Delta Airlines 2008 Annual Report Download - page 48

Table of Contents
Index to Financial Statements
Significant Liquidity Events
Significant liquidity events during 2008 were as follows:
• American Express Agreement. In December 2008, we entered into a multi-year extension of our exclusive Co-brand Credit Card relationship with
American Express (the "American Express Agreement"). As part of the American Express Agreement, we received $1.0 billion from American
Express for an advance purchase of SkyMiles. We also expect to receive an additional $1.0 billion benefit from contract improvements through
2010.
• Exit financing facility. In August 2008, we borrowed the entire amount of our $1.0 billion Revolving Facility under the Exit Facilities to increase
our financial flexibility.
• Hedge Margin. In accordance with our fuel and interest rate hedge contracts, we were required to post $1.1 billion of margin with counterparties.
• Northwest financing facility. In October 2008, Northwest entered into a $500 million revolving credit facility (the "Revolving Credit Facility"),
which matures at the earlier of (1) October 2009 (with respect to $300 million of such facility) or October 2011 (with respect to $200 million of
such facility) or (2) the date that Northwest Airlines, Inc., is no longer a separate legal entity and an operating airline, including when it is merged
with and into Delta Air Lines, Inc. As of December 31, 2008, there were no outstanding borrowings under the facility.
For additional information regarding these matters, see Notes 4 and 6 of the Notes to the Consolidated Financial Statements.
Combined Sources and Uses of Cash
Cash flows from operating activities
Cash used in operating activities totaled $1.7 billion for 2008, and cash provided by operating activities was $1.4 billion for 2007. Cash used in
operating activities for 2008 reflects (1) an increase in aircraft fuel payments due to record high fuel prices for most of the year, (2) the posting of $1.1 billion
in margin with counterparties primarily from our estimated fair value loss position on our fuel hedge contracts at December 31, 2008, (3) the payment of $438
million in premiums for fuel hedge derivatives entered into during 2008, (4) a $444 million decrease in advance ticket sales due to the slowing economy and
(5) the payment of $158 million in 2008 under our broad-based employee profit sharing plan related to 2007. Cash used in operating activities was partially
offset by cash flows driven by a $3.5 billion increase in operating revenue, $2.0 billion of which is directly attributable to Northwest's operations since the
Closing Date.
Cash flows from operating activities in 2007 reflect $875 million in cash used under Delta's Plan of Reorganization to satisfy bankruptcy-related
obligations under our comprehensive agreement with ALPA and settlement agreement with the PBGC. Cash flows from operating activities during 2007 also
reflect (1) the release of $804 million from restricted cash pursuant to an amendment to our Visa/Mastercard credit card processing agreement, (2) revenue
and network productivity improvements, including right-sizing capacity to better meet customer demand and the continued restructuring of our route network
to reduce less productive short haul domestic flights and reallocate widebody aircraft to international routes and (3) a $476 million decrease in short-term
investments primarily from sales of auction rate securities.
Cash flows from investing activities
Cash provided by investing activities totaled $1.6 billion for 2008, and cash used in investing activities was $625 million for 2007. Cash provided by
investing activities in 2008 reflects (1) the inclusion of $2.4 billion in cash and cash equivalents from Northwest in the Merger and (2) $609 million in
restricted cash and cash
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