cash collateral with the banks in an amount equal to all letters
of credit outstanding and other amounts we owe under the Reimbursement
Agreement.

As is customary in the airline industry, our aircraft lease and financing
agreements require that we maintain certain levels of insurance coverage. We
were in compliance with all of the covenants and requirements discussed above at
December 31, 2002 and 2001.

OTHER FINANCING ARRANGEMENTS

On December 12, 2001, we entered into an agreement under which we were able to
borrow, prior to July 1, 2002, up to $935 million on a secured basis. Upon
completion of the Series 2002-1 enhanced equipment trust certificates financing
on April 30, 2002, this facility terminated. No borrowings were outstanding
under this facility during its term.

On December 28, 2001, we entered into a credit facility with certain banks under
which, as amended, we may borrow up to $500 million on a secured basis until
August 21, 2003, subject to certain conditions. The banks' lending commitment
under this facility is reduced, however, to the extent we receive net cash
proceeds from the issuance of certain financings. The interest rate under this
facility is, at our option, LIBOR or a specified base rate plus a margin that
varies depending on the period during which borrowings are outstanding. Any
borrowings under this facility will be secured by certain aircraft owned by us.
At December 31, 2002 and 2001, no borrowings were outstanding under this
facility.

On January 31, 2002, we entered into a facility under which we were able to
borrow up to approximately $350 million secured by certain regional jet aircraft
which we purchased for cash. This facility was scheduled to expire on February
1, 2003, except that amounts borrowed prior to that date were due between 366
days and 18 months after the date of borrowing. In December 2002, we utilized as
security for longer-term financings all of the regional jet aircraft that served
as collateral under this facility. As a result, we terminated this facility on
December 19, 2002. No borrowings were outstanding under this facility on that
date.

Also on January 31, 2002, we entered into a facility to finance, on a secured
basis at the time of acquisition, certain future deliveries of regional jet
aircraft. At December 31, 2002, the total borrowings available to us under this
facility, as amended, were $197 million, of which $31 million was outstanding.
Borrowings under this facility (1) are due between 366 days and 18 months after
the date of borrowing (subject to earlier repayment if certain longer-term
financing is obtained for these aircraft) and (2) bear interest at LIBOR plus a
margin.

We have available to us long-term, secured financing commitments from a third
party that we may elect to use for a substantial portion of the commitments for
regional jet aircraft to be delivered to ASA and Comair through 2004 (see Note
9). Any borrowings under these commitments would be at a fixed interest rate
determined by reference to 10-year U.S. Treasury Notes and would have various
repayment dates.


                                       46

<PAGE>

Note 7. Lease Obligations

We lease aircraft, airport terminal and maintenance facilities, ticket offices
and other property and equipment. Rental expense for operating leases, which is
recorded on a straight-line basis over the life of the lease, totaled
$1.3 billion for each year ended December 31, 2002, 2001 and 2000. Amounts due
under capital leases are recorded as liabilities. Our interest in assets
acquired under capital leases is recorded as property and equipment on our
Consolidated Balance Sheets. Amortization of assets recorded under capital
leases is included in depreciation and amortization expense on our Consolidated
Statements of Operations. Our leases do not include residual value guarantees.

The following table summarizes, as of December 31, 2002, our minimum rental
commitments under capital leases and noncancelable operating leases with initial
or remaining terms in excess of one year:

<TABLE>
<CAPTION>
Years Ending December 31,                                            Capital         Operating
(in millions)                                                        Leases           Leases
                                                                     -------         ---------
<S>                                                                  <C>             <C>
2003                                                                  $ 40            $ 1,277
2004                                                                    31              1,203
2005                                                                    24              1,176
2006                                                                    16              1,128
2007                                                                    15              1,042
After 2007                                                              46              6,918
                                                                      ----            -------
Total minimum lease payments                                           172            $12,744
Less: lease payments that represent interest                            45            -------
                                                                      ----
Present value of future minimum capital lease payments                 127
Less: current obligations under capital leases                          27
                                                                      ----
Long-term capital lease obligations                                   $100
                                                                      ====
</TABLE>

The total minimum rental commitments under operating leases in the table above
do not include approximately $144 million in future minimum lease payments which
we expect to receive under noncancelable subleases.

As of December 31, 2002, we operated 313 aircraft under operating leases and 45
aircraft under capital leases. These leases have remaining terms ranging from
one month to 15 years.

Certain municipalities have issued special facilities revenue bonds to build or
improve airport and maintenance facilities leased to us. The facility lease
agreements require us to make rental payments sufficient to pay principal and
interest on the bonds. The above table includes $1.8 billion of operating lease
rental commitments for such payments.

Note 8. Sale of Receivables

We are party to an agreement, as amended, under which we sell a defined pool of
our accounts receivable, on a revolving basis, through a special-purpose, wholly
owned subsidiary, which then sells an undivided interest in the defined pool of
accounts receivable to a third party. In accordance with SFAS 140, this
subsidiary is not consolidated in our Consolidated Financial Statements. We
retain servicing and record-keeping responsibilities for the receivables sold,
the fair value of which is not material at December 31, 2002 and 2001.

In exchange for the sale of receivables, we receive (1) cash up to a maximum of
$250 million from the subsidiary's sale of an undivided interest in the pool of
receivables to the third party and (2) a subordinated promissory note from the
subsidiary, less certain program fees. Proceeds from new securitizations under
this agreement were approximately $38 million for the year ended December 31,
2002, which are recorded as cash flows from operations on our Consolidated
Statements of Cash Flows. The amount of the promissory note fluctuates because
it represents the portion of the purchase price payable for the volume of
receivables sold. The principal amount of the promissory note was $67 million
and $144 million at December 31, 2002 and 2001, respectively, and is included in
accounts receivable on our Consolidated Balance Sheets. Additionally, our
investment in the subsidiary, which represents our funding of the entity,
totaled $117 million at December 31, 2002, and is recorded in investments in
associated companies on our Consolidated Balance Sheets.


                                       47

<PAGE>

Notes to the Consolidated Financial Statements

The program fees related to this agreement are paid to the third party based on
the amounts invested by the third party. These fees were $4 million, $14 million
and $22 million for the years ended December 31, 2002, 2001 and 2000,
respectively, and are recorded in miscellaneous income (expense), net included
in other income (expense) on our Consolidated Statements of Operations.

This agreement, as amended during the June 2002 quarter, expires on March 31,
2003. However, the third party may terminate this agreement prior to its
scheduled termination date if our senior unsecured long-term debt is rated
either below Ba3 by Moody's or below BB- by Standard & Poor's. If this agreement
is terminated under these circumstances or upon expiration, we would be required
to repurchase the funded receivables, which totaled $250 million at December 31,
2002. At December 31, 2002, our senior unsecured long-term debt was rated Ba3 by
Moody's and BB- by Standard & Poor's. Both Moody's and Standard & Poor's ratings
outlook for our long-term debt is negative.

Note 9. Purchase Commitments and Contingencies

AIRCRAFT & ENGINE ORDER COMMITMENTS

Future expenditures for aircraft and engines on firm order as of December 31,
2002 are estimated to be $5.0 billion. The following table shows the timing of
these commitments:

<TABLE>
<CAPTION>
Year Ending December 31,
(in billions)                      Amount
                                   ------
<S>                                <C>
2003                                $1.0
2004                                 0.7
2005                                 1.2
2006                                 1.3
2007                                 0.8
After 2007                            --
                                    ----
Total                               $5.0
                                    ====
</TABLE>

CONTRACT CARRIER AGREEMENT COMMITMENTS

We have contract carrier agreements with two regional air carriers, Atlantic
Coast Airlines (ACA) and SkyWest Airlines, Inc. (SkyWest), which expire in 2010.
During the June 2002 quarter, we entered into a contract carrier agreement with
a third regional air carrier, Chautauqua Airlines, which expires in 2012.
Chautauqua began operations under our Delta Connection program in November 2002.

Under these contract carrier agreements, we schedule certain aircraft that are
operated by those airlines using our flight code, sell the seats on those
flights and retain the related revenues. We pay those airlines an amount that is
based on their cost of operating those flights plus a specified margin. The
following table shows the number of aircraft and available seat miles (ASMs)
operated for us by the regional air carriers, and our expenses related to the
contract carrier agreements for the years ended December 31, 2002, 2001 and
2000:

<TABLE>
<CAPTION>
(in millions, except aircraft)                 2002              2001             2000
                                              ------            ------            ----
<S>                                           <C>               <C>               <C>
Number of aircraft operated(1)                   100                72              23
ASMs(1,2)                                      3,513             1,562             328
Expenses                                      $  561            $  240            $ 89
                                              ------            ------            ----
</TABLE>

(1)      These amounts are unaudited.

(2)      These ASMs are not included in our ASMs on pages 11 and 68.

We expect to incur approximately $780 million in expenses related to these
contract carrier agreements in 2003. We anticipate that the number of aircraft
operated for us by these regional air carriers will increase to 136 by December
31, 2003, including the 12 additional Chautauqua aircraft discussed in Note 22.
See Note 1 for information about our accounting policy for revenues and expenses
related to our contract carrier agreements.


                                       48

<PAGE>

We may terminate the ACA and SkyWest agreements without cause at any time by
giving the airlines certain advance notice. If we terminate the ACA agreement in
this manner, ACA has the right to (1) assign to us leased aircraft that it
operates for us, provided we are able to continue the leases on the same
financial terms ACA had prior to the assignment, and (2) require us to purchase,
at fair value, aircraft that ACA operates for us and owns at the time of the
termination. If we terminate the SkyWest agreement in this manner, SkyWest has
the right to assign to us leased regional jet aircraft that it operates for us,
provided we are able to continue the leases on the same terms SkyWest had prior
to the assignment.

We may not terminate the Chautauqua agreement without cause during the
approximately first five years of its term. After that period, we may terminate
this agreement without cause at any time. If we terminate the Chautauqua
agreement in this manner, Chautauqua has the right to (1) assign to us leased
aircraft that it operates for us, provided we are able to continue the leases on
the same terms Chautauqua had prior to the assignment, and (2) require us to
purchase or sublease any of the aircraft that it owns and operates for us. If we
are required to purchase aircraft owned by Chautauqua, the purchase price would
be equal to the amount necessary (1) to reimburse Chautauqua for the equity it
provided to purchase the aircraft and (2) to repay in full any debt outstanding
at such time that is not being assumed in connection with such purchase. If we
are required to sublease aircraft owned by Chautauqua, the sublease would have
(1) a rate equal to the debt payments of Chautauqua for the debt financing of
the aircraft calculated as if 90% of the aircraft was debt financed by
Chautauqua and (2) specified other terms and conditions.

We estimate that the total fair value of the aircraft that all three regional
air carriers could assign to us or require that we purchase is approximately
$1.5 billion.

LEGAL CONTINGENCIES

We are involved in legal proceedings relating to antitrust matters, employment
practices, environmental issues and other matters concerning our business. We
cannot reasonably estimate the potential loss for certain legal proceedings
because, for example, the litigation is in its early stages or the plaintiff
does not specify damages being sought. Although the ultimate outcome of our
legal proceedings cannot be predicted with certainty, we believe that the
resolution of these actions will not have a material adverse effect on our
Consolidated Financial Statements.

OTHER CONTINGENCIES

REGIONAL AIRPORTS IMPROVEMENT CORPORATION (RAIC)

In 1996, the RAIC refinanced $88 million in Facilities Sublease Revenue Bonds
which had been initially issued in 1985 for the construction of certain airport
terminal facilities at Los Angeles International Airport for Western Airlines
(Western) prior to our merger with them. We are obligated under a facilities
sublease with the RAIC to pay the trustee rent in an amount sufficient to pay
the debt service on the bonds. When the bonds were refinanced in 1996, we also
provided a guarantee to the bond trustee covering the payment of the debt
service on the bonds substantially similar to the guarantee provided by Western
in 1985. In November 2002, the City of Los Angeles (City) deposited in escrow
with the bond trustee approximately $38 million as prepayment of an ongoing
rental credit for certain City areas within the terminal facilities constructed
and financed with the bonds. Subsequent to December 31, 2002, these escrow funds
were used to purchase, at a discount in the open market, and retire
approximately $41 million principal amount of the bonds.

GENERAL INDEMNIFICATIONS

We are the lessee under many real estate leases. It is common in these
commercial lease transactions for us, as the lessee, to agree to indemnify the
lessor and other related third parties for tort, environmental and other
liabilities that arise out of or relate to our use or occupancy of the leased
premises. Typically, this type of indemnity would make us responsible to
indemnified parties for liabilities arising out of the conduct of, among others,
contractors, licensees and invitees at or in connection with the use or
occupancy of the leased premises. Often, this indemnity extends to related
liabilities arising from the negligence of the indemnified parties, but usually
excludes any liabilities caused by their gross negligence or willful misconduct.

Our aircraft and other equipment lease and financing agreements typically
contain provisions requiring us, as the lessee or obligor, to indemnify the
other parties to those agreements, including certain related parties, against
virtually any liabilities that might arise from the condition, use or operation
of the aircraft or such other equipment.


                                       49

<PAGE>

Notes to the Consolidated Financial Statements

We believe that our insurance coverage would cover most, but not all, of such
liabilities and related indemnities associated with the types of lease and
financing agreements described above, including real estate leases.

Certain of our aircraft and other financing transactions also often include
provisions which require us to make payments to the lenders to preserve an
expected economic return to the lenders if that economic return is diminished
due to certain changes in law or regulations. In certain of these financing
transactions, we also bear the risk of certain changes in tax laws that would
subject payments to non-U.S. lenders to withholding taxes.

We cannot reasonably estimate our potential future payments under the
indemnities and related provisions described above.

EMPLOYEES UNDER COLLECTIVE BARGAINING AGREEMENTS

At December 31, 2002, Delta, ASA and Comair had a total of approximately 75,100
full-time equivalent employees. Approximately 18% of these employees, including
all of our pilots, are represented by labor unions. Approximately 3% of our
total full-time equivalent employees are covered under collective bargaining
agreements that are either in negotiations or will become amendable by December
31, 2003. ASA is currently in collective bargaining negotiations with the Air
Line Pilots Association, International, which represents ASA's approximately
1,520 pilots. This contract became amendable in September 2002. The outcome of
these collective bargaining negotiations cannot presently be determined. In
addition, ASA's contract with the Association of Flight Attendants, which
represents ASA's approximately 775 flight attendants, becomes amendable in
September 2003.

Note 10. Income Taxes

Deferred income taxes reflect the net tax effect of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and income tax purposes. See Note 1 for information about our
accounting policy for income taxes. At December 31, 2002, we had $349 million of
federal alternative minimum tax (AMT) credit carryforward, which does not
expire. We also had federal and state pretax net operating loss carryforwards of
approximately $3.3 billion at December 31, 2002, substantially all of which will
not expire until 2022. The following table shows significant components of our
deferred tax assets and liabilities at December 31, 2002 and 2001:

<TABLE>
<CAPTION>
(in millions)                                                      2002                2001
                                                                  -------             -------
<S>                                                               <C>                 <C>
DEFERRED TAX ASSETS:
Net operating loss carryforwards                                  $ 1,256             $   911
Additional minimum pension liability (see Note 14)                    972                  --
Postretirement benefits                                               909               1,025
Other employee benefits                                               404                 254
AMT credit carryforward                                               349                  23
Gains on sale and leaseback transactions, net                         217                 239
Rent expense                                                          215                 220
Other                                                                 508                 455
Valuation allowance                                                   (16)                (16)
                                                                  -------             -------
Total deferred tax assets                                         $ 4,814             $ 3,111
                                                                  =======             =======

DEFERRED TAX LIABILITIES:
Depreciation and amortization                                     $ 3,639             $ 2,696
Other                                                                 332                 362
                                                                  -------             -------
Total deferred tax liabilities                                    $ 3,971             $ 3,058
                                                                  =======             =======
</TABLE>

The following table shows the current and noncurrent deferred tax assets
(liabilities) recorded on our Consolidated Balance Sheets at December 31, 2002
and 2001:

<TABLE>
<CAPTION>
(in millions)                                                    2002            2001
                                                                 ----            -----
<S>                                                              <C>             <C>
Current deferred tax assets, net                                 $668            $ 518
Noncurrent deferred tax assets (liabilities), net                 175             (465)
                                                                 ----            -----
Total deferred tax assets, net                                   $843            $  53
                                                                 ====            =====
</TABLE>


                                       50

<PAGE>

Based on the actions we have taken and will continue to take to improve
financial performance and other relevant factors, we believe that it is more
likely than not that our net deferred tax assets recorded at December 31, 2002,
will be fully realized.

Our income tax benefit (provision) for the years ended December 31, 2002, 2001
and 2000 consisted of:

<TABLE>
<CAPTION>
(in millions)                                                             2002            2001            2000
                                                                          ----            ----            -----
<S>                                                                       <C>             <C>             <C>
Current tax benefit (provision)                                           $319            $ --            $(230)
Deferred tax benefit (provision)                                           407             644             (396)
Tax benefit of dividends on allocated Series B ESOP Convertible
  Preferred Stock                                                            4               4                5
                                                                          ----            ----            -----
Income tax benefit (provision)                                            $730            $648            $(621)
                                                                          ====            ====            =====
</TABLE>

The following table presents the principal reasons for the difference between
our effective income tax rate and the U.S. federal statutory income tax rate for
the years ended December 31, 2002, 2001 and 2000:

<TABLE>
<CAPTION>
                                                         2002               2001               2000
                                                         -----              -----              ----
<S>                                                      <C>                <C>                <C>
U.S. federal statutory income tax rate                   (35.0)%            (35.0)%            35.0%
State taxes, net of federal income tax effect             (2.4)              (2.6)              3.4
Meals and entertainment                                    0.7                1.0               1.1
Amortization                                                --                1.0               1.0
Municipal bond interest                                     --               (0.1)             (0.2)
Increase in valuation allowance                             --                0.8                --
Other, net                                                 0.2                0.1              (0.2)
                                                         -----              -----              ----
Effective income tax rate                                (36.5)%            (34.8)%            40.1%
                                                         =====              =====              ====
</TABLE>

Note 11. Employee Benefit Plans

We sponsor qualified and non-qualified defined benefit pension plans, defined
contribution pension plans, healthcare plans, and disability and survivorship
plans for eligible employees and retirees, and their eligible family members. We
reserve the right to modify or terminate these plans as to all participants and
beneficiaries at any time, except as restricted by the Internal Revenue Code or
the Employee Retirement Income Security Act (ERISA).

DEFINED BENEFIT PENSION PLANS

Our qualified defined benefit pension plans meet or exceed ERISA's minimum
funding requirements as of December 31, 2002. Our non-qualified pension plans
are funded primarily with current assets.

The following table shows the change in the projected benefit obligation for our
defined benefit pension plans for the years ended December 31, 2002 and 2001 (as
measured at September 30, 2002 and 2001):

<TABLE>
<CAPTION>
(in millions)                                                   2002                 2001
                                                              --------             --------
<S>                                                           <C>                  <C>
Projected benefit obligation at beginning of period           $ 10,657             $  9,263
Service cost                                                       282                  246
Interest cost                                                      825                  763
Actuarial loss                                                     798                  531
Benefits paid                                                     (888)                (623)
Special termination benefits                                        --                  185
Curtailment loss                                                    --                   30
Plan amendments                                                      8                  262
                                                              --------             --------
Projected benefit obligation at end of period                 $ 11,682             $ 10,657
                                                              ========             ========
</TABLE>

The special termination benefits and curtailment loss reflected in the table
above relate to the workforce reduction programs offered to certain of our
employees in 2001. In December 2002, we recorded a $7 million pretax charge for
special termination benefits related to the 2002 workforce reduction programs.
During the March 2003 quarter, we will record a $47 million pretax charge for
the associated cost of curtailing the pension obligations for participants in
the 2002 workforce reduction programs.


                                       51

<PAGE>

Notes to the Consolidated Financial Statements

See Note 16 for additional information about our 2002 and 2001 workforce
reduction programs.

The following table shows the change in the fair value of our defined benefit
pension plan assets for the years ended December 31, 2002 and 2001 (as measured
at September 30, 2002 and 2001):

<TABLE>
<CAPTION>
(in millions)                                                2002               2001
                                                            ------             -------
<S>                                                         <C>                <C>
Fair value of plan assets at beginning of period            $8,304             $10,398
Actual loss on plan assets                                    (718)             (1,521)
Employer contributions                                          77                  50
Benefits paid                                                 (888)               (623)
                                                            ------             -------
Fair value of plan assets at end of period                  $6,775             $ 8,304
                                                            ======             =======
</TABLE>

The accrued pension cost recognized for these plans on our Consolidated Balance
Sheets at December 31, 2002 and 2001 is computed as follows:

<TABLE>
<CAPTION>
(in millions)                                                                                2002                2001
                                                                                            -------             -------
<S>                                                                                         <C>                 <C>
Funded status                                                                               $(4,907)            $(2,353)
Unrecognized net actuarial loss                                                               4,092               1,584
Unrecognized transition obligation                                                               41                  49
Unrecognized prior service cost                                                                 292                 308
Contributions made between the measurement date and year end                                     10                  12
Special termination benefits recognized between the measurement date and year end                (7)                 --
Intangible asset                                                                               (333)                 (7)
Accumulated other comprehensive loss                                                         (2,558)                (12)
                                                                                            -------             -------
Accrued pension cost recognized on the Consolidated Balance Sheets                          $(3,370)            $  (419)
                                                                                            =======             =======
</TABLE>

Net periodic pension cost for the years ended December 31, 2002, 2001 and 2000
included the following components:

<TABLE>
<CAPTION>
(in millions)                                        2002                2001              2000
                                                     -----             -------             -----
<S>                                                  <C>               <C>                 <C>
Service cost                                         $ 282             $   246             $ 250
Interest cost                                          825                 763               686
Expected return on plan assets                        (984)             (1,040)             (924)
Amortization of prior service cost                      24                   5                 4
Recognized net actuarial gain                           (8)                (51)              (22)
Amortization of net transition obligation                8                   4                 2
Settlement costs                                         1                  --                --
Special termination benefits                             7                  --                --
                                                     -----             -------             -----
Net periodic pension cost                            $ 155             $   (73)            $  (4)
                                                     =====             =======             =====
</TABLE>

We used the following actuarial assumptions to account for our defined benefit
pension plans:

<TABLE>
<CAPTION>
                                                       September 30, 2002     September 30, 2001     September 30, 2000
                                                       ------------------     ------------------     ------------------
<S>                                                    <C>                    <C>                    <C>
Weighted average discount rate                               6.75%                   7.75%                   8.25%
Rate of increase in future compensation levels               2.67%                   4.67%                   5.35%
Expected long-term rate of return on plan assets             9.00%                  10.00%                  10.00%
                                                             ----                   -----                   -----
</TABLE>

At December 31, 2002, we recorded a non-cash charge to accumulated other
comprehensive income (loss) to recognize a portion of our additional minimum
pension liability in accordance with SFAS No. 87, "Employers' Accounting for
Pensions" (SFAS 87). SFAS 87 requires that this liability be recognized at year
end in an amount equal to the amount by which the accumulated benefit obligation
(ABO) exceeds the fair value of the defined benefit pension plan assets. The
additional minimum pension liability was recorded by recognizing an intangible
asset to the extent of any unrecognized prior service costs and transition


                                       52

<PAGE>

obligation, which totaled $333 million at December 31, 2002. The remaining
portion of the additional minimum pension liability totaling $1.6 billion, net
of tax, was recorded in accumulated other comprehensive income (loss) on our
Consolidated Balance Sheets (see Note 14).

The ABO and the fair value of plan assets for the plans with an ABO in excess of
plan assets were $10.1 billion and $6.8 billion, respectively, as of September
30, 2002, and $303 million and zero, respectively, as of September 30, 2001.

DEFINED CONTRIBUTION PENSION PLANS

DELTA PILOTS MONEY PURCHASE PENSION PLAN (MPPP)

We contribute 5% of covered pay to the MPPP for each eligible Delta pilot. The
MPPP is related to the Delta Pilots Retirement Plan. The defined benefit pension
payable to a pilot is reduced by the actuarial equivalent of the accumulated
account balance in the MPPP. During the years ended December 31, 2002, 2001 and
2000, we recognized expense of $71 million, $69 million and $63 million,
respectively, for this plan.

DELTA FAMILY-CARE SAVINGS PLAN

Our Savings Plan includes an employee stock ownership plan (ESOP) feature.
Eligible employees may contribute a portion of their covered pay to the Savings
Plan.

Prior to July 1, 2001, we matched 50% of employee contributions with a maximum
employer contribution of 2% of a participant's covered pay for all participants.
Effective July 1, 2001, the Savings Plan was amended to provide all eligible
Delta pilots with an employer contribution of 3% of their covered pay to replace
their former matching contribution. We make our contributions for non-pilots and
pilots by allocating Series B ESOP Convertible Preferred Stock (ESOP Preferred
Stock), common stock or cash to the Savings Plan. Our contributions, which are
recorded as salaries and related costs in the accompanying Consolidated
Statements of Operations, totaled $85 million, $83 million and $69 million for
the years ended December 31, 2002, 2001 and 2000, respectively.

When we adopted the ESOP in 1989, we sold 6,944,450 shares of ESOP Preferred
Stock to the Savings Plan for $500 million. We have recorded unearned
compensation equal to the value of the shares of preferred stock not yet
allocated to participants' accounts. We reduce the unearned compensation as
shares of preferred stock are allocated to participants' accounts. Dividends on
unallocated shares of preferred stock are used for debt service on the Savings
Plan's ESOP Notes and are not considered dividends for financial reporting
purposes. Dividends on allocated shares of preferred stock are credited to
participants' accounts and are considered dividends for financial reporting
purposes. Only allocated shares of preferred stock are considered outstanding
when we compute diluted earnings per share. At December 31, 2002, 3,666,639
shares of ESOP Preferred Stock were allocated to participants' accounts and
2,398,850 shares were held by the ESOP for future allocations.

OTHER PLANS

ASA, Comair and DAL Global Services, Inc., three of our wholly owned
subsidiaries, sponsor defined contribution retirement plans for eligible
employees. These plans did not have a material impact on our Consolidated
Financial Statements in 2002, 2001 and 2000.

POSTRETIREMENT BENEFITS OTHER THAN PENSIONS

Our medical plans provide medical and dental benefits to substantially all Delta
retirees and their eligible dependents. Benefits are funded from our general
assets on a current basis. Plan benefits are subject to copayments, deductibles
and other limits as described in the plans.


                                       53

<PAGE>

The following table shows the change in our accumulated postretirement benefit
obligation (APBO) for the years ended December 31, 2002 and 2001 (as measured at
September 30, 2002 and 2001):

<TABLE>
<CAPTION>
(in millions)                           2002               2001
                                       ------             ------
<S>                                    <C>                <C>
APBO at beginning of period            $2,100             $1,780
Service cost                               30                 37
Interest cost                             160                146
Benefits paid                            (154)              (102)
Actuarial loss                            234                163
Plan amendments                            --               (176)
Curtailment loss                           --                 49
Special termination benefits               --                203
                                       ------             ------
APBO at end of period                  $2,370             $2,100
                                       ======             ======
</TABLE>

The special termination benefits and curtailment loss reflected in the table
above relate to the workforce reduction programs offered to certain of our
employees during 2001. In December 2002, we recorded a $44 million pretax charge
for special termination benefits related to the 2002 workforce reduction
programs. During the March 2003 quarter, we will recorded a $4 million pretax
gain for the associated cost of curtailing the future obligations for the
participants in these programs. See Note 16 for additional information about
our 2002 and 2001 workforce reduction program.

A 1% change in the healthcare cost trend rate used in measuring the APBO at
September 30, 2002, would have the following effects:

<TABLE>
<CAPTION>
(in millions)                                                  1% Increase     1% Decrease
                                                               -----------     -----------
<S>                                                            <C>             <C>
Increase (decrease) in total service and interest cost            $ 12            $ (11)
Increase (decrease) in the APBO                                   $108            $(106)
                                                                  ----            -----
</TABLE>

The following table shows the calculation of the accrued postretirement benefit
cost recognized on our Consolidated Balance Sheets at December 31, 2002 and 2001
(as measured at September 30, 2002 and 2001):

<TABLE>
<CAPTION>
(in millions)                                                                                2002                2001
                                                                                            -------             -------
<S>                                                                                         <C>                 <C>
Funded status                                                                               $(2,370)            $(2,100)
Unrecognized net actuarial loss                                                                 299                 100
Unrecognized prior service cost                                                                (353)               (421)
Special termination benefits recognized between the measurement date and year end               (44)                 --
Contributions made between the measurement date and year end                                     45                  29
                                                                                            -------             -------
Accrued postretirement benefit cost recognized on the Consolidated Balance Sheets           $(2,423)            $(2,392)
                                                                                            =======             =======
</TABLE>

Our net periodic postretirement benefit cost for the years ended December 31,
2002, 2001 and 2000, included the following components:

<TABLE>
<CAPTION>
(in millions)                                      2002             2001             2000
                                                   ----             ----             ----
<S>                                                <C>              <C>              <C>
Service cost                                       $ 30             $ 37             $ 37
Interest cost                                       160              146              129
Amortization of prior service cost                  (50)             (39)             (40)
Recognized actuarial loss                             2               --               --
Special termination benefits                         44               --               --
                                                   ----             ----             ----
Net periodic postretirement benefit cost           $186             $144             $126
                                                   ====             ====             ====
</TABLE>


                                       54

<PAGE>
We used the following actuarial assumptions to account for our postretirement
benefit plans:

<TABLE>
<CAPTION>
                                            September 30, 2002     September 30, 2001     September 30, 2000
                                            ------------------     ------------------     ------------------
<S>                                         <C>                    <C>                    <C>
Weighted average discount rate                    6.75%                   7.75%                   8.25%
Assumed healthcare cost trend rate(1)            10.00%                   6.25%                   7.00%
                                                 -----                    ----                    ----
</TABLE>

(1)      The assumed healthcare cost trend rate is assumed to decline gradually
         to 5.25% by 2007 for noncapped plans and to zero between 2005 and 2007
         for capped plans, and remain level thereafter.

POSTEMPLOYMENT BENEFITS

We provide certain other welfare benefits to eligible former or inactive
employees after employment but before retirement, primarily as part of the
disability and survivorship plans.

Postemployment benefit (expense) income was $(62) million, $23 million and $51
million for the years ended December 31, 2002, 2001 and 2000, respectively. We
include the amount funded in excess of the liability in other noncurrent assets
on our Consolidated Balance Sheets. Future period expenses will vary based on
actual claims experience and the return on plan assets. Gains and losses occur
because actual experience differs from assumed experience. These gains and
losses are amortized over the average future service period of employees. We
also amortize differences in prior service costs resulting from amendments
affecting the benefits of retired and inactive employees.

We regularly evaluate ways to better manage employee benefits and control costs.
Any changes to the plans or assumptions used to estimate future benefits could
have a significant effect on the amount of the reported obligation and future
annual expense. During the December 2002 quarter, we announced the
implementation of and migration to a cash balance pension plan for non-pilot
employees. As a result of the changes to our pension plans and 2002 workforce
reductions (see Note 16), we were required to remeasure our pension plan
obligations, which will impact our pension expense in 2003.

Note 12. Common and Preferred Stock

STOCK OPTION AND OTHER STOCK-BASED AWARD PLANS

To more closely align the interests of directors, officers and other employees
with the interests of our shareowners, we maintain certain plans which provide
for the issuance of common stock in connection with the exercise of stock
options and for other stock-based awards. Stock options awarded under these
plans (1) have an exercise price equal to the fair value of the common stock on
the grant date; (2) become exercisable one to five years after the grant date;
and (3) generally expire 10 years after the grant date. The following table
includes additional information about these plans as of December 31, 2002:

<TABLE>
<CAPTION>
                                                                                                     Shares
                                                       Total Shares         Non-Qualified           Reserved
                                                      Authorized for        Stock Options          for Future
Plan                                                     Issuance              Granted                Grant
                                                      --------------        -------------          ----------
<S>                                                   <C>                   <C>                    <C>
Broad-based employee stock option plans(1)              49,400,000            49,400,000                   --
Delta 2000 Performance Compensation Plan(2)             16,000,000            10,802,850            4,963,183
Non-Employee Directors' Stock Option Plan(3)               250,000               119,245              132,755
Non-Employee Directors' Stock Plan(4)                      500,000                    --              457,272
                                                        ----------            ----------            ---------
</TABLE>

(1)      In 1996, shareowners approved broad-based pilot and non-pilot stock
         option plans. Under these two plans, we granted eligible employees
         non-qualified stock options to purchase a total of 49.4 million shares
         of common stock in three approximately equal installments on October
         30, 1996, 1997 and 1998.

(2)      On October 25, 2000, shareowners approved this plan, which authorizes
         the grant of stock options and a limited number of other stock awards.
         The plan amends and restates a prior plan which was also approved by
         shareowners. No awards have been, or will be, granted under the prior
         plan on or after October 25, 2000. At December 31, 2002, there were
         11.0 million shares of common stock reserved for awards (primarily
         non-qualified stock options) that were outstanding under the prior
         plan. The current plan provides that shares reserved for awards under
         the plans that are forfeited, settled in cash rather than stock or
         withheld, plus shares tendered to Delta in connection with such
         awards, may be added back to the shares available for future grants. At
         December 31, 2002, 1.5 million shares had been added back pursuant to
         that provision.

(3)      On October 22, 1998, the Board of Directors approved this plan. Each
         non-employee director receives an annual grant of non-qualified stock
         options. This plan provides that shares reserved for awards that are
         forfeited may be added back to the shares available for future grants.

(4)      In 1995, shareowners approved this plan, which provides that a portion
         of each non-employee director's compensation for serving as a director
         will be paid in shares of common stock. It also permits non-employee
         directors to elect to receive all or a portion of their cash
         compensation for service as a director in shares of common stock at
         current market prices.


                                       55

<PAGE>

The following table summarizes all stock option and stock appreciation rights
(SAR) activity for the years ended December 31, 2002, 2001 and 2000:

<TABLE>
<CAPTION>
                                                         2002                       2001                      2000
                                                 --------------------       --------------------       --------------------
                                                             Weighted                   Weighted                   Weighted
                                                              Average                    Average                    Average
                                                             Exercise                   Exercise                   Exercise
(shares in thousands)                            Shares        Price        Shares        Price        Shares        Price
                                                 ------      --------       ------      --------       ------      --------
<S>                                              <C>         <C>            <C>         <C>            <C>         <C>
Outstanding at the beginning of the year         51,537         $48         50,365         $48         47,859         $48
Granted                                           8,478          21          2,358          46          3,914          52
Exercised                                            (9)         27            (76)         34           (725)         41
Forfeited                                        (1,200)         48         (1,110)         53           (683)         53
                                                 ------         ---         ------         ---         ------         ---
Outstanding at the end of the year               58,806          44         51,537          48         50,365          48
                                                 ------         ---         ------         ---         ------         ---
Exercisable at the end of the year               45,996         $48         44,751         $48         46,309         $48
                                                 ======         ===         ======         ===         ======         ===
</TABLE>

The following table summarizes information about stock options outstanding and
exercisable at December 31, 2002:

<TABLE>
<CAPTION>
                           Stock Options Outstanding               Stock Options Exercisable
                   ----------------------------------------       ---------------------------
                                   Weighted        Weighted                         Weighted
                      Number        Average         Average         Number          Average
                   Outstanding     Remaining       Exercise       Exercisable       Exercise
Stock Options         (000)       Life (years)      Price            (000)           Price
                   ------------   ------------     --------       -----------       ---------
<S>                <C>            <C>              <C>            <C>               <C>
$9-$20                4,573            10            $11                --            $--
$21-$35              10,756             5            $33             6,960            $34
$36-$50              36,101             5            $49            33,743            $49
$51-$69               7,376             7            $56             5,293            $56
                     ------            --            ---            ------            ---
</TABLE>

ESOP PREFERRED STOCK

Each outstanding share of ESOP Preferred Stock pays a cumulative cash dividend
of 6% per year, is convertible into 1.7155 shares of common stock at a
conversion price of $41.97 per share and has a liquidation price of $72.00, plus
accrued and unpaid dividends. The ESOP Preferred Stock generally votes together
as a single class with the common stock and has two votes per share. It is
redeemable at our option at $72.00 per share plus accrued and unpaid dividends,
payable in cash or common stock. We cannot pay cash dividends on common stock
until all cumulative dividends on the ESOP Preferred Stock have been paid. The
conversion rate, conversion price and voting rights of the ESOP Preferred Stock
are subject to adjustment in certain circumstances.

All shares of ESOP Preferred Stock are held of record by the trustee of the
Delta Family-Care Savings Plan (see Note 11). At December 31, 2002, 10,405,346
shares of common stock were reserved for issuance for the conversion of the ESOP
Preferred Stock.

SHAREOWNER RIGHTS PLAN

The Shareowner Rights Plan is designed to protect shareowners against attempts
to acquire Delta that do not offer an adequate purchase price to all
shareowners, or are otherwise not in the best interest of Delta and our
shareowners. Under the plan, each outstanding share of common stock is
accompanied by one-half of a preferred stock purchase right. Each whole right
entitles the holder to purchase 1/100 of a share of Series D Junior
Participating Preferred Stock at an exercise price of $300, subject to
adjustment.

The rights become exercisable only after a person acquires, or makes a tender or
exchange offer that would result in the person acquiring, beneficial ownership
of 15% or more of our common stock. If a person acquires beneficial ownership of
15% or more of our common stock, each right will entitle its holder (other than
the acquiring person) to exercise his rights to purchase our common stock having
a market value of twice the exercise price.


                                       56
<PAGE>

If a person acquires beneficial interest of 15% or more of our common stock and
(1) we are involved in a merger or other business combination in which we are
not the surviving corporation, or (2) we sell more than 50% of our assets or
earning power, then each right will entitle its holder (other than the acquiring
person) to exercise their rights to purchase common stock of the acquiring
company having a market value of twice the exercise price.

The rights expire on November 4, 2006. We may redeem the rights for $0.01 per
right at any time before a person becomes the beneficial owner of 15% or more of
our common stock. At December 31, 2002, 2,250,000 shares of preferred stock were
reserved for issuance under the Shareowner Rights Plan.

PAYMENT OF DIVIDENDS

The determination to pay cash dividends on our ESOP Preferred Stock and our
common stock is at the discretion of our Board of Directors, and is also subject
to the provisions of Delaware General Corporation Law, which authorizes the
payment of dividends from (1) surplus, defined as the excess of net assets
(total assets minus total liabilities) over the amount determined to be capital,
or (2) if there is no surplus, out of net profits for the current fiscal year or
the previous fiscal year. The terms of the ESOP Preferred Stock discussed above
provide for cumulative dividends and also limit our ability to pay cash
dividends to our common shareowners in certain circumstances. Our debt
agreements do not limit the payment of dividends on our capital stock.

Note 13. Common Stock Repurchases

We repurchased 10.6 million shares of common stock for $502 million in 2000.
These repurchases were made under certain now-completed stock buyback programs,
and the ongoing common stock repurchase authorization described below.

In 1996, our Board of Directors authorized us to repurchase up to 49.4 million
shares of common stock issued under our broad-based employee stock option plans
(see Note 12). As of December 31, 2002, we had repurchased a total of 21.6
million shares of common stock under this authorization. We are authorized to
repurchase the remaining shares as employees exercise their stock options under
those plans. Repurchases are subject to market conditions and may be made in the
open market or privately negotiated transactions.

Note 14. Comprehensive Income (Loss)

Comprehensive income (loss) includes (1) reported net income (loss); (2) the
additional minimum pension liability; and (3) unrealized gains and losses on
marketable equity securities and fuel derivative instruments that qualify for
hedge accounting. The following table shows our comprehensive income (loss)
for the years ended December 31, 2002, 2001 and 2000:

<TABLE>
<CAPTION>
{in millions)                                                      2002              2001           2000
- -------------                                                   ---------          -------          ----
<S>                                                             <C>                <C>              <C>
Net income                                                      $  (1,272)         $(1,216)         $828
Other comprehensive income (loss)                                  (1,587)            (335)           94
                                                                ---------          -------          ----
Comprehensive income (loss)                                     $  (2,859)         $(1,551)         $922
                                                                =========          =======          ====
</TABLE>


                                       57
<PAGE>

The following table shows the components of accumulated other comprehensive
income (loss) at December 31, 2002, 2001 and 2000, and the activity for the
years then ended:

<TABLE>
<CAPTION>
                                                    Additional
                                                      Minimum          Fuel       Marketable
                                                      Pension       Derivative      Equity
(in millions)                                        Liability      Instruments   Securities     Other          Total
- -------------                                       ----------      -----------   ----------     -----        --------
<S>                                                 <C>             <C>           <C>            <C>          <C>
Balance at December 31, 1999                          $     --        $   --        $  266        $ --        $    266
                                                      --------        ------        ------        ----        --------
  Unrealized gain (loss)                                    --           814            16          --             830
  Realized (gain) loss                                      --          (375)         (301)         --            (676)
  Tax effect                                                --          (171)          111          --             (60)
                                                      --------        ------        ------        ----        --------
  Net of tax                                                --           268          (174)         --              94
                                                      --------        ------        ------        ----        --------
Balance at December 31, 2000                                --           268            92          --             360
                                                      --------        ------        ------        ----        --------
  Unrealized gain (loss)                                    --          (100)          (84)          2            (182)
  Realized (gain) loss                                      --          (299)          (73)         --            (372)
  Tax effect                                                --           156            64          (1)            219
                                                      --------        ------        ------        ----        --------
  Net of tax                                                --          (243)          (93)          1            (335)
                                                      --------        ------        ------        ----        --------
Balance at December 31, 2001                                --            25            (1)          1              25
                                                      --------        ------        ------        ----        --------
  Additional minimum pension liability adjustment       (2,558)           --            --          --          (2,558)
  Unrealized gain (loss)                                    --           143            (9)         (2)            132
  Realized (gain) loss                                      --          (136)            4          --            (132)
  Tax effect                                               972            (3)            1           1             971
                                                      --------        ------        ------        ----        --------
  Net of tax                                            (1,586)            4            (4)         (1)         (1,587)
                                                      --------        ------        ------        ----        --------
BALANCE AT DECEMBER 31, 2002                          $ (1,586)       $   29        $   (5)       $ --        $ (1,562)
                                                      ========        ======        ======        ====        ========
</TABLE>

We anticipate that gains of $29 million, net of tax, will be realized during
2003 as (1) fuel hedge contracts settle and (2) the related aircraft fuel
purchases being hedged are consumed and recognized in expense. For additional
information regarding our fuel hedge contracts, see Note 4.

See Note 11 for further information related to the additional minimum pension
liability.

Note 15. Geographic Information

SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
Information" (SFAS 131), requires us to disclose certain information about our
operating segments. Operating segments are defined as components of an
enterprise with separate financial information which is evaluated regularly by
the chief operating decision-maker and is used in resource allocation and
performance assessments.

We are managed as a single business unit that provides air transportation for
passengers and cargo. This allows us to benefit from an integrated revenue
pricing and route network that includes Delta-mainline, ASA and Comair. The
flight equipment of all three carriers is combined to form one fleet which is
deployed through a single route scheduling system. When making resource
allocation decisions, our chief operating decision-maker evaluates flight
profitability data, which considers aircraft type and route economics, but gives
no weight to the financial impact of the resource allocation decision on an
individual carrier basis. Their objective in making resource allocation
decisions is to maximize our consolidated financial results, not the individual
results of Delta-mainline, ASA and Comair.


                                       58
<PAGE>

Operating revenues are assigned to a specific geographic region based on the
origin, flight path and destination of each flight segment. Our operating
revenues by geographic region for the years ended December 31, 2002, 2001 and
2000, are summarized in the following table:

<TABLE>
<CAPTION>
(in millions)                                                         2002               2001               2000
- -------------                                                      ---------          ---------          ---------
<S>                                                                <C>                <C>                <C>
North America                                                      $  10,778          $  11,288          $  14,004
Atlantic                                                               1,860              1,823              1,988
Pacific                                                                  127                222                297
Latin America                                                            540                546                452
                                                                   ---------          ---------          ---------
Total                                                              $  13,305          $  13,879          $  16,741
                                                                   =========          =========          =========
</TABLE>

Our tangible assets consist primarily of flight equipment which is mobile across
geographic markets. Accordingly, assets are not allocated to specific geographic
regions.

Note 16. Asset Writedowns, Restructuring and Related Items, Net

2002

In 2002, we recorded net charges totaling $439 million ($277 million net of tax,
or $2.25 diluted earnings per share) in asset writedowns, restructuring and
related items, net on our Consolidated Statements of Operations, as follows:

- -        FLEET CHANGES

         During 2002, we made significant changes in our fleet plan (1) to
         reduce costs through fleet simplification and capacity reductions and
         (2) to decrease capital expenditures through aircraft deferrals. These
         actions resulted in $225 million in net asset impairments and other
         charges, which are discussed below.

         During the September 2002 quarter, we recorded an impairment charge,
         shown in the table below, related to 59 owned B-727 aircraft. The
         impairment of 23 B-727 aircraft used in operations resulted from a
         further reduction in their estimated future cash flows and fair values
         since our impairment review in 2001. The impairment of 36 B-727
         aircraft held for sale resulted from a further decline in their fair
         values less the cost to sell since our impairment review in 2001. The
         aircraft held for sale will be disposed of as part of our fleet
         simplification plan and are expected to be sold by December 31, 2003,
         under an existing agreement. The net book value of these aircraft held
         for sale is included in other noncurrent assets on our Consolidated
         Balance Sheets at December 31, 2002, and is not material; these
         aircraft are not included in the aircraft fleet table on page 70
         because they have been removed from service.

         During the September 2002 quarter, we also decided to temporarily
         remove our MD-11 aircraft from service beginning in early 2003. As a
         result of this decision, we recorded an impairment charge, shown in the
         table below, related to our eight owned MD-11 aircraft. This charge
         reflects the further reduction in estimated future cash flows and fair
         values of these aircraft since our impairment review in 2001. The MD-11
         aircraft will be replaced on international routes by B-767-300ER
         aircraft that are currently used in the domestic system. We will use
         smaller mainline aircraft to replace the B-767 aircraft on domestic
         routes, thereby reducing our domestic capacity.

         During the December 2002 quarter, we decided to return to service,
         beginning in 2003, nine leased B-737-300 aircraft to replace the B-767
         aircraft on domestic routes. This decision was based on (1) capacity
         and operating cost considerations and (2) our inability to sublease the
         B-737-300 aircraft due to the difficult business environment facing the
         airline industry after September 11, 2001. As discussed below, during
         the June 2001 quarter, we decided to remove the B-737-300 aircraft from
         service and recorded a reserve for future lease payments less estimated
         sublease income. Due to our decision to return these aircraft to
         service, we reversed the remaining $56 million reserve related to these
         B-737-300 aircraft.

         During the December 2002 quarter, we entered into an agreement with
         Boeing to defer 31 mainline aircraft previously scheduled for delivery
         in 2003 and 2004. As a result of these deferrals, we have no mainline
         aircraft scheduled for delivery during 2003 or 2004. We incurred a $30
         million charge related to these deferrals.


                                       59
<PAGE>

         During the December 2002 quarter, we decided to accelerate the
         retirement of 37 owned EMB-120 aircraft to achieve costs savings and
         operating efficiencies. We plan to remove these aircraft from service
         beginning in 2003. The accelerated retirement of these aircraft as well
         as a reduction in their estimated future cash flows and fair values
         resulted in an impairment charge.

         During 2002, we recorded the following impairment charges for our owned
         B-727, MD-11 and EMB-120 aircraft:

<TABLE>
<CAPTION>
                                    Used in Operations              Held for Sale
                               --------------------------      -----------------------
                                                  No. of                       No. of                       Spare
(dollars in millions)           Writedown(1)     Aircraft      Writedown      Aircraft     Subtotal        Parts(2)        Total
- ---------------------           ------------     --------      ---------      --------     --------        --------        -----
<S>                             <C>              <C>           <C>            <C>          <C>             <C>             <C>
B-727                               $  24            23           $ 37           36          $  61           $ --          $  61
MD-11                                 141             8             --           --            141             18            159
EMB-120                                27            37             --           --             27              4             31
                                    -----                         ----                       -----           ----          -----
Total                               $ 192                         $ 37                       $ 229           $ 22          $ 251
                                    =====                         ====                       =====           ====          =====
</TABLE>

(1)      The fair value of aircraft used in operations was determined using
         third-party appraisals.

(2)      Charges related to the writedown of the related spare parts inventory
         to their net realizable value.

- -        WORKFORCE REDUCTIONS

         We recorded a $127 million charge related to our decision in October
         2002 to reduce staffing by up to approximately 8,000 jobs across all
         work groups, excluding pilots, to further reduce operating costs. We
         offered eligible non-pilot employees several programs, including
         voluntary severance, leaves of absence and early retirement.
         Approximately 3,900 employees elected to participate in one of these
         programs. Involuntary reductions will affect up to approximately 4,000
         employees and are expected to be completed by May 2003.

         The total charge includes (1) $51 million for costs associated with the
         voluntary programs that were recorded as special termination benefits
         under our pension and postretirement medical benefit obligations (see
         Note 11) and (2) $76 million for severance and related costs.

- -        SURPLUS PILOTS AND GROUNDED AIRCRAFT

         We recorded $93 million in expenses for the temporary carrying cost of
         surplus pilots and grounded aircraft related to our capacity reductions
         which became effective on November 1, 2001. This cost also includes
         related requalification training and relocation costs for certain
         pilots.

- -        OTHER

         We also recorded (1) a $23 million gain related to the adjustment of
         certain prior year restructuring reserves based on revised estimates of
         remaining costs; (2) a $14 million charge associated with our decision
         to close certain leased facilities; and (3) a $3 million charge related
         to other items.

2001

In 2001, we recorded charges totaling $1.1 billion ($695 million net of tax,
or $5.63 diluted earnings per share) in asset write-downs, restructuring and
related items, net on our Consolidated Statements of Operations, as follows:

- -        WORKFORCE REDUCTIONS

         We recorded a $566 million charge relating to our decision in 2001 to
         reduce staffing across all workgroups due to the capacity reductions we
         implemented as a result of the September 11 terrorist attacks. We
         offered eligible employees several programs, including voluntary
         severance, leaves of absence and early retirement. Approximately 10,000
         employees elected to participate in one of the voluntary programs.
         Involuntary reductions were expected to affect up to approximately
         1,700 employees - up to 1,400 pilots and 300 employees from other
         workgroups.

         The total charge includes $475 million for costs associated with the
         early retirement and certain voluntary leave of absence programs which
         are recorded as special termination benefits under our pension and
         postretirement medical benefit obligations (see Note 11). The remaining
         $91 million relates to severance and related costs.


                                       60
<PAGE>

- -        FLEET CHANGES

         As a result of the effects of the September 11 terrorist attacks on our
         business and the related decline in aircraft values, we recorded $286
         million in asset writedowns. These writedowns include (1) the
         impairment of 16 MD-90 and eight MD-11 owned aircraft, which reflects
         further reductions in the estimated future cash flows and fair values
         of these aircraft since our impairment review in 1999, as well as a
         revised schedule for retiring these aircraft; (2) charges related to
         the accelerated retirement of 40 owned B-727 aircraft by 2003; and (3)
         the writedown to fair value of 18 owned L-1011 aircraft. These charges
         are summarized in the table below:

<TABLE>
<CAPTION>
                              Used in Operations           Held for Sale
                           ------------------------    ----------------------
                                            No. of                    No. of
(dollars in millions)      Writedown(1)    Aircraft    Writedown     Aircraft     Total
- ---------------------      ------------    --------    ---------     --------     -----
<S>                        <C>             <C>         <C>           <C>          <C>
MD-90                         $  98            16         $ --           --       $  98
MD-11                            93             8           --           --          93
B-727-200                        81            36            2            4          83
L-1011                           --            --           12           18          12
                              -----                       ----                    -----
Total                         $ 272                       $ 14                    $ 286
                              =====                       ====                    =====
</TABLE>

(1)      The fair value of aircraft used in operations was determined using
         third-party appraisals.

         The net book value of the aircraft held for sale is included in other
         noncurrent assets on our Consolidated Balance Sheets at December 31,
         2001, and is not material.

         In addition, we recorded a $71 million reserve related to our decision
         to remove nine leased B-737-300 aircraft from service to more closely
         align capacity and demand, and to improve scheduling and operating
         efficiency. The reserve consisted of future lease payments for these
         aircraft less estimated sublease income. We also recorded an additional
         $6 million charge for the writedown to net realizable value of related
         aircraft spare parts.

- -        SURPLUS PILOTS AND GROUNDED AIRCRAFT

         We recorded $30 million in expenses for the temporary carrying cost of
         surplus pilots and grounded aircraft related to our capacity reductions
         which became effective on November 1, 2001. This cost also includes
         related requalification training and relocation costs for certain
         pilots.

- -        OTHER

         We recorded $160 million in charges that include (1) an $81 million
         charge related to the write-off of previously capitalized amounts that
         would provide no future economic benefit due to our decision to cancel
         or delay certain airport and technology projects following September
         11, 2001; (2) a $63 million charge related to contract termination
         costs; (3) a $9 million charge related to the write-off of certain
         receivables, primarily those of foreign air carriers and other related
         businesses, that we believe became uncollectible as a result of those
         businesses' weakened financial condition after September 11, 2001; and
         (4) a $7 million charge related to our decision to close certain
         facilities.

2000

In 2000, we recorded charges totaling $108 million ($66 million net of tax, or
$0.53 basic and $0.50 diluted earnings per share) in asset writedowns,
restructuring and related items, net on our Consolidated Statements of
Operations, as follows:

- -        WORKFORCE REDUCTIONS

         We recorded an $86 million charge relating to our decision to offer an
         early retirement medical option program to enable eligible employees to
         retire with continued medical coverage without paying certain early
         retirement medical premiums. Approximately 2,500 employees participated
         in this program.

- -        OTHER

         We recorded a $22 million restructuring charge relating to our decision
         to close our Pacific gateway in Portland, Oregon.


                                       61
<PAGE>

Notes to the Consolidated Financial Statements

Note 17. Restructuring and Other Reserves

The following table shows changes in our restructuring and other reserve
balances as of December 31, 2002, 2001 and 2000, and the associated activity for
the years then ended:

<TABLE>
<CAPTION>
                                                                                   Restructuring and Other Charges
                                                                             -------------------------------------------
                                                                                             Severance and Related Costs
                                                                                              --------------------------
                                                                                                 2002            2001
                                                                                              Workforce        Workforce
                                                               Leased        Facilities       Reduction        Reduction
(in millions)                                                 Aircraft        and Other        Programs         Programs
- -------------                                                 --------       ----------       ---------        ---------
<S>                                                           <C>            <C>              <C>              <C>
Balance at December 31, 1999                                   $   --           $   41           $  --           $   --
Additional costs and expenses                                      --               22              --               --
Payments                                                           --               (7)             --               --
                                                               ------           ------           -----           ------
Balance at December 31, 2000                                       --               56              --               --
                                                               ------           ------           -----           ------
Additional costs and expenses                                      71               24              --               91
Payments                                                           (1)              (6)             --              (44)
                                                               ------           ------           -----           ------
Balance at December 31, 2001                                       70               74              --               47
                                                               ------           ------           -----           ------
Additional costs and expenses                                      --               14              76               --
Payments                                                          (14)              (9)             (5)             (35)
Adjustments                                                       (56)             (14)             --               (9)
                                                               ------           ------           -----           ------
BALANCE AT DECEMBER 31, 2002                                   $   --           $   65           $  71           $    3
                                                               ======           ======           =====           ======
</TABLE>

At December 31, 2002, the facilities and other reserve represents costs related
primarily to (1) future lease payments for facilities closures and (2) contract
termination fees. During 2002, we recorded a $14 million charge related to our
decision in 2002 to close certain facilities and a $14 million adjustment to
prior year reserves based on revised estimates of remaining costs.

The leased aircraft reserve represents future lease payments for B-737 aircraft
previously removed from service prior to the lease expiration date, less
estimated sublease income. Due to changes in our fleet plan during the December
2002 quarter, these aircraft will be returned to service in 2003. Therefore, we
reversed the remaining $56 million balance of this reserve.

The severance and related costs reserve represents future payments associated
with our 2002 and 2001 voluntary and involuntary workforce reduction programs.
At December 31, 2002, the remaining $71 million balance related to the 2002
workforce reduction programs represents severance and medical benefits for
employees who received severance or are participating in certain leave of
absence programs; this amount will be paid during 2003. At December 31, 2002,
the remaining $3 million balance related to the 2001 workforce reduction
programs primarily consists of severance for international employees that will
be paid during early 2003 in accordance with local country laws and regulations.
During 2002, we also recorded a $9 million adjustment to the 2001 reserve based
on revised estimates of the remaining costs, including (1) the adjustment of
medical benefits for certain employees participating in the leave of absence
programs who returned to the workforce earlier than originally scheduled and (2)
the change in the number of pilot furloughs from up to 1,400 to approximately
1,100.

See Note 16 for additional information related to the charges discussed above.


                                       62
<PAGE>

Note 18. Earnings (Loss) per Share

We calculate basic earnings (loss) per share by dividing the income (loss)
available to common shareowners by the weighted average number of common shares
outstanding. Diluted earnings (loss) per share includes the dilutive effects of
stock options and convertible securities. To the extent stock options and
convertible securities are anti-dilutive, they are excluded from the calculation
of diluted earnings (loss) per share. The following table shows our computation
of basic and diluted earnings (loss) per share:

<TABLE>
<CAPTION>
Years Ended December 31,
(in millions, except per share data)                                                  2002               2001              2000
- ------------------------------------                                                --------           --------           ------
<S>                                                                                 <C>                <C>                <C>
BASIC:
Net income (loss) excluding cumulative effect of change in
  accounting principle                                                              $ (1,272)          $ (1,216)          $  928
Dividends on allocated Series B ESOP
  Convertible Preferred Stock                                                            (15)               (14)             (13)
                                                                                    --------           --------           ------
Net income (loss) available to common shareowners, excluding
  cumulative effect of change in accounting principle                               $ (1,287)          $ (1,230)          $  915
Weighted average shares outstanding                                                    123.3              123.1            123.8
                                                                                    --------           --------           ------
Basic earnings (loss) per share excluding cumulative
  effect of change in accounting principle                                          $ (10.44)          $  (9.99)          $ 7.39
                                                                                    ========           ========           ======
DILUTED:
Net income (loss) available to common shareowners, excluding
  cumulative effect of change in accounting principle                               $ (1,287)          $ (1,230)          $  915
Income tax effect assuming conversion of allocated Series B ESOP
  Convertible Preferred Stock                                                             --                 --                8
                                                                                    --------           --------           ------
Income (loss) available to common shareowners including
  assumed conversion                                                                $ (1,287)          $ (1,230)          $  923
Weighted average shares outstanding                                                    123.3              123.1            123.8
Additional shares assuming:
  Exercise of stock options                                                               --                 --              1.6
  Conversion of allocated Series B ESOP Convertible Preferred Stock                       --                 --              5.4
  Conversion of performance-based stock units                                             --                 --              0.2
                                                                                    --------           --------           ------
Weighted average shares outstanding, as adjusted                                       123.3              123.1            131.0
                                                                                    --------           --------           ------
Diluted earnings (loss) per share excluding cumulative
effect of change in accounting principle                                            $ (10.44)          $  (9.99)          $ 7.05
                                                                                    ========           ========           ======
</TABLE>

For the years ended December 31, 2002, 2001 and 2000, we excluded from the
diluted earnings (loss) per share computation (1) 54.5 million, 44.3 million and
23.4 million stock options, respectively, because the exercise price of the
options was greater than the average price of common stock and (2) 6.9 million,
6.5 million and zero additional shares, respectively, because their effect on
earnings (loss) per share was anti-dilutive.

Note 19. Stabilization Act

On September 22, 2001, the Air Transportation Safety and System Stabilization
Act (Stabilization Act) became effective. The Stabilization Act is intended to
preserve the viability of the U.S. air transportation system following the
terrorist attacks on September 11, 2001 by, among other things, (1) providing
for payments from the U.S. Government totaling $5 billion to compensate U.S. air
carriers for losses incurred from September 11, 2001 through December 31, 2001
as a result of the September 11 terrorist attacks and (2) permitting the
Secretary of Transportation to sell insurance to U.S. air carriers.

Our allocated portion of compensation under the Stabilization Act was $668
million. Due to uncertainties regarding the U.S. government's calculation of
compensation, we recognized $634 million of this amount in our 2001 Consolidated
Statement of Operations. We recognized the remaining $34 million of compensation
in our 2002 Consolidated Statement of Operations. We received $112 million and
$556 million in cash for the years ended December 31, 2002 and 2001,
respectively, under the Stabilization Act.


                                       63
<PAGE>

Notes to the Consolidated Financial Statements

Subsequent to September 11, 2001, our insurance providers reduced our coverage
and significantly increased our premium rates for war and terrorism risk
insurance. Under the provisions of the Stabilization Act, the Federal Aviation
Administration (FAA) has been selling U.S. airlines excess war and terrorism
risk insurance coverage since the September 11 terrorist attacks. Effective
January 24, 2003, under the Homeland Security Act, the FAA is required to sell
passenger, third-party (ground damage) and aircraft hull war and terrorism risk
insurance to U.S. airlines through August 31, 2003.

Note 20. Related Party Transaction

The Delta Employees Credit Union (DECU) is an independent entity that is
chartered to provide banking and financial services to our employees, former
employees and certain relatives of these persons. At December 31, 2002, we had a
$71 million liability to DECU recorded in accounts payable, deferred credits and
other accrued liabilities on our Consolidated Balance Sheet. The liability
results from a timing difference in funding a portion of our 2002 year end
payroll and is reflected as a non-cash transaction on our Consolidated Statement
of Cash Flows for the year ended December 31, 2002. We paid the liability on
January 2, 2003.

Note 21. Valuation and Qualifying Accounts

The following table shows the valuation and qualifying accounts as of December
31, 2002, 2001 and 2000, and the associated activity for the years then ended:

<TABLE>
<CAPTION>
                                                                                                           Allowance for:
                                                                                                   ------------------------------
                                                                                                                    Obsolescence
                                                                                  Restructuring    Uncollectible    of Expendable
                                                                     Leased         and Other         Accounts     Parts & Supplies
(in millions)                                                      Aircraft(1)      Charges(1)      Receivable(2)    Inventory(3)
- -------------                                                      -----------    -------------    --------------  ----------------
<S>                                                                <C>            <C>              <C>             <C>
Balance at December 31, 1999                                          $  --           $   41           $   39           $  104
Additional costs and expenses                                            --               22               15               22
Payments and deductions                                                  --               (7)             (23)              (2)
                                                                      -----           ------           ------           ------
Balance at December 31, 2000                                             --               56               31              124
                                                                      -----           ------           ------           ------
Additional costs and expenses                                            71              115               18               38
Payments and deductions                                                  (1)             (50)              (6)             (23)
                                                                      -----           ------           ------           ------
Balance at December 31, 2001                                             70              121               43              139
                                                                      -----           ------           ------           ------
Additional costs and expenses                                            --               90               21               51
Payments and deductions                                                 (70)             (72)             (31)              (7)
                                                                      -----           ------           ------           ------
BALANCE AT DECEMBER 31, 2002                                          $  --           $  139           $   33           $  183
                                                                      =====           ======           ======           ======
</TABLE>

(1)      See Note 17 for additional information related to leased aircraft and
         restructuring and other charges.

(2)      The payments and deductions related to the allowance for uncollectible
         accounts receivable represent the write-off of accounts considered to
         be uncollectible, less recoveries.

(3)      These additional costs and expenses in 2001 and 2002 include the
         charges related to the writedown of certain aircraft spare parts
         inventory to their net realizable value (see Note 16).

Note 22. Subsequent Events (Unaudited)

ENHANCED EQUIPMENT TRUST CERTIFICATES

On January 30, 2003, we issued, in a private placement, $392 million aggregate
principal amount of insured Pass Through Certificates, Series 2003-1 G
(Certificates). The certificates bear interest at floating rates based on LIBOR
+ 0.75% and require principal payments from 2003 to 2008. This financing is
secured by two B-737-800 and 10 B-767-300ER aircraft owned by us. The net
proceeds of this financing were made available for general corporate purposes.

CONTRACT CARRIER AGREEMENT

During February 2003, we amended our contract carrier agreement with Chautauqua
to increase from 22 to 34 the number of aircraft Chautauqua will operate for us.
All of these aircraft are scheduled to be in service under the Delta Connection
program by the end of 2003. We estimate that the total fair value of these
additional aircraft that Chautauqua could assign to us or require that we
purchase if we were to terminate this agreement without cause is approximately
$200 million (see Note 9).


                                       64
<PAGE>

As part of this amended agreement, we received a warrant to purchase up to an
additional 720,000 shares of Republic common stock for (1) $12.50 per share, if
the warrant is exercised prior to the completion of Republic's initial public
offering of common stock (IPO) or (2) the price per share at which Republic
common stock is sold in the IPO, if the warrant is exercised after or in
connection with the IPO. The warrant is exercisable in whole or in part at any
time until February 7, 2013. The fair value of this warrant on the date received
was not material.

Note 23. Quarterly Financial Data (Unaudited)
The following table summarizes our unaudited quarterly results of operations
for 2002 and 2001:

<TABLE>
<CAPTION>
                                                                                    Three Months Ended
2002                                                           ---------------------------------------------------------------
(in millions, except per share data)                           March 31          June 30        September 30       December 31
- ------------------------------------                           --------          -------        ------------       -----------
<S>                                                            <C>               <C>            <C>                <C>
Operating revenues                                             $ 3,103           $ 3,474           $ 3,420           $  3,308
Operating loss                                                 $  (435)          $  (127)          $  (385)          $   (362)
Net loss                                                       $  (397)          $  (186)          $  (326)          $   (363)
Basic and diluted loss per share(1)                            $ (3.25)          $ (1.54)          $ (2.67)          $  (2.98)
                                                               -------           -------           -------           ---------
</TABLE>

<TABLE>
<CAPTION>
                                                                                    Three Months Ended
2001                                                           ---------------------------------------------------------------
(in millions, except per share data)                           March 31          June 30        September 30       December 31
- ------------------------------------                           --------          -------        ------------       -----------
<S>                                                            <C>               <C>            <C>                <C>
Operating revenues                                             $ 3,842           $ 3,776           $ 3,398           $  2,863
Operating loss                                                 $  (115)          $  (114)          $  (251)          $ (1,122)
Net loss                                                       $  (133)          $   (90)          $  (259)          $   (734)
Basic and diluted loss per share(1)                            $ (1.11)          $ (0.76)          $ (2.13)          $  (5.98)
                                                               -------           -------           -------           ---------
</TABLE>

(1)      The sum of the quarterly earnings per share does not equal the annual
         earnings per share due to changes in average shares outstanding.

Our financial results for the years ended December 31, 2002 and 2001 were
materially impacted by certain events, as discussed below:

- -        During the six months ended June 30, 2001, public concern over a
         possible strike by Delta pilots relating to then ongoing collective
         bargaining negotiations caused some customers to make reservations and
         travel with airlines other than Delta. On June 20, 2001, Delta pilots
         ratified a new collective bargaining agreement, avoiding a possible
         strike.

- -        On March 26, 2001, Comair pilots began a strike, which continued until
         June 22, 2001 when they ratified a new collective bargaining agreement.
         As a result of this 89-day strike, Comair suspended its operations
         between March 26, 2001 and July 1, 2001. Comair resumed partial service
         on July 2, 2001, and gradually began restoring service during the
         remainder of the year. Service was fully restored to pre-strike levels
         during January 2002.

- -        Prior to September 11, 2001, the slowing U.S. and world economies
         reduced the demand for air travel among both business and leisure
         passengers. This decline in demand negatively impacted our passenger
         traffic and yield in 2001 and 2002.

- -        The business environment significantly worsened as a result of the
         September 11 terrorist attacks. See Note 16 for information regarding
         certain charges and costs we recorded in 2001 as a result of these
         attacks.

- -        During 2002, we made significant changes in our fleet plan to simplify
         our aircraft fleet to reduce capacity and to decrease capital
         expenditures through aircraft deferrals. See Note 16 for information
         related to charges and other costs associated with these fleet changes.


                                       65
<PAGE>

Independent's Auditors' Report

To the Board of Directors and Shareowners' of Delta Air Lines, Inc.:

We have audited the accompanying consolidated balance sheet of Delta Air Lines,
Inc. (a Delaware corporation) and subsidiaries (the "Company) as of December 31,
2002, and the related consolidated statements of operations, cash flows and
shareowners' equity for the year then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit. The consolidated
financial statements of Delta Air Lines, Inc. as of December 31, 2001, and for
each of the two years in the period ended December 31, 2001, before the
revisions discussed below to Notes 5, 9, 17 and 21 to the consolidated financial
statements, were audited by other auditors who have ceased operations. Those
auditors expressed an unqualified opinion on those financial statements in their
report dated January 23, 2002. Their report contained an explanatory paragraph
related to the Company's change in its method of accounting for derivative
instruments and hedging activities effective July 1, 2000 as discussed in Note 4
to the consolidated financial statements.

We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.

In our opinion, such 2002 consolidated financial statements present fairly, in
all material respects, the financial position of the Company as of December 31,
2002 and the results of its operations and its cash flows for the year then
ended in conformity with accounting principles generally accepted in the United
States of America.

As discussed in Note 5 to the consolidated financial statements, effective
January 1, 2002, the Company changed its method of accounting for goodwill and
other intangible assets to conform to Statement of Financial Accounting
Standards No. 142 ("SFAS 142").

As discussed above, the financial statements of the Company as of December 31,
2001, and for each of the two years in the period ended December 31, 2001, were
audited by other auditors who have ceased operations. These consolidated
financial statements have been revised as follows:

- -        As described in Note 5, the Company adopted the provisions of SFAS 142
         as of January 1, 2002. These consolidated financial statements have
         been revised to include the disclosures required by SFAS 142.

- -        In Note 9, the Company has disclosed the amount of expenses incurred
         related to contract carrier agreements. These consolidated financial
         statements have been revised to include such disclosures for 2001 and
         2000.

- -        In Note 17, the Company has disclosed the amounts of the additional
         costs and expenses and payments related to restructuring and other
         reserves for leased aircraft and facilities and other items. These
         consolidated financial statements have been revised to include such
         disclosures for 2001 and 2000.

- -        In Note 21, the Company has disclosed the amounts of additional costs
         and expenses and deductions related to the allowance for obsolescence
         of expendable parts and supplies inventories. These consolidated
         financial statements have been revised to include such disclosures for
         2001 and 2000.

We audited the disclosures in Notes 5, 9, 17 and 21 that were included to revise
the 2001 and 2000 consolidated financial statements. In our opinion, such
disclosures are appropriate. However, we were not engaged to audit, review, or
apply any procedures to the 2001 and 2000 consolidated financial statements of
the Company other than with respect to such disclosures and, accordingly, we do
not express an opinion or any other form of assurance on the 2001 and 2000
consolidated financial statements taken as a whole.



/s/ Deloitte & Touche LLP

Atlanta, Georgia
January 31, 2003


                                       66
<PAGE>

Report of Independent Public Accountants

THE FOLLOWING IS A COPY OF THE AUDIT REPORT PREVIOUSLY ISSUED BY ARTHUR ANDERSEN
LLP IN CONNECTION WITH DELTA'S ANNUAL REPORT FOR THE YEAR ENDED DECEMBER 31,
2001. THIS AUDIT REPORT HAS NOT BEEN REISSUED BY ARTHUR ANDERSEN LLP.

To Delta Air Lines, Inc.:

We have audited the accompanying consolidated balance sheets of Delta Air Lines,
Inc. (a Delaware corporation) and subsidiaries as of December 31, 2001 and 2000,
and the related consolidated statements of operations, cash flows and
shareowners' equity for each of the three years in the period ended December 31,
2001. These financial statements are the responsibility of the company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Delta Air Lines,
Inc. and subsidiaries as of December 31, 2001 and 2000, and the consolidated
results of their operations and their cash flows for each of the three years in
the period ended December 31, 2001, in conformity with accounting principles
generally accepted in the United States.

As discussed in Note 4 to the consolidated financial statements, effective July
1, 2000, Delta Air Lines, Inc. changed its method of accounting for derivative
instruments and hedging activities.



/s/ Arthur Andersen LLP

Atlanta, Georgia
January 23, 2002


                                       67
<PAGE>

Consolidated Summary of Operations

For the years ended December 31, 2002-1998

<TABLE>
<CAPTION>
(in millions, except per share data)                       2002(1)          2001(2)        2000(3)         1999(4)          1998
- -----------------------------------                       --------        --------        --------        --------        --------
<S>                                                       <C>             <C>             <C>             <C>             <C>
Operating revenues                                        $ 13,305        $ 13,879        $ 16,741        $ 14,883        $ 14,312
                                                          --------        --------        --------        --------        --------
Operating expenses                                          14,614          15,481          15,104          13,565          12,509
                                                          --------        --------        --------        --------        --------
Operating income (loss)                                     (1,309)         (1,602)          1,637           1,318           1,803
Interest income (expense), net(5)                             (610)           (410)           (257)           (126)            (66)
Miscellaneous income (expense), net(6)                          (2)             80             328             901              39
Loss on extinguishment of ESOP Notes                           (42)             --              --              --              --
Fair value adjustments of SFAS 133 derivatives                 (39)             68            (159)             --              --
                                                          --------        --------        --------        --------        --------
Income (loss) before income taxes and cumulative
  effect of change in accounting principle                  (2,002)         (1,864)          1,549           2,093           1,776
Income tax benefit (provision)                                 730             648            (621)           (831)           (698)
                                                          --------        --------        --------        --------        --------
Net income (loss) before cumulative effect
  of change in accounting principle                         (1,272)         (1,216)            928           1,262           1,078
                                                          --------        --------        --------        --------        --------
Net income (loss) after cumulative effect
  of change in accounting principle                         (1,272)         (1,216)            828           1,208           1,078
Preferred stock dividends                                      (15)            (14)            (13)            (12)            (11)
                                                          --------        --------        --------        --------        --------
Net income (loss) attributable to
  common shareowners                                      $ (1,287)       $ (1,230)       $    815        $  1,196        $  1,067
                                                          --------        --------        --------        --------        --------
Earnings (loss) per share before cumulative
  effect of change in
  accounting principle(7)
    Basic                                                 $ (10.44)       $  (9.99)       $   7.39        $   9.05        $   7.22
    Diluted                                               $ (10.44)       $  (9.99)       $   7.05        $   8.52        $   6.87
                                                          --------        --------        --------        --------        --------
Earnings (loss) per share(7)
    Basic                                                 $ (10.44)       $  (9.99)       $   6.58        $   8.66        $   7.22
    Diluted                                               $ (10.44)          (9.99)       $   6.28        $   8.15        $   6.87
                                                          --------        --------        --------        --------        --------
Dividends declared per common share                       $   0.10        $   0.10        $   0.10        $   0.10        $   0.10
                                                          ========        ========        ========        ========        ========
</TABLE>

Other Financial and Statistical Data

<TABLE>
<CAPTION>
For the years ended December 31, 2002-1998       2002(1)          2001(2)         2000(3)          1999(4)              1998
- -------------------------------------------     ------------     ------------    ------------     ------------       ------------
<S>                                             <C>              <C>             <C>              <C>                <C>
Total assets (millions)                         $     24,720     $     23,605    $     21,931     $     19,942       $     14,727
Long-term debt and capital leases
 (excluding current maturities) (millions)      $     10,174     $      8,347    $      5,896     $      4,303       $      1,720
Shareowners' equity (millions)                  $        893     $      3,769    $      5,343     $      4,908       $      4,077
Shares of common stock outstanding
 at year end(7)                                  123,359,205      123,245,666     123,013,372      132,893,470        141,514,262
Revenue passengers enplaned (thousands)              107,048          104,943         119,930          110,083            105,304
Available seat miles (millions)                      141,719          147,837         154,974          147,073            142,154
Revenue passenger miles (millions)                   102,029          101,717         112,998          106,165            103,342
Operating revenue per available seat mile         9.39(cents)      9.39(cents)    10.80(cents)     10.12(cents)       10.07(cents)
Passenger mile yield                             12.08(cents)     12.74(cents)    13.86(cents)     13.14(cents)       12.99(cents)
Operating cost per available seat mile           10.31(cents)     10.47(cents)     9.75(cents)      9.22(cents)        8.80(cents)
Passenger load factor                                  71.99%           68.80%          72.91%           72.18%             72.70%
Breakeven passenger load factor                        79.64%           77.31%          65.29%           65.37%             62.94%
Available ton miles (millions)                        21,548           22,282          22,925           21,245              20,312
Revenue ton miles (millions)                          11,698           11,752          13,058           12,227              12,052
Operating cost per available ton miles           67.82(cents)     69.48(cents)    65.88(cents)     63.85(cents)        61.58(cents)
                                                ============     ============    ============     ============       =============
</TABLE>

(1)      Includes a $439 million charge ($277 million net of tax, or $2.25
         diluted EPS) for asset writedowns, restructuring and related items,
         net; a $34 million gain ($22 million net of tax, or $0.17 diluted EPS)
         for Stabilization Act compensation; and a $94 million charge ($59
         million net of tax, or $0.47 diluted EPS) for other income and expense
         items (seepages 16-17 of Management's Discussion and Analysis).

(2)      Includes a $1.1 billion charge ($695 million net of tax, or $5.63
         diluted EPS) for asset writedowns, restructuring and related items,
         net; a $634 million gain ($392 million net of tax, or $3.18 diluted
         EPS) for Stabilization Act compensation; and a $186 million gain ($114
         million net of tax, or $0.92 diluted EPS) for other income and expense
         items (see pages 16-17 of Management's Discussion and Analysis).

(3)      Includes a $108 million charge ($66 million net of tax, or $0.50
         diluted EPS) for asset writedowns, restructuring and related items,
         net; a $151 million gain ($93 million net of tax, or $0.70 diluted EPS)
         for other income and expense items; and a $164 million cumulative
         effect, non-cash charge ($100 million net of tax, or $0.77 diluted
         EPS), resulting from our adoption of SFAS 133 on July 1, 2000 (see
         pages 18-19 of Management's Discussion and Analysis).

(4)      Includes a $469 million charge ($286 million net of tax, or $1.94
         diluted EPS) for asset writedowns; $927 million gain ($565 million net
         of tax, or $3.83 diluted EPS) from the sale of certain investments; an
         $89 million non-cash charge ($54 million net of tax, or $0.37 diluted
         EPS) from the cumulative effect of a change in accounting principle
         resulting from our adoption on January 1, 1999 of SAB 101; and a $40
         million charge ($24 million net of tax, or $0.16 diluted EPS) for the
         early extinguishment of certain debt obligations.

(5)      Includes interest income.

(6)      Includes gains (losses) from the sale of investments.

(7)      All earnings per share amounts for 1998 have been restated to reflect
         the two-for-one common stock split that became effective on November 2,
         1998.


                                       68
<PAGE>


Shareowner Information

TRANSFER AGENT, REGISTRAR, AND DIVIDEND PAYING AGENT FOR COMMON STOCK

Registered shareowner inquiries related to stock transfers, address changes,
lost stock certificates, dividend payments or account consolidations should be
directed to:

        Wells Fargo Shareowner Services
        P.O. Box 64854
        St. Paul, MN 55164-0854
        Telephone (800) 259-2345 or (651) 450-4064
        www.wellsfargo.com/shareownerservices

SHAREOWNER SERVICE PLUS PLAN(SM)

Investors may purchase Delta common stock under this program, which is sponsored
and administered by Wells Fargo Shareowner Services. All correspondence and
inquiries concerning the program should be directed to:

        Delta Air Lines, Inc.
        c/o Wells Fargo Shareowner Services
        P.O. Box 64863
        St. Paul, MN 55164-0863
        Telephone (800) 259-2345 or (651) 450-4064

FORM 10-K AND OTHER FINANCIAL INFORMATION

A copy of the Form 10-K for the year ended December 31, 2002 and other financial
reports filed by Delta with the SEC is available on Delta's Web site at
www.delta.com or the SEC's Web site at www.sec.gov, or may be obtained without
charge by calling (866) 240-0597 or by writing to:

        Delta Air Lines, Inc.
        Investor Relations, Department 829
        P.O. Box 20706
        Atlanta, Georgia 30320-6001

A copy of this Annual Report can be found on Delta's Web site, www.delta.com.
Registered shareowners and participants in the Delta Family-Care Savings Plan
may elect to receive future annual meeting materials electronically by signing
up at www.delta.com/inside/investors/index.jsp

AVAILABILITY OF ANNUAL REPORT ON COMMUNITY AFFAIRS AND ANNUAL REPORT ON GLOBAL
DIVERSITY

Copies of these reports are available online at www.delta.com.

INVESTOR RELATIONS

Telephone inquiries related to financial information, other than requests for
financial documents, may be directed to Delta Investor Relations at (866)
715-2170.

INDEPENDENT AUDITORS

Deloitte & Touche LLP
191 Peachtree Street, N.E., Suite 1500
Atlanta, GA 30303-1924

COMMON STOCK

Delta's Common Stock is traded on the New York Stock Exchange under the ticker
symbol DAL. As of December 31, 2002, there were 22,390 registered owners of
common stock.

MARKET PRICES AND DIVIDENDS

<TABLE>
<CAPTION>
                                  PRICE OF                     CASH DIVIDENDS
YEAR 2002                       COMMON STOCK                  PER COMMON SHARE
- ---------               -----------------------------         ----------------
<S>                     <C>                   <C>             <C>
QUARTER ENDED:            HIGH                  LOW
March 31                $ 38.69               $ 28.52              $ 0.025
June 30                   32.65                 18.30                0.025
September 30              20.12                  8.30                0.025
December 31               14.09                  6.10                0.025
                        =======               =======              =======
</TABLE>

<TABLE>
<CAPTION>
                                  Price of                     Cash Dividends
Year 2001                       Common Stock                  per Common Share
- ---------               -----------------------------         ----------------
<S>                     <C>                   <C>             <C>
Quarter Ended:            High                  Low
March 31                $ 52.94               $ 37.51              $ 0.025
June 30                   48.05                 37.80                0.025
September 30              46.56                 20.00                0.025
December 31               31.15                 22.20                0.025
                        =======               =======              =======
</TABLE>

AVAILABILITY OF EQUAL EMPLOYMENT OPPORTUNITY REPORT

A copy of Delta's Equal Employment Opportunity Report is available without
charge upon written request to:

        Delta Air Lines, Inc.
        Equal Opportunity, Department 955
        P.O. Box 20706
        Atlanta, Georgia 30320-6001


                                       69
<PAGE>
Delta's Aircraft Fleet

MAINLINE AIRCRAFT FLEET

Our mainline fleet strategy is designed to achieve operational and cost
efficiencies through fleet modernization. Our long-term agreement with The
Boeing Company (Boeing) covers firm orders, options and rolling options for
certain aircraft through calendar year 2017. This agreement supports our plan
for disciplined growth, aircraft rationalization and fleet replacement. It also
gives us certain flexibility to adjust scheduled aircraft deliveries and to
substitute between aircraft models and aircraft types. The majority of the
aircraft under firm order from Boeing will be used to replace older aircraft.
During 2002, we deferred delivery of 31 mainline aircraft. As a result of these
deferrals, we have no mainline aircraft deliveries scheduled in 2003 or 2004.

Our long-term plan is to reduce our mainline aircraft fleet to three family
types. We believe fleet standardization will improve reliability and produce
long-term cost savings. Consistent with this plan, we will retire our last B-727
aircraft in April 2003. Due to the weak demand environment, we will temporarily
ground the entire MD-11 fleet by March 31, 2004. As a result of these actions,
by early 2004, we will operate a mainline fleet composed entirely of two-pilot,
two-engine aircraft.

Our fleet at December 31, 2002, includes the following 25 aircraft that have
been temporarily grounded: 14 B-737-200, eight B-737-300 and three B-767-200
aircraft. These aircraft are included in the table to the right.

REGIONAL JET AIRCRAFT FLEET

Our regional jet program offers service to small and medium-sized cities and
enables us to supplement mainline frequencies and service to larger cities. In
2000, ASA and Comair entered into agreements with Bombardier, Inc. to purchase a
total of 94 Canadair Regional Jet (CRJ) aircraft, including 69 CRJ-200 aircraft
with a mix of 40 and 50 seats, and 25 CRJ-700 aircraft with 70 seats. ASA and
Comair also received options to purchase 406 CRJ aircraft through 2010. In 2002,
ASA and Comair each took delivery of their first CRJ-700 aircraft. Additionally,
Comair now operates an all-jet fleet, having retired its last EMB-120 turbo prop
aircraft in August 2002.

AIRCRAFT FLEET AT DECEMBER 31, 2002

<TABLE>
<CAPTION>
                                                                   Current Fleet
                                                    ----------------------------------------------
                                                                 Capital     Operating                    Average
Aircraft Type                                       Owned         Lease        Lease         Total          Age
- -------------                                       -----        -------     ---------       -----        -------
<S>                                                 <C>          <C>         <C>             <C>          <C>
B-727-200                                              18           --             3            21          23.5
B-737-200                                              --           42            10            52          17.8
B-737-300                                              --           --            26            26          16.1
B-737-800                                              71           --            --            71           2.2
B-757-200                                              77            3            41           121          11.3
B-767-200                                              15           --            --            15          19.6
B-767-300                                               4           --            24            28          12.9
B-767-300ER                                            51           --             8            59           6.9
B-767-400                                              21           --            --            21           1.8
B-777-200                                               8           --            --             8           2.9
MD-11                                                   8           --             7            15           8.9
MD-88                                                  63           --            57           120          12.5
MD-90                                                  16           --            --            16           7.1
EMB-120                                                29           --            --            29          11.8
ATR-72                                                  4           --            15            19           8.5
CRJ-100/200                                            73           --           122           195           3.7
CRJ-700                                                15           --            --            15           0.3
                                                     ----          ---          ----          ----
Total                                                 473           45           313           831           9.0
                                                     ====          ===          ====          ====
</TABLE>

AIRCRAFT DELIVERY SCHEDULE AT DECEMBER 31, 2002

<TABLE>
<CAPTION>
                                                        Delivery Calendar Year Ending
                                                    -------------------------------------------
                                                                                                        After
Aircraft on Firm Order                              2003         2004         2005         2006         2006         Total
- ----------------------                              ----         ----         ----        -----         ----         -----
<S>                                                 <C>          <C>          <C>         <C>           <C>          <C>
B-737-800                                             --           --           19           19           23            61
B-777-200                                             --           --            2            3           --             5
CRJ-100/200                                           31           --           --           --           --            31
CRJ-700                                               20           23           --           --           --            43
                                                     ---          ---          ---          ---          ---          ----
Total                                                 51           23           21           22           23           140
                                                     ===          ===          ===          ===          ===          ====
</TABLE>

AIRCRAFT ON OPTION AT DECEMBER 31, 2002

<TABLE>
<CAPTION>
                                                     Delivery in Calendar year Ending
                                           ---------------------------------------------------------
                                                                                               After                      Rolling
Aircraft on Option(1)                      2003         2004         2005        2006          2006          Total        Options
- ---------------------                      ----         ----         ----        ----          -----         -----        -------
<S>                                        <C>          <C>          <C>         <C>           <C>           <C>          <C>
B-737-800                                    --            4            8          10            38             60          231
B-757-200                                    --            3            6           6             5             20           43
B-767-300/300ER                              --           --            2           2             6             10            9
B-767-400                                    --            2            2           2            18             24            3
B-777-200                                    --            2            5           1            12             20           14
CRJ-100/200                                  --           27           38          33            99            197           --
CRJ-700                                      --            5           30          30           100            165           --
                                           ----         ----         ----        ----         -----          -----         ----
Total                                        --           43           91          84           278            496          300
                                           ====         ====         ====        ====         =====          =====         ====
</TABLE>

(1)      Aircraft options have scheduled delivery slots, while rolling options
         replace options and are assigned delivery slots as options expire or
         are exercised.


                                       70

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-21
<SEQUENCE>7
<FILENAME>g81186exv21.txt
<DESCRIPTION>EX-21 SUBSIDIARIES OF THE REGISTRANT
<TEXT>
<PAGE>
                                                                               .
                                                                               .
                                                                               .
                                                                     EXHIBIT 21

                     SUBSIDIARIES OF DELTA AIR LINES, INC.

<TABLE>
<CAPTION>
                                                               JURISDICTION OF
                                                              INCORPORATION OR
             NAME OF SUBSIDIARY                                 ORGANIZATION
             ------------------                               ----------------
        <S>                                                   <C>

        Aero Assurance Ltd.                                       Vermont

        ASA Holdings, Inc.                                        Georgia

        Atlantic Southeast Airlines, Inc.                         Georgia

        CMD, Ltd.                                                  Cayman

        Comair Acquisition Co., Inc.                              Michigan

        Comair Capital Markets, Inc.                              Delaware

        Comair Holdings, Inc.                                     Kentucky

        Comair, Inc.                                                Ohio

        Comair Services, Inc.                                     Kentucky

        Crown Rooms, Inc.                                          Nevada

        Crown Rooms of Texas, Inc.                                 Texas

        DAL Aircraft Trading, Inc.                                Delaware

        DAL Funding, LLC                                          Delaware

        DAL Global Services, Inc.                                 Delaware

        DAL Hospitality Services Ltd.                              Canada

        DAL Moscow, Inc.                                          Delaware

        DAL Receivables, LLC                                      Delaware

        DASH Management, Inc.                                     Delaware

        Delta AirElite Business Jets, Inc.                        Kentucky

        Delta Air Lines, Inc. and Pan American World
        Airways, Inc. - Unterstutzungskasse GMBH                  Germany
</TABLE>


                                       1
<PAGE>

<TABLE>
<CAPTION>
                                                               JURISDICTION OF
                                                              INCORPORATION OR
             NAME OF SUBSIDIARY                                 ORGANIZATION
             ------------------                               ----------------
        <S>                                                   <C>

        Delta Air Lines Receivables Corporation                    Delaware

        Delta Air Technology, Ltd.                              United Kingdom

        Delta Connection Academy, Inc                              Florida

        Delta Benefits Management, Inc.                            Delaware

        Delta Corporate Identity, Inc                              Delaware

        Delta Connection, Inc.                                     Delaware

        Delta Grantor Trust                                        New York

        Delta Loyalty Management Services, Inc.                    Delaware

        Delta Technology, Inc.                                     Georgia

        Delta Ventures III, Inc.                                   Delaware

        Epsilon Trading, Inc.                                      Delaware

        Guardant, Inc.                                             Delaware

        Kappa Capital Management, Inc.                             Delaware

        New Sky, Ltd.                                              Bermuda

        Song Airways, LLC                                          Delaware

        Omicron Reservations Management, Inc.                      Delaware

        Theta Services, LLC                                        Georgia

        TransQuest Holdings, Inc.                                  Georgia
</TABLE>

         None of Delta's subsidiaries do business under any names other than
         their corporate names.


                                       2

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23
<SEQUENCE>8
<FILENAME>g81186exv23.txt
<DESCRIPTION>EX-23 CONSENT OF DELOITTE & TOUCHE LLP
<TEXT>
<PAGE>

                                                                      EXHIBIT 23

                          INDEPENDENT AUDITORS' CONSENT

We consent to the incorporation by reference in Registration Statements No.
2-94541 and 333-65218 on Form S-3 and in Registration Statements No. 33-65391,
333-16471, 333-92291, 333-46904, 333-48718, 33-30454, 333-49553 and 333-73856 on
Form S-8 of Delta Air Lines, Inc. of our report dated January 31, 2003, relating
to the consolidated financial statements of Delta Air Lines, Inc. as of and for
the year ended December 31, 2002 (which report expresses an unqualified opinion
and includes explanatory paragraphs relating to (1) the Company's change in its
method of accounting for goodwill and other intangible assets to conform with
Statement of Financial Accounting Standards No. 142 and (2) the application of
procedures relating to certain revised disclosures in Notes 5, 9, 17 and 21
related to the 2001 and 2000 consolidated financial statements that were audited
by other auditors who have ceased operations and for which we have expressed no
opinion or other form of assurance other than with respect to such disclosures),
incorporated by reference in this Annual Report on Form 10-K of Delta Air Lines,
Inc. for the year ended December 31, 2002.



/s/ Deloitte & Touche LLP

Atlanta, Georgia
March 24, 2003

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-24
<SEQUENCE>9
<FILENAME>g81186exv24.txt
<DESCRIPTION>EX-24 POWER OF ATTORNEY
<TEXT>
<PAGE>

                                                                      EXHIBIT 24

                                POWER OF ATTORNEY

         I hereby constitute and appoint Leo F. Mullin, M. Michele Burns and
Edward H. Bastian, and each of them separately, as my true and lawful
attorneys-in-fact and agents, with full power of substitution, for me and in my
name, in any and all capacities, to sign on my behalf the Annual Report on Form
10-K of Delta Air Lines, Inc. for the fiscal year ended December 31, 2002, and
any amendment or supplement thereto; and to file such Annual Report on Form 10-K
with the Securities and Exchange Commission, the New York Stock Exchange, and
any other appropriate agency pursuant to applicable laws and regulations.

         IN WITNESS WHEREOF, I have hereunto set my hand as of February 3, 2003.



                                         /s/  Edward H. Budd
                                         --------------------------------------
                                         Director
                                         Delta Air Lines, Inc.


<PAGE>

                                POWER OF ATTORNEY

         I hereby constitute and appoint Leo F. Mullin, M. Michele Burns and
Edward H. Bastian, and each of them separately, as my true and lawful
attorneys-in-fact and agents, with full power of substitution, for me and in my
name, in any and all capacities, to sign on my behalf the Annual Report on Form
10-K of Delta Air Lines, Inc. for the fiscal year ended December 31, 2002, and
any amendment or supplement thereto; and to file such Annual Report on Form 10-K
with the Securities and Exchange Commission, the New York Stock Exchange, and
any other appropriate agency pursuant to applicable laws and regulations.

         IN WITNESS WHEREOF, I have hereunto set my hand as of January 31, 2003.



                                         /s/  George Fisher
                                         --------------------------------------
                                         Director
                                         Delta Air Lines, Inc.


<PAGE>

                                POWER OF ATTORNEY

         I hereby constitute and appoint Leo F. Mullin, M. Michele Burns and
Edward H. Bastian, and each of them separately, as my true and lawful
attorneys-in-fact and agents, with full power of substitution, for me and in my
name, in any and all capacities, to sign on my behalf the Annual Report on Form
10-K of Delta Air Lines, Inc. for the fiscal year ended December 31, 2002, and
any amendment or supplement thereto; and to file such Annual Report on Form 10-K
with the Securities and Exchange Commission, the New York Stock Exchange, and
any other appropriate agency pursuant to applicable laws and regulations.

         IN WITNESS WHEREOF, I have hereunto set my hand as of January 30, 2003.



                                         /s/ David R. Goode
                                         --------------------------------------
                                         Director
                                         Delta Air Lines, Inc.


<PAGE>

                                POWER OF ATTORNEY

         I hereby constitute and appoint Leo F. Mullin, M. Michele Burns and
Edward H. Bastian, and each of them separately, as my true and lawful
attorneys-in-fact and agents, with full power of substitution, for me and in my
name, in any and all capacities, to sign on my behalf the Annual Report on Form
10-K of Delta Air Lines, Inc. for the fiscal year ended December 31, 2002, and
any amendment or supplement thereto; and to file such Annual Report on Form 10-K
with the Securities and Exchange Commission, the New York Stock Exchange, and
any other appropriate agency pursuant to applicable laws and regulations.

         IN WITNESS WHEREOF, I have hereunto set my hand as of February 3, 2003.



                                         /s/  Gerald Grinstein
                                         --------------------------------------
                                         Director
                                         Delta Air Lines, Inc.


<PAGE>

                                POWER OF ATTORNEY

         I hereby constitute and appoint Leo F. Mullin, M. Michele Burns and
Edward H. Bastian, and each of them separately, as my true and lawful
attorneys-in-fact and agents, with full power of substitution, for me and in my
name, in any and all capacities, to sign on my behalf the Annual Report on Form
10-K of Delta Air Lines, Inc. for the fiscal year ended December 31, 2002, and
any amendment or supplement thereto; and to file such Annual Report on Form 10-K
with the Securities and Exchange Commission, the New York Stock Exchange, and
any other appropriate agency pursuant to applicable laws and regulations.

         IN WITNESS WHEREOF, I have hereunto set my hand as of January 29, 2003.



                                         /s/  James M. Kilts
                                         --------------------------------------
                                         Director
                                         Delta Air Lines, Inc.


<PAGE>

                                POWER OF ATTORNEY

         I hereby constitute and appoint Leo F. Mullin, M. Michele Burns and
Edward H. Bastian, and each of them separately, as my true and lawful
attorneys-in-fact and agents, with full power of substitution, for me and in my
name, in any and all capacities, to sign on my behalf the Annual Report on Form
10-K of Delta Air Lines, Inc. for the fiscal year ended December 31, 2002, and
any amendment or supplement thereto; and to file such Annual Report on Form 10-K
with the Securities and Exchange Commission, the New York Stock Exchange, and
any other appropriate agency pursuant to applicable laws and regulations.

         IN WITNESS WHEREOF, I have hereunto set my hand as of January 29, 2003.



                                         /s/  John F. Smith Jr.
                                         --------------------------------------
                                         Director
                                         Delta Air Lines, Inc.


<PAGE>

                                POWER OF ATTORNEY

         I hereby constitute and appoint Leo F. Mullin, M. Michele Burns and
Edward H. Bastian, and each of them separately, as my true and lawful
attorneys-in-fact and agents, with full power of substitution, for me and in my
name, in any and all capacities, to sign on my behalf the Annual Report on Form
10-K of Delta Air Lines, Inc. for the fiscal year ended December 31, 2002, and
any amendment or supplement thereto; and to file such Annual Report on Form 10-K
with the Securities and Exchange Commission, the New York Stock Exchange, and
any other appropriate agency pursuant to applicable laws and regulations.

         IN WITNESS WHEREOF, I have hereunto set my hand as of February 2, 2003.



                                         /s/  Joan E. Spero
                                         --------------------------------------
                                         Director
                                         Delta Air Lines, Inc.


<PAGE>

                                POWER OF ATTORNEY

         I hereby constitute and appoint Leo F. Mullin, M. Michele Burns and
Edward H. Bastian, and each of them separately, as my true and lawful
attorneys-in-fact and agents, with full power of substitution, for me and in my
name, in any and all capacities, to sign on my behalf the Annual Report on Form
10-K of Delta Air Lines, Inc. for the fiscal year ended December 31, 2002, and
any amendment or supplement thereto; and to file such Annual Report on Form 10-K
with the Securities and Exchange Commission, the New York Stock Exchange, and
any other appropriate agency pursuant to applicable laws and regulations.

         IN WITNESS WHEREOF, I have hereunto set my hand as of February 3, 2003.



                                         /s/  Andrew J. Young
                                         --------------------------------------
                                         Director
                                         Delta Air Lines, Inc.

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>10
<FILENAME>g81186exv99w1.txt
<DESCRIPTION>EX-99.1 CERTIFICATION OF THE CEO AND CFO
<TEXT>
<PAGE>

                                                                    EXHIBIT 99.1

                                 March 27, 2003

Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549

Ladies and Gentlemen:

         The certifications set forth below are hereby submitted to the
Securities and Exchange Commission pursuant to, and solely for the purpose of
complying with, Section 1350 of Chapter 63 of Title 18 of the United States Code
in connection with the filing on the date hereof with the Securities and
Exchange Commission of the Annual Report on Form 10-K of Delta Air Lines, Inc.
("Delta") for the fiscal year ended December 31, 2002 (the "Report").

         Each of the undersigned, the Chairman of the Board and Chief Executive
Officer, and the Executive Vice President and Chief Financial Officer,
respectively, of Delta, hereby certifies that, as of the end of the period
covered by the Report:

         1.       such Report fully complies with the requirements of Section
                  13(a) of the Securities Exchange Act of 1934; and

         2.       the information contained in the Report fairly presents, in
                  all material respects, the financial condition and results of
                  operations of Delta.



                                         /s/ Leo F. Mullin
                                         --------------------------------------
                                         Name:  Leo F. Mullin
                                         Chairman of the Board and
                                         Chief Executive Officer



                                         /s/ M. Michele Burns
                                         --------------------------------------
                                         Name:  M. Michele Burns
                                         Executive Vice President and
                                         Chief Financial Officer


A signed original of this written statement required by Section 906 has been
provided to Delta and will be retained by Delta and furnished to the Securities
and Exchange Commission or its staff upon request.

</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
