Delta Airlines 2012 Annual Report Download - page 18

In addition, the strategic agreements utilize market prices for the products being exchanged. If Monroe's cost of producing the non-jet fuel
products that it is required to deliver under these agreements exceeds the value it receives for those products, the financial benefits we expect to
achieve through the ownership of the refinery and our consolidated results of operations could be materially adversely affected.
Our fuel hedging activities are intended to reduce the financial impact from changes in the price of jet fuel. Our obligation to post collateral
in connection with our hedge contracts may have a substantial impact on our short-term liquidity.
We actively manage our fuel price risk through a hedging program intended to reduce the financial impact on us from changes in the price of jet
fuel. This fuel hedging program utilizes several different contract and commodity types. The economic effectiveness of this hedge portfolio is
frequently tested against our financial targets. The hedge portfolio is rebalanced from time to time according to market conditions, which may result
in locking in gains or losses on hedge contracts prior to their settlement dates and may have a negative impact on our financial results.
Our fuel hedge contracts contain margin funding requirements. 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. If fuel prices decrease significantly from the
levels existing at the time we enter into fuel hedge contracts, we may be required to post a significant amount of margin, which could have a material
adverse impact on the level of our unrestricted cash and cash equivalents and short-term investments.
Our funding obligation with respect to defined benefit pension plans we sponsor is significant and can vary materially because of changes in
investment asset returns and values.
As of December 31, 2012 , our defined benefit pension plans had an estimated benefit obligation of approximately $21.5 billion and were funded
through assets with a value of approximately $8.2 billion . The benefit obligation is significantly affected by investment asset returns and changes in
interest rates, neither of which is in our control. We estimate that our funding requirement for our defined benefit pension plans, which are governed
by ERISA and have been frozen for future accruals, is approximately $675 million in 2013. Estimates of pension plan funding requirements can vary
materially from actual funding requirements because the estimates are based on various assumptions concerning factors outside our control,
including, among other things, the market performance of assets; statutory requirements; and demographic data for participants, including the number
of participants and the rate of participant attrition. Results that vary significantly from our assumptions could have a material impact on our future
funding obligations.
Our substantial indebtedness may limit our financial and operating activities and may adversely affect our ability to incur additional debt to
fund future needs.
We have substantial indebtedness, which could:
In addition, a substantial level of indebtedness, particularly because a significant portion of our assets are currently subject to liens, could limit our
ability to obtain additional financing on acceptable terms or at all for working capital, capital expenditures and general corporate purposes. We have
historically had substantial liquidity needs in the operation of our business. These liquidity needs could vary significantly and may be affected by
general economic conditions, industry trends, performance and many other factors not within our control.
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make us more vulnerable to economic downturns, adverse industry conditions or catastrophic external events;
• limit our ability to borrow additional money for working capital, restructurings, capital expenditures, research and development,
investments, acquisitions or other purposes, if needed, and increasing the cost of any of these borrowings;
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limit our ability to withstand competitive pressures; and/or
• limit our flexibility in responding to changing business and economic conditions, including increased competition and demand for new
services, placing us at a disadvantage when compared to our competitors that have less debt, and making us more vulnerable than our
competitors who have less debt to a downturn in our business, industry or the economy in general.