Delta Airlines 2011 Annual Report Download - page 72

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Hedge Gains (Losses)
Gains (losses) related to our designated hedge contracts, including those previously designated as accounting hedges, are as follows:
Effective Portion Reclassified from Accumulated Other Comprehensive Loss to Earnings Effective Portion Recognized in Other Comprehensive Income (Loss)
Year Ended December 31,
(in millions) 2011 2010 2009 2011 2010 2009
Fuel hedge
contracts
$ 233 $ (87) $ (1,344) $ (166) $ 153 $ 1,268
Interest rate
contracts
— (5) — (8) (28) 51
Foreign currency
exchange
contracts
(61) (31) (6) 7 (73) 11
Total designated $ 172 $ (123) $ (1,350) $ (167) $ 52 $ 1,330
As of December 31, 2011, we recorded in accumulated other comprehensive loss $36 million of net losses on our hedge contracts scheduled to settle in
the next 12 months.
Credit Risk
To manage credit risk associated with our aircraft fuel price, interest rate and foreign currency hedging programs, we select counterparties based on their
credit ratings and limit our exposure to any one counterparty. We monitor our relative market position with each counterparty.
Our hedge contracts contain margin funding requirements, which are driven by changes in the price of the underlying hedged items and the contracts used.
The margin funding requirements may cause us to post margin to counterparties or may cause counterparties to post margin to us as market prices in the
underlying hedged items change. Due to the fair value position of our hedge contracts, we paid $30 million and received $119 million of net hedge margin
from counterparties as of December 31, 2011 and 2010, respectively.
Our accounts receivable are generated largely from the sale of passenger airline tickets and cargo transportation services. The majority of these sales are
processed through major credit card companies, resulting in accounts receivable that may be subject to certain holdbacks by the credit card processors. We
also have receivables from the sale of mileage credits under our SkyMiles Program to participating airlines and non-airline businesses such as credit card
companies, hotels, and car rental agencies. The credit risk associated with our receivables is minimal.
Self-Insurance Risk
We self-insure a portion of our losses from claims related to workers' compensation, environmental issues, property damage, medical insurance for
employees and general liability. Losses are accrued based on an estimate of the ultimate aggregate liability for claims incurred, using independent actuarial
reviews based on standard industry practices and our historical experience. A portion of our projected workers' compensation liability is secured with
restricted cash collateral.
NOTE 4. JFK REDEVELOPMENT
During 2010, we began a redevelopment project at John F. Kennedy International Airport (“JFK”). At JFK, we currently operate domestic flights
primarily at Terminal 2 and international flights at Terminal 3 under leases with the Port Authority of New York and New Jersey (“Port Authority”), which
operates JFK. We also conduct flights from Terminal 4, which is operated by JFK International Air Terminal LLC (“IAT”), a private party, under its lease
with the Port Authority.
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