Delta Airlines 2015 Annual Report Download - page 17

TableofContents
Ourfuelhedgecontractscontainmarginfundingrequirements.Themarginfundingrequirementsmayrequire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impactonthelevelofourunrestricted
cashandcashequivalentsandshort-terminvestments.
Significant extended disruptions in the supply of aircraft fuel, including from Monroe, could have a material adverse effect on our operations and operating
results.
Weather-relatedevents,naturaldisasters,politicaldisruptionsorwarsinvolvingoil-producingcountries,changesingovernmentalpolicyconcerningaircraft
fuelproduction,transportation,taxesormarketing,environmentalconcernsandotherunpredictableeventsmayimpactcrudeoilandfuelsupplyandcouldresultin
shortagesinthefuture.Shortagesinfuelsuppliescouldhavenegativeeffectsonourresultsofoperationsandfinancialcondition.
BecauseweacquirealargeamountofourjetfuelfromMonroe,thedisruptionorinterruptionofproductionattherefinerycouldhaveanimpactonourability
toacquirejetfuelneededforouroperations.Disruptionsorinterruptionsofproductionattherefinerycouldresultfromvarioussourcesincludingamajoraccident
ormechanicalfailure,interruptionofsupplyordeliveryofcrudeoil,workstoppagesrelatingtoorganizedlaborissues,ordamagefromsevereweatherorother
naturalorman-madedisasters,includingactsofterrorism.Iftherefineryweretoexperienceaninterruptioninoperations,disruptionsinfuelsuppliescouldhave
negativeeffectsonourresultsofoperationsandfinancialcondition.Inaddition,thefinancialbenefitsfromtheoperationoftherefinerycouldbematerially
adverselyaffected(totheextentnotrecoverablethroughinsurance)becauseoflostproductionandrepaircosts.
UnderastrategicagreementthatMonroehaswithasignificantcounterparty,Monroeisexchangingnon-jetfuelproductsforjetfuelforuseinourairline
operations.Monroeisrequiredtodeliverspecifiedquantitiesofnon-jetfuelproductstothecounterpartyandthecounterpartyisrequiredtodeliverspecified
quantitiesofjetfueltous.Ifeitherpartydoesnothavethespecifiedquantityortypeofproductavailable,thatpartyisrequiredtoprocureanysuchshortageto
fulfillitsobligationundertheagreement.Iftherefineryexperiencesasignificantinterruptioninoperations,Monroemayberequiredtoexpendsubstantialamounts
topurchasetheproductsitisrequiredtodeliver,whichcouldhaveamaterialadverseeffectonourconsolidatedfinancialresultsofoperations.
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 significant investments in airlines in other parts of the world and the commercial relationships that we have with those carriers may not produce the
returns or results we expect.
Animportantpartofourstrategytoexpandourglobalnetworkhasbeentomakesignificantinvestmentsinairlinesinotherpartsoftheworldandexpandour
commercialrelationshipswiththesecarriers.Weexpecttocontinueexploringsimilarnon-controllinginvestmentsin,andenteringintojointventuresandstrategic
allianceswith,othercarriersaspartofourglobalbusinessstrategy.Thesetransactionsandrelationshipsinvolvesignificantchallengesandrisks,includingthatwe
maynotrealizeasatisfactoryreturnonourinvestment,thattheymaydistractmanagementfromouroperationsorthattheymaynotgeneratetheexpectedrevenue
synergies.Theseeventscouldhaveamaterialadverseeffectonouroperatingresultsorfinancialcondition.
Inaddition,wearedependentontheseothercarriersforsignificantaspectsofournetworkintheregionsinwhichtheyoperate.Whileweworkcloselywith
thesecarriers,wedonothavecontrolovertheiroperationsorbusinessmethods.Wemaybesubjecttoconsequencesfromanyimproperbehaviorofjointventure
partners,includingforfailuretocomplywithanti-corruptionlawssuchastheUnitedStatesForeignCorruptPracticesAct.Totheextentthattheoperationsofany
ofthesecarriersaredisruptedoveranextendedperiodoftimeortheiractionssubjectustotheconsequencesoffailuretocomplywithlawsandregulations,our
resultsofoperationsmaybeadverselyaffected.
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