Delta Airlines 2006 Annual Report Download - page 36

The increase in miscellaneous, net expense is primarily due to charges related to the ineffective portion of our fuel hedge positions accounted for in
accordance with SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities.” For additional information about our fuel hedge positions,
see Note 2 of the Notes to the Consolidated Financial Statements.
Reorganization Items, Net
Reorganization items, net totaled a $6.2 billion charge for 2006, primarily consisting of the following:
•Pilot pension termination.$2.2 billion and $801 million allowed general, unsecured pre-petition claims in connection with our settlement
agreements with the PBGC and a group representing retired pilots, respectively. Charges for these claims were offset by $1.3 billion in
settlement gains associated with the derecognition of previously recorded Pilot Plan and pilot non-qualified plan obligations upon each plan’s
termination. For additional information regarding these settlement agreements and the termination of these plans, see Note 10 of the Notes to the
Consolidated Financial Statements.
•Pilot collective bargaining agreement.A $2.1 billion allowed general, unsecured pre-petition claim in connection with our comprehensive
agreement with ALPA reducing our pilot labor costs. For additional information regarding this agreement, see Note 1 of the Notes to the
Consolidated Financial Statements.
•Aircraft financing renegotiations and rejections.$1.7 billion of estimated claims associated with restructuring the financing arrangements for 188
aircraft and the rejectionof 16 aircraft leases.
•Retiree healthcare benefit claims.$539 million of allowed general, unsecured pre-petition claims in connection with agreements that we reached
with committees representingboth pilot and non-pilot retired employees reducing their postretirement healthcare benefits. For additional
information regarding these agreements, see Note 10 of the Notes to the Consolidated Financial Statements.
Reorganization items, net totaled an $884 million charge for 2005, primarily consisting of the following:
•Aircraft financing renegotiations, rejections and repossessions.A $611 million charge for estimated claims associated with restructuring the
financing arrangements for sevenaircraft, the rejection of 50 aircraft leases and the repossession of 15 aircraft.
•Debt issuance and discount costs.A $163 million charge associated with the write-off of certain debt issuance costs and discounts in conjunction
with the valuation of our unsecured and undersecured debt.
•Facility leases.An $88 million charge for estimated claims in connection with the rejection of certain unexpired facility leases and the related
bond obligations.
Income Tax Benefit
For 2006, we recorded an income tax benefit totaling $765 million. The amount primarily reflects a decrease to our deferred tax asset valuation
allowances from the reversal of accrued pension liabilities associated with the derecognition of previously recorded Pilot Plan and pilot non-qualified plan
obligations upon each plan’s termination.
For 2005, we recorded an income tax benefit totaling $41 million. The amount is primarily the result of a $1.6 billion adjustment to our deferred tax asset
valuation allowance due to increases in the deferred tax asset related to our additional minimum pension liability and net operating loss carryforwards.
For additional information about the income tax valuation allowance, see Note 9 of the Notes to the Consolidated Financial Statements.
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