Delta Airlines 2015 Annual Report Download - page 46

TableofContents
IdentifiableIntangibleAssets.Ouridentifiableintangibleassets,whicharerelatedtotheairlinesegment,hadanetcarryingamountof$4.9billionat
December31,2015,ofwhich$4.7billionrelatedtoindefinite-livedintangibleassets.Indefinite-livedassetsarenotamortizedandconsistprimarilyofroutes,
slots,theDeltatradenameandassetsrelatedtoSkyTeamandcollaborativearrangements.Definite-livedassetsconsistprimarilyofmarketingandmaintenance
serviceagreements.
In2015,weperformedquantitativeassessments,includingapplicablefactorsnotedin"KeyAssumptions"above,ofourindefinite-livedintangibleassets
(excludingsixLondon-Heathrowslotpairsweacquiredfor$276millionduringtheDecember2015quarter)anddeterminedthattherewasnoindicationthatthe
assetswereimpairedasthefairvaluesrangedfromapproximately130%to280%ofthecarryingvalues.
WeobtainedthePacificroutesandslotsassetaspartoftheacquisitionofNorthwestAirlinesin2008andiscomposedofPacificrouteauthoritiesandtakeoff
andlandingrights(“slots”)atcapacity-constrainedairportsinAsia,includingTokyo-NaritaInternationalAirport("Narita").ThisintangibleassetsupportsDelta’s
NaritahubactivitiesandisessentialtoDelta'sentirePacificnetwork.Changesinkeyinputsandassumptions,including(1)neworenhancedjointventuresor
alliances,(2)foreigncurrencyexchangerates,(3)fuelcosts,legislativeorregulatorychanges,includingchangesinaccesstoTokyo-Hanedaairportand(4)Pacific
regionprofitability,couldimpactthevalueofthisassetinthefuture.
Long-LivedAssets
Ourflightequipmentandotherlong-livedassetshavearecordedvalueof$23.0billionatDecember31,2015.Thisvalueisbasedonvariousfactors,including
theassets'estimatedusefullivesandsalvagevalues.Werecordimpairmentlossesonflightequipmentandotherlong-livedassetsusedinoperationswhenevents
andcircumstancesindicatetheassetsmaybeimpairedandtheestimatedfuturecashflowsgeneratedbythoseassetsarelessthantheircarryingamounts.Factors
whichcouldcauseimpairmentinclude,butarenotlimitedto,(1)adecisiontopermanentlyremoveflightequipmentorotherlong-livedassetsfromoperations,(2)
significantchangesintheestimatedusefullife,(3)significantchangesinprojectedcashflows,(4)permanentandsignificantdeclinesinfleetfairvaluesand(5)
changestotheregulatoryenvironment.Forlong-livedassetsheldforsale,wediscontinuedepreciationandrecordimpairmentlosseswhenthecarryingamountof
theseassetsisgreaterthanthefairvaluelessthecosttosell.
Todeterminewhetherimpairmentsexistforaircraftusedinoperations,wegroupassetsatthefleet-typelevel(thelowestlevelforwhichthereareidentifiable
cashflows)andthenestimatefuturecashflowsbasedonprojectionsofcapacity,passengermileyield,fuelcosts,laborcostsandotherrelevantfactors.Ifan
impairmentoccurs,theimpairmentlossrecognizedistheamountbywhichthefleet'scarryingamountexceedsitsestimatedfairvalue.Weestimateaircraftfair
valuesusingpublishedsources,appraisalsandbidsreceivedfromthirdparties,asavailable.
IncomeTaxValuationAllowance
Weperiodicallyassesswhetheritismorelikelythannotthatwewillgeneratesufficienttaxableincometorealizeourdeferredincometaxassets.Weestablish
valuationallowancesifitisnotlikelywewillrealizeourdeferredincometaxassets.Inmakingthisdetermination,weconsiderallavailablepositiveandnegative
evidenceandmakecertainassumptions.Weconsider,amongotherthings,projectedfuturetaxableincome,scheduledreversalsofdeferredtaxliabilities,the
overallbusinessenvironment,ourhistoricalfinancialresultsandtaxplanningstrategies.Inevaluatingthelikelihoodofutilizingournetdeferredincometaxassets,
thesignificantfactorsthatweconsiderinclude(1)ourrecenthistoryofprofitability,(2)growthintheU.S.andglobaleconomies,(3)forecastofairlinerevenue
trends,(4)estimateoffuturefuelpricesand(5)futureimpactoftaxabletemporarydifferences.
Werecordedafullvaluationallowancein2004duetoourcumulativelosspositionatthattime.During2013,afterconsideringallpositiveandnegative
evidence,weconcludedthatourdeferredincometaxassetsaremorelikelythannottoberealized.Accordingly,wereleasedsubstantiallyallofthevaluation
allowanceagainstournetdeferredincometaxassets.Werecognizedan$8.0billionbenefitinourprovisionforincometaxes,primarilyrelatedtothevaluation
allowancerelease.
Attheendof2015ournetdeferredtaxassetbalancewas$5.0billion,againstwhichwemaintaineda$56millionvaluationallowance,primarilyrelatedto
statenetoperatinglosses,statecreditsandunrealizedlossesoninvestments,whichhavelimitedexpirationperiods.
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