Delta Airlines 2009 Annual Report Download - page 94

Table of Contents
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 January 2016, 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, 2009, 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 $200 million and
$440 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 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 $25 million and $52 million, respectively.
Legal Contingencies
We are involved in various legal proceedings relating to employment practices, environmental issues, bankruptcy matters, antitrust matters 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.
Credit Card Processing Agreements
Visa/MasterCard Processing Agreement
Our Visa/MasterCard credit card processing agreement provides that no cash reserve ("Reserve") is required except in certain circumstances, including
when we do not maintain a required level of unrestricted cash. In circumstances in which the processor can establish a Reserve, the amount of the Reserve
would be equal to the potential liability of the credit card processor for tickets purchased with Visa or MasterCard that had not yet been used for travel. There
was no Reserve as of December 31, 2009 and 2008.
American Express
Our American Express credit card processing agreement provides that no withholding of our receivables will occur except in certain circumstances,
including when we do not maintain a required level of unrestricted cash. In circumstances in which American Express is permitted to withhold our
receivables, the amount that can be withheld is an amount up to American Express' potential liability for tickets purchased with the American Express credit
card that had not yet been used for travel. No amounts were withheld as of December 31, 2009 and 2008.
Other Contingencies
General Indemnifications
We are the lessee under many commercial real estate leases. It is common in these transactions for us, as the lessee, to agree to indemnify the lessor and
the lessor's related parties for tort, environmental and other liabilities that arise out of or relate to our use or occupancy of the leased premises. This type of
indemnity would typically make us responsible to indemnified parties for liabilities arising out of the conduct of, among others, contractors, licensees and
invitees at, or in connection with, the use or occupancy of the leased premises. This indemnity often extends to related liabilities arising from the negligence
of the indemnified parties, but usually excludes any liabilities caused by either their sole or gross negligence and their willful misconduct.
Our aircraft and other equipment lease and financing agreements typically contain provisions requiring us, as the lessee or obligor, to indemnify the other
parties to those agreements, including certain of those parties' related persons, against virtually any liabilities that might arise from the condition, use or
operation of the aircraft or such other equipment. 89