Delta Airlines 2008 Annual Report Download - page 108

Table of Contents
Index to Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The table above was not subject to the audit procedures of our Independent Registered Public Accounting Firm.
(1) We have an agreement with ASA, SkyWest Airlines and SkyWest, Inc. ("SkyWest"), the parent company of ASA and SkyWest Airlines, under which the parties collectively determine
whether the aircraft are operated by ASA or SkyWest Airlines.
(2) In March 2008, we issued a notice to Freedom to terminate, effective June 30, 2008, its ERJ-145 capacity purchase agreement due to Freedom's failure to meet certain minimum
operational performance requirements under the agreement. Freedom filed a lawsuit against us in the U.S. District Court for the Northern District of Georgia alleging, among other things,
that our termination of the agreement was wrongful. In May 2008, the District Court granted Freedom's request for a preliminary injunction, temporarily enjoining us from terminating
Freedom's ERJ-145 capacity purchase agreement. We have appealed this ruling to the U.S. Court of Appeals for the Eleventh Circuit.
The following table shows the available seat miles ("ASMs") and revenue passenger miles ("RPMs") operated for us under capacity purchase
agreements with the following seven Contract Carriers for the years ended December 31, 2008, 2007 and 2006:
• ASA, SkyWest Airlines, Chautauqua, Freedom and Shuttle America for all periods presented;
• ExpressJet Airlines, Inc. from January 1, 2008 to September 1, 2008 and from June 1, 2007 to December 31, 2007; and
• Pinnacle for the year ended December 31, 2008, including aircraft flying on behalf of Northwest for the period from October 30 to December 31,
2008, and from December 1, 2007 to December 31, 2007.
(in millions, except for number of aircraft operated) 2008 2007 2006
ASMs 17,425 17,881 15,390
RPMs 13,899 14,005 11,931
Number of aircraft operated, end of period 443 349 324
The table above was not subject to the audit procedures of our Independent Registered Public Accounting Firm.
Revenue Proration Agreements. As of December 31, 2008, we had a revenue proration agreement with American Eagle Airlines, Inc. 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.
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, 2008, 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 $255 million
and $418 million,
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