Delta Airlines 2003 Annual Report Download - page 54

Table of Contents
We estimate that our pension plan funding will be approximately $440 million for 2004. As discussed in the Business Environment section of
Management's Discussion and Analysis in this Form 10-K, this includes a voluntary contribution of $325 million to our non-pilot pension plan in January and
February 2004. Our anticipated funding obligations under our pension plans for 2005 and thereafter cannot be reasonably estimated at this time because these
estimates vary materially depending on the assumptions used to determine them and whether we make contributions in excess of those required. Nevertheless,
we presently expect that our funding obligations under our pension plans in each of the years from 2005 through 2008 will be significant and could have a
material adverse impact on our liquidity.
In addition to the contractual obligations discussed above, we have certain contracts for goods and services that require us to pay a penalty, acquire
inventory specific to us or purchase contract specific equipment, as defined by each respective contract, if we terminate the contract without cause prior to its
expiration date. These obligations are contingent upon whether we terminate the contract without cause prior to its expiration date; therefore, no obligation
would exist unless such a termination were to occur.
We are party to a collective bargaining agreement with ALPA representing Delta pilots. The agreement generally provides that no pilot on the seniority list
as of July 1, 2001 may be furloughed unless the furlough is caused by a circumstance beyond our control, as defined in that agreement. Therefore, if we
reduce the number of flights in our schedule for reasons other than a circumstance beyond our control, as defined in the agreement, we may be required to pay
unutilized pilots their full salary and benefits. If we furlough pilots due to a circumstance beyond our control, we are only obligated to remit furlough pay and
to provide or pay for certain other benefits for a limited period until the pilots are recalled. We have been involved in arbitration regarding whether the
agreement permits furloughs in particular circumstances, as described in Item 1. "Business—Employee Matters—Pilot Furloughs" of this Form 10-K. Our
agreement with ALPA becomes amendable on May 1, 2005.
We have long-term contract carrier agreements with three regional air carriers, ACA, SkyWest and Chautanqua. Under these agreements, ACA, SkyWest
and Chautauqua operate certain of their aircraft using our flight code; we schedule those aircraft and sell the seats on those flights; and we keep the related
revenues. We pay those airlines an amount, as defined in the applicable agreement, which is based on an annual redetermination of their cost of operating
those flights and other factors intended to approximate market rates for those services.
We expect to incur expenses of approximately $890 million in 2004 related to our contract carrier agreements with ACA, SkyWest and Chautauqua. These
expenses are not included in the table above because they are contingent based on the costs associated with the operation of contract carrier flights by those air
carriers. We cannot reasonably estimate at this time our expenses under the contract carrier agreements in 2005 and thereafter. For additional information
regarding our contract carrier agreements, including the possibility that we may be required to assume certain of ACA's regional jet leases, see Note 9 of the
Notes to the Consolidated Financial Statements.
47