Delta Airlines 2012 Annual Report Download - page 8

Proposed transatlantic joint venture with Virgin Atlantic . In December 2012, in connection with entering into an agreement for the purchase by
Delta from Singapore Airlines of a 49% equity stake in Virgin Atlantic Limited ("VAL"), we and Virgin Atlantic Airways entered into a joint venture
agreement with respect to operations on non-stop routes between the United Kingdom and North America. The joint venture agreement provides for
the sharing of revenues and costs, as well as joint marketing and sales activities, coordinated pricing and revenue management, network planning and
scheduling and other coordinated activities with respect to the parties' operations on joint venture routes. We and Virgin Atlantic will file an
application with the U.S. Department of Transportation for U.S. antitrust immunity with respect to the joint venture. The share purchase transaction
will be reviewed by the U.S. Department of Justice and regulatory authorities in Europe and other relevant jurisdictions. The closing of the share
purchase transaction is subject to certain conditions, including receipt of required governmental approvals. At the closing of the share purchase
transaction, Delta will enter into a shareholders agreement with VAL and affiliates of Virgin Group (the controlling shareholder of VAL) containing
provisions relating to the governance and management of VAL and the rights and obligations of the shareholders.
Transpacific joint venture with Virgin Australia Airlines . In November 2012, following the grant of U.S. antitrust immunity by the U.S.
Department of Transportation and the receipt of required regulatory approvals from the Australian and New Zealand authorities, we and Virgin
Australia implemented our joint venture covering operations on certain transpacific routes between North America and the South Pacific. The joint
venture agreement provides for the sharing of incremental revenues on the joint venture routes, as well as joint marketing and sales activities, joint
pricing and revenue management, network planning and scheduling with respect to the parties' operations on joint venture routes.
Enhanced commercial agreements with Latin American Carriers. In 2011, we entered into separate agreements with Grupo Aeroméxico, S.A.B.
de C.V., the parent company of Aeroméxico, and GOL Linhas Aéreas Inteligentes, S.A, the parent company of GOL, for a strategic equity
investment in each company and an exclusive commercial relationship with each company's affiliated air carrier. We invested in GOL and
Aeromexico because they operate in Latin America's two largest markets, Brazil and Mexico, respectively. The agreements provide for expansion of
reciprocal codesharing and frequent flyer program participation, airport lounge access arrangements, improved passenger connections and potential
joint sales cooperation. In addition to our commercial cooperation arrangements for passenger service with Aeromexico, we and Aeromexico have
established a joint venture relating to an engine maintenance, repair and overhaul operation that will be located in Queretaro, Mexico.
Domestic Alliances
We have entered into a marketing alliance with Alaska Airlines, which includes reciprocal codesharing and frequent flyer and airport lounge
access arrangements. Our alliance agreement with Alaska Airlines provides for extensive cooperation with respect to our west coast presence. We
also have reciprocal codesharing and frequent flyer and airport lounge access arrangements with Hawaiian Airlines.
Regional Carriers
We have air service agreements with multiple domestic regional air carriers that feed traffic to our route system by serving passengers primarily in
small-and medium-sized cities. These arrangements enable us to increase the number of flights we have available in certain locations and to better
match capacity with demand. Approximately 21% of our passenger revenue in 2012 was related to flying by regional air carriers.
Through our regional carrier program, we have contractual arrangements with seven regional carriers to operate regional jet and, in certain cases,
turbo-prop aircraft using our “DL” designator code. We have contractual arrangements with: ExpressJet Airlines, Inc. and SkyWest Airlines, Inc.,
both subsidiaries of SkyWest, Inc.; Chautauqua Airlines, Inc. and Shuttle America Corporation, both subsidiaries of Republic Airways Holdings,
Inc.; Pinnacle Airlines, Inc., a subsidiary of Pinnacle Airlines Corp.; Compass Airlines, Inc. (“Compass”) and GoJet Airlines, LLC, both subsidiaries
of Trans States Holdings, Inc. (“Trans States”). In connection with the exit of Pinnacle Airlines Corp. and Pinnacle Airlines, Inc. from bankruptcy
reorganization, we expect to become the sole equity holder of Pinnacle Airlines Corp. as the result of being the primary provider of financing during
its bankruptcy.
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