Delta Airlines 2009 Annual Report Download - page 104

Table of Contents
Reorganization Items, net
The following table summarizes the components of reorganization items, net on our Consolidated Statement of Operations for the four months ended
April 30, 2007:
Predecessor
Four Months
Ended
April 30,
(in millions) 2007
Discharge of claims and liabilities(1) $ 4,424
Revaluation of frequent flyer obligation(2) (2,586)
Revaluation of other assets and liabilities(3) 238
Aircraft financing renegotiations, rejections and repossessions(4) (440)
Contract carrier agreements(5) (163)
Emergence compensation(6) (162)
Professional fees (88)
Pilot collective bargaining agreement(7) (83)
Interest income(8) 50
Facility leases(9) 43
Vendor waived pre-petition debt 29
Retiree healthcare claims(10) (26)
Other (21)
Total reorganization items, net $ 1,215
(1) The discharge of claims and liabilities primarily relates to allowed general, unsecured claims in our Chapter 11 proceedings, such as (a) the Air Line
Pilots Association, International's ("ALPA") claim under our comprehensive agreement reducing pilot labor costs; (b) the Pension Benefit Guaranty
Corporation's (the "PBGC") claim relating to the termination of the Delta Pilot Plan; (c) claims relating to changes in postretirement healthcare benefits
and the rejection of our non-qualified retirement plans; (d) claims associated with debt and certain municipal bond obligations based upon their
rejection; (e) claims relating to the restructuring of financing arrangements or the rejection of leases for aircraft; and (f) other claims due to the rejection
or modification of certain executory contracts, unexpired leases and contract carrier agreements.
In accordance with Delta's Plan of Reorganization, we discharged our obligations to holders of allowed general, unsecured claims in exchange for the
distribution of 386 million newly issued shares of common stock and the issuance of certain debt securities and obligations. Accordingly, in discharging
our liabilities subject to compromise, we recognized a reorganization gain of $4.4 billion as follows:
(in millions)
Liabilities subject to compromise $ 19,345
Reorganization value (9,400)
Liabilities reinstated (4,429)
Issuance of new debt securities and obligations, net of discounts of $22 (938)
Other (154)
Discharge of claims and liabilities $ 4,424
(2) We revalued our SkyMiles frequent flyer obligation at fair value as a result of fresh start reporting, which resulted in a $2.6 billion reorganization
charge.
(3) We revalued our assets and liabilities at estimated fair value as a result of fresh start reporting. This resulted in a $238 million gain, primarily reflecting
the fair value of newly recognized intangible assets, which was partially offset by reductions in the fair value of tangible property and equipment.
(4) Estimated claims for the four months ended April 30, 2007 relate to the restructuring of the financing arrangements for 143 aircraft, the rejection of two
aircraft leases and adjustments to prior claims estimates.
(5) In connection with amendments to our Contract Carrier agreements with Chautauqua and Shuttle America, both subsidiaries of Republic Airways
Holdings, Inc. ("Republic Holdings"), which, among other things, reduced the rates we pay those carriers, we recorded (a) a $91 million allowed
general, unsecured claim and (b) a $37 million net charge related to our surrender of warrants to purchase up to 3.5 million shares of Republic Holdings
common stock. Additionally, in connection with an amendment to our Contract Carrier agreement with Freedom, a subsidiary of Mesa, which, among
other things, reduced the rates we pay that carrier, we recorded a $35 million allowed general, unsecured claim.
(6) In accordance with Delta's Plan of Reorganization, we made $130 million in lump-sum cash payments to approximately 39,000 eligible non-contract,
non-management employees. We also recorded an additional charge of $32 million related to our portion of payroll related taxes associated with the
issuance, as contemplated by Delta's Plan of Reorganization, of approximately 14 million shares of common stock to these employees.
(7) Allowed general, unsecured claims of $83 million for the four months ended April 30, 2007 in connection with the comprehensive agreements of
Comair with ALPA reducing pilot labor costs.
(8) Reflects interest earned due to the preservation of cash during our Chapter 11 proceedings.
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