This is an exercise in predictive analytics. Estimation of the cost function and evaluation of the cost function is an important skill for MBAS. As often happens, you will get a cost function that includes both fixed and variable components, so you will need to identify and separate those components. You will practice using the High- Low method and simple regression in the case. One of the most common mistakes using the High-Low method is picking the wrong data points. For the 're - analyzing' case, we'll be using the spreadsheet called Exhibit 2 and 4 side by side. Let's find the data points to use for the Delta Low values. The case specifies that we will compare Revenue Passenger Miles and salary expense. Locate the appropriate columns on the spreadsheet: Revenue Passenger Miles in column AF and Salary and Related Costs in column G. Find the lowest value for Revenue Passenger Miles in column AF. It should be no surprise that it is the first time period, 93T1, with a value of 14. Now, for the SAME TIME PERIOD, locate the entry in column G. Your value for Salary and Related Costs in 93T1 is $1200. The Delta High values for your analysis are obtained in a similar method. Always use the same time period for both variables. A word about your regression analysis. Use ALL the data available for each airline. When you do this analysis, not to worry if your R- squared value is low; it doesn't give me the warm fuzzies either. A better value is obtained with a multiple regression, but that is not part of this assignment. And, just to clarify, when you are asked for a cost function, the response should be the equation itself, in this case Salaries=FC + (VC* Revenue Passenger Miles). On another topic in the discussion boards, refresh your memory about operating leverage from the text, not from Investopedia and the like. In this class we are concerned about cost structure. Let's post until Thursday. EXHIBIT 2 Delta Airlines Selected Quarterly Financial Data, 1993-2002- Panel A: 1993-1998 Consolidated Statements of Income in millions) Operating Revenues Operating Expenses Issues in Accounting Education, August 2004 Passenger Total operating 99 Other, met Cargo revenues Salaries & related costs Passenger commissions 5* Aircraft Real Depreciation & Samortization Selling expenses Passenger service Contracted services 383 298 326 311 315 311 140 381 2.688 322 298 283 290 $40 278 145 1993 01 2,709 1993 Q2 2,897 1993 03 2.942 1993 Q4 2,742 1994 01 2.691 1994 Q2 2,941 1994 Q3 2,933 1994 04 1995 Q1 2,685 1995 Q2 3,013 1995 03 2,977 1995 Q4 2,731 1996 01 2,774 1996 Q2 3.134 1996 Q3 3,170 1996 Q4 2.925 1997 01 3,160 1997 02 3.250 1997033.260 1997 0 4 3.133 1998 Q1 3.118 1998 Q2 3,669 1998 Q3 3,487 1998 Q4 3,135 168 49 $2,927 1,200 366 177 57 $3,132 1.203 383 129 67 $3,138 1,161 206 69 $3,017 1,145 372 187 65 $2.943 1,145 331 247 74 53,261 1.138 325 138 86 $3,157 1,138 362 154 77 $2,919 1,074 357 134 83 $2,902 1,102 321 139 64 $3,216 1,040 330 129 82 53.188 1,037 348 135 78 $2,944 1.051 355 126 64 $2.964 1,077 131 94 53.359 1.041 396 124 138 $3,432 1,092 416 145 $3,197 1.107 142 118 $3,420 1.118 444 143 148 $3.541 1,127 397 143 150 $3,553 1,204 409 160 141 $3,434 1,206 409 138 133 $3,389 1.179 342 141 (129) $3,681 1.261 347 139 176 53,802 1.237 339 150 163 $3,448 1,217 351 246 195 127 122 89 63 83 160 104 87 67 (1) 166 139 114 105 92 69 172 131 98 94 61 112 170 127 102 98 64 170 (139) 133 (114) 113 97 67 414 164 150 137 116 111 102 73 155 165 118 122 112 110 60 147 172 92 155 109 110 65 156 131 96 163 98 114 68 161 104 172 109 113 69 159 150 91 163 102 109 56 156 159 37 88 82 59 556 158 140 86 182 77 75 64 273 166 179 105 199 108 99 64 174 94 182 103 92 62 180 172 92 179 106 99 63 52 190 177 98 191 117 96 67 198 164 111 172 124 211 170 105 169 126 153 218 172 107 212 126 99 58 233 94 127 141 119 (99) 269 218 196 133 183 143 179 233 179 124 193 138 164 365 184 186 190 187 182 173 172 172 171 156 140 139 138 138 137 137 136 137 137 137 137 141 145 146 241 187 277 278 410 $3,137 (5211) 438 53,107 (5429) 146 $3,016 $122 509 $3,197 $180 482 $3,010 (567) 826 $3,583 ($682) 156 $3,003 $154 158 $2,901 518 133 $2,862 125 $2,767 5449 126 $2,802 $386 154 $2,773 $169 156 $3,351 (5387) 157 $3,064 $295 151 $2,994 $438 167 $2.970 $227 183 $3,074 5346 174 $3.022 5519 168 $3,122 5431 181 $3.102 5332 174 $3,053 $336 203 $3,086 5595 225 $3,250 $352 175 $3,128 $320 (continued on next page) 127 466 237 149 169 250 251 266 235 229 250 252 208 Dikolli and Sedatele Panel B: 1999-2002 Operating Revenues EXHIBIT 2 (continued) Operating Expenses Passenger Cargo Other, at Total operating 2 revesues lated costs Aireraft fuel Passenger commissions Aircraft Rent Depreciation & amortization expenses Passenger service Contracted Aircraft mainte- sance & Repairs Facilities and other reat Landing fees Restructuring Asse writedown charge Stabilization Act services OPERATING INCOME (LOSS Other expenses 241 263 1999 01 3,203 134 167 $3,504 1.268 316 191 146 192 190 134 1999 02 3,860 134 (151) $3,843 1,271 354 216 153 269 74 130 206 146 1999 Q3 3,593 140 96 $3,829 1,306 367 203 154 160 133 213 166 1999 04 3,293 153 261 $3,707 1,349 384 174 169 284 200 122 215 148 2000 01 3.589 141 230 $3.960 1,428 169 185 297 198 102 228 171 2000 02 4,401 145 (154) 54,392 1,514 461 176 185 302 86 114 237196 2000 Q3 4,050 141 154 $4,345 1,514 533 164 183 281 190 134 239 184 200004 3,617 156 271 $4,044 1.515 541 152 187 307 214 120 262 172 2001 01 3,598 140 104 $3,842 1,607 141 188 324 179 114 257 187 2001 02 3,537 131 108 53,776 1.560 463 144 186 331 165 127 253193 2001 03 3.190 116 92 $3,398 1.534 472 183 152 124 248 216 2001 04 2,639 119 105 $2,863 1.423 368 118 180 310 120 101 258 205 2002 01 2,878 111 114 33, 1031,501 339 178 281 145 94 263 185 2002 02 3,217 109 148 $3,474 1.363 401 89 179 291 140 98 241181 2002 Q3 3.165 112 143 $3,420 1.535 463 72 175 289 141 95 256 182 2002 04 3,061 126 121 $3,308 1,546 475 54 177 287 113 85 243163 Data collected from Delta Airlines quarterly SEC filings (see also Delta Airlines webolte hotp://www.delta.com) 176 181 $3,148 $356 188 194 $3,201 5642 180 149 199 $3,493 5336 179 320 179 $3,723 (516) 188 205 $3,605 $355 195 86 226 33,779 5613 199 22 192 $3,835 5510 189 226 $3,885 5159 198 248 $3,957 ($115) 192 60 216 53,890 ($114) 198 68 (171) 170 $3,649 (5251) 192 991 (463) 182 $3,985 (51,122) 203 202 $3,538 (5435) 211 23 184 $3,601 ($127) 225 (34) 168 $3,803 (5335) 207 (40) 191 169 $3,670 (5362) Delta's New Song: A Case on Cost Elemination in the Airline Industry 314 137 318 107 es in Accounting Education, August 2004 349 352 EXHIBIT 4 Delta Airlines Selected Quarterly Statistical Data, 1993-2002 Other Statistical Data (in millions, unless otherwise stated) Issues in Accounting Education Ar 2004 Passenger Ton Miles Revenue Tan Miles Operating Rev. che per Avail able Seat Mile Operating Cost per Available Seal Mile Operating Cost per Avail Table To Mile Passenger Mile Yield Load Factor (%) 147 143 14.0 15.5 16.5 15.5 149 145 142 145 147 148 150 146 145 146 148 148 179 19.8 20,6 20.1 19.0 20.9 21.5 20,8 145 147 147 19.5 199301 24.6 3.196 19930225.1 3.263 19933 25.5 3,318 199304 24.6 3.225 19940123.8 3.132 1994Q2 24 33,226 1994 03 24.9 3.283 199404 24.8 3.268 1995 1 24.5 3.217 1995 Q2 25.0 3.251 1995 Q3 25.2 3.276 1995 4 25.1 3,260 199601 253 3,291 199602 26,3 3,418 199603 26.8 3.486 199604 27,0 3,510 199701 27.0 3.509 1997Q2 22.5 3.573 1997Q3 28,0 3,652 199704 27.8 3.623 230.9 341.5 236.5 344.8 236.6 345.1 2299 339.7 223.6 3332 2287 338.1 230.5 340.1 230.1 341.7 226,3 339.4 2260 340.7 225 8 339.0 223.0 341.2 218.6 345.9 2249 352.4 226,8 357.0 229.4 3657 228) 1692 2322 372.9 2343 3752 233 23784 20.4 20.3 20.4 21.2 1.402 1.547 1.645 1,350 1.468 1.607 1.686 1,584 1,505 1,592 1,631 1,594 1,678 1,856 1.930 1,027 1.852 2,003 2,033 1,190 148 149 148 152 154 157 159 159 161 165 164 1.580 1,728 1.822 1.747 1.647 1.788 1,856 1.775 1.677 1,759 1.793 1.772 1.839 2,029 2,101 2,026 2,036 2.191 2,223 2,094 16.1 16.9 15.8 15.1 15.9 16.3 15.9 168 18.6 19.3 18.3 18.5 20.0 203 189 $118.97 $124.55 $123.00 $122.67 $123.4) $133.02 $126.60 $117.67 $118.32 $128.45 $126.26 $117.17 $117.03 $127.89 $128.06 $118.25 $126.57 $128.93 $126.38 $123.69 $127.54 $123.55 S118.22 $129.99 $126.25 $146.14 $120.43 $116.95 $116.69 $110.52 $110.97 $110.44 5132.31 $116.65 $111.72 $109.85 $113.76 $110.03 SI11.49 SI 11.73 141 $0.98 $193.23 $0.95 $187.28 $0.91 $178.83 $0.99 $176.96 50.96 $183.28 $1.11 $182.99 50.91 $173.98 50.89 $169.73 $0.89 $178.36 $0.85 S169.27 50.86 $182.49 50.85 $171.33 $1.02 $165.35 $0.90 $168.85 $0,86 $164.22 $0.85 $160.11 50.88 $170.65 50.85 S16227 50.35 $16037 $0.86 $165.74 56.99 61.51 64.48 63.01 61.58 65.55 67.60 63 84 6138 63.58 64.61 63.44 66 24 70.66 720) 67.57 68.53 72.92 7259 6809 147 147 153 156 157 197 160 163 162 23.6 23.2 23.2 25.1 248 241 Dikaland Sedatele (continued on next page EXHIBIT 4 (continued) Available Seat Miles Available Ton Miles Number of Departures (thousands) Revenue Air W Hours (thousands) Revesse Miles Flowe Revenue Miles Scheduled Revesse Passengers Empland Revenue Passenger Miles Revenue Passenger Ton Miles Operating Rer e per Avail Table Seat Mile Miles Operating Cost per Available Operating & Seat Mile Cost per Avail o Table Ton Mile Mile Yield Passager Load Factor (%) 1998 01 27.1 3,537 1998 Q2 27.3 3,568 1998 Q3 27.8 3,627 1998 04 27.9 3,650 1999 0127.4 3.587 1999 Q2 28.1 3.698 1999 03 28.5 3,773 1999 04 28.5 3,846 2000 01 281 3.902 2000 Q2 28.5 3,952 200003 288 4,029 2000 Q4 28.1 3.922 2001 01 27.3 3.841 2001 Q2 28.0 3.936 2001 Q3 27.1 3,819 2001 04 24.7 3.507 200201 245 3,501 200202 25.3 3.622 200203 25.6 3.674 200204 24.5 3.524 23.3 25.8 24.2 24.0 23.7 25.7 25.2 241 227.8 372.3 230.5 373.2 229.5 376.0 229.4 380.8 224.7 377.7 2289 383.5 228.5 381.4 229.0 387.4 224.5 384.8 225.8 386.4 225.6 3873 223.6 387.5 219.6 3817 225.5 387.8 214.7 373.2 1961 3383 196.9 341.6 20253481 202.5 346.8 177.0 3222 158 160 163 164 161 165 167 167 165 167 170 166 162 167 163 147 146 150 152 140 161 162 167 166 166 168 170 170 171 171 173 175 169 172 18.4 20.6 19.8 19.1 19,2 20.3 20.9 19.4 19.1 213 21.7 192 18.2 20.1 19.0 15.9 16.7 18.3 18.3 17.5 1,844 2,056 1,975 1.914 1.917 2,083 2,093 1,935 1.914 2,179 2,166 1.922 1.821 2,012 1,899 1.588 1.674 1,829 1,877 1,760 26.4 25.2 23.2 22.0 24.4 21.9 189 19.8 21.6 21.7 21.0 2,030 2,241 2,156 2,106 2,096 2,258 2,267 2.139 2,099 2.369 2.344 2,116 1.988 2,177 2,044 1.709 1,808 1.975 2,008 1,906 $125.19 5134,84 $136.94 $12339 $127.90 $136.71 $134,28 $130.16 $140.78 $154.22 $150.70 $144.05 $140.53 $134.68 $125.28 $116.13 $126.65 $137.32 $133.62 $135.19 $112.78 5113,05 $117.06 511194 5114.91 $113.87 $122.49 $130.72 5128.16 $132.69 $133.01 5138 39 $144.74 5138.74 $134.53 5161.64 $144.40 5142 34 $148,66 $149.98 $0.86 5169.10 50.86 5178.47 $0.90 $176.52 $0.86 5163.76 $0.88 $167.10 50.87 $185 30 $0.93 5171.68 50.97 $169.91 $0.925187.50 $0.96 $201.97 $0.95 $186.98 $0.99 $188.15 $1.03 $197.58 $0.99 $175.78 $0.96 5167.99 $1.14 $166.17 $1.01 51 71.92 $0.99 $175,87 $1.04 $168.58 $1.04 5173.96 68.11 7531 71.15 68.51 69.97 74.11 73.39 68.05 68.05 76.31 75.13 68.48 66,61 71.77 70.01 64.42 68.33 72.31 73.35 71.91 Delia's New Song 1 Case on Cost Elimination in the Airline Industry 174 148 148 152 153 141 Issues in Accounting Education agur 2004 Data collected from Delte Aulines quarterly SEC ingee also Delta Airlines website: http://www.delta.com) Reparare the total number of paying passengers flown on all night ents. He passenger miles are the number of miles flown by revenue passengers wale wat lewe the number of seats Sailable for passengers multiplied by the number of miles the seats are flown Load factors the percentage of craft seating city that is actually tiled (revenue passenger miles divided by wailable seat miles) ESE This is an exercise in predictive analytics. Estimation of the cost function and evaluation of the cost function is an important skill for MBAS. As often happens, you will get a cost function that includes both fixed and variable components, so you will need to identify and separate those components. You will practice using the High- Low method and simple regression in the case. One of the most common mistakes using the High-Low method is picking the wrong data points. For the 're - analyzing' case, we'll be using the spreadsheet called Exhibit 2 and 4 side by side. Let's find the data points to use for the Delta Low values. The case specifies that we will compare Revenue Passenger Miles and salary expense. Locate the appropriate columns on the spreadsheet: Revenue Passenger Miles in column AF and Salary and Related Costs in column G. Find the lowest value for Revenue Passenger Miles in column AF. It should be no surprise that it is the first time period, 93T1, with a value of 14. Now, for the SAME TIME PERIOD, locate the entry in column G. Your value for Salary and Related Costs in 93T1 is $1200. The Delta High values for your analysis are obtained in a similar method. Always use the same time period for both variables. A word about your regression analysis. Use ALL the data available for each airline. When you do this analysis, not to worry if your R- squared value is low; it doesn't give me the warm fuzzies either. A better value is obtained with a multiple regression, but that is not part of this assignment. And, just to clarify, when you are asked for a cost function, the response should be the equation itself, in this case Salaries=FC + (VC* Revenue Passenger Miles). On another topic in the discussion boards, refresh your memory about operating leverage from the text, not from Investopedia and the like. In this class we are concerned about cost structure. Let's post until Thursday. EXHIBIT 2 Delta Airlines Selected Quarterly Financial Data, 1993-2002- Panel A: 1993-1998 Consolidated Statements of Income in millions) Operating Revenues Operating Expenses Issues in Accounting Education, August 2004 Passenger Total operating 99 Other, met Cargo revenues Salaries & related costs Passenger commissions 5* Aircraft Real Depreciation & Samortization Selling expenses Passenger service Contracted services 383 298 326 311 315 311 140 381 2.688 322 298 283 290 $40 278 145 1993 01 2,709 1993 Q2 2,897 1993 03 2.942 1993 Q4 2,742 1994 01 2.691 1994 Q2 2,941 1994 Q3 2,933 1994 04 1995 Q1 2,685 1995 Q2 3,013 1995 03 2,977 1995 Q4 2,731 1996 01 2,774 1996 Q2 3.134 1996 Q3 3,170 1996 Q4 2.925 1997 01 3,160 1997 02 3.250 1997033.260 1997 0 4 3.133 1998 Q1 3.118 1998 Q2 3,669 1998 Q3 3,487 1998 Q4 3,135 168 49 $2,927 1,200 366 177 57 $3,132 1.203 383 129 67 $3,138 1,161 206 69 $3,017 1,145 372 187 65 $2.943 1,145 331 247 74 53,261 1.138 325 138 86 $3,157 1,138 362 154 77 $2,919 1,074 357 134 83 $2,902 1,102 321 139 64 $3,216 1,040 330 129 82 53.188 1,037 348 135 78 $2,944 1.051 355 126 64 $2.964 1,077 131 94 53.359 1.041 396 124 138 $3,432 1,092 416 145 $3,197 1.107 142 118 $3,420 1.118 444 143 148 $3.541 1,127 397 143 150 $3,553 1,204 409 160 141 $3,434 1,206 409 138 133 $3,389 1.179 342 141 (129) $3,681 1.261 347 139 176 53,802 1.237 339 150 163 $3,448 1,217 351 246 195 127 122 89 63 83 160 104 87 67 (1) 166 139 114 105 92 69 172 131 98 94 61 112 170 127 102 98 64 170 (139) 133 (114) 113 97 67 414 164 150 137 116 111 102 73 155 165 118 122 112 110 60 147 172 92 155 109 110 65 156 131 96 163 98 114 68 161 104 172 109 113 69 159 150 91 163 102 109 56 156 159 37 88 82 59 556 158 140 86 182 77 75 64 273 166 179 105 199 108 99 64 174 94 182 103 92 62 180 172 92 179 106 99 63 52 190 177 98 191 117 96 67 198 164 111 172 124 211 170 105 169 126 153 218 172 107 212 126 99 58 233 94 127 141 119 (99) 269 218 196 133 183 143 179 233 179 124 193 138 164 365 184 186 190 187 182 173 172 172 171 156 140 139 138 138 137 137 136 137 137 137 137 141 145 146 241 187 277 278 410 $3,137 (5211) 438 53,107 (5429) 146 $3,016 $122 509 $3,197 $180 482 $3,010 (567) 826 $3,583 ($682) 156 $3,003 $154 158 $2,901 518 133 $2,862 125 $2,767 5449 126 $2,802 $386 154 $2,773 $169 156 $3,351 (5387) 157 $3,064 $295 151 $2,994 $438 167 $2.970 $227 183 $3,074 5346 174 $3.022 5519 168 $3,122 5431 181 $3.102 5332 174 $3,053 $336 203 $3,086 5595 225 $3,250 $352 175 $3,128 $320 (continued on next page) 127 466 237 149 169 250 251 266 235 229 250 252 208 Dikolli and Sedatele Panel B: 1999-2002 Operating Revenues EXHIBIT 2 (continued) Operating Expenses Passenger Cargo Other, at Total operating 2 revesues lated costs Aireraft fuel Passenger commissions Aircraft Rent Depreciation & amortization expenses Passenger service Contracted Aircraft mainte- sance & Repairs Facilities and other reat Landing fees Restructuring Asse writedown charge Stabilization Act services OPERATING INCOME (LOSS Other expenses 241 263 1999 01 3,203 134 167 $3,504 1.268 316 191 146 192 190 134 1999 02 3,860 134 (151) $3,843 1,271 354 216 153 269 74 130 206 146 1999 Q3 3,593 140 96 $3,829 1,306 367 203 154 160 133 213 166 1999 04 3,293 153 261 $3,707 1,349 384 174 169 284 200 122 215 148 2000 01 3.589 141 230 $3.960 1,428 169 185 297 198 102 228 171 2000 02 4,401 145 (154) 54,392 1,514 461 176 185 302 86 114 237196 2000 Q3 4,050 141 154 $4,345 1,514 533 164 183 281 190 134 239 184 200004 3,617 156 271 $4,044 1.515 541 152 187 307 214 120 262 172 2001 01 3,598 140 104 $3,842 1,607 141 188 324 179 114 257 187 2001 02 3,537 131 108 53,776 1.560 463 144 186 331 165 127 253193 2001 03 3.190 116 92 $3,398 1.534 472 183 152 124 248 216 2001 04 2,639 119 105 $2,863 1.423 368 118 180 310 120 101 258 205 2002 01 2,878 111 114 33, 1031,501 339 178 281 145 94 263 185 2002 02 3,217 109 148 $3,474 1.363 401 89 179 291 140 98 241181 2002 Q3 3.165 112 143 $3,420 1.535 463 72 175 289 141 95 256 182 2002 04 3,061 126 121 $3,308 1,546 475 54 177 287 113 85 243163 Data collected from Delta Airlines quarterly SEC filings (see also Delta Airlines webolte hotp://www.delta.com) 176 181 $3,148 $356 188 194 $3,201 5642 180 149 199 $3,493 5336 179 320 179 $3,723 (516) 188 205 $3,605 $355 195 86 226 33,779 5613 199 22 192 $3,835 5510 189 226 $3,885 5159 198 248 $3,957 ($115) 192 60 216 53,890 ($114) 198 68 (171) 170 $3,649 (5251) 192 991 (463) 182 $3,985 (51,122) 203 202 $3,538 (5435) 211 23 184 $3,601 ($127) 225 (34) 168 $3,803 (5335) 207 (40) 191 169 $3,670 (5362) Delta's New Song: A Case on Cost Elemination in the Airline Industry 314 137 318 107 es in Accounting Education, August 2004 349 352 EXHIBIT 4 Delta Airlines Selected Quarterly Statistical Data, 1993-2002 Other Statistical Data (in millions, unless otherwise stated) Issues in Accounting Education Ar 2004 Passenger Ton Miles Revenue Tan Miles Operating Rev. che per Avail able Seat Mile Operating Cost per Available Seal Mile Operating Cost per Avail Table To Mile Passenger Mile Yield Load Factor (%) 147 143 14.0 15.5 16.5 15.5 149 145 142 145 147 148 150 146 145 146 148 148 179 19.8 20,6 20.1 19.0 20.9 21.5 20,8 145 147 147 19.5 199301 24.6 3.196 19930225.1 3.263 19933 25.5 3,318 199304 24.6 3.225 19940123.8 3.132 1994Q2 24 33,226 1994 03 24.9 3.283 199404 24.8 3.268 1995 1 24.5 3.217 1995 Q2 25.0 3.251 1995 Q3 25.2 3.276 1995 4 25.1 3,260 199601 253 3,291 199602 26,3 3,418 199603 26.8 3.486 199604 27,0 3,510 199701 27.0 3.509 1997Q2 22.5 3.573 1997Q3 28,0 3,652 199704 27.8 3.623 230.9 341.5 236.5 344.8 236.6 345.1 2299 339.7 223.6 3332 2287 338.1 230.5 340.1 230.1 341.7 226,3 339.4 2260 340.7 225 8 339.0 223.0 341.2 218.6 345.9 2249 352.4 226,8 357.0 229.4 3657 228) 1692 2322 372.9 2343 3752 233 23784 20.4 20.3 20.4 21.2 1.402 1.547 1.645 1,350 1.468 1.607 1.686 1,584 1,505 1,592 1,631 1,594 1,678 1,856 1.930 1,027 1.852 2,003 2,033 1,190 148 149 148 152 154 157 159 159 161 165 164 1.580 1,728 1.822 1.747 1.647 1.788 1,856 1.775 1.677 1,759 1.793 1.772 1.839 2,029 2,101 2,026 2,036 2.191 2,223 2,094 16.1 16.9 15.8 15.1 15.9 16.3 15.9 168 18.6 19.3 18.3 18.5 20.0 203 189 $118.97 $124.55 $123.00 $122.67 $123.4) $133.02 $126.60 $117.67 $118.32 $128.45 $126.26 $117.17 $117.03 $127.89 $128.06 $118.25 $126.57 $128.93 $126.38 $123.69 $127.54 $123.55 S118.22 $129.99 $126.25 $146.14 $120.43 $116.95 $116.69 $110.52 $110.97 $110.44 5132.31 $116.65 $111.72 $109.85 $113.76 $110.03 SI11.49 SI 11.73 141 $0.98 $193.23 $0.95 $187.28 $0.91 $178.83 $0.99 $176.96 50.96 $183.28 $1.11 $182.99 50.91 $173.98 50.89 $169.73 $0.89 $178.36 $0.85 S169.27 50.86 $182.49 50.85 $171.33 $1.02 $165.35 $0.90 $168.85 $0,86 $164.22 $0.85 $160.11 50.88 $170.65 50.85 S16227 50.35 $16037 $0.86 $165.74 56.99 61.51 64.48 63.01 61.58 65.55 67.60 63 84 6138 63.58 64.61 63.44 66 24 70.66 720) 67.57 68.53 72.92 7259 6809 147 147 153 156 157 197 160 163 162 23.6 23.2 23.2 25.1 248 241 Dikaland Sedatele (continued on next page EXHIBIT 4 (continued) Available Seat Miles Available Ton Miles Number of Departures (thousands) Revenue Air W Hours (thousands) Revesse Miles Flowe Revenue Miles Scheduled Revesse Passengers Empland Revenue Passenger Miles Revenue Passenger Ton Miles Operating Rer e per Avail Table Seat Mile Miles Operating Cost per Available Operating & Seat Mile Cost per Avail o Table Ton Mile Mile Yield Passager Load Factor (%) 1998 01 27.1 3,537 1998 Q2 27.3 3,568 1998 Q3 27.8 3,627 1998 04 27.9 3,650 1999 0127.4 3.587 1999 Q2 28.1 3.698 1999 03 28.5 3,773 1999 04 28.5 3,846 2000 01 281 3.902 2000 Q2 28.5 3,952 200003 288 4,029 2000 Q4 28.1 3.922 2001 01 27.3 3.841 2001 Q2 28.0 3.936 2001 Q3 27.1 3,819 2001 04 24.7 3.507 200201 245 3,501 200202 25.3 3.622 200203 25.6 3.674 200204 24.5 3.524 23.3 25.8 24.2 24.0 23.7 25.7 25.2 241 227.8 372.3 230.5 373.2 229.5 376.0 229.4 380.8 224.7 377.7 2289 383.5 228.5 381.4 229.0 387.4 224.5 384.8 225.8 386.4 225.6 3873 223.6 387.5 219.6 3817 225.5 387.8 214.7 373.2 1961 3383 196.9 341.6 20253481 202.5 346.8 177.0 3222 158 160 163 164 161 165 167 167 165 167 170 166 162 167 163 147 146 150 152 140 161 162 167 166 166 168 170 170 171 171 173 175 169 172 18.4 20.6 19.8 19.1 19,2 20.3 20.9 19.4 19.1 213 21.7 192 18.2 20.1 19.0 15.9 16.7 18.3 18.3 17.5 1,844 2,056 1,975 1.914 1.917 2,083 2,093 1,935 1.914 2,179 2,166 1.922 1.821 2,012 1,899 1.588 1.674 1,829 1,877 1,760 26.4 25.2 23.2 22.0 24.4 21.9 189 19.8 21.6 21.7 21.0 2,030 2,241 2,156 2,106 2,096 2,258 2,267 2.139 2,099 2.369 2.344 2,116 1.988 2,177 2,044 1.709 1,808 1.975 2,008 1,906 $125.19 5134,84 $136.94 $12339 $127.90 $136.71 $134,28 $130.16 $140.78 $154.22 $150.70 $144.05 $140.53 $134.68 $125.28 $116.13 $126.65 $137.32 $133.62 $135.19 $112.78 5113,05 $117.06 511194 5114.91 $113.87 $122.49 $130.72 5128.16 $132.69 $133.01 5138 39 $144.74 5138.74 $134.53 5161.64 $144.40 5142 34 $148,66 $149.98 $0.86 5169.10 50.86 5178.47 $0.90 $176.52 $0.86 5163.76 $0.88 $167.10 50.87 $185 30 $0.93 5171.68 50.97 $169.91 $0.925187.50 $0.96 $201.97 $0.95 $186.98 $0.99 $188.15 $1.03 $197.58 $0.99 $175.78 $0.96 5167.99 $1.14 $166.17 $1.01 51 71.92 $0.99 $175,87 $1.04 $168.58 $1.04 5173.96 68.11 7531 71.15 68.51 69.97 74.11 73.39 68.05 68.05 76.31 75.13 68.48 66,61 71.77 70.01 64.42 68.33 72.31 73.35 71.91 Delia's New Song 1 Case on Cost Elimination in the Airline Industry 174 148 148 152 153 141 Issues in Accounting Education agur 2004 Data collected from Delte Aulines quarterly SEC ingee also Delta Airlines website: http://www.delta.com) Reparare the total number of paying passengers flown on all night ents. He passenger miles are the number of miles flown by revenue passengers wale wat lewe the number of seats Sailable for passengers multiplied by the number of miles the seats are flown Load factors the percentage of craft seating city that is actually tiled (revenue passenger miles divided by wailable seat miles) ESE