Delta Airlines 2007 Annual Report Download - page 102

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Table of Contents
Index to Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Revenue Proration Agreements. As of December 31, 2007, we had revenue proration agreements with American Eagle Airlines, Inc., Big Sky Airlines
("Big Sky") and ExpressJet. In addition, a portion of our contract carrier agreement with SkyWest Airlines is structured as a revenue proration agreement.
These agreements establish a fixed dollar or percentage division of revenues for tickets sold to passengers traveling on connecting flight itineraries. Effective
January 7, 2008, Big Sky ceased operations.
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 July 2015, 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, 2007, 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 (the "Put Right") are approximately $480 million
and $370 million, respectively. The actual amount that we may be required to pay in these circumstances may be materially different from these estimates. If
the Chautauqua or Shuttle America Put Right is exercised, we must also pay to the exercising carrier 10% interest (compounded monthly) on the equity the
carrier provided when it purchased the put aircraft. These equity amounts for Chautauqua and Shuttle America total $56 million and $34 million, respectively.
Legal Contingencies
We are involved in various legal proceedings relating to employment practices, environmental issues and other matters concerning our business. We
cannot reasonably estimate the potential loss for certain legal proceedings because, for example, the litigation is in its early stages or the plaintiff does not
specify the damages being sought.
Comair Flight 5191
On August 27, 2006, Comair Flight 5191 crashed shortly after take-off in a field near the Blue Grass Airport in Lexington, Kentucky. All 47 passengers
and two members of the flight crew died in the accident. The third crew member survived with severe injuries. Lawsuits arising out of this accident have been
filed against our wholly owned subsidiary, Comair, on behalf of 44 passengers. A number of lawsuits also name Delta as a defendant. The lawsuits generally
assert claims for wrongful death and related personal injuries, and seek unspecified damages, including punitive damages in most cases. As of January 28,
2008, settlements have been reached with the families of 15 of the 47 passengers. All the passenger lawsuits are currently pending in the U.S. District Court
for the Eastern District of Kentucky and have been consolidated as "In Re Air Crash at Lexington, Kentucky, August 27, 2006, Master File No. 5:06-
CV-316."
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