Delta Airlines 2012 Annual Report Download - page 86

We estimate that the total fair values, determined as of December 31, 2012 , of the aircraft Chautauqua or Shuttle America could assign to us or
require that we purchase if we terminate without cause our contract carrier agreements with those airlines (the "Put Right") are approximately $156
million and $497 million , respectively. The actual amount we may be required to pay in these circumstances may be materially different from these
estimates. If the Put Right is exercised, we must also pay the exercising carrier 10% interest (compounded monthly) on the equity the carrier
provided when it purchased the put aircraft. These equity amounts for Chautauqua and Shuttle America total $25 million and $52 million ,
respectively.
Legal Contingencies
We are involved in various legal proceedings related to employment practices, environmental issues, antitrust matters and other matters
concerning our business. We record liabilities for losses from legal proceedings when we determine that it is probable that the outcome in a legal
proceeding will be unfavorable and the amount of loss can be reasonably estimated. We cannot reasonably estimate the potential loss for certain legal
proceedings because, for example, the litigation is in its early stages or the plaintiff does not specify the damages being sought. Although the
outcome of the legal proceedings in which we are involved cannot be predicted with certainty, management believes that the resolution of these
matters will not have a material adverse effect on our Consolidated Financial Statements.
Credit Card Processing Agreements
Our VISA/MasterCard and American Express credit card processing agreements provide that no cash reserve ("Reserve") is required, and no
withholding of payment related to receivables collected will occur, except in certain circumstances, including when we do not maintain a required
level of liquidity. In circumstances in which the credit card processor can establish a Reserve or withhold payments, the amount of the Reserve or
payments that may be withheld would be equal to the potential liability of the credit card processor for tickets purchased with VISA/MasterCard or
American Express credit cards, as applicable, that had not yet been used for travel. There was no Reserve or amounts withheld as of December 31,
2012 and 2011 .
Other Contingencies
General Indemnifications
We are the lessee under many commercial real estate leases. It is common in these transactions for us, as the lessee, to agree to indemnify the
lessor and the lessor's related parties for tort, environmental and other liabilities that arise out of or relate to our use or occupancy of the leased
premises. This type of indemnity would typically make us responsible to indemnified parties for liabilities arising out of the conduct of, among
others, contractors, licensees and invitees at, or in connection with, the use or occupancy of the leased premises. This indemnity often extends to
related liabilities arising from the negligence of the indemnified parties, but usually excludes any liabilities caused by either their sole or gross
negligence or their willful misconduct.
Our aircraft and other equipment lease and financing agreements typically contain provisions requiring us, as the lessee or obligor, to indemnify
the other parties to those agreements, including certain of those parties' related persons, against virtually any liabilities that might arise from the use
or operation of the aircraft or such other equipment.
We believe that our insurance would cover most of our exposure to liabilities and related indemnities associated with the commercial real estate
leases and aircraft and other equipment lease and financing agreements described above. While our insurance does not typically cover environmental
liabilities, we have certain insurance policies in place as required by applicable environmental laws.
Certain of our aircraft and other financing transactions include provisions that require us to make payments to preserve an expected economic
return to the lenders if that economic return is diminished due to certain changes in law or regulations. In certain of these financing transactions, we
also bear the risk of certain changes in tax laws that would subject payments to non-U.S. lenders to withholding taxes.
We cannot reasonably estimate our potential future payments under the indemnities and related provisions described above because we cannot
predict (1) when and under what circumstances these provisions may be triggered and (2) the amount that would be payable if the provisions were
triggered because the amounts would be based on facts and circumstances existing at such time.
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