INTANGIBLE ASSETS
Indefinite-Lived Intangible Assets
|
| | | | | | |
| Carrying Amount at December 31, |
(in millions) | 2013 | 2012 |
International routes and slots | $ | 2,287 |
| $ | 2,240 |
|
Delta tradename | 850 |
| 850 |
|
SkyTeam related assets | 661 |
| 661 |
|
Domestic slots | 622 |
| 622 |
|
Total | $ | 4,420 |
| $ | 4,373 |
|
International Routes and Slots. Our remaining international routes and slots primarily relate to the Pacific region. The U.S. and Japan have a bilateral agreement that allows U.S. air carriers unlimited flying to and from Japan under route authorities granted by the U.S. Department of Transportation. Access to the primary Japanese airports (Haneda and Narita airports in Tokyo) is regulated through allocations of slots, which limit the rights of carriers to operate at these airports. The U.S. and Japan have agreed on plans for a limited number of additional slots at these airports. The substantial number of slots we hold at Tokyo Narita Airport, combined with limited-entry rights we hold in other countries, enables us to operate a hub at Tokyo serving the Asia-Pacific region. We currently believe that the current U.S.-Japan bilateral agreement will not have a significant long-term impact on our Pacific routes and slots; therefore, these assets continue to have an indefinite life and are not presently impaired.
Negative changes to our operations could result in an impairment charge or a change from indefinite-lived to definite-lived in the period in which the changes occur or are projected to occur.
Domestic Slots. In December 2011, we and US Airways exchanged takeoff and landing rights at LaGuardia Airport ("LaGuardia") and Reagan National airports. Under the agreement, (1) we acquired 132 slot pairs at LaGuardia from US Airways and (2) US Airways acquired from us 42 slot pairs at Reagan National and $67 million in cash. Additionally, we divested 16 slot pairs at LaGuardia and eight slot pairs at Reagan National to airlines with limited or no service at those airports and received $90 million in cash proceeds from the sale of the divested slot pairs. The divestiture of these slot pairs resulted in the recognition of a $43 million gain during the December 2011 quarter in restructuring and other items on our Consolidated Statement of Operations. This gain was offset by a $50 million impairment charge recorded on our Moscow slots, for a net $7 million loss recorded during 2011.
The 132 slot pairs at LaGuardia acquired in 2011 were recorded at fair value. We estimated their fair value using a combination of limited market transactions and the lease savings method, which is an income approach. These assets are classified in Level 3 of the fair value hierarchy. The carrying value related to the 42 slot pairs at Reagan National acquired by US Airways was removed from our indefinite-lived intangible assets. In approving the transaction, the Department of Transportation restricted our use of the exchanged slots. We recorded a $78 million deferred gain in December 2011. We recognized this deferred gain in 2012 as the restrictions lapsed.
Definite-Lived Intangible Assets
|
| | | | | | | | | | | | | |
| December 31, 2013 | | December 31, 2012 |
(in millions) | Gross Carrying Amount | Accumulated Amortization | | Gross Carrying Amount | Accumulated Amortization |
Marketing agreements | $ | 730 |
| $ | (602 | ) | | $ | 730 |
| $ | (545 | ) |
Contracts | 193 |
| (83 | ) | | 193 |
| (72 | ) |
Other | 53 |
| (53 | ) | | 53 |
| (53 | ) |
Total | $ | 976 |
| $ | (738 | ) | | $ | 976 |
| $ | (670 | ) |
Amortization expense for each of the years ended December 31, 2013, 2012 and 2011 was approximately $70 million. The following table summarizes the estimated aggregate amortization expense for each of the five succeeding fiscal years:
|
| | | |
Years Ending December 31, (in millions) | |
2014 | $ | 67 |
|
2015 | 67 |
|
2016 | 9 |
|
2017 | 9 |
|
2018 | 8 |
|
