Delta Airlines 2010 Annual Report Download - page 38

Table of Contents
During the December 2010 quarter, we began a redevelopment project that we believe will create a state-of-the-art facility for us at JFK. We estimate this
project will cost approximately $1.2 billion and will be completed in stages over five years. This project includes the (1) enhancement and expansion of
Terminal 4, including the construction of nine new gates; (2) construction of a passenger connector between Terminal 2 and Terminal 4; (3) demolition of the
outdated Terminal 3 facilities; and (4) development of the Terminal 3 site for aircraft parking positions. Upon completion of the Terminal 4 expansion,
expected to occur in 2013, we will relocate our operations from Terminal 3 to Terminal 4; proceed with demolition activities in Terminal 3; and thereafter
conduct coordinated flight operations from Terminals 2 and 4. Once our project is complete, we expect that passengers will benefit from an enhanced
customer experience and improved operational performance, including reduced taxi times and better on-time performance. For additional information, see
Note 8 of the Notes to the Consolidated Financial Statements.
Liquidity Events
Significant liquidity events during 2010 included the following (see also Note 5 of the Notes to the Consolidated Financial Statements for additional
information):
• American Express Agreement. We and American Express modified our agreement under which we received $1.0 billion in 2008 from American
Express for their advance purchase of SkyMiles. Our obligations with respect to the advance payment will be satisfied by the use of SkyMiles by
American Express over a specified period ("SkyMiles Usage Period") rather than by cash payments from us to American Express. The 2010
modification changed the SkyMiles Usage Period to a three-year period beginning in December 2011 from a two-year period beginning in
December 2010.
• Pension Obligations. We sponsor a defined benefit pension plan for eligible non-pilot pre-Merger Delta employees and retirees, and defined benefit
pension plans for eligible pre-Merger Northwest employees and retirees. These plans are closed to new entrants and are frozen for future benefit
accruals. Our funding obligations for these plans are generally governed by the Employee Retirement Income Security Act. We contributed
$728 million to our defined benefit pension plans during 2010.
• Exit Revolving Facility. We (1) repaid $914 million of our $1.0 billion first-lien revolving credit facility (the "Exit Revolving Facility") and
(2) amended the Exit Revolving Facility to convert the remaining $86 million of revolving commitment to a fully funded, non-revolving loan due
April 2012. Borrowings under the Exit Revolving Facility can be repaid without penalty and amounts repaid can be reborrowed.
• 2009-1 EETC. We received $347 million of net proceeds, which were previously held in escrow, from the 2009 offering of Pass Through
Certificates, Series 2009-1 (the "2009-1 EETC"). We used the proceeds received in 2010 to refinance 22 aircraft that secured our 2000-1 EETC,
which matured in November 2010. The 2009-1 EETC has a weighted average fixed interest rate of 8.1% and has a final maturity in December 2019.
• 2010-1A EETC. We completed a $450 million offering of Pass Through Certificates, Series 2010-1A (the "2010-1A EETC"), through a pass through
trust. We used the net proceeds to finance two B-777-200LR aircraft purchased in March 2010 and refinance 22 aircraft that secured our 2000-1
EETC. The 2010-1A EETC bears interest at a fixed rate of 6.2% per year and has a final maturity in July 2018.
• 2010-2A EETC. We completed a $474 million offering of Pass Through Certificates, Series 2010-2A (the "2010-2A EETC"), through a pass through
trust. We used $270 million in net proceeds to finance or refinance 12 aircraft. The remaining $204 million is being held in escrow until we
refinance other aircraft, including 10 aircraft currently securing our 2001-1 EETC, which matures in September 2011. The 2010-2A EETC bears
interest at a fixed rate of 4.95% per year and has a final maturity in May 2019.
• Other. We used $1.0 billion to:
• Repurchase in cash tender offers $300 million principal amount of debt;
• Prepay $435 million of existing debt;
• Redeem $75 million of other secured financings; and
• Purchase 18 aircraft off lease.
We also restructured $820 million of existing debt, including changes in applicable interest rates and other payment terms.
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