Delta Airlines 2002 Annual Report Download - page 16

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