Delta Airlines 2005 Annual Report Download - page 100

Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(2) In our Chapter 11 proceedings, we assumed our obligations under the contract carrier agreements with ASA and SkyWest Airlines.
Accordingly, these agreements are not subject to rejection pursuant to Section 365 of the Bankruptcy Code.
(3) ASA became an unaffiliated contract carrier on September 8, 2005, after we sold ASA to SkyWest. The number of aircraft included in the
chart reflects 167 regional jet aircraft and 12 turbo-prop aircraft. The turbo-prop aircraft are scheduled to be removed from Delta Connection
service by the end of 2007.
(4) In May 2005, we entered into a contract carrier agreement with Mesa Air Group, Inc. ("Mesa") and its wholly owned subsidiary, Freedom.
We began placing these aircraft in service under the Delta Connection program in October 2005. In March 2006, we entered into a separate
agreement with Mesa and Freedom under which Freedom will operate 12 turbo-prop aircraft that will be placed into service beginning in
July 2006.
(5) In January 2005, we entered into a contract carrier agreement with Republic Holdings and its wholly owned subsidiary Republic Airline,
Inc. ("Republic Airline"). In August 2005, we consented to the assignment of the contract carrier agreement by Republic Airline to Shuttle
America.
The following table shows the Available Seat Miles ("ASMs") and Revenue Passenger Miles ("RPMs") operated for us under
contract carrier agreements with:
• Chautauqua and SkyWest Airlines for all periods presented;
• Flyi, Inc. (formerly Atlantic Coast Airlines) for the year ended December 31, 2004;
• Shuttle America from September 1, 2005 to December 31, 2005;
• ASA from September 8, 2005 to December 31, 2005. On September 7, 2005, we sold ASA to SkyWest; and
• Freedom from October 1, 2005 to December 31, 2005.
Twelve Months
Ended
December 31,
(in millions), unaudited 2005 2004
ASMs 8,275 5,535
RPMs 5,961 3,991
Number of aircraft operated, end of period 265 128
Contingencies Related to Termination of Contract Carrier Agreements
We may terminate the Chautauqua and Shuttle America agreements without cause at any time after May 2010 and January 2013,
respectively, by providing certain advance notice. If we terminate either the Chautauqua or Shuttle America agreements without cause,
Chautauqua or Shuttle America, respectively, has the right to (1) assign to us leased aircraft that the airline operates for us, provided
we are able to continue the leases on the same terms the airline had prior to the assignment and (2) require us to purchase or lease any
of the aircraft that the airline owns and operates for us at the time of the termination. If we are required to purchase aircraft owned by
Chautauqua or Shuttle America, the purchase price would be equal to the amount necessary to (1) reimburse Chautauqua or Shuttle
America for the equity it provided to purchase the aircraft and (2) repay in full any debt outstanding at such time that is not being
assumed in connection with such purchase. If we are required to lease aircraft owned by Chautauqua or Shuttle America, the lease
would have (1) a rate equal to the debt payments of Chautauqua or Shuttle America for the debt financing of the aircraft calculated as
if 90% of the aircraft was debt financed by Chautauqua or Shuttle America and (2) other specified terms and conditions.
We estimate that the total fair values, determined as of December 31, 2005, of the aircraft that Chautauqua or Shuttle America
could assign to us or require that we purchase if we terminate without cause our contract carrier agreements with those airlines are
$549 million and $386 million, respectively. The actual F-38