Delta Airlines 2015 Annual Report Download - page 40

TableofContents
FinancialConditionandLiquidity
Weexpecttomeetourcashneedsforthenext12monthsfromcashflowsfromoperations,cashandcashequivalents,short-terminvestmentsandfinancing
arrangements.AsofDecember31,2015,wehad$5.6billioninunrestrictedliquidity,consistingof$3.4billionincashandcashequivalentsandshort-term
investmentsand$2.2billioninundrawnrevolvingcreditfacilities.During2015,wegenerated$7.9billionincashfromoperatingactivities,whichweusedtofund
capitalexpendituresof$2.9billion,return$2.6billiontoshareholders,reducetheprincipalonourdebtandcapitalleaseobligationsby$1.5billionandfund
equityinvestmentsof$500million,whilemaintainingasolidliquidityposition.
Sources of Liquidity
OperatingActivities
Cashflowsfromoperatingactivitiescontinuetoprovideourprimarysourceofliquidity.Wegeneratedpositivecashflowsfromoperationsof$7.9billionin
2015,$4.9billionin2014and$4.5billionin2013.Wealsoexpecttogeneratepositivecashflowsfromoperationsin2016.
Ouroperatingcashflowscanbeimpactedbythefollowingfactors:
SeasonalityofAdvanceTicketSales.Wesellticketsforairtravelinadvanceofthecustomer'straveldate.Whenwereceiveacashpaymentatthetimeofsale,
werecordthecashreceivedonadvancesalesasdeferredrevenueinairtrafficliability.Theairtrafficliabilityincreasesduringthewinterandspringasadvanced
ticketsalesgrowpriortothesummerpeaktravelseasonanddecreasesduringthesummerandfallmonths.
FuelandFuelHedgeMargins.Includingourregionalcarriers,fuelexpenserepresented23.0%ofourtotaloperatingexpensesfor2015.Themarketpricefor
jetfuelishighlyvolatile,whichcanimpactthecomparabilityofourcashflowsfromoperationsfromperiodtoperiod.
Aspartofourfuelhedgingprogram,wemayberequiredtopostmargintocounterpartieswhenourportfolioisinalossposition.Conversely,ifourportfolio
withcounterpartiesisinagainposition,wemayreceivemargin.Ourfuturecashflowsareimpactedbythenatureofourderivativecontractsandthemarketprice
ofthecommoditiesunderlyingthosederivativecontracts.OurhedgecontractswereinanetlosspositionatDecember31,2015and2014,resultingin$119million
and$925million,respectively,ofmarginpostingstocounterparties.
TimingofSkyMilesSales.InDecember2011,weamendedourAmericanExpressagreementsandagreedtosell$675millionofunrestrictedSkyMilesto
AmericanExpressineachDecemberfrom2011through2014.PursuanttotheDecember2011amendment,AmericanExpresspurchased$675millionof
unrestrictedSkyMilesineachofthoseyearswiththefinalpaymentin2014.TheSkyMilespurchasedinDecember2014wereutilizedbyAmericanExpressin
2015.TherewerenoadvancedsalesofSkyMilesin2015.
PensionContributions.Wesponsordefinedbenefitpensionplansforeligibleemployeesandretirees.Theseplansareclosedtonewentrantsandarefrozenfor
futurebenefitaccruals.OurfundingobligationsfortheseplansaregovernedbytheEmployeeRetirementIncomeSecurityAct,asmodifiedbythePension
ProtectionActof2006.In2015,wecontributed$1.2billiontoourqualifieddefinedbenefitpensionplans.Asaresultofthesecontributions,wesatisfied,onan
acceleratedbasis,our2015requiredcontributionsforourdefinedbenefitplansincludingnearly$600millionabovetheminimumfundingrequirements.We
contributed$917millionand$914millionin2014and2013,respectively,including$250millionabovetheminimumfundinglevelsineachofthoseyears.We
estimateourfundingundertheseplanswilltotalatleast$1.0billionin2016,including$500millionabovetheminimumfundingrequirements.
ProfitSharing.Ourbroad-basedemployeeprofitsharingprogramprovidesthat,foreachyearinwhichwehaveanannualpre-taxprofit,asdefinedbythe
termsoftheprogram,wewillpayaspecifiedportionofthatprofittoemployees.Indeterminingtheamountofprofitsharing,theprogramdefinesprofitaspre-tax
profitadjustedforprofitsharingandcertainotheritems.Foryearspriorto2016,ourprofitsharingprogrampaid10%toemployeesforthefirst$2.5billionof
annualprofitand20%ofannualprofitabove$2.5billion.
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