Delta Airlines 2008 Annual Report Download - page 28

Table of Contents
Index to Financial Statements
periods of less than one year to 30 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 hub or other significant airports that will expire in the next several
years include, among others: (1) our Atlanta Airport central passenger terminal lease and the airport use agreement, which expire in 2010; (2) our Salt Lake
City International Airport use and lease agreement, which expires in 2010; and (3) NWA's Memphis International Airport use and lease agreement, which
expires in 2009. We also lease aircraft maintenance facilities and air cargo facilities at certain airports, including, among others: (1) our main Atlanta
maintenance base; (2) our Atlanta air cargo facilities and our hangar and air cargo facilities at the Cincinnati/Northern Kentucky International Airport and Salt
Lake City International Airport; and (3) NWA hangar and air cargo facilities at the Detroit Metropolitan International Airport, Minneapolis/St. Paul
International Airport and Seattle-Tacoma 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, ticketing and reservations offices in certain locations for varying terms.
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 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 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 will not be complete until at least 2012, 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, some may be
eliminated 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 elsewhere in this Form 10-K, 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. On April 25, 2007, the Bankruptcy Court entered an order approving and confirming the Plan of
Reorganization and the Plan of Reorganization became effective, allowing Delta to emerge from bankruptcy on April 30, 2007. The reorganization cases were
jointly administered under the caption "In re Delta Air Lines, Inc., et al., Case No. 05-17923-ASH." As of the date of the Chapter 11 filing, then pending
litigation 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 Delta and our subsidiaries that were a part of the Chapter 11 proceedings.
On April 24, 2007, the Bankruptcy Court approved the Cincinnati Airport Settlement Agreement with the Kenton County Airport Board ("KCAB") and
UMB Bank, N.A., the trustee (the "Bond Trustee") for the Series 1992 Bonds (as defined below), to restructure certain of our lease and other obligations at the
Cincinnati-Northern Kentucky International Airport (the "Cincinnati Airport"). The Series 1992 Bonds include: (1) the $419 million Kenton County Airport
Board Special Facilities Revenue Bonds, 1992 Series A (Delta Air Lines, Inc.
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