Delta Airlines 2015 Annual Report Download - page 91

TableofContents
ContingenciesRelatedtoTerminationofShuttleAmericaAgreements
WehavetwocapacitypurchaseagreementswithShuttleAmerica,onethatrelatestoitsoperationofEmbraer145sandonethatrelatestoitsoperationof
Embraer170/175aircraft.TheEmbraer145aircraftwereoperatedbyChautauquaAirlinesatDecember31,2014andassignedwithourconsenttoShuttleAmerica
inJanuary2015.Byprovidingrequiredadvancenotice,wemayterminatetheEmbraer145agreementand/ortheEmbraer170/175agreementwithoutcauseatany
time.Ifweterminateeitheroftheagreementswithoutcause,ShuttleAmericahastherightto(1)assigntouscertainleasedaircraftthattheairlineoperatesforus,
providedweareabletocontinuetheleasesonthesametermstheairlinehadpriortotheassignmentand(2)requireustopurchaseorleasecertainoftheaircraft
theairlineownsandoperatesforusatthetimeofthetermination.IfwearerequiredtopurchaseaircraftownedbyShuttleAmerica,thepurchasepricewouldbe
equaltotheamountnecessaryto(1)reimburseShuttleAmericafortheequityitprovidedtopurchasetheaircraftand(2)repayinfullanydebtoutstandingatsuch
timethatisnotbeingassumedinconnectionwithsuchpurchase.IfwearerequiredtoleaseaircraftownedbyShuttleAmerica,theleasewouldhave(1)arate
equaltotheaircraft-relateddebtpaymentsofShuttleAmericaasif90%oftheaircraftwasfinancedbyShuttleAmericaand(2)otherspecifiedtermsand
conditions.Becausethesecontingenciesdependonourterminationoftheagreementswithoutcausepriortotheirexpirationdates,noobligationexistsunlesssuch
terminationoccurs.
Weestimatethatthetotalfairvalues,determinedasofDecember31,2015,oftheaircraftShuttleAmericacouldassigntousorrequirethatwepurchaseifwe
terminatewithoutcauseourcontractcarrieragreementsareapproximately$90millionwithrespecttotheEmbraer145aircraftand$184millionwithrespecttothe
Embraer170/175aircraft.Theactualamountwemayberequiredtopayinthesecircumstancesmaybemateriallydifferentfromtheseestimates.IfShuttle
Americaexercisesthisright,wemustalsopayShuttleAmerica10%interest(compoundedmonthly)ontheequityitprovidedwhenitpurchasedtheaircraft.
Venezuelan Currency Devaluation
DuringtheDecember2015quarter,wedevaluedtheunrestrictedcashheldinVenezuelabasedupontheprevailingmarketexchangerateof200bolivarsper
U.S.dollaraswewillnotbeabletorepatriatethosefundsatthepreviousoriginalexchangerate.Asaresultofthedevaluation,werecordeda$72millioncharge
inmiscellaneous,netwithinnon-operatingexpense,relatedtosalesin2013and2014.AsofDecember31,2015,theremainingbalanceofVenezuelanbolivars
recordedinunrestrictedcashonourConsolidatedBalanceSheetisdeminimis.WenowonlyacceptU.S.dollarsaspaymentforticketsonVenezuelaflights.
Legal Contingencies
Weareinvolvedinvariouslegalproceedingsrelatedtoemploymentpractices,environmentalissues,antitrustmattersandothermattersconcerningour
business.Werecordliabilitiesforlossesfromlegalproceedingswhenwedeterminethatitisprobablethattheoutcomeinalegalproceedingwillbeunfavorable
andtheamountoflosscanbereasonablyestimated.Althoughtheoutcomeofthelegalproceedingsinwhichweareinvolvedcannotbepredictedwithcertainty,
managementbelievesthattheresolutionofcurrentmatterswillnothaveamaterialadverseeffectonourConsolidatedFinancialStatements.
Credit Card Processing Agreements
OurVISA/MasterCardandAmericanExpresscreditcardprocessingagreementsprovidethatnocashreserve("Reserve")isrequired,andnowithholdingof
paymentrelatedtoreceivablescollectedwilloccur,exceptincertaincircumstances,includingwhenwedonotmaintainarequiredlevelofliquidityasoutlinedin
themerchantprocessingagreements.IncircumstancesinwhichthecreditcardprocessorcanestablishaReserveorwithholdpayments,theamountoftheReserve
orpaymentsthatmaybewithheldwouldbeequaltothepotentialliabilityofthecreditcardprocessorforticketspurchasedwithVISA/MasterCardorAmerican
Expresscreditcards,asapplicable,thathadnotyetbeenusedfortravel.WedidnothaveaReserveoranamountwithheldasofDecember31,2015and2014.
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