Delta Airlines 2015 Annual Report Download - page 20

TableofContents
An extended disruption in services provided by our third-party regional carriers could have a material adverse effect on our results of operations.
Weutilizetheservicesofthirdpartiesinanumberofareasinsupportofouroperationsthatareintegraltoourbusiness,includingthird-partycarriersinthe
DeltaConnectionprogram.Whilewehaveagreementswiththeseprovidersthatdefineexpectedserviceperformance,wedonothavedirectcontrolovertheir
operations.Inparticular,somethird-partyregionalcarriersarefacingashortageofqualifiedpilotsduetogovernmentmandatedincreasesinflightexperience
requiredforpilotsworkingforairlines.Ifthisshortagebecomesmorewidespread,third-partyregionalcarriersmaynotbeabletocomplywiththeirobligationsto
us.Totheextentthatasignificantdisruptioninourregionaloperationsoccursbecauseanyoftheseprovidersareunabletoperformtheirobligationsoveran
extendedperiodoftime,ourrevenuemaybereducedorourexpensesmaybeincreasedresultinginamaterialadverseeffectonourresultsofoperations.
The failure or inability of insurance to cover a significant liability related to an environmental or other incident associated with the operation of the Monroe
refinery could have a material adverse effect on our consolidated financial results.
Monroe'srefiningoperationsaresubjecttovarioushazardsuniquetorefineryoperations,includingexplosions,fires,toxicemissionsandnaturalcatastrophes.
Monroecouldincursubstantiallosses,includingcleanupcosts,finesandothersanctionsandthird-partyclaims,anditsoperationscouldbeinterrupted,asaresult
ofsuchanincident.Monroe'sinsurancecoveragedoesnotcoverallpotentiallosses,costsorliabilitiesandMonroecouldsufferlossesforuninsurableoruninsured
risksorinamountsgreaterthanitsinsurancecoverage.Inaddition,Monroe'sabilitytoobtainandmaintainadequateinsurancemaybeaffectedbyconditionsinthe
insurancemarketoverwhichithasnocontrol.IfMonroeweretoincurasignificantliabilityforwhichitisnotfullyinsuredorforwhichinsurancecompaniesdo
notorareunabletoprovidecoverage,thiscouldhaveamaterialadverseeffectonourconsolidatedfinancialresultsofoperationsorconsolidatedfinancial
position.
The operation of the refinery by Monroe is subject to significant environmental regulation. Failure to comply with environmental regulations or the enactment
of additional regulation could have a negative impact on our consolidated financial results.
Monroe'soperationsaresubjecttoextensiveenvironmental,healthandsafetylawsandregulations,includingthoserelatingtothedischargeofmaterialsinto
theenvironment,wastemanagement,pollutionpreventionmeasuresandgreenhousegasemissions.Monroecouldincurfinesandothersanctions,cleanupcosts
andthird-partyclaimsasaresultofviolationsoforliabilitiesunderenvironmental,healthandsafetyrequirements,whichifsignificant,couldhaveamaterial
adverseeffectonourfinancialresults.Inaddition,theenactmentofnewenvironmentallawsandregulations,includinganylawsorregulationsrelatingto
greenhousegasemissions,couldsignificantlyincreasethelevelofexpendituresrequiredforMonroeorrestrictitsoperations.
Inparticular,undertheEnergyIndependenceandSecurityActof2007,theEPAhasadoptedRFSthatmandatetheblendingofrenewablefuelsinto
TransportationFuels.RINsareassignedtorenewablefuelsproducedorimportedintotheU.S.thatareblendedintoTransportationFuelstodemonstrate
compliancewiththisobligation.ArefinerymaymeetitsobligationunderRFSbyblendingthenecessaryvolumesofrenewablefuelswithTransportationFuelsor
bypurchasingRINsintheopenmarketorthroughacombinationofblendingandpurchasingRINs.
BecausetherefineryoperatedbyMonroedoesnotblendrenewablefuels,itmustpurchaseitsentireRINsrequirementinthesecondarymarketorobtaina
waiverfromtheEPA.Asaresult,MonroeisexposedtothemarketpriceofRINs.MarketpricesforRINshavebeenvolatile,markedbyperiodsofsharpincreases.
WecannotpredictthefuturepricesofRINs.PurchasingRINsatelevatedpricescouldhaveamaterialimpactonourresultsofoperationsandcashflows.
Existinglawsorregulationscouldchangeandtheminimumvolumesofrenewablefuelsthatmustbeblendedwithrefinedpetroleumproductsmayincrease.
IncreasesinthevolumeofrenewablefuelsthatmustbeblendedintoMonroe'sproductscouldlimittherefinery'sproductionifsufficientnumbersofRINsarenot
availableforpurchaseorrelieffromthisrequirementisnotobtained,whichcouldhaveanadverseeffectonourconsolidatedfinancialresults.
If we lose senior management personnel and other key employees and they are not replaced by individuals with comparable skills, our operating results could
be adversely affected.
Wearedependentontheexperienceandindustryknowledgeofourofficersandotherkeyemployeestodesignandexecuteourbusinessplans.Ifweexperience
asubstantialturnoverinourleadershipandotherkeyemployees,andthesepersonsarenotreplacedbyindividualswithcomparableskills,ourperformancecould
bemateriallyadverselyimpacted.Furthermore,wemaybeunabletoattractandretainadditionalqualifiedexecutivesasneededinthefuture.
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