Delta Airlines 2010 Annual Report Download - page 54

Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. BACKGROUND AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Background
Delta Air Lines, Inc., a Delaware corporation, provides scheduled air transportation for passengers and cargo throughout the United States ("U.S.") and
around the world.
On October 29, 2008 (the "Closing Date"), a wholly-owned subsidiary of Delta merged (the "Merger") with and into Northwest Airlines Corporation. On
the Closing Date, (1) Northwest Airlines Corporation and its wholly-owned subsidiaries, including Northwest Airlines, Inc. (collectively, "Northwest"),
became wholly-owned subsidiaries of Delta and (2) each share of Northwest common stock outstanding on the Closing Date or issuable under Northwest's
Plan of Reorganization (as defined in Note 11) was converted into the right to receive 1.25 shares of Delta common stock.
On December 31, 2009, Northwest Airlines, Inc. merged with and into Delta. As a result of this merger, Northwest Airlines, Inc. ceased to exist as a
separate entity.
Unless otherwise indicated, Delta Air Lines, Inc. and our wholly-owned subsidiaries are collectively referred to as "Delta," "we," "us," and "our." Prior to
October 30, 2008, these references do not include Northwest.
Basis of Presentation
The accompanying Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the U.S.
("GAAP"). Our Consolidated Financial Statements include the accounts of Delta Air Lines, Inc. and our wholly-owned subsidiaries. As a result of the Merger,
the accounts of Northwest are included for all periods subsequent to the Closing Date. We reclassified certain prior period amounts, none of which were
material, to conform to the current period presentation.
We eliminate all material intercompany transactions in our Consolidated Financial Statements. We do not consolidate the financial statements of any
company in which we have an ownership interest of 50% or less. We are not the primary beneficiary of nor do we have a controlling financial interest in any
variable interest entity. Accordingly, we have not consolidated any variable interest entity.
We have marketing alliances with other airlines to enhance our access to domestic and international markets. These arrangements may include
codesharing, reciprocal frequent flyer program benefits, shared or reciprocal access to passenger lounges, joint promotions, common use of airport gates and
ticket counters, ticket office co-location and other marketing agreements. We have received antitrust immunity for certain marketing arrangements, which
enables us to offer a more integrated route network and develop common sales, marketing and discount programs for customers. Some of our marketing
arrangements provide for the sharing of revenues and expenses. Revenues and expenses associated with collaborative arrangements are presented on a gross
basis in the applicable line items on our Consolidated Statements of Operations.
On July 1, 2010, we sold Compass Airlines, Inc. ("Compass") and Mesaba Aviation, Inc. ("Mesaba"), our wholly-owned subsidiaries, to Trans States
Airlines, Inc. ("Trans States") and Pinnacle Airlines Corp. ("Pinnacle"), respectively. Upon the closing of these transactions, we entered into new or amended
long-term capacity purchase agreements with Compass, Mesaba and Pinnacle. See Note 7.
Use of Estimates
We are required to make estimates and assumptions when preparing our Consolidated Financial Statements in accordance with GAAP. These estimates
and assumptions affect the amounts reported in our Consolidated Financial Statements and the accompanying notes. Actual results could differ materially
from those estimates.
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