Airtran 2008 Annual Report Download - page 86

exposure to additional holdbacks by our largest two credit card processors based on advanced ticket sales as of
December 31, 2008, after considering the $125 million letter of credit issued in favor of our largest credit card
processor, was up to a maximum of $84.0 million. Our levels of unrestricted cash and air traffic liability are
highly seasonal reaching their highest levels in the early summer and late fall and reaching their lowest levels in
the winter; accordingly the amounts potentially withheld by our credit card processors are also higher, and in
some cases substantially higher, during certain times of the year. Our future aggregate cash and investments will
be dependent on, among other factors, our future profitability, including the cost of fuel, the extent of cash
collateral related to derivative financial instruments we may be required to fund, the level of advance ticket
sales, our borrowing availability under our Line of Credit Facility, and the continued availability of our Letter
of Credit Facility. While a decrease in our unrestricted cash and investments could result in additional amounts
being withheld by our credit card processors, to the extent that we achieve specified aggregate unrestricted cash
and investment amounts and profitability levels, each agreement also provides for a reduction or elimination of
the percent of its exposure that each processor is currently entitled to holdback.
General Indemnifications
We are party to many routine contracts under which we indemnify third parties for various risks. We have not
accrued any liability for any of these indemnities, as the amounts are not determinable or estimable.
Historically, we have not incurred significant costs related to such indemnifications. These indemnities consist
of the following:
• Certain of our debt agreements related to aircraft-secured notes payable through 2017 contain language,
whereby, we have agreed to indemnify certain holders of certificates evidencing the debt associated with
such notes, as necessary, to compensate them for any costs incurred by, or any reduction in receivables
due to, such certificate holders resulting from broadly defined regulatory changes that impose or modify
any reserve, special deposit or similar requirements relating to any extensions of credit or other assets o
f
or any deposits with or other liabilities of such certificate holders. Additionally, if it becomes unlawful
for such certificate holders to make or maintain the investment or credit evidenced by the certificates, we
have agreed to pay such certificate holders an amount necessary to cause the interest rate with respect to
the certificates to be a rate per annum equal to 4.88 percent over the rate specified by such certificate
holders as the cost to them of obtaining funds in dollars in the United States in an amount equal to the
pool balance of the certificates. The maximum potential payment under these indemnities cannot be
determined.
• Our aircraft lease transaction documents contain customary indemnities concerning withholding taxes i
n
which we are responsible in some circumstances should withholding taxes be imposed for paying such
amounts of additional rent, as is necessary to ensure that the lessor still receives, after taxes, the ren
t
stipulated in the lease agreements. These provisions apply on leases expiring through 2022. The
maximum
p
otential
p
a
y
ment under these indemnities cannot be determined.
• In our aircraft financing agreements, we typically indemnify the financing parties, the trustee acting o
n
their behalf and, other related parties against liabilities that arise from the manufacture, design,
ownership, financing, use, operation, and maintenance of the aircraft for tort liability, whether or not
these liabilities arise out of or relate to the negligence of these indemnified parties except for their gross
negligence or willful misconduct. We believe that we are covered by insurance (subject to deductibles)
for most tort liabilities and related indemnities, as described above with respect to the aircraft we operate.
Additionally, if there is a change in the law which results in the imposition of any reserve, capital
adequacy, special deposit, or similar requirement which will increase the cost to the lender, we will pay
the lender the additional amount necessary to compensate the lender for the actual cost increase.
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