““Merger Mania”

Will it affect your Airport?

SEC/AAAE - 2010

David HammDirector – Corporate Real Estate

Delta Air LinesApril 20,2010

• International focus on Asia and #1 U.S. carrier in U.S.-Japan market

• Domestic focus in Midwest

• Member of SkyTeam alliance• 7th largest carrier in the U.S. with

7.3% of domestic ASMs• 9th largest carrier in the world with

2.6% of worldwide ASMs• Hubs in Detroit, Memphis,

Minneapolis/St. Paul and Tokyo• Focus cities in Indianapolis and

Seattle• Service to 200 domestic and 50

international destinations

• #1 U.S. carrier to Europe and strong Latin American presence

• Domestic focus in East and Mountain West

• Member of SkyTeam alliance• 3rd largest carrier in the U.S. with

13.2% of domestic ASMs • 4th largest carrier in the world with

4.1% of worldwide ASMs• Hubs in Atlanta, Cincinnati, New York

City and Salt Lake City• Focus cities in Boston, Los Angeles

and Orlando• Service to 212 domestic and 115

international destinations

Created an effective global U.S. carrier with over 390 worldwide destinations

Delta and Northwest

Source: Market share based on March 2008 OAG (week sample). Destinations served data based upon OAG Jan 2008 – Dec 2008 (excluding cancellations and including additions as of March 28, 2008)

DomestiDomesticc

NW #7NW #7

JapanJapanNW #1NW #1

Latin AmericaLatin AmericaNW #10NW #10

AfricaAfricaDL #1DL #1

TransatlanticTransatlanticNW #5NW #5

AsiaAsiaNW #2NW #2

JapanJapanDL #5DL #5

AsiaAsiaDL #5DL #5

DomestiDomesticc

DL #3DL #3

Latin AmericaLatin AmericaDL #2DL #2

TransatlanticTransatlanticDL #1DL #1

Delta and Northwest

Regional strengths, but globally weakRegional strengths, but globally weak

Flying independently…..

DomestiDomesticc

#1#1

JapanJapan#1#1

Latin AmericaLatin America#2#2

AfricaAfrica#1#1

TransatlanticTransatlantic#1#1

AsiaAsia#1#1

Leading presence across the globeLeading presence across the globe

AustraliaAustralia#2#2

Delta and Northwest

Flying together….. America’s Premier Global Airline

5

61%

30%

2%

7%

31%

10%

3%

55%

Europe / MiddleEast / Africa

Latin / Caribbean Canada Asia / Pacific

Delta Northwest

International ASM Breakdown by Region (% of airline’s total)

Source: March 2008 OAG (week sample)

Delta and Northwest

International Networks are Highly Complementary

19.4 19.213.1 12.0 10.6 10.4

7.2 6.94.0 3.9 3.5

0

10

20

30

40

50

60

70

80

90

100

WN DL+NW AA DL UA US NW CO FL B6 AS

Source: APGDat DB1A 3Q07 Domestic passenger share

Domestic Passenger Share

• No airline currently has greater than 20% domestic passenger share

• Post merger, Southwest continues to have the highest domestic passenger share

U.S. airline industry will remain highly competitive post merger

Delta and Northwest

Domestic Market is Highly Fragmented

MidwestMidwest #1#1

NortheastNortheast #1#1

SoutheastSoutheast #1#1

SouthwestSouthwest #5#5

RockyRockyMountainMountain

#2#2West West #3#3

Source: US DOT revenue 4Q ended 1Q08

Delta and Northwest

Domestic Strength and International Success

Source: OAG, Jan 2008 – Dec 2008 (excluding cancellations and including additions as of March 28, 2008)

Customers benefit from increased choice and more efficient connections

Northwest airports not served by Delta

Delta airports not served by Northwest

Albany

Augusta

Waterloo

Alpena

Aspen

Watertown

Bakersfield

Binghamton

BismarckBemidji

Brunswick

BrainerdButte

Burbank

Sault St. Marie

Champaign

Hancock

Cody

Columbus

Wausau

Daytona Beach

Dothan

Duluth

Durango

Devils Lake

Eau Claire

Elko

Elmira

El Paso

Erie

Eugene

New Bern

Key West

Fresno

Fayetteville

Florence

Ft. Dodge

Grand Forks

Grand Junction

Columbus

GainesvilleKilleen

GreenvilleGuam Hilton Head

Hibbing

Houston- HOU

Huntington

Wilmington

International Falls

Ithaca

Jamestown

Latrobe

Long Beach

Lincoln

La Crosse

Lewiston

Lynchburg

Saginaw

Macon

Mason City

Meridian

Medford

Muskegon

Melbourne

Minot

Marquette

Muscle Shoals

Montrose

Jacksonville

Oakland

Ontario

Paducah

Newport News

Hattiesburg

PocatelloPierre

Pellston

Pasco

Redmond

Rhinelander

Reno

Rochester

Santa Barbara

San Luis ObispoSt. George

Salem

Saipan

St. Cloud

St. Croix

Sun Valley

Sioux City

Thief River Falls

Twin Falls

Valdosta

Yakima

Tupelo

Aberdeen

Lihue

Cedar City

LawtonYuma

Nantucket

West Yellowstone

Greenbrier

Eureka/Arcata

Escanaba

Iron Mountain

Dubuque

Fargo

Albany

Augusta

Waterloo

Alpena

Aspen

Watertown

Bakersfield

Binghamton

BismarckBemidji

Brunswick

BrainerdButte

Burbank

Sault St. Marie

Champaign

Hancock

Cody

Columbus

Wausau

Daytona Beach

Dothan

Duluth

Durango

Devils Lake

Eau Claire

Elko

Elmira

El Paso

Erie

Eugene

New Bern

Key West

Fresno

Fayetteville

Florence

Ft. Dodge

Grand Forks

Grand Junction

Columbus

GainesvilleKilleen

GreenvilleGuam Hilton Head

Hibbing

Houston- HOU

Huntington

Wilmington

International Falls

Ithaca

Jamestown

Latrobe

Long Beach

Lincoln

La Crosse

Lewiston

Lynchburg

Saginaw

Macon

Mason City

Meridian

Medford

Muskegon

Melbourne

Minot

Marquette

Muscle Shoals

Montrose

Jacksonville

Oakland

Ontario

Paducah

Newport News

Hattiesburg

PocatelloPierre

Pellston

Pasco

Redmond

Rhinelander

Reno

Rochester

Santa Barbara

San Luis ObispoSt. George

Salem

Saipan

St. Cloud

St. Croix

Sun Valley

Sioux City

Thief River Falls

Twin Falls

Valdosta

Yakima

Tupelo

Aberdeen

Lihue

Cedar City

LawtonYuma

Nantucket

West Yellowstone

Greenbrier

Eureka/Arcata

Escanaba

Iron Mountain

Dubuque

Fargo

Delta and Northwest

Unique Regional Presence allowed for End-To-End Merger

Source:DOT O&D Survey, Twelve months ended 3Q07

Domestic Passenger Breakdown by Region (% of airline’s total)

36%

24%

8% 7%

2%

23%

6%8%

24%

17%

44%

1%

Intra-East East toWest

Intra-West

Central toWest

Intra-Central

East toCentral

Delta Northwest

Delta and Northwest

Domestic Networks are Highly Complementary

747-400747-400

A333A333

A332A332

757-200/300757-200/300

A320/319A320/319

DC-9DC-9

777-200/LR777-200/LR

767-400767-400

767-300767-300

757-200757-200

737-800737-800

MD-88MD-88

Delta and Northwest

Diversity Among the Delta/Northwest Fleets Provides Flexibility

361

131204 189

50

190

151

73 71

111621

22

0

100

200

300

400

500

600

Delta Northwest

Source: SEC Filings and Ascend Aircraft Database

Number of Aircraft by Average Seat Count(As of 12/31/2007)

<50 51-76 77-125 126-175 176-225 226-275 276-325 >325

• Delta has no aircraft with more than 285 seats while Northwest has 37• Delta has no aircraft in the 77-125 seat range while Northwest has 151

Delta and Northwest

Complementary Fleets allows Matching Capacity to Demand

• Delta operating in over 390 airports worldwide– Roughly 245 domestic and 145 international locations

• Delta rebranding completed in 76 stations where only Northwest operated– Primarily located in the Midwest and Asia

• Airport consolidations in 170 locations where both Delta and Northwest operated were completed in January 2010

– First airports were consolidated in March 2009– PHL was the last airport consolidated in January 2010– Critical to consolidate prior to February 1, 2010, date of last Northwest flights– Over 160 airport gates and associated space were released during the process

• Rebranding in 150 Delta only airports with Air France and KLM signage was also completed

– Providing system wide signage consistency for SkyTeam

Delta and Northwest

Positioning Delta for Continued Success

• Volatile fuel costs – although lower this year, still at historically high levels

• Industry seeing passenger declines in major airports for first time

• Shifting dynamics of airline model – repositioning to build on core strengths

• Worldwide recession and economic challenges unparalleled during our lifetime

• Airline Ratings continue to be below investment grade

• Consolidation – more to come?

Industry Perspective – the last few years.

From 2002 to 2008, Price of Jet Fuel Rose RelentlesslyAverage U.S. Spot Price Surged 320% During That Six-Year Period

Ave

rag

e* U

.S. J

et F

uel

Pri

ce (

¢/G

allo

n)

Source: U.S. Energy Information Administration14

* Simple average of spot prices in New York Harbor, U.S. Gulf Coast and Los Angeles

2000 to 2008: Up 230.7%2002 to 2008: Up 320.3%

Demand for Domestic Air Travel Has Not RecoveredDomestic Passenger Revenue as Share of U.S. GDP Continues to Stagnate

Sources: Bureau of Economic Analysis and Bureau of Transportation Statistics15

Imp

act

=

$22B

“The events of 9/11 marked…a permanent

decline in domestic airline demand. We

estimate that the gap between pre-9/11

demand and the post-9/11 period demand

resulted in $26bn in lost revenue in 2008 and $150bn in cumulative lost revenue over the

last 7 years. For perspective, the

cumulative loss in revenue is the

equivalent of the industry having no

domestic revenue in 2007 and 2008.”

“9/11 Revenue Impact in Context,”

Gary Chase, Barclays Capital

(Feb. 10, 2009)

With Declining Portion of Economy Being Spent on Domestic Air Travel, Airlines Have Contracted Accordingly

16

Do

mes

tic

AS

Ms

per

000

Do

llars

($2

000)

of

U.S

. GD

P

Sources: ATA analysis of data from the Bureau of Economic Analysis and Bureau of Transportation Statistics

Demand for Air Travel and Air Cargo Down Sharply in 2009

* Alaska, American, Continental, Delta, JetBlue, United and US Airways, as well as selected regional affiliates

Yea

r-O

ver-

Yea

r C

han

ge

(%)

Th

rou

gh

Mar

ch

17

** Alaska, American, Continental, Delta, FedEx, Hawaiian, JetBlue, Midwest, Southwest, United, UPS and US Airways

Economy Continues Heavy Toll on U.S. Airline JobsFTEs Down 28% from May 2001 Peak (542K) to February 2009 (392K)

Source: U.S. Bureau of Transportation Statistics

U.S

. Pas

sen

ger

Air

line

FT

Es

(000

)

18

~151,000 FTEs

One U.S. Passenger Airline Has Investment Grade CreditNo Passenger Airline in the World Enjoys an A-Minus or Better Rating

Investment Grade

SpeculativeBBB-

19

Source: Standard and Poor’s as of Apr. 16, 2009

A-

S&

P C

orp

ora

te C

red

it R

atin

gs

U.S. airline

Non-U.S.

airline

Immediate Challenges Loom Large

A healthy commercial aviation sector enables/fosters a thriving economy

In large part, airlines’ post-2000 survival has come via contraction, with 152K fewer jobs and 8% less domestic seating capacity (through 2Q09)

U.S. airlines incurred multibillion-dollar pretax losses in 2008

For 2009, lower fuel prices were offset by plummeting demand

o Demand for air travel and air cargo, especially time-sensitive shipments, is down sharply in all regions in which U.S. carriers operate

o Spending on air transport also down – permanently – as share of U.S. GDP

To invest in people, planes and product, airlines require sustained profitability (pretax margin) – they need to earn their cost of capital

Mergers may help facilitate continue contractions and allow carriers to cover their cost of capital

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