Delta Airlines 2006 Annual Report Download - page 22

Ground Facilities
We lease most of the land and buildings that we occupy. Our largest aircraft maintenance base, various computer, cargo, flight kitchen and training
facilities and most of our principal offices are located at or near the Atlanta Airport, on land leased from the City of Atlanta generally under long-term leases.
We own a portion of our principal offices, our Atlanta reservations center and other real property in Atlanta.
We lease ticket counter and other terminal space, operating areas and air cargo facilities in most of the airports that we serve. At most airports that we
serve, we have entered into use agreements which provide for the non-exclusive use of runways, taxiways, and other improvements and facilities; landing fees
under these agreements normally are based on the number of landings and weight of aircraft. These leases and use agreements generally run for periods of less
than one year to thirty years or more, and often contain provisions for periodic adjustments of lease rates, landing fees and other charges applicable under that
type of agreement. Examples of major leases and use agreements at Delta hub or other significant airports that will expire in the next several years include,
among others: (1) Atlanta central passenger terminal lease and the airport use agreement, which expire in 2010; (2) Salt Lake City airport use and lease
agreement, which expires in 2008; and (3) LaGuardia terminal lease, which expires in 2008. We also lease aircraft maintenance facilities and air cargo
facilities at certain airports, including, among others, our main Atlanta maintenance base, Atlanta air cargo facilities and hangar and air cargo facilities at the
Cincinnati/Northern Kentucky International Airport and Salt Lake City International Airport. Our aircraft maintenance facility leases generally require us to
pay the cost of providing, operating and maintaining such facilities, including, in some cases, amounts necessary to pay debt service on special facility bonds
issued to finance their construction. We also lease marketing, ticket and reservations offices in certain locations for varying terms. Additional information
relating to our leases of our ground facilities is set forth in Note 7 of the Notes to the Consolidated Financial Statements.
In recent years, some airports have increased or sought to increase the rates charged to airlines to levels that we believe are unreasonable. The extent to
which such charges are limited by statute or regulation and the ability of airlines to contest such charges has been subject to litigation and to administrative
proceedings before the DOT. If the limitations on such charges are relaxed, or the ability of airlines to challenge such proposed rate increases is restricted, the
rates charged by airports to airlines may increase substantially.
The City of Atlanta, with our support and the support of other airlines, is currently implementing portions of a ten year capital improvement program
(the “CIP”) at the Atlanta Airport. Implementation of the CIP should increase the number of flights that may operate at the airport and reduce flight delays.
The CIP includes, among other things, a new approximately 9,000 foot full-service runway that opened in May 2006, related airfield improvements,
additional terminal and gate capacity, new cargo and other support facilities and roadway and other infrastructure improvements. If fully implemented, the
CIP is currently estimated by the City of Atlanta to cost approximately $6.8 billion, which exceeds the $5.4 billion CIP approved by the airlines in 1999. The
CIP runs through 2010, with individual projects scheduled to be constructed at different times. A combination of federal grants, passenger facility charge
revenues, increased user rentals and fees, and other airport funds are expected to be used to pay CIP costs directly and through the payment of debt service on
bonds. Certain elements of the CIP have been delayed, and there is no assurance that the CIP will be fully implemented. Failure to implement certain portions
of the CIP in a timely manner could adversely impact our operations at the Atlanta Airport.
ITEM 3. LEGAL PROCEEDINGS
Chapter 11 Proceedings
As discussed above, on September 14, 2005, we and certain of our subsidiaries filed voluntary petitions for reorganization under Chapter 11 of the
Bankruptcy Code in the Bankruptcy Court. The reorganization cases are being jointly administered under the caption “In re Delta Air Lines, Inc., et al., Case
No. 05-17923-ASH.” The Debtors continue to operate their business as “debtors-in-possession” under the jurisdiction of the Bankruptcy Court and in
accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court. As of the date of the Chapter 11 filing, then pending
litigation against the Debtors was generally stayed, and absent further order of the Bankruptcy Court, most parties may not take any action to recover on pre-
petition claims against the Debtors.
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