Delta Airlines 2003 Annual Report Download - page 107

Table of Contents
ACA has announced plans to begin operating in November 2004 a new low-fare airline using jet aircraft with more than 70 seats. Our collective bargaining
agreement with the Air Line Pilots Association, International (ALPA) prohibits contract carrier codeshare arrangements with domestic carriers such as ACA if
the contract carrier operates aircraft with more than 70 seats. As discussed above, we have the right to terminate the ACA agreement without cause, in which
case ACA has the right to require us to assume the leases on leased aircraft, or purchase owned aircraft, that ACA operates for us. ACA currently operates 30
leased Fairchild Dornier FRJ-328 regional jet aircraft for us. If we are required to assume the leases on these aircraft in November 2004, we estimate that the
total remaining operating lease payments would be approximately $300 million. These payments would be made over the remaining terms of the aircraft
leases, which are approximately 13 years.
We estimate that the total fair value, at December 31, 2003, of the aircraft that SkyWest or Chautauqua could assign to us or require that we purchase if we
terminate without cause our contract carrier agreements with those airlines is approximately $630 million and $450 million, respectively. The actual amount
that we may be required to pay in these circumstances may be materially different from these estimates.
Legal Contingencies
We are involved in legal proceedings relating to antitrust matters, employment practices, environmental issues and other matters concerning our business. We
are also a defendant in numerous lawsuits arising out of the terrorist attacks of September 11, 2001. We cannot reasonably estimate the potential loss for
certain legal proceedings because, for example, the litigation is in its early stages or the plaintiff does not specify the damages being sought. Although the
ultimate outcome of our legal proceedings cannot be predicted with certainty, we believe that the resolution of these actions will not have a material adverse
effect on our Consolidated Financial Statements.
Other Contingencies
Regional Airports Improvement Corporation (RAIC)
We are obligated under a facilities sublease with the RAIC to pay the bond trustee rent in an amount sufficient to pay the debt service on $47 million in
Facilities Sublease Revenue Bonds; these bonds were issued in 1985 to finance the construction of certain airport and terminal facilities we lease at Los
Angeles International Airport. We also provide a guarantee to the bond trustee covering payment of the debt service.
General Indemnifications
We are the lessee under many real estate leases. It is common in these commercial lease transactions for us, as the lessee, to agree to indemnify the lessor and
other related third parties for tort, environmental and other liabilities that arise out of or relate to our use or occupancy of the leased premises. This type of
indemnity would typically make us responsible to indemnified parties for liabilities arising out of the conduct of, among others, contractors, licensees and
invitees at or in connection with the use or occupancy of the leased premises. This indemnity often extends to related liabilities arising from the negligence of
the indemnified parties, but
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