Delta Airlines 2014 Annual Report Download - page 63

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 . SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
Delta Air Lines, Inc., a Delaware corporation, provides scheduled air transportation for passengers and cargo throughout the United States (“U.S.”)
and around the world. Our Consolidated Financial Statements include the accounts of Delta Air Lines, Inc. and our wholly-owned subsidiaries and
have been prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”). We do not consolidate the financial statements
of any company in which we have an ownership interest of 50% or less. We are not the primary beneficiary of, nor do we have a controlling financial
interest in, any variable interest entity. Accordingly, we have not consolidated any variable interest entity.
We have marketing alliances with other airlines to enhance our access to domestic and international markets. These arrangements may include
codesharing, reciprocal frequent flyer program benefits, shared or reciprocal access to passenger lounges, joint promotions, common use of airport
gates and ticket counters, ticket office co-location and other marketing agreements. We have received antitrust immunity for certain marketing
arrangements, which enables us to offer a more integrated route network and develop common sales, marketing and discount programs for customers.
Some of our marketing arrangements provide for the sharing of revenues and expenses. Revenues and expenses associated with collaborative
arrangements are presented on a gross basis in the applicable line items on our Consolidated Statements of Operations.
As described in Note 4 , we became the sole owner of Endeavor Air, Inc. ("Endeavor"), formerly Pinnacle Airlines, Inc., on May 1, 2013, pursuant
to a confirmed plan of reorganization in the bankruptcy cases of Endeavor and its affiliates. Prior to this acquisition, Endeavor served as a regional
carrier under a capacity purchase agreement where we purchased Endeavor's entire seat inventory and marketed it under the Delta tradename.
Accordingly, Endeavor's passenger revenue was included in regional carriers passenger revenue in Delta's Consolidated Statements of Operations. All
of the expenses Delta incurred under this arrangement were included in contract carrier arrangements expense. Subsequent to this acquisition, we have
maintained this presentation and have re-titled contract carrier arrangements expense as regional carrier expense to reflect the inclusion of a wholly-
owned regional carrier. This presentation aligns with the regional revenue presentation on the Consolidated Statements of Operations.
We reclassified certain prior period amounts, none of which were material, to conform to the current period presentation. Unless otherwise noted,
all amounts disclosed are stated before consideration of income taxes.
Use of Estimates
We are required to make estimates and assumptions when preparing our Consolidated Financial Statements in accordance with GAAP. These
estimates and assumptions affect the amounts reported in our Consolidated Financial Statements and the accompanying notes. Actual results could
differ materially from those estimates.
Recent Accounting Standards
Revenue from Contracts with Customers
In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09, "Revenue from
Contracts with Customers." While the standard supersedes existing revenue recognition guidance, it closely aligns with current GAAP. Under the new
standard, revenue is recognized at the time a good or service is transferred to a customer for the amount of consideration received for that specific good
or service.
It is effective for annual reporting periods beginning after December 15, 2016, including interim reporting periods, and early adoption is not
permitted. Entities may use a full retrospective approach or report the cumulative effect as of the date of adoption. We are currently evaluating the
impact, if any, the adoption of this standard will have on our Consolidated Financial Statements.
Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income
In February 2013, the FASB issued ASU No. 2013-02, "Comprehensive Income." The standard revises the reporting of items reclassified out of
accumulated other comprehensive income and is effective for fiscal years beginning after December 15, 2012. We adopted this guidance in the March
2013 quarter and have presented amounts reclassified out of accumulated other comprehensive income in a note to the financial statements. For
additional information, see Note 15.
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