Alaska Airlines and Horizon Air 2013 Annual Report Download - page 133

Contractual Obligations
The following table provides a summary of our principal payments under current and long-term debt
obligations, operating lease commitments, aircraft purchase commitments and other obligations as of
December 31, 2013.
(in millions) 2014 2015 2016 2017 2018
Beyond
2018 Total
Current and long-term debt obligations .... $117 $113 $111 $116 $147 $ 267 $ 871
Operating lease commitments (a) ........ 221 186 154 119 55 160 895
Aircraft purchase commitments .......... 407 338 289 341 429 1,034 2,838
Interest obligations (b) ................ 42 37 32 27 20 24 182
Other obligations (c) .................. 61 54 32 32 14 — 193
Total ............................... $848 $728 $618 $635 $665 $1,485 $4,979
(a) Operating lease commitments generally include aircraft operating leases, airport property and hangar leases, office space,
and other equipment leases.
(b) For variable-rate debt, future obligations are shown above using interest rates in effect as of December 31, 2013.
(c) Includes minimum obligations under our long-term power-by-the-hour maintenance agreements and obligations associated
with third-party CPAs with SkyWest and PenAir. Refer to the "Commitments" note in the consolidated financial statements for
further information.
Defined Benefit Pensions
Our qualified defined-benefit pension plans were
overfunded by $60 million at December 31,
2013, compared to a $335 million unfunded
liability at December 31, 2012. This results in a
104% funded status on a projected benefit
obligation basis compared to 82% funded as of
December 31, 2012. Considering the funded
status of the plans, we do not plan on making
any material pension contributions in 2014.
Credit Card Agreements
We have agreements with a number of credit
card companies to process the sale of tickets
and other services. Under these agreements,
there are material adverse change clauses that,
if triggered, could result in the credit card
companies holding back a reserve from our
credit card receivables. Under one such
agreement, we could be required to maintain a
reserve if our credit rating is downgraded to or
below a rating specified by the agreement or our
cash and marketable securities balance fell
below $500 million. Under another such
agreement, we could be required to maintain a
reserve if our cash and marketable securities
balance fell below $500 million. We are not
currently required to maintain any reserve under
these agreements, but if we were, our financial
position and liquidity could be materially harmed.
Deferred Income Taxes
For federal income tax purposes, the majority of
our assets, as measured by value, are fully
depreciated over a seven-year life using an
accelerated depreciation method or bonus
depreciation if available. For financial reporting
purposes, the majority of our assets are
depreciated over 15 to 20 years to an estimated
salvage value using the straight-line basis. This
difference has created a significant deferred tax
liability. At some point in the future the
depreciation basis will reverse, potentially
resulting in an increase in income taxes paid.
While it is possible that we could have material
cash obligations for this deferred liability at
some point in the future, we cannot estimate the
timing of long-term cash flows with reasonable
accuracy. Taxable income and cash taxes
payable in the short term are impacted by many
items, including the amount of book income
generated, which can be volatile depending on
revenue and fuel prices, level of pension funding
(which is generally not known until late each
year), whether "bonus depreciation" provisions
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ŠForm 10-K