Delta Airlines 2004 Annual Report Download - page 89

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Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The following table summarizes, as of December 31, 2004, our minimum rental commitments under capital leases and noncancelable operating leases
with initial terms in excess of one year:
Years Ending December 31, Capital Operating
(in millions) Leases Leases
2005 $ 158 $ 1,091
2006 162 1,017
2007 134 915
2008 112 980
2009 146 836
After 2009 410 4,823
Total minimum lease payments 1,122 $ 9,662
Less: lease payments that represent interest 674
Present value of future minimum capital lease payments 448
Less: current obligations under capital leases 58
Long-term capital lease obligations $ 390
We expect to receive approximately $120 million under noncancelable sublease agreements. This expected sublease income is not reflected as a reduction
in the total minimum rental commitments under operating leases in the table above.
At December 31, 2004, we operated 297 aircraft under operating leases and 48 aircraft under capital leases. These leases have remaining terms ranging
from three months to 13 years. During the December 2004 quarter, we renegotiated 99 aircraft lease agreements (95 operating leases and four capital leases)
as part of our transformation plan (see Note 1). As a result of changes in certain lease terms, 33 of the operating leases were reclassified as capital leases when
their new terms were evaluated in accordance with SFAS No. 13 "Accounting for Leases" ("SFAS 13"). These reclassifications increased our capital lease
obligations by approximately $375 million and our flight and ground equipment under capital leases by approximately $240 million at December 31, 2004.
As part of our aircraft lease and debt renegotiations, we entered into agreements with aircraft lessors and lenders under which we expect to receive average
annual cash savings of approximately $57 million between 2005 and 2009, which will also result in some cost reductions. We issued a total of
4,354,724 shares of common stock in these transactions. Substantially all of these shares were issued under the aircraft lease renegotiations. The fair value of
the shares issued to lessors approximated $30 million and, in accordance with SFAS 13, was considered a component of minimum lease payments.
Certain municipalities have issued special facilities revenue bonds to build or improve airport and maintenance facilities leased to us. The facility lease
agreements require us to make rental payments sufficient to pay principal and interest on the bonds. The above table includes $1.7 billion of operating lease
rental commitments for these payments.
See Note 8 for additional lease commitments occurring subsequent to December 31, 2004. See Note 6 for additional information about the Reimbursement
Agreement which covers certain of our lease obligations in the table above. F-32