Delta Airlines 2014 Annual Report Download - page 78

Credit Risk
To manage credit risk associated with our aircraft fuel price, interest rate and foreign currency hedging programs, we evaluate counterparties based
on several criteria including their credit ratings and limit our exposure to any one counterparty.
Our hedge contracts contain margin funding requirements. The margin funding requirements may cause us to post margin to counterparties or may
cause counterparties to post margin to us as market prices in the underlying hedged items change.
Due to the fair value position of our hedge contracts,
we posted net margin of $925 million as of December 31, 2014 and received net margin of $65 million as of December 31, 2013 .
Our accounts receivable are generated largely from the sale of passenger airline tickets and cargo transportation services, the majority of which are
processed through major credit card companies. We also have receivables from the sale of mileage credits under our SkyMiles Program to
participating airlines and non-airline businesses such as credit card companies, hotels and car rental agencies. The credit risk associated with our
receivables is minimal.
Self
-Insurance Risk
We self-insure a portion of our losses from claims related to workers' compensation, environmental issues, property damage, medical insurance for
employees and general liability. Losses are accrued based on an estimate of the aggregate liability for claims incurred, using independent actuarial
reviews based on standard industry practices and our historical experience.
NOTE 6 . JFK REDEVELOPMENT
We are optimizing our international and trans-
continental flight schedule and undertaking a redevelopment project at John F. Kennedy International
Airport (“JFK”) to facilitate convenient connections for our passengers and improve coordination with our SkyTeam alliance partners. Prior to
beginning the redevelopment project, we primarily operated domestic flights out of Terminal 2 and international flights out of Terminal 3 under leases
with the Port Authority of New York and New Jersey (“Port Authority”), which operates JFK. In 2013, we completed construction on nine new
international widebody gates at Terminal 4, Concourse B, and relocated our operations from Terminal 3 to our new facilities there. In 2014, we
substantially completed the demolition of Terminal 3 and began work on the site for ramp paving in order to accommodate new aircraft parking.
During 2013, we also announced that we would begin construction of another extension of Terminal 4, Concourse B, for an additional $180 million
expansion project that added 11 more regional jet gates. This second extension was completed in January 2015 when we relocated the majority of our
regional jet operations from Terminal 2 to Terminal 4. Terminal 4 is operated by JFK International Air Terminal LLC (“IAT”), a private party, under
its lease with the Port Authority.
In December 2010, the Port Authority issued approximately $800 million principal amount of special project bonds to fund the majority of the
project. Also in December 2010, we entered into a 33 year agreement with IAT (“Sublease”) to sublease space in Terminal 4. IAT is unconditionally
obligated under its lease with the Port Authority to pay rentals from the revenues it receives from its operation and management of Terminal 4,
including, among others, our rental payments under the Sublease, in an amount sufficient to pay principal and interest on the bonds. We do not
guarantee payment of the bonds. The balance of the project costs will be provided by Port Authority passenger facility charges, Transportation Security
Administration funding and our contributions. Our future rental payments will vary based on our share of total passenger and baggage counts at
Terminal 4, the number of gates we occupy in Terminal 4, IAT's actual expenses of operating Terminal 4 and other factors.
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