Exhibit 1 Delta Air Lines Depreciation Estimates and Policies for Flight Equipment Using Straight-line Depreciation Estimated Useful Lives of Residual Values Flight Equipment 1985 and prior 10 Years 10% of Cost 1986 to 1992 15 Years 10% of Cost 1993 to 1997 20 Years 5% of Cost 1998 to 2006 25 Years Between 5% and 10% of Cost 2007 21 - 30 Years 10% of Cost Source: Note to Delta Airlines financial statements 1987, 1993, 2007 Exhibit 2 Delta Air Lines Active Aircraft Fleet at December 31, 2007 Current Fleet Capital Operating Average Owned Lease Leaged Total Age B-737-800 71 71 7.2 B-757-200 68 34 18 120 16.3 B-757-200ER 11 13 10.0 B767-300 4 17 21 16.9 B767-300ER 50 59 11.9 B767-400ER 21 21 6.8 B777-200ER 8 7.9 MD-88 63 33 21 117 17.5 MD-90 16 16 12.1 CRJ-100 28 13 49 90 10.3 CRJ-200 5 12 17 5.2 CRJ-700 17 17 4.2 CRJ-900 0.2 Total 359 82 137 578 12.4 Source: Note to Delta Air Lines financial statements, 2007 Aircraft on operating leases are not included in the balance sheet or in depreciation in the income statement.Exhibit 3 Commercial Airline Prices of Boeing Airplane Families (millions of dollars) Airplane Families 2007 737 Family 737-600 50.0-57.0 737-700 57.0 -67.5 737-800 70.5-79.0 737-900ER 74.0-85.0 747 Family 747-400/400ER 228.0 -260.0 747-400/400ER Freighter 232.0-261.0 747-8 285.5-300.0 747-8 Freighter 294.0 - 297.0 767 Family 767-200ER 124.5-135.0 767-300ER 141.0- 157.5 767-300 Freighter . 151.0-162.0 767-400ER 154.0 -169.0 777 Family 777-200ER 200.0 - 225.0 777-200LR 231.0 -258.5 777-300ER 250.0-279.0 777 Freighter 246.0-254.0 787 Family 787-3 146.0 -151.5 787-8 157.0-167.0 787-9 189.0 -200.0 Source: Boeing Aircraft Prices on InternetExhibit 3 Commercial Airline Prices of Boeing Airplane Families (millions of dollars) Airplane Families 2007 737 Family 737-600 50.0-57.0 737-700 57.0 -67.5 737-800 70.5-79.0 737-900ER 74.0-85.0 747 Family 747-400/400ER 228.0 -260.0 747-400/400ER Freighter 232.0-261.0 747-8 285.5-300.0 747-8 Freighter 294.0 - 297.0 767 Family 767-200ER 124.5-135.0 767-300ER 141.0- 157.5 767-300 Freighter . 151.0-162.0 767-400ER 154.0 -169.0 777 Family 777-200ER 200.0 - 225.0 777-200LR 231.0 -258.5 777-300ER 250.0-279.0 777 Freighter 246.0-254.0 787 Family 787-3 146.0 -151.5 787-8 157.0-167.0 787-9 189.0 -200.0 Source: Boeing Aircraft Prices on InternetExhibit 4 Delta Air Lines, Inc., Consolidated Balance Sheets Successor Predecessor December 31, December 31, ASSETS (in millions) 2007 2006 CURRENT ASSETS: Cash and cash equivalents $ 2,648 $ 2,034 Short-term investments 138 614 Restricted cash 520 750 Accounts receivable, net of allowance for uncollectible accounts of $26 at December 31, 2007 and $21 at December 2006 1,066 915 Expendable parts and supplies inventories, net of an allowance for obsolescence of $11 at December 31, 2007 and $161 at December 31, 2006 262 181 Deferred income taxes, net 142 102 Prepaid expenses and other 464 489 Total current assets 5.240 5.385 PROPERTY AND EQUIPMENT: Flight equipment 9,525 17,641 Accumulated depreciation (299) (6.800) Flight equipment, net 9.226 10.841 Ground property and equipment 1,943 4,575 Accumulated depreciation (246) (2.838) Ground property and equipment, net 1.697 1,737 Flight and ground equipment under capital leases 602 474 Accumulated amortization (63) (136) Flight and ground equipment under capital leases, net 539 338 Advance payment for equipment 239 57 Total property and equipment, net 11,701 12.973 OTHER ASSETS: Goodwill 12,104 227 Identifiable intangibles, net of accumulated amortization of $147 at December 31, 2007 and $190 at December 31, 2006 2,806 89 Other noncurrent assets 572 948 Total other assets 15,482 1.264 Total assets $32.423 $19.622 (Exhibit 4 continues on next page)Exhibit 4 (continued) Delta Air Lines, Inc., Consolidated Balance Sheets Successor Predecessor LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) December 31, December 31, ($ in millions, except share data) 2007 2006 CURRENT LIABILITIES: Current maturities of long-term debt and capital leases $ 1,014 $ 1,503 Air traffic liability 1,982 1,797 Deferred revenue 1,100 363 Accounts payable 1,045 936 Accrued salaries and related benefits 734 405 Taxes payable 320 500 Note payable 295 Other accrued liabilities 115 265 Total current liabilities 6.605 5,769 NONCURRENT LIABILITIES: Long-term debt and capital leases 7,986 6,509 Pension and related benefits 3,002 Deferred revenue 2,532 346 Post-retirement benefits 865 Deferred income taxes, net 855 406 Other noncurrent liabilities 465 368 Total noncurrent liabilities 15.705 Z.629 LIABILITIES SUBJECT TO COMPROMISE 19,817 COMMITMENTS AND CONTINGENCIES SHAREOWNERS' EQUITY (DEFICIT): Common stock: Predecessor common stock at $0.001 per value; 900,000,000 shares authorized, 202,081,648 shares issued at December 31, 2006 2 Successor common stock at 50.0001 par value; 1,500,000,000 shares authorized, 299,464,669 shares issued at December 31, 2007 Additional paid-in capital 9,512 1,561 Retained earnings (accumulated deficit) 314 (14,414) Accumulated other comprehensive income (loss) 435 (518) Predecessor stock held in treasury, at cost, 4,745,710 shares at December 31, 2006 (224) Successor stock held in treasury, at cost, 7,238,973 shares at December 31, 2007 (148) Total shareowners' equity (deficit) 10.113 (13.593) Total liabilities and shareowners' equity (deficit) $32.423 $19.622 Source: Annual Report, Form 10-KExhibit 5 Delta Air Lines, Inc., Consolidated Statements of Operations ($ in millions) Successor Predecessor Eight Months Four Months Ended Ended Year Ended December 31, April 30, December 31, 2007 2007 2005 OPERATING REVENUE: Passenger. Mainline 58,929 $3,829 $11,640 $11,367 Regional affiliates 2.874 1,296 3.853 3,225 Cargo 334 148 498 524 Other net 1.221 523 1.541 1.364 Total operating revenue 13 358 5.796 17 532 16,480 OPERATING EXPENSES: Aircraft and related taxes 3,416 1,270 4,433 4,466 Salaries and related costs 2.887 1,302 4,365 5,290 Contract carrier arrangements 2,196 956 2.656 1.318 Depreciation and amortization 778 386 1,276 1,273 Contracted services 670 326 918 936 Aircraft maintenance and outside repairs 663 320 921 893 Passenger commissions and other selling expenses 635 298 888 918 Landing fees and other rents 475 250 881 878 Passenger service 243 95 332 3-18 Aircraft rent 156 90 316 5-13 Profit sharing 144 14 Restructuring, asset write-downs, pension settlements and related items, net 986 Other 294 189 475 700 Total operating expense 12.562 IZAZA 18.481 OPERATING INCOME (LOSS) 796 300 58 (2,001) OTHER (EXPENSE) INCOME: Interest expense (contractual interest expense totaled $366 for the four months ended April 30, 2007, and $1,210 and $1,169 for the years ended December 31, 2006 and 2005, respectively) (390) (262) (870) (1,032) Interest income 114 14 69 59 Miscellaneous, net 1191 Total other expense, net (271) (221) (820) INCOME (LOSS) BEFORE REORGANIZATION ITEMS, NET 525 79 (762) (2,975) REORGANIZATION ITEMS, NET 1.215 (6 2061 INCOME (LOSS) BEFORE INCOME TAXES 525 1,294 (6,968 (3,859) INCOME TAX (PROVISION) BENEFIT (211) 765 41 NET INCOME (LOSS) 314 (6,203) (3,818) PREFERRED STOCK DIVIDENDS = (181 NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREOWNERS (6.205) BASIC INCOME (LOSS) PER SHARE $131.581 5/23.75 DILUTED INCOME (LOSS) PER SHARE $123.75) Source: Annual Report, Form 10-KQuestions for Depreciation at Delta Case Delta has extended the lives ofight equipment four times since 1986. Why would they do this? Complete the Excel table provided as part of the assignment. When you compare the depreciation results from the planes purchased in the early 1980's to the planes purchased in the 2000's, what do you notice? lfthere had been no adoption of "Frh Start Acoounting\2008 FIFO 2007 2008 Units Per Unit Quarter LIFO FIFC FIFO Beginning Inventory 15,000 900 13500000 Qrt 1 $ 9,000 $ 9,000 $ 9,000 Q1 10,000 1,400 14000000 Qrt 2 9,000 $ 9,000 S 9,000 Q2 10,000 1,500 15000000 Qrt 3 S 9,000 $ 9,000 9,000 Q3 10,000 1,600 16000000 Qrt 4 S 9,000 $ 9,000 S 9,000 Q4 10,000 1,700 17000000 Total COGS $ 36,000 $ 36,000 $ 36,000 Available for sale 55,000 75500000 Less: Sales 40,000 50,500,000 Ending Inventory 15,000 25,000,000 2007 LIFO 2008 LIFO 2008 FIFO 2008 FIFO Sales Unit Cost COGS Units Per Unit Cost Units Per Unit Cost Units Per Unit Cost 1st Quarter, Q1 10,000 $ 900 9,000,000 Beginning Inventory 15,000 900 13500000 15,000 900 13,500,000 15,000 900 13,500,000 2nd Quarter, 5,000 $ 900 $ 4,500,000 Q1 10,000 850 8500000 10,000 650 6500000 10,000 650 6500000 5,000 $ 1,400 $ 7,000,000 Q2 10,000 800 8000000 10,000 6000000 10,000 600 6000000 Third Quarter, Q3 5,000 $ 1,400 S 7,000,000 Q3 10,000 750 7500000 10,000 550 5500000 10,000 550 5500000 5,000 $ 1,500 $ 7,500,000 04 10,000 70 7000000 10,000 500 5000000 10,000 500 5000000 Fourth Quarter, Q4 5,000 $ 1,500 $ 7,500,000 Available for sale 65,000 44500000 55000 36500000 55,000 36500000 5,000 $ 1,600 $ 8,000,000 Less: Sales 40,000 31,000,000 40,000 36,000,000 40,000 28,750,000 Ending Inventory 15,000 13,500,000 15,000 13,500,000 15,000 7,750,000Exhibits 4 and 5 show the resulting Consolidated Balance Sheets and Consolidated Statements of Operations shown in the Form 10-K for 200? and prior years. The Fresh Start adjustments for property and equipment and ight equipment were described in notes to the consolidated financial statements as follows: Depreciation We revalued property and equipment to fair value, which reduced the net book value of these assets by $1.0 billion. In addition, we adjusted the depreciable lives of ight equipment to reect revised estimated useful lives. As a result, depreciation expense decreased by $127 million for the year ended December 31, 2007. (Fresh Start Adjustments, p. 28, Form 10-K) Fresh Start Reporting As previously noted, upon emergence of Chapter 11, we adopted fresh start reporting, which required us to revalue our assets and liabilities to fair value. In estimating fair value, we based our estimates and assumptions on the guidance prescribed by SFAS No. 15?, "Fair Value Measurements" (SPAS 157), which we were required to adopt in connection with our adoption of fresh start reporting. SFAS 157, among other things, defines fair value, established a framework for measuring fair value and expands disclosure about fair value measurements. (p. 42, Form lit-K) Long-Lived Assets Our ight equipment and other long-lived assets have a recorded value of $11.7 billion on our Consolidated Balance Sheet at December 31, 2007. This value is based on various factors, including the assets' estimated useful lives and their estimated salvage values. In accordance with SFAS No. 144, "Accounting for Impairment or Disposal of Long-Lived Assets" ("SFAS 144"), we record impairment losses on long-lived assets used in operations when events and circumstances indicate the assets might be impaired and the estimated future cash ows generated by those assets are less than their carrying amounts. The impairment loss recognized is the amount by which the asset' s carrying amount exceeds its estimated fair value. In order to evaluate potential impairment as required by SFAS 144, we group assets at the eet type level (the lowest level for which there are identifiable cash ows) and then estimate future cash ows based on projections of passenger yield, fuel costs, labor costs and other relevant factors. We estimate aircraft fair values using published sources, appraisals and bids received from third parties, as available. {page 44, Form 10-K )