Delta Airlines 2014 Annual Report Download - page 98

NOTE 17 . RESTRUCTURING AND OTHER ITEMS
The following table shows amounts recorded in restructuring and other items on our Consolidated Statements of Operations:
Fleet, Facilities and Other . During the September 2014 quarter, we decided to retire our fleet of 16 B-747-400 aircraft over the next three years.
Additionally, we continue to restructure our domestic fleet by replacing a significant portion of our 50-seat regional flying with more efficient and
customer preferred CRJ-900 and B-717-200 aircraft and replacing older, less cost effective B-757-200 aircraft with B-737-900ER aircraft.
Accordingly, we recorded restructuring charges of $758 million , $402 million and $ 293 million during 2014 , 2013 and 2012, respectively. These
restructuring charges include impairments, remaining lease payments and lease return costs for permanently grounded aircraft, the acceleration of
aircraft depreciation and related equipment disposals.
As part of the accelerated retirement of our B-747-400 fleet, we recorded an impairment charge for the owned and capital leased aircraft. This
impairment charge was calculated using Level 3 fair value inputs based primarily upon recent market transactions and existing market conditions.
Also, we recorded a lease restructuring charge for the three B-747-400 aircraft under operating leases that were retired during the September 2014
quarter.
As we restructure our fleet and assess our fleet plans, we will continue to evaluate older, retiring aircraft and related equipment for changes in
depreciable life, impairment and lease termination costs. The retirement of aircraft, when permanently removed from our fleet, will likely result in
lease termination and other charges. The timing and amount of these charges will depend on a number of factors, including final negotiations with
lessors, the timing of removing aircraft from service and ultimate disposition of aircraft included in the fleet restructuring program. We expect to
benefit from reduced future maintenance cost and improved operational and fuel efficiency over the life of the new aircraft.
As an extension of our fleet restructuring initiative and our desire to reduce the number of regional jets in our network, we shut down the operations
of Comair, a wholly-owned regional airline subsidiary, as of September 29, 2012. The restructuring charges in 2012 also include amounts associated
with the closure of Comair.
Severance and Related Costs . In June 2014, we announced a voluntary retirement program for eligible U.S. employees. We recorded a $
71 million
charge in connection with this program and other programs related to our Pacific strategy.
During 2012, we recognized a severance charge of $ 237 million , which included $116 million of special termination benefits (see Note 11 ). We
offered voluntary severance programs in which more than 2,000 employees elected to participate. These participants became eligible for retiree
healthcare benefits. Also, we accrued $66 million in severance and related costs in 2012 to provide severance benefits to Comair's 1,700 employees, as
we ceased operations at the carrier.
Gain on Slot Exchange. During December 2011, we closed transactions with US Airways where we received takeoff and landing rights (each a
"slot pair") at LaGuardia in exchange for slot pairs at Reagan National. In approving these transactions, the DOT restricted our use of the exchanged
slots. We recorded a $ 78 million deferred gain in December 2011, which we recognized in 2012 as the restrictions lapsed.
Settlements . During the year ended December 31, 2014, we settled outstanding litigation resulting in a favorable settlement of $ 67 million and
received an unrelated insurance settlement of $46 million .
91
Year Ended December 31,
(in millions) 2014 2013 2012
Fleet, facilities and other
$
758
$
402
$
293
Severance and related costs
71
—
237
Routes and slots
—
—
(
78
)
Settlements
(113
)
—
—
Total restructuring and other items
$
716
$
402
$
452