UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~March 31,~~September 30, 2021


Or
☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 001-5424

DELTA AIR LINES, INC.

(Exact name of registrant as specified in its charter)


Delaware						58-0218548
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

Post Office Box 20706
Atlanta, Georgia						30320-6001
(Address of principal executive offices)						(Zip Code)

Registrant's telephone number, including area code: (404) 715-2600

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Common Stock, par value $0.0001 per share

DAL

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☑

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☑

Number of shares outstanding by each class of common stock, as of ~~March 31,~~September 30, 2021:

Common Stock, $0.0001 par value - ~~639,661,387~~640,013,818 shares outstanding

This document is also available through our website at http://ir.delta.com/.

Forward Looking Statements

Unless otherwise indicated or the context otherwise requires, the terms "Delta," "we," "us" and "our" refer to Delta Air Lines, Inc. and its subsidiaries.

FORWARD-LOOKING STATEMENTS

Statements in this Form 10-Q (or otherwise made by us or on our behalf) that are not historical facts, including statements about our estimates, expectations, beliefs, intentions, projections, goals, aspirations, commitments or strategies for the future, may be "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from historical experience or our present expectations. Known material risk factors applicable to Delta are described in "Item 1A. Risk Factors" of our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 ("Form 10-K"), other than risks that could apply to any issuer or offering. All forward-looking statements speak only as of the date made, and we undertake no obligation to publicly update or revise any forward-looking statements to reflect events or circumstances that may arise after the date of this report except as required by law.

Delta Air Lines, Inc. September 2021 ~~March~~ Form 10-Q 1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

Delta Air Lines, Inc.

Results of Review of Interim Financial Statements

We have reviewed the accompanying consolidated balance sheet of Delta Air Lines, Inc. (the Company) as of ~~March 31,~~September 30, 2021, the related condensed consolidated statements of operations and comprehensive ~~loss, cash flows~~income/(loss) and consolidated statements of stockholders' equity for the three-month and nine-month periods ended ~~March 31,~~September 30, 2021 and 2020, the condensed consolidated statements of cash flows for the nine-month periods ended September 30, 2021 and 2020 and the related notes (collectively referred to as the "condensed consolidated interim financial statements"). Based on our reviews, we are not aware of any material modifications that should be made to the condensed consolidated interim financial statements for them to be in conformity with U.S. generally accepted accounting principles.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheet of the Company as of December 31, 2020, the related consolidated statements of operations, comprehensive loss, cash flows, and stockholders' equity for the year then ended, and the related notes (not presented herein); and in our report dated February 12, 2021, we expressed an unqualified audit opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of December 31, 2020, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

Basis for Review Results

These financial statements are the responsibility of the Company's management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the SEC and the PCAOB. We conducted our review in accordance with the standards of the PCAOB. A review of interim financial statements consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.


			/s/ Ernst & Young LLP
Atlanta, Georgia
~~April 15,~~October 13, 2021

Delta Air Lines, Inc. September 2021 ~~March~~ Form 10-Q 2

Financial Statements

DELTA AIR LINES, INC.

Consolidated Balance Sheets

(Unaudited)


(in millions, except share data)	(in millions, except share data)	March 31, 2021		December 31, 2020		(in millions, except share data)	September 30, 2021		December 31, 2020
ASSETS	ASSETS					ASSETS
Current Assets:	Current Assets:					Current Assets:
Cash and cash equivalents	Cash and cash equivalents	$	8,460	$	8,307	Cash and cash equivalents	$	8,785	$	8,307
Short-term investments	Short-term investments	5,575		5,789		Short-term investments	4,417		5,789
Accounts receivable, net of an allowance for uncollectible accounts of $75 and $89		1,837		1,396
Accounts receivable, net of an allowance for uncollectible accounts of $78 and $89						Accounts receivable, net of an allowance for uncollectible accounts of $78 and $89	2,183		1,396
Fuel inventory	Fuel inventory	457		377		Fuel inventory	641		377
Expendable parts and supplies inventories, net of an allowance for obsolescence of $176 and $188		371		355
Expendable parts and supplies inventories, net of an allowance for obsolescence of $174 and $188						Expendable parts and supplies inventories, net of an allowance for obsolescence of $174 and $188	371		355
Prepaid expenses and other	Prepaid expenses and other	1,153		1,180		Prepaid expenses and other	1,074		1,180
Total current assets	Total current assets	17,853		17,404		Total current assets	17,471		17,404
Noncurrent Assets:	Noncurrent Assets:					Noncurrent Assets:
Property and equipment, net of accumulated depreciation and amortization of $17,922 and $17,511		26,862		26,529
Property and equipment, net of accumulated depreciation and amortization of $18,693 and $17,511						Property and equipment, net of accumulated depreciation and amortization of $18,693 and $17,511	27,816		26,529
Operating lease right-of-use assets	Operating lease right-of-use assets	5,577		5,733		Operating lease right-of-use assets	5,827		5,733
Goodwill	Goodwill	9,753		9,753		Goodwill	9,753		9,753
Identifiable intangibles, net of accumulated amortization of $885 and $883		6,009		6,011
Identifiable intangibles, net of accumulated amortization of $890 and $883						Identifiable intangibles, net of accumulated amortization of $890 and $883	6,004		6,011
Cash restricted for airport construction	Cash restricted for airport construction	1,223		1,556		Cash restricted for airport construction	713		1,556
Equity investments	Equity investments	1,929		1,665		Equity investments	1,919		1,665
Deferred income taxes, net	Deferred income taxes, net	2,306		1,988		Deferred income taxes, net	1,813		1,988
Other noncurrent assets	Other noncurrent assets	1,571		1,357		Other noncurrent assets	1,467		1,357
Total noncurrent assets	Total noncurrent assets	55,230		54,592		Total noncurrent assets	55,312		54,592
Total assets	Total assets	$	73,083	$	71,996	Total assets	$	72,783	$	71,996

LIABILITIES AND STOCKHOLDERS' EQUITY	LIABILITIES AND STOCKHOLDERS' EQUITY					LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:	Current Liabilities:					Current Liabilities:
Current maturities of debt and finance leases	Current maturities of debt and finance leases	$	2,983	$	1,732	Current maturities of debt and finance leases	$	2,296	$	1,732
Current maturities of operating leases	Current maturities of operating leases	653		678		Current maturities of operating leases	636		678
Air traffic liability	Air traffic liability	5,105		4,044		Air traffic liability	6,246		4,044
Accounts payable	Accounts payable	3,432		2,840		Accounts payable	4,017		2,840
Accrued salaries and related benefits	Accrued salaries and related benefits	2,182		2,086		Accrued salaries and related benefits	2,198		2,086
Loyalty program deferred revenue	Loyalty program deferred revenue	2,439		1,777		Loyalty program deferred revenue	2,619		1,777
Fuel card obligation	Fuel card obligation	1,100		1,100		Fuel card obligation	1,100		1,100
Other accrued liabilities	Other accrued liabilities	2,794		1,670		Other accrued liabilities	1,812		1,670
Total current liabilities	Total current liabilities	20,688		15,927		Total current liabilities	20,924		15,927
Noncurrent Liabilities:	Noncurrent Liabilities:					Noncurrent Liabilities:
Debt and finance leases	Debt and finance leases	26,061		27,425		Debt and finance leases	25,523		27,425
Noncurrent air traffic liability	Noncurrent air traffic liability	250		500		Noncurrent air traffic liability	130		500
Pension, postretirement and related benefits	Pension, postretirement and related benefits	10,396		10,630		Pension, postretirement and related benefits	8,408		10,630
Loyalty program deferred revenue	Loyalty program deferred revenue	4,846		5,405		Loyalty program deferred revenue	4,837		5,405
Noncurrent operating leases	Noncurrent operating leases	5,568		5,713		Noncurrent operating leases	5,742		5,713
Other noncurrent liabilities	Other noncurrent liabilities	4,792		4,862		Other noncurrent liabilities	4,613		4,862
Total noncurrent liabilities	Total noncurrent liabilities	51,913		54,535		Total noncurrent liabilities	49,253		54,535

Commitments and Contingencies	Commitments and Contingencies	0		0		Commitments and Contingencies	0		0

Stockholders' Equity:	Stockholders' Equity:					Stockholders' Equity:
Common stock at $0.0001 par value; 1,500,000,000 shares authorized, 649,361,047 and 647,352,203 shares issued		0		0
Common stock at $0.0001 par value; 1,500,000,000 shares authorized, 649,758,099 and 647,352,203 shares issued						Common stock at $0.0001 par value; 1,500,000,000 shares authorized, 649,758,099 and 647,352,203 shares issued	—		—
Additional paid-in capital	Additional paid-in capital	11,326		11,259		Additional paid-in capital	11,428		11,259
Accumulated deficit		(1,605)		(428)
Retained earnings/(accumulated deficit)						Retained earnings/(accumulated deficit)	259		(428)
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(8,960)		(9,038)		Accumulated other comprehensive loss	(8,800)		(9,038)
Treasury stock, at cost, 9,699,660 and 9,169,683 shares		(279)		(259)
Treasury stock, at cost, 9,744,281 and 9,169,683 shares						Treasury stock, at cost, 9,744,281 and 9,169,683 shares	(281)		(259)
Total stockholders' equity	Total stockholders' equity	482		1,534		Total stockholders' equity	2,606		1,534
Total liabilities and stockholders' equity	Total liabilities and stockholders' equity	$	73,083	$	71,996	Total liabilities and stockholders' equity	$	72,783	$	71,996
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.	The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.					The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

Delta Air Lines, Inc. September 2021 ~~March~~ Form 10-Q 3

Financial Statements

DELTA AIR LINES, INC.

Condensed Consolidated Statements of Operations and Comprehensive ~~Loss~~Income/(Loss)

(Unaudited)

Three Months Ended March 31,
(in millions, except per share data) 2021 2020
Operating Revenue:
Passenger $ 2,748 $ 7,569
Cargo 215 152
Other 1,187 871
Total operating revenue 4,150 8,592
Operating Expense:
Salaries and related costs 2,202 2,862
Aircraft fuel and related taxes 1,017 1,595
Ancillary businesses and refinery 706 219
Contracted services 519 748
Landing fees and other rents 493 550
Depreciation and amortization 492 678
Regional carrier expense 401 577
Aircraft maintenance materials and outside repairs 294 469
Passenger service 118 273
Passenger commissions and other selling expenses 110 398
Aircraft rent 104 100
Restructuring charges (44) 0
Government grant recognition (1,186) 0
Other 322 533
Total operating expense 5,548 9,002
Operating Loss (1,398) (410)
Non-Operating Expense:
Interest expense, net (361) (79)
Impairments and equity method losses (54) (260)
Gain/(loss) on investments, net 262 (112)
Miscellaneous, net 36 254
Total non-operating expense, net (117) (197)
Loss Before Income Taxes (1,515) (607)
Income Tax Benefit 338 73
Net Loss $ (1,177) $ (534)
Basic Loss Per Share $ (1.85) $ (0.84)
Diluted Loss Per Share $ (1.85) $ (0.84)
Cash Dividends Declared Per Share $ 0 $ 0.40
Comprehensive Loss $ (1,099) $ (443)
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.


	Three Months Ended September 30,				Nine Months Ended September 30,
(in millions, except per share data)	2021		2020		2021		2020
Operating Revenue:
Passenger	$	7,191	$	1,938	$	15,278	$	10,185
Cargo	262		142		728		403
Other	1,701		982		4,423		2,534
Total operating revenue	9,154		3,062		20,429		13,122

Operating Expense:
Salaries and related costs	2,566		2,012		7,096		7,000
Aircraft fuel and related taxes	1,552		486		4,056		2,453
Ancillary businesses and refinery	1,079		561		2,724		1,181
Contracted services	634		419		1,723		1,536
Depreciation and amortization	501		545		1,494		1,813
Landing fees and other rents	524		458		1,477		1,430
Regional carrier expense	453		290		1,258		1,204
Aircraft maintenance materials and outside repairs	433		106		1,014		618
Passenger commissions and other selling expenses	308		100		640		548
Passenger service	226		92		520		456
Aircraft rent	105		99		313		295
Restructuring charges	33		5,345		(3)		7,798
Government grant recognition	(1,822)		(1,315)		(4,512)		(2,595)
Other	357		250		1,006		996
Total operating expense	6,949		9,448		18,806		24,733

Operating Income/(Loss)	2,205		(6,386)		1,623		(11,611)

Non-Operating Expense:
Interest expense, net	(314)		(291)		(1,014)		(564)
Impairments and equity method losses	(49)		(114)		(102)		(2,432)
Gain/(loss) on investments, net	(223)		(95)		251		(199)
Loss on extinguishment of debt	(183)		—		(266)		—
Miscellaneous, net	96		27		301		327
Total non-operating expense, net	(673)		(473)		(830)		(2,868)

Income/(Loss) Before Income Taxes	1,532		(6,859)		793		(14,479)

Income Tax (Provision)/Benefit	(320)		1,480		(105)		2,849

Net Income/(Loss)	$	1,212	$	(5,379)	$	688	$	(11,630)

Basic Earnings/(Loss) Per Share	$	1.90	$	(8.47)	$	1.08	$	(18.30)
Diluted Earnings/(Loss) Per Share	$	1.89	$	(8.47)	$	1.07	$	(18.30)
Cash Dividends Declared Per Share	$	—	$	—	$	—	$	0.40

Comprehensive Income/(Loss)	$	1,294	$	(5,381)	$	926	$	(11,580)

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

Delta Air Lines, Inc. September 2021 ~~March~~ Form 10-Q 4

Financial Statements

DELTA AIR LINES, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

Three Months Ended March 31,
(in millions) 2021 2020
Net Cash Provided by Operating Activities $ 691 $ 358
Cash Flows from Investing Activities:
Property and equipment additions:
Flight equipment, including advance payments (132) (629)
Ground property and equipment, including technology (306) (308)
Purchase of short-term investments (3,161) 0
Redemption of short-term investments 3,371 0
Purchase of equity investments 0 (2,099)
Other, net 168 65
Net cash used in investing activities (60) (2,971)
Cash Flows from Financing Activities:
Proceeds from short-term obligations 0 2,882
Proceeds from long-term obligations 924 3,962
Payments on debt and finance lease obligations (1,775) (1,238)
Repurchase of common stock 0 (344)
Cash dividends 0 (260)
Fuel card obligation 0 364
Other, net 61 (22)
Net cash (used in)/provided by financing activities (790) 5,344
Net (Decrease)/Increase in Cash, Cash Equivalents and Restricted Cash Equivalents (159) 2,731
Cash, cash equivalents and restricted cash equivalents at beginning of period 10,055 3,730
Cash, cash equivalents and restricted cash equivalents at end of period $ 9,896 $ 6,461
Non-Cash Transactions:
Flight and ground equipment acquired under finance leases $ 473 $ 184
Right-of-use assets acquired under operating leases 20 55
Other financings 200 0
The following table provides a reconciliation of cash, cash equivalents and restricted cash equivalents reported within the Consolidated Balance Sheets to the total of the same such amounts shown above:
March 31,
(in millions) 2021 2020
Current assets:
Cash and cash equivalents $ 8,460 $ 5,967
Restricted cash included in prepaid expenses and other 213 39
Noncurrent assets:
Cash restricted for airport construction 1,223 455
Total cash, cash equivalents and restricted cash equivalents $ 9,896 $ 6,461
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.


	Nine Months Ended September 30,
(in millions)	2021		2020
Net Cash Provided by/(Used in) Operating Activities	$	2,708	$	(2,507)

Cash Flows from Investing Activities:
Property and equipment additions:
Flight equipment, including advance payments	(961)		(594)
Ground property and equipment, including technology	(1,068)		(757)
Proceeds from sale-leaseback transactions	—		465
Purchase of short-term investments	(10,799)		(8,700)
Redemption of short-term investments	12,158		3,654
Purchase of equity investments	—		(2,099)

Other, net	252		(159)
Net cash used in investing activities	(418)		(8,190)

Cash Flows from Financing Activities:
Proceeds from short-term obligations	—		3,261
Proceeds from long-term obligations	1,902		22,481
Proceeds from sale-leaseback transactions	—		2,306
Payments on debt and finance lease obligations	(4,685)		(2,318)
Repurchase of common stock	—		(344)
Cash dividends	—		(260)
Fuel card obligation	—		364
Other, net	98		(177)
Net cash (used in)/provided by financing activities	(2,685)		25,313

Net (Decrease)/Increase in Cash, Cash Equivalents and Restricted Cash Equivalents	(395)		14,616
Cash, cash equivalents and restricted cash equivalents at beginning of period	10,055		3,730
Cash, cash equivalents and restricted cash equivalents at end of period	$	9,660	$	18,346

Non-Cash Transactions:
Flight and ground equipment acquired under finance leases	$	904	$	347
Right-of-use assets acquired under operating leases	536		1,062
Other financings	240		115


The following table provides a reconciliation of cash, cash equivalents and restricted cash equivalents reported within the Consolidated Balance Sheets to the total of the same such amounts shown above:
	September 30,
(in millions)	2021		2020
Current assets:
Cash and cash equivalents	$	8,785	$	16,477
Restricted cash included in prepaid expenses and other	162		189
Noncurrent assets:
Cash restricted for airport construction	713		1,680
Total cash, cash equivalents and restricted cash equivalents	$	9,660	$	18,346

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

Delta Air Lines, Inc. September 2021 ~~March~~ Form 10-Q 5

Financial Statements

DELTA AIR LINES, INC.

Consolidated Statements of Stockholders' Equity

(Unaudited)


		Common Stock			Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Treasury Stock						Common Stock			Additional Paid-In Capital		Retained Earnings / (Accumulated Deficit)		Accumulated Other Comprehensive Loss		Treasury Stock
(in millions, except per share data)	(in millions, except per share data)	Shares	Amount								Shares	Amount		Total		(in millions, except per share data)	Shares	Amount								Shares	Amount		Total
Balance at December 31, 2020	Balance at December 31, 2020	647	$	0	$	11,259	$	(428)	$	(9,038)	9	$	(259)	$	1,534	Balance at December 31, 2020	647	$	—	$	11,259	$	(428)	$	(9,038)	9	$	(259)	$	1,534
Net loss	Net loss	—	—		—		(1,177)		—		—	—		(1,177)		Net loss	—	—		—		(1,177)		—		—	—		(1,177)

Other comprehensive income	Other comprehensive income	—	—		—		—		78		—	—		78		Other comprehensive income	—	—		—		—		78		—	—		78
Common stock issued for employee equity awards(1)	Common stock issued for employee equity awards(1)	2	—		23		—		—		1	(20)		3		Common stock issued for employee equity awards(1)	2	—		23		—		—		1	(20)		3

Government grant warrant issuance	Government grant warrant issuance	—	—		44		—		—		—	—		44		Government grant warrant issuance	—	—		44		—		—		—	—		44
Balance at March 31, 2021	Balance at March 31, 2021	649	$	0	$	11,326	$	(1,605)	$	(8,960)	10	$	(279)	$	482	Balance at March 31, 2021	649	$	—	$	11,326	$	(1,605)	$	(8,960)	10	$	(279)	$	482
Net income																Net income	—	—		—		652		—		—	—		652

Other comprehensive income																Other comprehensive income	—	—		—		—		78		—	—		78
Common stock issued for employee equity awards(1)																Common stock issued for employee equity awards(1)	1	—		28		—		—		—	(1)		27

Government grant warrant issuance																Government grant warrant issuance	—	—		42		—		—		—	—		42
Balance at June 30, 2021																Balance at June 30, 2021	650	$	—	$	11,396	$	(953)	$	(8,882)	10	$	(280)	$	1,281
Net income																Net income	—	—		—		1,212		—		—	—		1,212

Other comprehensive income																Other comprehensive income	—	—		—		—		82		—	—		82
Common stock issued for employee equity awards(1)																Common stock issued for employee equity awards(1)	—	—		32		—		—		—	(1)		31

Balance at September 30, 2021																Balance at September 30, 2021	650	$	—	$	11,428	$	259	$	(8,800)	10	$	(281)	$	2,606

(1)Treasury shares were withheld for payment of taxes, at a weighted average price per share of $38.35, $46.21 and $43.48 in the March 2021 ~~quarter.~~quarter, June 2021 quarter and September 2021 quarter, respectively.


		Common Stock			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock						Common Stock			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock
(in millions, except per share data)	(in millions, except per share data)	Shares	Amount								Shares	Amount		Total		(in millions, except per share data)	Shares	Amount								Shares	Amount		Total
Balance at December 31, 2019	Balance at December 31, 2019	652	$	0	$	11,129	$	12,454	$	(7,989)	9	$	(236)	$	15,358	Balance at December 31, 2019	652	$	—	$	11,129	$	12,454	$	(7,989)	9	$	(236)	$	15,358
Net loss	Net loss	—	—		—		(534)		—		—	—		(534)		Net loss	—	—		—		(534)		—		—	—		(534)
Dividends declared	Dividends declared	—	—		—		(257)		—		—	—		(257)		Dividends declared	—	—		—		(257)		—		—	—		(257)
Other comprehensive income	Other comprehensive income	—	—		—		—		91		—	—		91		Other comprehensive income	—	—		—		—		91		—	—		91
Common stock issued for employee equity awards(1)	Common stock issued for employee equity awards(1)	1	—		29		—		—		1	(34)		(5)		Common stock issued for employee equity awards(1)	1	—		29		—		—		1	(34)		(5)
Stock purchased and retired	Stock purchased and retired	(6)	—		(104)		(240)		—		—	—		(344)		Stock purchased and retired	(6)	—		(104)		(240)		—		—	—		(344)
Balance at March 31, 2020	Balance at March 31, 2020	647	$	—	$	11,054	$	11,423	$	(7,898)	10	$	(270)	$	14,309	Balance at March 31, 2020	647	$	—	$	11,054	$	11,423	$	(7,898)	10	$	(270)	$	14,309
Net loss																Net loss	—	—		—		(5,717)		—		—	—		(5,717)

Other comprehensive loss																Other comprehensive loss	—	—		—		—		(39)		—	—		(39)
Common stock issued for employee equity awards(1)																Common stock issued for employee equity awards(1)	—	—		38		—		—		—	(1)		37

Government grant warrant issuance																Government grant warrant issuance	—	—		100		—		—		—	—		100
Balance at June 30, 2020																Balance at June 30, 2020	647	$	—	$	11,192	$	5,706	$	(7,937)	10	$	(271)	$	8,690
Net loss																Net loss	—	—		—		(5,379)		—		—	—		(5,379)

Other comprehensive loss																Other comprehensive loss	—	—		—		—		(2)		—	—		(2)
Common stock issued for employee equity awards(1)																Common stock issued for employee equity awards(1)	—	—		35		—		—		—	(1)		34

Government grant warrant issuance																Government grant warrant issuance	—	—		14		—		—		—	—		14
Balance at September 30, 2020																Balance at September 30, 2020	647	$	—	$	11,241	$	327	$	(7,939)	10	$	(272)	$	3,357

(1)Treasury shares were withheld for payment of taxes, at a weighted average price per share of $56.48, $25.56 and $28.29 in the March 2020 ~~quarter.~~quarter, June 2020 quarter and September 2020 quarter, respectively.

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

Delta Air Lines, Inc. September 2021 ~~March~~ Form 10-Q 6

Notes to the Consolidated Financial Statements

DELTA AIR LINES, INC.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited Condensed Consolidated Financial Statements include the accounts of Delta Air Lines, Inc. and our consolidated subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP") for interim financial information. Consistent with these requirements, this Form 10-Q does not include all the information required by GAAP for complete financial statements. As a result, this Form 10-Q should be read in conjunction with the Consolidated Financial Statements and accompanying Notes in our Form 10-K for the year ended December 31, 2020.

Management believes the accompanying unaudited Condensed Consolidated Financial Statements reflect all adjustments, including normal recurring items, considered necessary for a fair statement of results for the interim periods presented.

Due to impacts from the COVID-19 pandemic and the uncertain pace of recovery, seasonal variations in the demand for air travel, the volatility of aircraft fuel prices and other factors, operating results for the three and nine months ended ~~March 31,~~September 30, 2021 are not necessarily indicative of operating results for the entire year.

We reclassified certain prior period amounts to conform to the current period presentation. Unless otherwise noted, all amounts disclosed are stated before consideration of income taxes.

Regional Carrier Expense

We previously allocated certain costs (such as landing fees and other rents, salaries and related costs and contracted services) to regional carrier expense in our Condensed Consolidated Statements of Operations and Comprehensive ~~Loss~~Income/(Loss) ("income statement") based on relevant statistics (such as passenger counts). Beginning in the March 2021 quarter we ~~are no longer~~ceased performing this allocation and have reclassified the costs presented in prior periods to align with this presentation. This reclassification better reflects the nature of, and how management views, these regional carrier related expenses. This allocation was approximately $900 million in 2020, including ~~$325~~approximately $200 million in the ~~March~~September 2020 quarter, and $1.4 billion in 2019, including ~~$355~~approximately $360 million in the ~~March~~September 2019 quarter. The remaining amounts in regional carrier expense represent the accrual of payments to our regional carriers under capacity purchase agreements and the expenses of our wholly owned regional subsidiary, Endeavor Air, Inc.

Delta Air Lines, Inc. September 2021 ~~March~~ Form 10-Q 7

Notes to the Consolidated Financial Statements

NOTE 2. REVENUE RECOGNITION

Passenger Revenue

Three Months Ended March 31,
(in millions) 2021 2020
Ticket $ 2,277 $ 6,511
Loyalty travel awards 241 543
Travel-related services 230 515
Total passenger revenue $ 2,748 $ 7,569



	Three Months Ended September 30,				Nine Months Ended September 30,
(in millions)	2021		2020		2021		2020
Ticket	$	6,237	$	1,634	$	13,067	$	8,712
Loyalty travel awards	544		143		1,213		731
Travel-related services	410		161		998		742
Total passenger revenue	$	7,191	$	1,938	$	15,278	$	10,185

We recognized approximately ~~$822 million~~ $1.8 billionand ~~$2.8~~$3.0 billion in passenger revenue during the ~~three~~nine months ended ~~March 31,~~September 30, 2021 and 2020, respectively, that had been recorded in our air traffic liability balance at the beginning of those periods.

In the March 2021 quarter, we announced the extension of the validity of all passenger tickets and travel credits ~~expiring in 2021~~purchased or ~~purchased~~expiring in 2021 to December 31, 2022. ~~In addition, we have waived change fees for all tickets purchased through April 30, 2021, as well as eliminated change fees for domestic and international tickets originating from North America~~Additionally, with the exception of Basic Economy ~~tickets.~~tickets, we eliminated change fees for tickets originating in North America and waived change fees for those originating outside of North America. We also implemented a waiver that allows Basic Economy tickets purchased for travel in 2021, which are normally non-changeable, to be changed without paying a fee regardless of origin or destination.

~~Other Revenue~~

Three Months Ended March 31,
(in millions) 2021 2020
Ancillary businesses and refinery $ 726 $ 223
Loyalty program 368 474
Miscellaneous 93 174
Total other revenue $ 1,187 $ 871
We estimate the value of tickets that will expire unused (“breakage”) and recognize revenue at the scheduled flight date. Our breakage estimates are primarily based on historical experience, ticket contract terms and customers’ travel behavior. Given the change in ticket validity terms made in 2021 and the uncertainty caused by the COVID-19 pandemic, our estimates of revenue that will be recognized from the air traffic liability for unused tickets may vary in future periods.

~~Ancillary Businesses and~~ Other Revenue



	Three Months Ended September 30,				Nine Months Ended September 30,
(in millions)	2021		2020		2021		2020
Refinery	$	872	$	417	$	2,189	$	709
Loyalty program	453		343		1,260		1,086
Ancillary businesses	215		155		586		476
Miscellaneous	161		67		388		263
Total other revenue	$	1,701	$	982	$	4,423	$	2,534

Refinery. ~~Ancillary businesses and refinery includes~~This represents refinery sales to third parties, ~~aircraft maintenance services we provide to third parties and our vacation wholesale operations.~~which are at or near cost; accordingly, the margin on these sales is de minimis.

Loyalty Program. Our SkyMiles loyalty program allows customers to earn mileage credits ("miles") by flying on Delta, Delta Connection and other airlines that participate in the loyalty program. Customers can also earn miles through participating companies, such as credit card companies, hotels, car rental agencies and ridesharing companies, who purchase miles from us. Our most significant contract to sell miles relates to our co-brand credit card relationship with American Express. During the ~~three~~nine months ended ~~March 31,~~September 30, 2021 and 2020, total cash sales from marketing agreements related to our loyalty program were ~~$760 million~~$2.9 billion and ~~$992 million,~~$2.2 billion, respectively, which are allocated to travel and other performance obligations.

Ancillary Businesses. Ancillary businesses includes aircraft maintenance services we provide to third parties and our vacation wholesale operations.

Delta Air Lines, Inc. September 2021 Form 10-Q 8

Notes to the Consolidated Financial Statements

Current Activity of the Loyalty Program. Miles are combined in one homogeneous pool and are not separately identifiable. Therefore, ~~the~~ revenue is comprised of miles that were part of the loyalty program deferred revenue balance at the beginning of the period as well as miles that were issued during the period.

The table below presents the activity of the current and noncurrent loyalty program deferred revenue and includes miles earned through travel and miles sold to participating companies, which are primarily through marketing agreements.


Loyalty program activity	Loyalty program activity					Loyalty program activity
(in millions)	(in millions)	2021		2020		(in millions)	2021		2020
Balance at January 1	Balance at January 1	$	7,182	$	6,728	Balance at January 1	$	7,182	$	6,728
Miles earned	Miles earned	354		660		Miles earned	1,541		1,132
Travel miles redeemed		(241)		(543)
Non-travel miles redeemed		(10)		(28)
Balance at March 31		$	7,285	$	6,817
Miles redeemed for air travel						Miles redeemed for air travel	(1,213)		(731)
Miles redeemed for non-air travel and other						Miles redeemed for non-air travel and other	(54)		(40)
Balance at September 30						Balance at September 30	$	7,456	$	7,089

The timing of mile redemptions can vary widely; however, the majority of miles have historically been redeemed within two years of being earned.

~~Delta Air Lines, Inc. 2021 March Form 10-Q 8~~

~~Notes to the Consolidated Financial Statements~~

Revenue by Geographic Region

Operating revenue for the airline segment is recognized in a specific geographic region based on the origin, flight path and destination of each flight segment. A significant portion of the refinery segment's revenues typically consists of fuel sales to support the airline, which is eliminated in the Condensed Consolidated Financial Statements. The remaining operating revenue for the refinery segment is included in the domestic region. Our passenger and operating revenue by geographic region is summarized in the following tables:


Passenger revenue by geographic region	Passenger revenue by geographic region					Passenger revenue by geographic region
		Passenger Revenue					Passenger Revenue
		Three Months Ended March 31,						Three Months Ended September 30,						Nine Months Ended September 30,
(in millions)	(in millions)	2021		2020					(in millions)	2021		2020			2021		2020
Domestic	Domestic	$	2,280	$	5,601				Domestic	$	5,759	$	1,647		$	12,517	$	7,812
Atlantic	Atlantic	142		818					Atlantic	730		132			1,160		1,014
Latin America	Latin America	264		765					Latin America	564		97			1,313		879
Pacific	Pacific	62		385					Pacific	138		62			288		480
Total	Total	$	2,748	$	7,569				Total	$	7,191	$	1,938		$	15,278	$	10,185


Operating revenue by geographic region	Operating revenue by geographic region					Operating revenue by geographic region
		Operating Revenue					Operating Revenue
		Three Months Ended March 31,						Three Months Ended September 30,						Nine Months Ended September 30,
(in millions)	(in millions)	2021		2020					(in millions)	2021		2020			2021		2020
Domestic	Domestic	$	3,368	$	6,267				Domestic	$	7,311	$	2,585		$	16,572	$	10,116
Atlantic	Atlantic	267		994					Atlantic	954		240			1,688		1,353
Latin America	Latin America	381		863					Latin America	653		126			1,620		1,015
Pacific	Pacific	134		468					Pacific	236		111			549		638
Total	Total	$	4,150	$	8,592				Total	$	9,154	$	3,062		$	20,429	$	13,122

Delta Air Lines, Inc. September 2021 ~~March~~ Form 10-Q 9

Notes to the Consolidated Financial Statements

NOTE 3. FAIR VALUE MEASUREMENTS

Assets Measured at Fair Value on a Recurring Basis


(in millions)	September 30, 2021		Level 1		Level 2		Level 3
Cash equivalents	$	6,098	$	6,098	$	—	$	—
Restricted cash equivalents	874		874		—		—
Short-term investments	4,417		2,291		2,126		—
Long-term investments	1,659		1,525		37		97

(in millions) March 31,
2021 Level 1 Level 2 Level 3
Cash equivalents $ 6,004 $ 6,004 $ 0 $ 0
Restricted cash equivalents 1,436 1,436 0 0
Short-term investments 5,575 3,564 2,011 0
Long-term investments 1,673 895 557 221


(in millions)	(in millions)	December 31, 2020		Level 1		Level 2		Level 3		(in millions)	December 31, 2020		Level 1		Level 2		Level 3
Cash equivalents	Cash equivalents	$	5,755	$	5,755	$	0	$	0	Cash equivalents	$	5,755	$	5,755	$	—	$	—
Restricted cash equivalents	Restricted cash equivalents	1,747		1,747		0		0		Restricted cash equivalents	1,747		1,747		—		—
Short-term investments	Short-term investments	5,789		3,919		1,870		0		Short-term investments	5,789		3,919		1,870		—
Long-term investments	Long-term investments	1,417		948		38		431		Long-term investments	1,417		948		38		431

Cash Equivalents and Restricted Cash Equivalents. Cash equivalents generally consist of money market funds. Restricted cash equivalents are recorded in prepaid expenses and other and cash restricted for airport construction on ~~the~~our Consolidated Balance Sheet ("balance sheet") ~~and~~. Restricted cash equivalents generally consist of money market funds, time deposits, commercial paper and negotiable certificates of deposit, which primarily relate to proceeds from debt issued to finance, among other things, a portion of the construction costs for our new terminal facilities at New York's LaGuardia Airport. The fair value of these cash equivalents is based on a market approach using prices generated by market transactions involving identical or comparable assets.

Short-Term Investments. Short-term investments consist of U.S. government and agency securities. The fair values of these investments are based on a market approach using industry standard valuation techniques that incorporate observable inputs such as quoted market prices, interest rates, benchmark curves, credit ratings of the security and other observable information.

~~At March 31,~~As of September 30, 2021, the estimated fair value of our short-term investments was ~~$5.6 billion, which approximates cost.~~$4.4 billion. Of these investments, ~~$4.7~~$3.7 billion are expected to mature in one year or less, with the remainder maturing ~~during 2022.~~by the first half of 2023. Investments with maturities beyond one year when purchased are classified as short-term investments if they are expected to be available to support our short-term liquidity needs.

Long-Term Investments. Our long-term investments ~~that are~~ measured at fair value primarily consist of equity investments, which are valued based on market prices or other observable transactions and inputs, and are recorded in equity investments on our balance sheet. In the ~~March~~September 2021 quarter, ~~due to its agreement to merge with Aspirational Consumer Lifestyle Corp~~Wheels Up Experience Inc. ("~~Aspirational"~~Wheels Up")~~, a publicly-traded special purpose acquisition company,~~ became publicly traded and, as of September 30, 2021, our investment in Wheels Up ~~was~~is classified as Level 2.1. In the June 2021 quarter, Clear Secure, Inc. ("CLEAR") became publicly traded and our investment is classified as Level 1. In addition, our equity investments in private companies are classified as Level 3 in the fair value hierarchy as their equity is not traded on a public exchange and our valuations incorporate certain unobservable inputs, including non-public equity issuances and forecasts provided by our investees. Fair value measurement using unobservable inputs is inherently uncertain, and a change in significant inputs could result in different fair values. See Note 4, "Investments," for further information on our equity investments.

~~Delta Air Lines, Inc. 2021 March Form 10-Q 10~~

~~Notes to the Consolidated Financial Statements~~

NOTE 4. INVESTMENTS

We have developed strategic relationships with a number of airlines and airline services companies through joint ventures and other forms of cooperation and support, including equity investments. Our equity investments reinforce our commitment to these relationships and generally enhance our ability to offer input to the investee on strategic issues and direction, in some cases through representation on the board of directors.

Changes in the valuation of investments accounted for at fair value are recorded in gain/(loss) on investments, net in our income statement within non-operating expense and are driven by changes in stock prices, other valuation techniques for investments in companies without publicly-traded shares and foreign currency fluctuations. ~~We recorded gains of $262 million and losses of $112 million on our fair value investments during the three months ended March 31, 2021 and 2020, respectively.~~

Delta Air Lines, Inc. September 2021 Form 10-Q 10

Notes to the Consolidated Financial Statements

Our share of Unifi Aviation's financial results is recorded in contracted services in our income statement as this entity is integral to the operations of our business by providing services at our airport locations, while our share of other equity method investees' financial results is recorded in impairments and equity method losses in our income statement under non-operating expense. If an investment accounted for under the equity method experiences a loss in value that is determined to be other than temporary, we will reduce our carrying value of the investment to fair value and record the loss in impairments and equity method losses in our income statement.

Equity investments ownership interest and carrying value
Accounting Treatment Ownership Interest Carrying Value
(in millions) March 31, 2021 December 31, 2020 March 31, 2021 December 31, 2020
Wheels Up Fair Value 24 % 24 % $ 520 $ 210
Hanjin-KAL Fair Value 13 % 13 % 447 512
Air France-KLM Fair Value 9 % 9 % 225 235
China Eastern Fair Value 3 % 3 % 219 201
Unifi Aviation Equity Method 49 % 49 % 165 154
Other investments Various 353 353
Equity investments $ 1,929 $ 1,665


Equity investments ownership interest and carrying value
	Accounting Treatment	Ownership Interest				Carrying Value
(in millions)		September 30, 2021		December 31, 2020		September 30, 2021		December 31, 2020
Wheels Up	Fair Value	21	%	24	%	$	343	$	210
Hanjin-KAL	Fair Value	13	%	13	%	456		512
Air France-KLM	Fair Value	6	%	9	%	184		235
China Eastern	Fair Value	3	%	3	%	179		201
CLEAR	Fair Value	6	%	6	%	340		120
Unifi Aviation	Equity Method	49	%	49	%	167		154
Other investments	Various					250		233
Equity investments						$	1,919	$	1,665

Wheels Up. In ~~February~~July 2021, Wheels Up ~~entered into~~became a ~~definitive agreement to become~~ publicly-traded ~~via~~company through a merger with ~~Aspirational. The transaction is expected~~Aspirational Consumer Lifestyle Corp ("Aspirational"). Aspirational subsequently changed its name to ~~close in~~Wheels Up Experience Inc. and its common stock trades on the ~~June 2021 quarter.~~New York Stock Exchange under the symbol UP. We account for our investment ~~using~~under the fair value option ~~as this election better reflects~~and are using the ~~economics~~stock price to recognize fair value adjustments beginning in the September 2021 quarter.

CLEAR. In the June 2021 quarter, CLEAR completed an initial public offering of ~~our~~Class A common stock, which trades on the New York Stock Exchange under the symbol YOU. We own shares of Alclear Holdings, LLC, which are convertible on a one-to-one basis for the Class A common stock of CLEAR. Our 6% ownership interest is determined on a fully exchanged and ~~we have recorded~~converted basis. We account for our investment ~~primarily based on Aspirational’s~~under the fair value method and are using the stock price ~~and information included in its public filings.~~to recognize fair value adjustments.

Other Investments. This category includes various investments that are accounted for at fair value or under the equity method, depending on our ownership interest and the level of influence conveyed by our investment. Included ~~in this category~~therein are our investments in Grupo Aeroméxico, LATAM Airlines Group S.A. ("LATAM") and Virgin Atlantic, all of which are undergoing in-court or out-of-court restructurings, and the carrying values of these investments have been reduced to and remain ~~0 at March 31,~~zero as of September 30, 2021. In order to support our relationships with these carriers, we have provided them with strategic and operational assistance through their restructurings. ~~We have~~As of September 30, 2021, we had notes payable of ~~$480~~approximately $525 million, which ~~are~~were recorded in current maturities of debt and finance leases, and receivables from those ~~partners~~carriers recorded within other noncurrent assets, including $185 million related to our option to purchase certain obligations of a lender under Grupo Aeroméxico's restructuring process and that lender’s right to require us to purchase that portion of its obligations.

GOL. During 2020, we loaned GOL Linhas Aéreas Inteligentes, the parent company of GOL Linhas Aéreas (operating as GOL), $250 million to be used exclusively to repay the term loan we had previously guaranteed. In the June 2021 quarter, GOL repaid the outstanding balance of ~~March 31, 2021.~~this loan in full.

Delta Air Lines, Inc. September 2021 ~~March~~ Form 10-Q 11

Notes to the Consolidated Financial Statements

NOTE 5. DEBT


Summary of outstanding debt by category	Summary of outstanding debt by category											Summary of outstanding debt by category
		Maturity			Interest Rate(s) Per Annum at			March 31,		December 31,			Maturity			Interest Rate(s) Per Annum at			September 30,		December 31,
(in millions)	(in millions)	Dates			March 31, 2021			2021		2020		(in millions)	Dates			September 30, 2021			2021		2020
Unsecured notes	Unsecured notes	2021	to	2029	2.90%	to	7.38%	$	5,350	$	5,350	Unsecured notes	2022	to	2029	2.90%	to	7.38%	$	4,460	$	5,350
Unsecured Payroll Support Program Loan		2030			1.00%			1,648		1,648
Unsecured Payroll Support Program Extension Loan		2031			1.00%			828		0
Unsecured Payroll Support Program Loans												Unsecured Payroll Support Program Loans	2030	to	2031	1.00%			3,496		1,648

Financing arrangements secured by SkyMiles assets:	Financing arrangements secured by SkyMiles assets:											Financing arrangements secured by SkyMiles assets:
SkyMiles Notes(1)	SkyMiles Notes(1)	2023	to	2028	4.50%	and	4.75%	6,000		6,000		SkyMiles Notes(1)	2023	to	2028	4.50%	and	4.75%	6,000		6,000
SkyMiles Term Loan(1)(2)	SkyMiles Term Loan(1)(2)	2023	to	2027	4.75%			3,000		3,000		SkyMiles Term Loan(1)(2)	2023	to	2027	4.75%			2,865		3,000
Financing arrangements secured by slots, gates and/or routes:	Financing arrangements secured by slots, gates and/or routes:											Financing arrangements secured by slots, gates and/or routes:
2020 Senior Secured Notes	2020 Senior Secured Notes	2025			7.00%			3,500		3,500		2020 Senior Secured Notes	2025			7.00%			2,823		3,500
2020 Term Loan	2020 Term Loan	n/a						0		1,493		2020 Term Loan	n/a						—		1,493
2018 Revolving Credit Facility(2)	2018 Revolving Credit Facility(2)	2021	to	2023	Undrawn			0		0		2018 Revolving Credit Facility(2)	2022	to	2023	Undrawn			—		—
Financing arrangements secured by aircraft:	Financing arrangements secured by aircraft:											Financing arrangements secured by aircraft:
Certificates(1)	Certificates(1)	2021	to	2028	2.00%	to	8.02%	2,518		2,633		Certificates(1)	2021	to	2028	2.00%	to	8.00%	1,990		2,633
Notes(1)(2)	Notes(1)(2)	2021	to	2033	0.77%	to	5.75%	1,350		1,284		Notes(1)(2)	2021	to	2033	0.70%	to	5.75%	1,208		1,284
NYTDC Special Facilities Revenue Bonds, Series 2020(1)	NYTDC Special Facilities Revenue Bonds, Series 2020(1)	2026	to	2045	4.00%	to	5.00%	1,511		1,511		NYTDC Special Facilities Revenue Bonds, Series 2020(1)	2026	to	2045	4.00%	to	5.00%	1,511		1,511
NYTDC Special Facilities Revenue Bonds, Series 2018(1)	NYTDC Special Facilities Revenue Bonds, Series 2018(1)	2022	to	2036	4.00%	to	5.00%	1,383		1,383		NYTDC Special Facilities Revenue Bonds, Series 2018(1)	2022	to	2036	4.00%	to	5.00%	1,383		1,383
Other financings(1)(2)	Other financings(1)(2)	2021	to	2030	2.25%	to	8.75%	611		412		Other financings(1)(2)	2021	to	2030	2.25%	to	8.00%	592		412
Other revolving credit facilities(2)	Other revolving credit facilities(2)	2021	to	2022	Undrawn			0		0		Other revolving credit facilities(2)	2022			Undrawn			—		—
Total secured and unsecured debt	Total secured and unsecured debt							27,699		28,214		Total secured and unsecured debt							26,328		28,214
Unamortized (discount)/premium and debt issue cost, net and other	Unamortized (discount)/premium and debt issue cost, net and other							(226)		(240)		Unamortized (discount)/premium and debt issue cost, net and other							(227)		(240)
Total debt	Total debt							27,473		27,974		Total debt							26,101		27,974
Less: current maturities	Less: current maturities							(2,671)		(1,443)		Less: current maturities							(2,024)		(1,443)
Total long-term debt	Total long-term debt							$	24,802	$	26,531	Total long-term debt							$	24,077	$	26,531

(1)Due in installments.

(2)Certain financings are comprised of variable rate debt. All variable rates are equal to LIBOR (generally subject to a floor) or another index rate ~~in each case~~ plus a specified margin.

Unsecured Payroll Support Program Extension Loans

A summary of the amounts received and warrants issued under the initial payroll support program under the Coronavirus Aid, Relief and Economic Security Act ("CARES Act") and the program extensions is set forth in the following table:


Summary of payroll support program activity
(in millions)	Total		Grant		Loan		Number of Warrants	Percentage of Outstanding Shares at September 30, 2021
Payroll Support Program (PSP1)	$	5,594	$	3,946	$	1,648	6.8	1.1	%
Payroll Support Program Extension (PSP2)	3,290		2,333		957		2.4	0.4	%
Payroll Support Program 3 (PSP3)	3,069		2,178		891		1.9	0.3	%
Total	$	11,953	$	8,457	$	3,496	11.1	1.8	%

Grants received were recognized in government grant recognition in our income statement over the periods that the funds were intended to compensate. The PSP1 grant was recognized during 2020 and grants received from PSP2 and PSP3 have been fully recognized as of the end of September 2021.

Delta Air Lines, Inc. September 2021 Form 10-Q 12

Notes to the Consolidated Financial Statements

Payroll Support Program Extension (PSP2). The Consolidated Appropriations Act, 2021 was enacted on December 27, 2020, and included an extension of the payroll support program created under the ~~Coronavirus Aid, Relief and Economic Security~~CARES Act ~~("CARES Act")~~ providing an additional $15 billion in grants and loans to ~~be used for~~the airline ~~employee wages, salaries and benefits.~~industry. In January 2021, we entered into a payroll support program extension agreement with the U.S. Department of the Treasury. InDuring the ~~March~~six months ended June 30, 2021, ~~quarter,~~ we received ~~$2.9~~a total of $3.3 billion in payroll support payments under this extension agreement, which ~~must be used~~we were required to use exclusively for the payment of employee wages, salaries and benefits and iswere conditioned on our agreement to refrain from conducting involuntary employee layoffs or furloughs from the date of the extension agreement through March 2021. Other conditions include prohibitions on share repurchases and dividends through March 2022 and certain limitations on executive compensation until October 2022. The Department of Transportation also has the authority until March 1, 2022 to require airlines that received payroll support program funds to maintain scheduled air service deemed necessary to any point served by the airline before March 1, 2020.

These support payments consisted of ~~approximately $2.0~~$2.3 billion in a grant and ~~$828~~$957 million in an unsecured 10-year low interest loan. In return, we entered into a promissory note for the loan and issued warrants to the U.S. Department of the Treasury to acquire approximately 2.4 million shares of Delta common stock. The loan bears interest at an annual rate of 1.00% for the first five years and the applicable Secured Overnight Financing Rate ("SOFR") plus 2.00% in the final five years. In return, we entered into a promissory note for the $828 million and issued warrants to the U.S. Department of the Treasury to acquire approximately 2.1 million shares of Delta common stock, representing approximately 0.3% of our outstanding shares. TheseThe warrants have an initial exercise price of $39.73 per share, subject to adjustment in certain cases, and a five-year term. We have recorded the value of the promissory note and warrants on a relative fair value basis as ~~$784~~$905 million of noncurrent debt, net of discount, and ~~$44~~$52 million in additional paid in capital, respectively.

~~Delta Air Lines, Inc. 2021 March Form 10-Q 12~~

~~Notes to the Consolidated Financial Statements~~

We have participated in the initial payroll support program, and as described above, the first extension of the payroll support program. A summary of the amounts received and warrants issued to date under these programs is set forth in the following table:

Summary of payroll support program activity
(in millions, except percentages) Total Amount Grant Loan Number of Warrants Percentage of Outstanding Shares at March 31, 2021
Payroll Support Program (PSP1) $ 5,594 $ 3,946 $ 1,648 6.8 1.1 %
First Payroll Support Program Extension (PSP2) (1)
2,861 2,033 828 2.1 0.3 %

~~(1)~~Payroll Support Program 3 (PSP3). During the March 2021 quarter $1.2 billion of this grant was recognized in government grant recognition in our income statement and $847 million is deferred in other accrued liabilities on our balance sheet as of March 31, 2021.

The American Rescue Plan Act of 2021 was enacted on March 11, 2021, and included a ~~second~~further extension of the payroll support program providing an additional $14 billion in grants and loans to ~~be used for~~the airline ~~employee wages, salaries and benefits. We expect to enter~~industry. In April 2021, we entered into ~~similar agreements as those discussed above~~a Payroll Support Program 3 Agreement with the U.S. Department of the Treasury. ~~Based on~~During the ~~share of funds~~June 2021 quarter, we received ~~from the first extension~~a total of ~~the~~$3.1 billion in payroll support ~~program,~~payments under this agreement, which we were required to use exclusively for the payment of employee wages, salaries and ~~the similar structures of both extensions, we estimate that we will receive approximately $2.7 billion, consisting of $1.9 billion in a grant~~benefits and $800 million in an unsecured 10-year low interest loan. However, the actual amounts received and the allocation between the grant and loan could differ from our estimates. These payments are expected to bewas conditioned on our agreement to refrain from conducting involuntary employee layoffs or furloughs from the date of the agreement through September 30, 2021 or the date on which ~~assistance provided under~~we have expended all of the ~~agreement is exhausted,~~payroll support, whichever is later. Other conditions ~~would~~ include prohibitions on share repurchases and dividends through September 30, 2022 and certain limitations on executive compensation until April 1, 2023.

These support payments consisted of $2.2 billion in a grant and $891 million in an unsecured 10-year low interest loan. In return, we ~~expect to enter~~entered into a promissory note for the ~~amount of the~~ loan and ~~to issue~~issued warrants to the U.S. Department of the Treasury to acquire approximately 1.9 million shares of Delta common ~~stock~~stock. The loan bears interest at an annual rate of 1.00% for the first five years and the applicable SOFR plus 2.00% in the final five years. The warrants have an ~~amount~~initial exercise price of $47.80 per share, subject to ~~be determined consistent with~~adjustment in certain cases, and a five-year term. We have recorded the ~~structure~~value of the ~~prior warrant issuances.~~promissory note and warrants on a relative fair value basis as $857 million of noncurrent debt, net of discount, and $34 million in additional paid in capital, respectively.

2020 Term Loan

In 2020 we entered into a $1.5 billion term loan secured by certain slots, gates and routes. In the March 2021 quarter, we repaid in full the term loan, which was scheduled to mature in April 2023, and incurred a $56 million loss on extinguishment of debt, which is recorded in ~~miscellaneous, net~~loss on extinguishment of debt in non-operating expense in ~~the~~our income statement.

Enhanced Equipment Trust Certificates ("EETCs") Prepayments

In the June 2021 quarter, we repaid in full approximately $450 million of various EETCs which were scheduled to mature between 2022 and 2023, and incurred a $26 million loss on extinguishment of debt, which is recorded in loss on extinguishment of debt in non-operating expense in our income statement.

Delta Air Lines, Inc. September 2021 Form 10-Q 13

Notes to the Consolidated Financial Statements

Early Settlement of Outstanding Notes

In July 2021, we completed a cash tender offer for an aggregate purchase price of $1.0 billion, excluding accrued and unpaid interest, of our outstanding 7.0% Senior Secured Notes due 2025 (the "2025 Notes"), 7.375% Notes due 2026 (the "2026 Notes") and 4.5% Senior Secured Notes due 2025 (the "2025 SkyMiles Notes"). As a result of the tender offer, we purchased 2025 Notes, included as 2020 Senior Secured Notes in the table above, with principal amount of $677 million for approximately $800 million and 2026 Notes, included in Unsecured Notes in the table above, with principal amount of $169 million for approximately $200 million. We did not purchase any of the 2025 SkyMiles Notes under the tender offer. In addition to the early settlement of the principal amount of the purchased notes, we recorded a loss of $166 million on extinguishment of debt in non-operating expense in our income statement.

Throughout the September 2021 quarter we also repurchased $262 million of various secured certificates, unsecured notes and a portion of the SkyMiles Term Loan on the open market. These payments resulted in a $17 million loss on extinguishment of debt.

Availability Under Revolving Facilities

As of ~~March 31,~~September 30, 2021, we had approximately $2.6 billion undrawn and available under our revolving credit facilities. In addition, we had outstanding letters of credit as of ~~March 31,~~September 30, 2021, including approximately ~~$400~~$300 million that reduced the availability under our revolving credit facilities and approximately $300 million that did not affect the availability of our revolving credit facilities.

Fair Value of Debt

Market risk associated with our fixed- and variable-rate debt relates to the potential reduction in fair value and negative impact to future earnings, respectively, from an increase in interest rates. The fair value of debt, shown below, is principally based on reported market values, recently completed market transactions and estimates based on interest rates, maturities, credit risk and where applicable, underlying collateral. Debt is primarily classified as Level 2 within the fair value hierarchy.

Fair value of outstanding debt
(in millions) March 31,
2021 December 31,
2020
Net carrying amount $ 27,473 $ 27,974
Fair value $ 29,500 $ 29,800


Fair value of outstanding debt
(in millions)	September 30, 2021		December 31, 2020
Net carrying amount	$	26,101	$	27,974
Fair value	$	28,300	$	29,800

Covenants

Our debt agreements contain various affirmative, negative and financial covenants. We were in compliance with the covenants in ~~these~~our debt agreements at ~~March 31,~~September 30, 2021.

Delta Air Lines, Inc. September 2021 ~~March~~ Form 10-Q 1314

Notes to the Consolidated Financial Statements

NOTE 6. EMPLOYEE BENEFIT PLANS


Employee benefit plans net periodic (benefit) cost	Employee benefit plans net periodic (benefit) cost									Employee benefit plans net periodic (benefit) cost
		Pension Benefits				Other Postretirement and Postemployment Benefits					Pension Benefits				Other Postretirement and Postemployment Benefits
(in millions)	(in millions)	2021		2020		2021		2020		(in millions)	2021		2020		2021		2020
Three Months Ended March 31,
Three Months Ended September 30,										Three Months Ended September 30,
Service cost	Service cost	$	0	$	0	$	21	$	24	Service cost	$	—	$	—	$	21	$	24
Interest cost	Interest cost	146		175		29		28		Interest cost	146		175		29		30
Expected return on plan assets	Expected return on plan assets	(375)		(343)		(9)		(11)		Expected return on plan assets	(381)		(343)		(9)		(11)
Amortization of prior service credit	Amortization of prior service credit	0		0		(2)		(2)		Amortization of prior service credit	—		—		(2)		(2)
Recognized net actuarial loss	Recognized net actuarial loss	89		75		15		10		Recognized net actuarial loss	88		74		15		10
Special termination benefits										Special termination benefits	—		—		—		1,260

Settlements										Settlements	1		30		—		—
Net periodic (benefit) cost	Net periodic (benefit) cost	$	(140)	$	(93)	$	54	$	49	Net periodic (benefit) cost	$	(146)	$	(64)	$	54	$	1,311

Nine Months Ended September 30,										Nine Months Ended September 30,
Service cost										Service cost	$	—	$	—	$	64	$	72
Interest cost										Interest cost	437		526		88		86
Expected return on plan assets										Expected return on plan assets	(1,142)		(1,030)		(26)		(33)
Amortization of prior service credit										Amortization of prior service credit	—		—		(5)		(7)
Recognized net actuarial loss										Recognized net actuarial loss	266		223		42		32
Special termination benefits										Special termination benefits	—		—		—		1,260
Settlements										Settlements	1		33		—		—
Net periodic (benefit) cost										Net periodic (benefit) cost	$	(438)	$	(248)	$	163	$	1,410

Service cost is recorded in salaries and related costs in our income statement, while all other components are recorded within miscellaneous, net under non-operating expense.

We have no minimum funding requirements for our defined benefit pension plans in 2021, however we voluntarily contributed ~~$1.0~~$1.5 billion to these plans in ~~April 2021.~~the June 2021 quarter.

Delta Air Lines, Inc. September 2021 Form 10-Q 15

Notes to the Consolidated Financial Statements

NOTE 7. COMMITMENTS AND CONTINGENCIES

Aircraft Purchase Commitments

Our future aircraft purchase commitments totaled approximately ~~$13.4~~$16.9 billion at ~~March 31,~~September 30, 2021. Also, as of September 30, 2021, we had commitments under leases that had not yet commenced of $795 million. These leases will commence between 2021 and 2024 with lease terms ranging from 7 to 12 years.


Aircraft purchase commitments
(in millions)	Total
Three months ending December 31, 2021	$	550
2022	3,670
2023	3,100
2024	3,260
2025	2,880
Thereafter	3,430
Total	$	16,890

Our future aircraft purchase commitments included the following aircraft at September 30, 2021:

Aircraft purchase commitments
(in millions) Total
Nine months ending December 31, 2021 $ 750
2022 2,480
2023 2,310
2024 2,960
2025 2,750
Thereafter 2,110
Total $ 13,360


Aircraft purchase commitments by fleet type
Aircraft Type			Purchase Commitments
A220-100			4
A220-300			41
A321-200			4
A321-200neo			155
A330-900neo			26
A350-900(1)			26
B-737-900ER			27
Total			283

(1)Includes 6 A350-900 lease commitments in 2021 incremental to our order book with Airbus.

Aircraft Orders

During the June and September 2021 quarters, we agreed with Airbus to add incremental aircraft to our order book by converting options for 55 A321neo aircraft into firm orders and replenishing 25 of our options. We expect to take delivery of our first A321neo in the first half of 2022, with deliveries of these aircraft continuing through 2027. Additionally, we agreed to move up 2 A350-900 deliveries and 1 A330-900neo delivery to occur in the second half of 2022.

During the June 2021 quarter, we agreed to acquire 29 B-737-900 aircraft and enter into leases for 7 A350-900 aircraft. Additionally, during the September 2021 quarter, we agreed to enter into leases for 2 incremental A350-900 aircraft. We began taking delivery of these preowned aircraft in the September 2021 quarter and deliveries are expected to continue through the first quarter of 2022. Phased entry into service is expected through the summer of 2023.

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, we believe that the resolution of current matters will not have a material adverse effect on our Condensed Consolidated Financial Statements.

Delta Air Lines, Inc. September 2021 ~~March~~ Form 10-Q 1416

Notes to the Consolidated Financial Statements

Other Contingencies

General Indemnifications

We are the lessee under many commercial real estate leases. It is common in these transactions for us, as the lessee, to agree to indemnify the lessor and the lessor's related parties for tort, environmental and other liabilities that arise out of or relate to our use or occupancy of the leased premises. This type of indemnity would typically make us responsible to indemnified parties for liabilities arising out of the conduct of, among others, contractors, licensees and invitees at, or in connection with, the use or occupancy of the leased premises. This indemnity often extends to related liabilities arising from the negligence of the indemnified parties but usually excludes any liabilities caused by either their sole or gross negligence or their willful misconduct.

Our aircraft and other equipment lease and financing agreements typically contain provisions requiring us, as the lessee or obligor, to indemnify the other parties to those agreements, including certain of those parties' related persons, against virtually any liabilities that might arise from the use or operation of the aircraft or other equipment.

We believe that our insurance would cover most of our exposure to liabilities and related indemnities associated with the commercial real estate leases and aircraft and other equipment lease and financing agreements described above. While our insurance does not typically cover environmental liabilities, we have insurance policies in place as required by applicable environmental laws.

Some of our aircraft and other financing transactions include provisions that require us to make payments to preserve an expected economic return to the lenders if that economic return is diminished due to specified changes in laws or regulations. In some of these financing transactions, we also bear the risk of changes in tax laws that would subject payments to non-U.S. lenders to withholding taxes.

We cannot reasonably estimate our potential future payments under the indemnities and related provisions described above because we cannot predict (1) when and under what circumstances these provisions may be triggered and (2) the amount that would be payable if the provisions were triggered because the amounts would be based on facts and circumstances existing at such time.

Other

We have certain contracts for goods and services that require us to pay a penalty, acquire inventory specific to us or purchase contract-specific equipment, as defined by each respective contract, if we terminate the contract without cause prior to its expiration date. Because these obligations are contingent on our termination of the contract without cause prior to its expiration date, no obligation would exist unless such a termination occurs.

NOTE 8. ACCUMULATED OTHER COMPREHENSIVE LOSS


Components of accumulated other comprehensive loss	Components of accumulated other comprehensive loss							Components of accumulated other comprehensive loss
(in millions)	(in millions)	Pension and Other Benefit Liabilities(2)		Other		Total		(in millions)	Pension and Other Benefit Liabilities(2)		Other		Total
Balance at January 1, 2021 (net of tax effect of $1,764)	Balance at January 1, 2021 (net of tax effect of $1,764)	$	(9,078)	$	40	$	(9,038)	Balance at January 1, 2021 (net of tax effect of $1,764)	$	(9,078)	$	40	$	(9,038)

Reclassifications into earnings (net of tax effect of $23)(1)		78		0		78
Balance at March 31, 2021 (net of tax effect of $1,741)		$	(9,000)	$	40	$	(8,960)
Changes in value (net of tax effect of $1)								Changes in value (net of tax effect of $1)	3		—		3
Reclassifications into earnings (net of tax effect of $71)(1)								Reclassifications into earnings (net of tax effect of $71)(1)	235		—		235
Balance at September 30, 2021 (net of tax effect of $1,692)								Balance at September 30, 2021 (net of tax effect of $1,692)	$	(8,840)	$	40	$	(8,800)

Balance at January 1, 2020 (net of tax effect of $1,549) $ (8,095) $ 106 $ (7,989)
Changes in value (net of tax effect of $3) 0 21 21
Reclassifications into earnings (net of tax effect of $21)(1)
70 0 70
Balance at March 31, 2020 (net of tax effect of $1,531) $ (8,025) $ 127 $ (7,898)


Balance at January 1, 2020 (net of tax effect of $1,549)	$	(8,095)	$	106	$	(7,989)
Changes in value (net of tax effect of $31)	(102)		17		(85)
Reclassifications into earnings (net of tax effect of $149)(1)	218		(83)		135
Balance at September 30, 2020 (net of tax effect of $1,431)	$	(7,979)	$	40	$	(7,939)

(1)Amounts reclassified from ~~AOCI~~accumulated other comprehensive loss for pension and other benefit liabilities are recorded in miscellaneous, net in non-operating expense in our income statement.

(2)Includes approximately $750 million of deferred income tax expense primarily related to pension and other benefit obligations that will not be recognized in net income until these obligations are fully extinguished. ~~We consider all income sources, including other comprehensive income, in determining the amount of tax benefit allocated to results from operations.~~

Delta Air Lines, Inc. September 2021 ~~March~~ Form 10-Q 1517

Notes to the Consolidated Financial Statements

NOTE 9. SEGMENTS

Refinery Operations

Our refinery segment operates for the benefit of the airline segment by providing jet fuel to the airline segment from its own production and through jet fuel obtained through agreements with third parties. The refinery's production consists of jet fuel, as well as non-jet fuel products. ~~Due to the decrease in demand for jet fuel caused by the COVID-19 pandemic, the refinery has shifted production to more non-jet fuel products.~~ We use several counterparties to exchange the non-jet fuel products produced by the refinery for jet fuel consumed in our airline operations. The gross fair value of the products exchanged under these agreements during the three and nine months ended ~~March 31,~~September 30, 2021 ~~and 2020~~ was ~~$503~~$629 million and ~~$831~~$1.7 billion, respectively, compared to $249 million and $1.1 billion for the three and nine months ended September 30, 2020, respectively.

Segment Reporting

Segment results are prepared based on our internal accounting methods described below, with reconciliations to consolidated amounts in accordance with GAAP. Our segments are not designed to measure operating income or loss directly related to the products and services included in each segment on a stand-alone basis.


Financial information by segment	Financial information by segment										Financial information by segment
(in millions)	(in millions)	Airline		Refinery		Intersegment Sales/Other			Consolidated		(in millions)	Airline		Refinery		Intersegment Sales/Other			Consolidated
Three Months Ended March 31, 2021
Three Months Ended September 30, 2021											Three Months Ended September 30, 2021
Operating revenue:											Operating revenue:	$	8,282	$	1,696				$	9,154
Sales to airline segment											Sales to airline segment					$	(183)	(1)
Exchanged products											Exchanged products					(629)		(2)
Sales of refined products											Sales of refined products					(12)		(3)
Operating income											Operating income	2,108		97		—			2,205
Interest expense, net											Interest expense, net	312		2		—			314
Depreciation and amortization											Depreciation and amortization	501		24		(24)		(4)	501
Restructuring charges											Restructuring charges	33		—		—			33
Total assets, end of period											Total assets, end of period	70,771		2,012		—			72,783
Net fair value obligations, end of period(5)											Net fair value obligations, end of period(5)	—		(547)		—			(547)
Capital expenditures											Capital expenditures	818		12		—			830

Three Months Ended September 30, 2020											Three Months Ended September 30, 2020
Operating revenue:	Operating revenue:	$	3,610	$	1,047				$	4,150	Operating revenue:	$	2,645	$	669				$	3,062
Sales to airline segment	Sales to airline segment					$	0	(1)			Sales to airline segment					$	—	(1)
Exchanged products	Exchanged products					(503)		(2)			Exchanged products					(249)		(2)
Sales of refined products	Sales of refined products					(4)		(3)			Sales of refined products					(3)		(3)
Operating loss	Operating loss	(1,273)		(125)		0			(1,398)		Operating loss	(6,358)		(28)		—			(6,386)
Interest expense, net	Interest expense, net	360		1		0			361		Interest expense, net	288		3		—			291
Depreciation and amortization	Depreciation and amortization	492		24		(24)		(4)	492		Depreciation and amortization	545		25		(25)		(4)	545
Restructuring charges											Restructuring charges	5,345		—		—			5,345
Total assets, end of period	Total assets, end of period	71,505		1,578		0			73,083		Total assets, end of period	77,558		1,518		—			79,076
Fair value obligations, end of period(5)		0		(346)		0			(346)
Net fair value obligations, end of period(5)											Net fair value obligations, end of period(5)	—		(68)		—			(68)
Capital expenditures	Capital expenditures	425		13		0			438		Capital expenditures	130		3		—			133

Three Months Ended March 31, 2020
Operating revenue:		$	8,592	$	1,184				$	8,592
Sales to airline segment						$	(210)	(1)
Exchanged products						(831)		(2)
Sales of refined products						(143)		(3)
Operating (loss)/income		(439)		29		0			(410)
Interest expense (income), net		80		(1)		0			79
Depreciation and amortization		678		25		(25)		(4)	678
Total assets, end of period		66,864		1,874		0			68,738
Fair value obligations, end of period(5)		0		(33)		0			(33)
Capital expenditures		926		11		0			937

(1)Represents transfers, valued on a market price basis, from the refinery to the airline segment for use in airline operations. We determine market price by reference to the market index for the primary delivery location, which is New York Harbor, for jet fuel from the refinery.

(2)Represents value of products delivered under our exchange agreements, as discussed above, determined on a market price basis.

(3)These sales were at or near cost; accordingly, the margin on these sales is de ~~minimis.~~minimis.

(4)Refinery segment operating results, including depreciation and amortization, are included within aircraft fuel and related taxes in our income statement.

(5)The fair values of these obligations, which are related to renewable fuel compliance costs, are based on quoted market prices and other observable information and are classified as Level 2 in the fair value hierarchy.

At September 30, 2021 we had a gross fair value obligation of $625 million and related assets of $78 million. At September 30, 2020 we had a gross fair value obligation of $80 million and related assets of $12 million. We expect to use the assets in settling a portion of our obligations.

Delta Air Lines, Inc. September 2021 ~~March~~ Form 10-Q 1618

Notes to the Consolidated Financial Statements


Financial information by segment
(in millions)	Airline		Refinery		Intersegment Sales/Other			Consolidated
Nine Months Ended September 30, 2021
Operating revenue:	$	18,240	$	4,177				$	20,429
Sales to airline segment					$	(292)	(1)
Exchanged products					(1,667)		(2)
Sales of refined products					(29)		(3)
Operating income (loss)	1,809		(186)		—			1,623
Interest expense, net	1,009		5		—			1,014
Depreciation and amortization	1,494		72		(72)		(4)	1,494
Restructuring charges	(3)		—		—			(3)
Capital expenditures	1,994		35		—			2,029

Nine Months Ended September 30, 2020
Operating revenue:	$	12,413	$	2,366				$	13,122
Sales to airline segment					$	(214)	(1)
Exchanged products					(1,144)		(2)
Sales of refined products					(299)		(3)
Operating loss	(11,498)		(113)		—			(11,611)
Interest expense, net	564		—		—			564
Depreciation and amortization	1,813		74		(74)		(4)	1,813
Restructuring charges	7,798		—		—			7,798
Capital expenditures	1,336		15		—			1,351

(2)Represents value of products delivered under our exchange agreements, as discussed above, determined on a market price basis.

(3)These sales were at or near cost; accordingly, the margin on these sales is de minimis.

(4)Refinery segment operating results, including depreciation and amortization, are included within aircraft fuel and related taxes in our income statement.

NOTE 10. ~~LOSS~~EARNINGS/(LOSS) PER SHARE

We calculate basic ~~loss~~earnings/(loss) per share and diluted ~~loss~~(loss) per share by dividing net ~~loss~~income/(loss) by the weighted average number of common shares outstanding, excluding restricted shares. ~~Antidilutive~~We calculate diluted earnings per share by dividing net income by the weighted average number of common shares outstanding plus the dilutive effect of outstanding share-based awards, including stock options, restricted stock awards and warrants. Antidilutive common stock equivalents excluded from the diluted ~~loss~~earnings per share calculation are not material. The following table shows the computation of basic and diluted ~~loss~~earnings/(loss) per share:

Basic and diluted loss per share
Three Months Ended March 31,
(in millions, except per share data) 2021 2020
Net loss $ (1,177) $ (534)
Basic weighted average shares outstanding 636 637
Dilutive effect of share-based awards 0 0
Diluted weighted average shares outstanding 636 637
Basic loss per share $ (1.85) $ (0.84)
Diluted loss per share $ (1.85) $ (0.84)


Basic and diluted earnings/(loss) per share
	Three Months Ended September 30,				Nine Months Ended September 30,
(in millions, except per share data)	2021		2020		2021		2020
Net income/(loss)	$	1,212	$	(5,379)	$	688	$	(11,630)

Basic weighted average shares outstanding	637		635		636		636
Dilutive effect of share-based awards	4		—		5		—
Diluted weighted average shares outstanding	641		635		641		636

Basic earnings/(loss) per share	$	1.90	$	(8.47)	$	1.08	$	(18.30)
Diluted earnings/(loss) per share	$	1.89	$	(8.47)	$	1.07	$	(18.30)

Delta Air Lines, Inc. September 2021 ~~March~~ Form 10-Q 1719

Item 2. MD&A

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our Condensed Consolidated Financial Statements and the related notes and other financial information included elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated financial statements and related notes included in our 2020 ~~Annual Report on~~ Form 10-K.

Our business and operating results for 2021 continue to be significantly impacted by the COVID-19 pandemic. However, as described further below, we have seen improvement in our business ~~during~~beginning in March 2021 and progressing through the ~~March~~September 2021 quarter, which we expect to ~~continue throughout 2021.~~continue. Given the drastic and unprecedented impact of the pandemic on our operating results in 2020, we believe that for the financial overview discussion below, a comparison of our results in 2021 to 2019 allows for ana better understanding of the full impact of the COVID-19 pandemic and the progress of our recovery. Throughout the remainder of this management's discussion and analysis, we present results for the three and nine months ended September 30, 2021, 2020 and 2019, and our commentary on results of operations, financial conditions and liquidity includes comparisons of 2021 results to both 2020 and ~~2019 results.~~2019.

~~March~~September 2021 Quarter Financial Overview

Our pre-tax ~~loss~~income for the ~~March~~September 2021 quarter was $1.5 billion, including the ~~$1.2~~$1.8 billion benefit related to recognition of ~~a portion of~~ the ~~first payroll support program extension~~remaining PSP3 grant during the quarter. This represents a ~~$2.5 billion~~$415 million decrease in pre-tax income compared to the ~~March~~September 2019 quarter primarily ~~resulting from~~due to a ~~60% decrease~~27% reduction in ~~revenue.~~operating revenue, partially offset by the recognition of the remaining PSP3 grant. Pre-tax ~~loss,~~income, adjusted (a non-GAAP financial measure) was ~~$2.9 billion,~~$216 million, a decrease of ~~$3.8~~$1.8 billion compared to the ~~March~~September 2019 quarter.

Revenue. Compared to the ~~March~~September 2019 quarter, our operating revenuedecreased ~~$6.3~~$3.4 billion, or ~~60%~~27%, due primarily to reduced demand resulting from the COVID-19 pandemic.

Operating Expense. Total operating expense in the ~~March~~September 2021 quarter decreased ~~$3.9~~$3.5 billion, or ~~41%~~34%, compared to the ~~March~~September 2019 quarter, primarily resulting from recognition of the remaining PSP3 grant, lower volume-related expenses, mainly fuel and passenger commissions and other selling expenses, ~~recognition of the first payroll support program extension grant~~lower salaries and related costs and profit sharing, and significant cost reduction measures taken across all aspects of our operation in response to the COVID-19 pandemic. These decreases were partially offset by an increase in expenses related to refinery sales to third parties, reflected in ancillary business and refinery expense. Total operating expense, adjusted (a non-GAAP financial measure) for the ~~March~~September 2021 quarter decreased ~~$3.1~~$2.6 billion, or ~~33%~~25%, compared to the ~~March~~September 2019 quarter.

Non-Operating Results. Total non-operating expense was ~~$117~~$673 million in the ~~March~~September 2021 quarter, ~~$43~~$549 million higher than the ~~March~~September 2019 quarter, primarily due to higher interest expense as a result of our increased debt due to financing arrangements entered into ~~during~~in 2020, ~~partially offset by~~losses on debt extinguishment and mark-to-market ~~gains~~losses on certain of our equity investments.

Cash Flow. Our cash, cash equivalents, short-term investments and aggregate principal amount committed and available to be drawn under our revolving credit facilities ("liquidity") ~~at March 31,~~as of September 30, 2021 was ~~$16.6~~$15.8 billion. During the ~~March~~September 2021 quarter, operating activities ~~provided $691 million, which included $2.0 billion from the first payroll support program extension grant.~~generated $151 million. Also during the quarter, ~~we incurred $60~~investing activities used $384 million, ~~of investing cash outflows,~~ primarily ~~from~~for capital expenditures, partially offset by net redemptions of short-term investments. Capital expenditures primarily related to the purchase of aircraft, fleet modifications, our airport redevelopment projects ~~the purchase~~and technology enhancements. These activities resulted in $463 million of ~~aircraft and fleet modifications, partially offset by the net redemption of short-term investments. These results generated $710 million~~ofnegative free cash flow (a non-GAAP financial measure) in the ~~March~~September 2021 quarter. ~~Additionally,~~Also, during the ~~March~~September 2021 quarter we ~~repaid $1.8~~had cash outflows of approximately $1.6 billion onrelated to repayments of our debt and finance leases, ~~of which $1.5~~including approximately $1.3 billion ~~was~~for early ~~repayment of~~repayments and the ~~term loan secured by certain of our slots, gates and routes and issued $924 million of debt primarily in connection with the first payroll support program extension.~~remainder from scheduled maturities.

The ~~above~~ non-GAAP financial measures referenced above for pre-tax ~~loss,~~income, adjusted, operating expense, adjusted, and free cash flow are defined and reconciled in "Supplemental Information" below.

Delta Air Lines, Inc. September 2021 Form 10-Q 20

Item 2. MD&A

Environmental Sustainability. In February 2020, we announced plans to invest $1.0 billion over the next 10 years in our effort to achieve carbon neutrality from March 1, 2020 forward, a commitment we have reiterated despite the challenges faced during the COVID-19 pandemic. Our plan to achieve airline carbon neutrality ~~plan seeks to balance immediate actions (such as~~includes the purchase and retirement of carbon offset credits ~~from projects that maintain, protect and expand forests) and long-term solutions (such~~ as well as increased use of sustainable aviation fuel and improved fuel efficiency from fleet renewal and operational initiatives. In the first nine months of 2021, we incurred $69 million of expense related to carbon ~~sequestration technologies). We plan to spend more than~~offset credits. This amount consists of $30 million ~~in 2021~~ to address 13 million metric tons of carbon emissions generated by our airline segment from March 1 to December 31, 2020 through carbon offset credits, ~~including $20~~as well as an additional $39 million onfor the purchase and retirement of carbon offset credits ~~that~~related to a portion of our airline segment's 2021 carbon emissions. In September 2021, we ~~purchased~~committed to setting net zero 2050 and ~~retired during~~interim goals through the ~~March 2021 quarter.~~Science Based Targets initiative ("SBTi") for our airline operations using recently released SBTi criteria and guidance for the aviation sector.

Delta Air Lines, Inc. September 2021 ~~March~~ Form 10-Q 1821

Item 2. MD&A - Results of Operations

Results of Operations - Three Months Ended ~~March 31,~~September 30, 2021, 2020 and 2019

Operating Revenue

Three Months Ended March 31, 2021 vs. 2020
% Increase (Decrease) 2021 vs. 2019
% Increase (Decrease)
(in millions)(1)
2021 2020 2019
Ticket - Main cabin $ 1,399 $ 3,798 $ 4,721 (63) % (70) %
Ticket - Business cabin and premium products 878 2,713 3,267 (68) % (73) %
Loyalty travel awards 241 543 692 (56) % (65) %
Travel-related services 230 515 574 (55) % (60) %
Total passenger revenue $ 2,748 $ 7,569 $ 9,254 (64) % (70) %
Cargo 215 152 192 41 % 12 %
Other 1,187 871 1,026 36 % 16 %
Total operating revenue $ 4,150 $ 8,592 $ 10,472 (52) % (60) %
TRASM (cents) 10.34 ¢ 14.59 ¢ 16.78 ¢ (29) % (38) %
Third-party refinery sales(2)
(1.35) — (0.08) NM NM
Delta Private Jets adjustment(2)
— — (0.07) NM (100) %
TRASM, adjusted 9.00 ¢ 14.59 ¢ 16.63 ¢ (38) % (46) %


	Three Months Ended September 30,									2021 vs. 2020 % Increase (Decrease)(2)		2021 vs. 2019 % Increase (Decrease)(2)
(in millions)(1)	2021			2020			2019
Ticket - Main cabin	$	3,742		$	1,057		$	6,021		254	%	(38)	%
Ticket - Business cabin and premium products	2,495			577			4,008			332	%	(38)	%
Loyalty travel awards	544			143			732			280	%	(26)	%
Travel-related services	410			161			649			155	%	(37)	%
Total passenger revenue	$	7,191		$	1,938		$	11,410		271	%	(37)	%
Cargo	262			142			189			85	%	39	%
Other	1,701			982			961			73	%	77	%
Total operating revenue	$	9,154		$	3,062		$	12,560		199	%	(27)	%

TRASM (cents)	16.93		¢	10.82		¢	16.58		¢	56	%	2	%
Third-party refinery sales(3)	(1.61)			(1.47)			(0.01)			10	%	NM
Delta Private Jets adjustment(3)	—			—			(0.06)			—	%	(100)	%
TRASM, adjusted	15.31		¢	9.35		¢	16.51		¢	64	%	(7)	%

(1)~~This reconciliation~~Total amounts in the table above may not calculate exactly due to rounding.

(2)Certain variances are labeled as not meaningful ("NM") throughout management's discussion and analysis.

(3)For additional information on adjustments to TRASM, see "Supplemental Information" below.

Operating Revenue

Compared to the ~~March~~September 2019 quarter, our operating revenue decreased ~~$6.3~~$3.4 billion, or ~~60%~~27%, due primarily to reduced demand resulting from the COVID-19 pandemic. The ~~decrease~~decline in operating revenue, on a ~~36%~~29% decrease in capacity, resulted in a ~~38% decrease~~2% increase in total revenue per available seat mile ("TRASM") and a ~~46%~~7% decrease in TRASM, adjusted compared to the ~~March~~September 2019 quarter. ~~The~~

Our operating revenue ~~declines~~increased $6.1 billion compared to the ~~March~~September 2020 quarter ~~are attributable~~due to ~~these same factors, with~~ the ~~impact~~continued recovery in demand that began in the September 2020 quarter, following the depth of the COVID-19 pandemic ~~largely limited to~~impact in the ~~month of March~~June 2020 quarter. The increase in ~~2020.~~operating revenue, which outpaced the 91% increase in capacity, resulted in a 56% increase in TRASM and a 64% increase in TRASM, adjusted.

~~The increase in third-party refinery sales resulted from the refinery's shift to producing more non-jet fuel products due to the decline in demand for jet fuel.~~ See "Refinery Segment" below for additional details on the refinery's operations, including third-party refinery sales recorded in other revenue, during ~~the March 2021 quarter.~~each period.

Passenger revenue during the month of March 2021 was approximately 50% higher than the month of February 2021, which is a higher increase than we have historically experienced in prior years between February and March. The length and severity of the reduction in travel demand due to the COVID-19 pandemic ~~are uncertain, but~~remains uncertain; however, with continued distribution of effective vaccines and easing of travel advisories and restrictions, we believe customer confidence will continue to grow, leading to increased demand for the remainder of 2021, subject to seasonality-driven impacts. The September 2021 quarter started with July monthly revenue increasing over the prior month at a higher rate than our historical seasonality-based change. However, we experienced a temporary pause in demand in August and early September due to a rise in COVID-19 cases attributable to a variant of the COVID-19 virus. We expect domestic leisure travel to remain near 2019 levels, while we are experiencing a delay in the ~~spring and summer~~return of ~~2021. The increase in passenger revenue from February 2021~~business travel as many companies are pausing or delaying return to ~~March 2021 is indicative of this increasing demand.~~office plans. We ~~expect widespread vaccination~~continue to ~~result in sustained demand improvement going forward, with recovery of~~expect domestic demand ~~preceding the~~ recovery ofto lead international demand recovery. We believe international demand recovery will continue to be uneven in ~~most regions.~~the remainder of 2021 and the beginning of 2022. We continue to monitor risks to the pace of recovery from COVID-19 variants, the impact of vaccine programs and travel advisories and restrictions. We are planning for our system capacity to be approximately 20% lower in the December 2021 quarter than the December 2019 quarter.

We have historically generated cargo ~~revenues~~revenue in domestic and international markets through the use of cargo space on regularly scheduled passenger aircraft. Reduced industry capacity as a result of the COVID-19 pandemic drove a significant increase in our cargo yield and our cargo revenue in the ~~March~~September 2021 quarter compared to the ~~March 2020 and March~~September 2019 ~~quarters, in contrast~~quarter. Compared to the ~~decreases experienced~~September 2020 quarter, our cargo revenue in ~~passenger revenue.~~the September 2021 quarter increased due to continued higher yields as well as higher volume.

Delta Air Lines, Inc. September 2021 ~~March~~ Form 10-Q 1922

Item 2. MD&A - Results of Operations

Passenger Revenue by Geographic Region


				Increase (Decrease) vs. Three Months Ended March 31, 2020															Increase (Decrease) vs. Three Months Ended September 30, 2020
(in millions)	(in millions)	Three Months Ended March 31, 2021		Passenger Revenue		RPMs (Traffic)		ASMs (Capacity)		Passenger Mile Yield		PRASM		Load Factor		(in millions)	Three Months Ended September 30, 2021		Passenger Revenue		RPMs (Traffic)		ASMs (Capacity)		Passenger Mile Yield		PRASM		Load Factor
Domestic	Domestic	$	2,280	(59)	%	(50)	%	(27)	%	(18)	%	(44)	%	(23)	pts	Domestic	$	5,759	250	%	242	%	74	%	2	%	101	%	41	pts
Atlantic	Atlantic	142		(83)	%	(84)	%	(63)	%	7	%	(53)	%	(40)	pts	Atlantic	730		455	%	559	%	179	%	(16)	%	99	%	41	pts
Latin America	Latin America	264		(65)	%	(53)	%	(6)	%	(27)	%	(63)	%	(40)	pts	Latin America	564		482	%	469	%	226	%	2	%	79	%	34	pts
Pacific	Pacific	62		(84)	%	(91)	%	(58)	%	75	%	(61)	%	(60)	pts	Pacific	138		121	%	73	%	50	%	28	%	47	%	4	pts
Total	Total	$	2,748	(64)	%	(58)	%	(32)	%	(13)	%	(47)	%	(28)	pts	Total	$	7,191	271	%	273	%	91	%	—	%	94	%	39	pts


				Increase (Decrease) vs. Three Months Ended March 31, 2019															Increase (Decrease) vs. Three Months Ended September 30, 2019
(in millions)	(in millions)	Three Months Ended March 31, 2021		Passenger Revenue		RPMs (Traffic)		ASMs (Capacity)		Passenger Mile Yield		PRASM		Load Factor		(in millions)	Three Months Ended September 30, 2021		Passenger Revenue		RPMs (Traffic)		ASMs (Capacity)		Passenger Mile Yield		PRASM		Load Factor
Domestic	Domestic	$	2,280	(66)	%	(57)	%	(27)	%	(21)	%	(53)	%	(34)	pts	Domestic	$	5,759	(28)	%	(20)	%	(16)	%	(10)	%	(15)	%	(4)	pts
Atlantic	Atlantic	142		(87)	%	(87)	%	(68)	%	1	%	(59)	%	(47)	pts	Atlantic	730		(65)	%	(65)	%	(56)	%	1	%	(20)	%	(18)	pts
Latin America	Latin America	264		(69)	%	(59)	%	(11)	%	(26)	%	(65)	%	(46)	pts	Latin America	564		(16)	%	(15)	%	(7)	%	(1)	%	(10)	%	(8)	pts
Pacific	Pacific	62		(89)	%	(94)	%	(69)	%	77	%	(65)	%	(68)	pts	Pacific	138		(80)	%	(90)	%	(67)	%	101	%	(39)	%	(60)	pts
Total	Total	$	2,748	(70)	%	(65)	%	(36)	%	(15)	%	(54)	%	(38)	pts	Total	$	7,191	(37)	%	(36)	%	(29)	%	(2)	%	(12)	%	(9)	pts

~~Passenger revenue decreased $4.8 billion, or 64%, compared to~~In the March ~~2020 quarter. Passenger revenue per available seat mile ("PRASM") decreased 47%, and passenger mile yield decreased 13% on 32% lower capacity. Load factor decreased 28 points from the March 2020~~2021 quarter, ~~to 45%.~~

Passenger revenue decreased $6.5 billion, or 70%, compared to the March 2019 quarter. PRASM decreased 54%, and passenger mile yield decreased 15% on 36% lower capacity. Load factor decreased 38 points from the March 2019 quarter to 45%.

~~In March 2021,~~ we announced the extension of the validity of all passenger tickets and travel credits ~~expiring in 2021~~purchased or ~~purchased~~expiring in 2021 to December 31, 2022. ~~In addition, we have waived change fees for all tickets purchased through April 30, 2021, as well as eliminated change fees for domestic and international tickets originating from North America~~Additionally, with the exception of Basic Economy ~~tickets.~~tickets, we eliminated change fees for tickets originating in North America and waived change fees for those originating outside of North America. We also implemented a waiver that allows Basic Economy tickets purchased for travel in 2021, which are normally non-changeable, to be changed without paying a fee regardless of origin or destination. We do not expect ~~these policy changes~~the updated change fee policies to materially affect our revenue in future ~~periods.~~periods; however, our estimates of revenue that will be recognized for unused tickets may vary in future periods due to the extension of the validity of passenger tickets and travel credits.

Domestic

~~Passenger~~Domestic passenger unit revenue ~~related to our domestic region~~("PRASM") for the ~~March~~September 2021 quarter decreased ~~53%~~15% with capacity down ~~27%~~16% compared to the ~~March~~September 2019 quarter as a result of reduced demand due to the COVID-19 ~~pandemic and our policy to block middle seats on flights through April 30, 2021.~~pandemic. The revenue ~~decline~~increase in the September 2021 quarter compared to the ~~March~~September 2020 quarter is attributable to ~~these same factors, with~~ the ~~impact~~low levels of capacity and demand during the ~~pandemic largely limited~~September 2020 quarter due to the ~~month of March~~COVID-19 pandemic and the ongoing recovery in ~~2020.~~the September 2021 quarter.

~~We are planning for improvement to~~The September 2021 quarter began with domestic leisure demand near September 2019 quarter levels. This strong demand moderated slightly in the ~~demand environment, primarily from leisure customers, to continue throughout 2021, though still lower than the comparable periods in 2019. Throughout the latter~~second half of the ~~March 2021~~ quarter ~~we have seen~~due to a rise in COVID-19 cases attributable to a variant of the virus. However, as cases begin to decline, leisure ~~customer~~and business bookings ~~continue to improve, ending the quarter down approximately only 25% from March 2019 quarter levels.~~are increasing. We also remain optimistic about the ultimate recovery of business ~~travel~~travel; however, in the September 2021 quarter we experienced a pause in the recovery of this demand. We expect this demand to improve modestly in the December 2021 quarter but accelerate in the first half of 2022 as more corporate offices reopen; we are, however, unable to fully predict the ~~timing or extent~~pace of that recovery. ~~As a result, we are planning for our domestic capacity to be approximately 20% lower in the June 2021 quarter than the June 2019 quarter.~~

~~Delta Air Lines, Inc. 2021 March Form 10-Q 20~~

~~Item 2. MD&A - Results of Operations~~

International

~~Passenger~~International passenger revenue ~~related to our international regions~~for the September 2021 quarter decreased ~~81%~~58% with capacity down ~~51%~~50% compared to the ~~March~~September 2019 ~~quarter, with similar declines compared~~quarter. Compared to the ~~March~~September 2020 ~~quarter.~~quarter passenger revenue has increased as travel to certain destinations has resumed or increased. The ~~reductions~~decreases in revenue and capacity ~~presented in~~compared to the ~~tables above were~~September 2019 quarter resulted from continued reduced demand, including as a result of ~~continued reduced demand and~~ government travel directives and quarantines significantly limiting or suspending air travel due to the COVID-19 pandemic. Additionally, while some countries have removed or eased travel restrictions, many countries ~~have implemented~~maintained or reinstituted international testing requirements and travel restrictions, which ~~has slowed~~have restrained demand in the short-term but isare expected to enable the long-term recovery of international air travel.

Delta Air Lines, Inc. September 2021 Form 10-Q 23

Item 2. MD&A - Results of Operations

We are monitoring the Biden administration's recent announcement that will lift travel restrictions on all fully vaccinated foreign visitors to the United States beginning in November 2021. This action will make travel to the U.S. by many foreign nationals possible for the first time in 18 months. Despite this policy change, we expect ~~this~~the significantly lower international demand environment to continue ~~for an extended period,~~at least into early 2022, with ~~improvement expected after~~ the recovery inpace continuing to trail domestic travel. ~~As a result, we are planning for our international capacity to be approximately 50% lower in the June 2021 quarter than the June 2019 quarter.~~ In each of the international regions, we continue to monitor government travel directives and customer demand and will continue to adjust flight schedules accordingly.

The Atlantic and Pacific regions continue to be the most impacted by the restrictions described above. ~~In December 2020,~~However, in the September 2021 quarter, we ~~became~~have continued our service to certain countries in the ~~first U.S. airline~~Atlantic region based on their lifting or easing of travel restrictions. These countries include Croatia, France, Germany, Greece, Iceland, Italy, the Netherlands, Portugal and Spain. Travel in the Pacific region is largely limited to ~~offer flights between the U.S. and Europe that allow customers to avoid quarantine upon arrival after testing negative for the virus prior to~~essential travel, and ~~upon arrival in Amsterdam~~we expect only small demand improvements until vaccine distribution improves and ~~Rome. We plan to continue this program to Rome through the June 2021 quarter, while also adding more routes and frequencies, including the addition of Milan as a destination.~~government restrictions ease.

The Latin America region has shown the most recovery of the international regions, with ~~improving~~continued demand improvement for leisure destinations in the Caribbean, Mexico and Central America. Capacity in the Latin America region in the September 2021 quarter has increased to near September 2019 quarter levels and as demand continues to return we expect revenue to return to those levels as well. We expect ~~that~~this trend to continue ~~into~~through the ~~June~~remainder of 2021 ~~quarter~~ with the recovery in the Atlantic and Pacific regions lagging behind Latin America.

Other Revenue

Three Months Ended March 31, 2021 vs. 2020
% Increase (Decrease) 2021 vs. 2019
% Increase (Decrease)
(in millions) 2021 2020 2019
Ancillary businesses and refinery $ 726 $ 223 $ 369 NM 97 %
Loyalty program 368 474 474 (22) % (22) %
Miscellaneous 93 174 183 (47) % (49) %
Total other revenue $ 1,187 $ 871 $ 1,026 36 % 16 %


	Three Months Ended September 30,						2021 vs. 2020 % Increase (Decrease)		2021 vs. 2019 % Increase (Decrease)
(in millions)	2021		2020		2019
Refinery	$	872	$	417	$	6	109	%	NM
Loyalty program	453		343		485		32	%	(7)	%
Ancillary businesses	215		155		285		39	%	(25)	%
Miscellaneous	161		67		185		140	%	(13)	%
Total other revenue	$	1,701	$	982	$	961	73	%	77	%

~~Ancillary Businesses and~~ Refinery. ~~Ancillary businesses and refinery includes~~This represents refinery sales to third ~~parties, aircraft maintenance services we provide to third parties and our vacation wholesale operations. Refinery~~parties. These sales, ~~to third parties,~~ which are at or near cost, increased ~~approximately $540~~$455 million and ~~$490~~$866 million compared to the ~~March~~September 2020 and ~~March~~September 2019 quarters, respectively. The increase in third-party refinery sales compared to the September 2019 quarter resulted from the refinery's shift to producing and selling more non-jet fuel products due to the decline in demand for jet ~~fuel.~~fuel compared to pre-pandemic levels. The increase compared to the September 2020 quarter was driven by higher pricing during the September 2021 quarter, with lower production and demand for both jet and non-jet fuel products in the September 2020 quarter. See "Refinery Segment" below for additional details on the refinery's operations, including third-party refinery sales ~~was partially offset by declines~~recorded in other revenue, from aircraft maintenance services we provide to third parties, which decreased due to the reduction in flights operated worldwide. The March 2019 quarter results also included $52 million of revenue from Delta Private Jets, which was combined with Wheels Up in January 2020 and is no longer reflected in ancillary businesses and refinery.during each period.

Loyalty Program. Loyalty program revenues relate to brand usage by third parties and other performance obligations embedded in miles sold, including redemption of miles for non-travel awards. These revenues are mainly driven by customer spend on American Express cards and new cardholder acquisitions. Revenues from our relationship with American Express increased in the September 2021 quarter compared to the September 2020 period and were effectively flat compared to the September 2019 period. During the September 2021 quarter, co-brand card spend surpassed September 2019 levels and card acquisitions were nearly recovered to September 2019 levels.

Ancillary Businesses. Ancillary businesses revenue includes aircraft maintenance services we provide to third parties and our vacation wholesale operations. Compared to the September 2019 quarter, revenue from aircraft maintenance services we provide to third parties decreased due to the reduction in flights operated worldwide. Compared to the September 2020 quarter, these revenues increased due to higher levels of flying. The September 2019 quarter results also included $47 million of revenue from Delta Private Jets, which ~~declined at a less severe rate than air travel.~~was combined with Wheels Up in January 2020 and is no longer reflected in ancillary businesses.

Miscellaneous. Miscellaneous revenue is primarily composed of lounge access and codeshare revenues. The volume of these transactions has fallen compared to the ~~March 2020 and March~~September 2019 ~~quarters~~quarter due to the impact of, and our response to, the COVID-19 pandemic, including reduced ~~capacity and~~capacity. However, compared to the ~~temporary closure~~September 2020 quarter, these transactions have increased due to the general recovery in our business that continued to materialize in the September 2021 quarter. Our full network of ~~certain lounges. We expect to reopen nearly all~~lounges was reopened by the end of ~~our lounges by~~ July 2021.

Delta Air Lines, Inc. September 2021 ~~March~~ Form 10-Q 2124

Item 2. MD&A - Results of Operations

Operating Expense

Three Months Ended March 31, 2021 vs. 2020
% Increase (Decrease) 2021 vs. 2019
% Increase (Decrease)
(in millions) 2021 2020 2019
Salaries and related costs $ 2,202 $ 2,862 $ 2,732 (23) % (19) %
Aircraft fuel and related taxes 1,017 1,595 1,978 (36) % (49) %
Ancillary businesses and refinery 706 219 351 NM NM
Contracted services 519 748 709 (31) % (27) %
Landing fees and other rents 493 550 524 (10) % (6) %
Depreciation and amortization 492 678 615 (27) % (20) %
Regional carrier expense 401 577 538 (31) % (25) %
Aircraft maintenance materials and outside repairs 294 469 476 (37) % (38) %
Passenger service 118 273 288 (57) % (59) %
Passenger commissions and other selling expenses 110 398 474 (72) % (77) %
Aircraft rent 104 100 102 4 % 2 %
Restructuring charges (44) — — NM NM
Government grant recognition (1,186) — — NM NM
Profit sharing — — 220 NM (100) %
Other 322 533 445 (40) % (28) %
Total operating expense $ 5,548 $ 9,002 $ 9,452 (38) % (41) %


	Three Months Ended September 30,						2021 vs. 2020 % Increase (Decrease)		2021 vs. 2019 % Increase (Decrease)
(in millions)	2021		2020		2019
Salaries and related costs	$	2,566	$	2,012	$	2,976	28	%	(14)	%
Aircraft fuel and related taxes	1,552		486		2,239		219	%	(31)	%
Ancillary businesses and refinery	1,079		561		279		92	%	287	%
Contracted services	634		419		760		51	%	(17)	%
Depreciation and amortization	501		545		631		(8)	%	(21)	%

Landing fees and other rents	524		458		566		14	%	(7)	%
Regional carrier expense	453		290		543		56	%	(17)	%
Aircraft maintenance materials and outside repairs	433		106		424		308	%	2	%
Passenger commissions and other selling expenses	308		100		597		208	%	(48)	%
Passenger service	226		92		360		146	%	(37)	%
Aircraft rent	105		99		110		6	%	(5)	%
Restructuring charges	33		5,345		—		(99)	%	NM
Government grant recognition	(1,822)		(1,315)		—		39	%	NM
Profit sharing	—		—		517		—	%	(100)	%
Other	357		250		487		43	%	(27)	%
Total operating expense	$	6,949	$	9,448	$	10,489	(26)	%	(34)	%

In response to the reduced demand and related reduction in revenue following the onset of the COVID-19 pandemic in early 2020, we quickly reduced capacity to more closely align with demand, implemented cost saving initiatives related to our fleet and operations, offered employees voluntary separation programs and delayed or eliminated nearly all discretionary spending.

As a result, most operating expense line items ~~decreased~~remain significantly lower in the ~~March~~September 2021 quarter ~~compared to~~than in the ~~March 2020 and~~September 2019 ~~quarters.~~quarter. Operating expense decreased primarily due to recognition of the ~~voluntary separation programs described below, the many~~remaining PSP3 grant, lower volume-related expenses, mainly fuel and passenger commissions and other selling expenses, lower salaries and related costs and profit sharing, and significant cost reduction measures ~~and programs implemented~~taken across all aspects of our operation in response to the COVID-19 ~~pandemic and~~pandemic. During the ~~reduction in volume and selling-related costs. During~~September 2021 quarter, as distribution of effective vaccines ~~continues,~~continued, travel restrictions and advisories ~~ease~~eased and customer confidence ~~continues~~continued to grow despite the negative impact of a variant of the COVID-19 virus, we ~~expect~~saw revenue and capacity to return and related operating expense toline items increase. However, we believe that a portion of the cost savings achieved during 2020 was structural in nature, which we expect to contribute to a lower non-fuel unit cost in the future as capacity is fully restored.

The discussion below is focused largely on the changes in certain operating expense line items compared to the ~~March~~September 2020 and ~~March~~September 2019 quarters that were not primarily driven by the ~~reduction~~change in capacity or revenue. These include many of ~~the~~what are expected to be structural cost reduction measures and programs we implemented in response to the COVID-19 pandemic.

Salaries and Related Costs. ~~The decrease in salaries and related costs compared to the March 2020 and March 2019 quarters is primarily due to actions~~Actions taken as a result of decreased demand for air travel due to the COVID-19 ~~pandemic.~~pandemic had a significant impact on salaries and related costs, leading to a decrease compared to the September 2019 quarter. In the second half of 2020, approximately 18,000 employees elected to participate in voluntary separation programs, ~~reducing~~which initially reduced our workforce by approximately 20%~~. Additionally,~~, though some of those positions have subsequently been filled. Since the beginning of 2021, we have hired approximately ~~13,000~~8,000 employees ~~took voluntary unpaid leaves of absence during the March 2021 quarter.~~in certain areas, including flight operations and reservations and customer care, in order to support our operations as demand and capacity return.

Beginning in March 2020 and continuing through December 2020, salaries were reduced by 100% for our CEO and 50% for our other officers. In addition, work hours were reduced by 25% for all other management and most front-line employee work groups. On January 1, 2021, employees were restored to full work hours and we ~~plan to recall~~have recalled approximately 1,700 pilots ~~between March~~from inactive status back to active service. Additionally, approximately 40,000 employees took voluntary unpaid leaves of absence during the September 2020 quarter. These actions resulted in higher salaries and ~~October that had been placed on inactive status.~~

related costs in the September 2021 quarter compared to the September 2020 quarter.

Delta Air Lines, Inc. September 2021 ~~March~~ Form 10-Q 2225

Item 2. MD&A - Results of Operations

Aircraft Fuel and Related Taxes. Fuel expense decreased~~$961~~ $687 million compared to the ~~March~~September 2019 quarter primarily due to a ~~43%~~32% decrease in consumption, ~~and~~partially offset by a ~~18% decrease in the market price of jet fuel. Fuel expense decreased $578 million compared to the March 2020 quarter primarily due to a 38% decrease in consumption and an 11% decrease~~1% increase in the market price of jet fuel. Consumption decreased ondue to a combination of reduced capacity and improved fuel efficiency on an available seat mile basis.

Fuel expense increased $1.1 billion compared to the September 2020 quarter primarily due to a 102% increase in consumption on a comparable increase in capacity, and a 75% increase in the market price of jet fuel.

Additionally, during the ~~March~~September 2021 quarter, we purchased and retired ~~approximately $20~~$29 million of carbon offset credits, which relate to ~~approximately 60%~~a portion of ~~the 13 million metric tons of~~2021 carbon emissions generated by our airline ~~segment from March 1 to December 31, 2020.~~segment. In the table below, these costs are shown in environmental sustainability impact.

~~The table below also shows the impact of hedging and the refinery on fuel expense and average price per gallon.~~

Fuel expense and average price per gallon
Average Price Per Gallon
Three Months Ended March 31, 2021 vs. 2019 Increase (Decrease) Three Months Ended March 31, 2021 vs. 2019 Increase (Decrease)
(in millions, except per gallon data) 2021 2020 2019 2021 2020 2019
Fuel purchase cost(1)
$ 895 $ 1,631 $ 1,936 $ (1,041) $ 1.64 $ 1.85 $ 2.01 $ (0.37)
Environmental sustainability impact 20 — — 20 0.04 — — 0.04
Fuel hedge impact (23) (7) 8 (31) (0.04) (0.01) 0.01 (0.05)
Refinery segment impact 125 (29) 34 91 0.23 (0.03) 0.04 0.19
Total fuel expense $ 1,017 $ 1,595 $ 1,978 $ (961) $ 1.87 $ 1.81 $ 2.06 $ (0.19)


Fuel expense and average price per gallon
									Average Price Per Gallon
	Three Months Ended September 30,						2021 vs. 2019 Increase (Decrease)		Three Months Ended September 30,						2021 vs. 2019 Increase (Decrease)
(in millions, except per gallon data)	2021		2020		2019				2021		2020		2019
Fuel purchase cost(1)	$	1,601	$	449	$	2,313	$	(712)	$	2.03	$	1.16	$	2.00	$	0.03
Environmental sustainability impact	29		—		—		29		0.04		—		—		0.04
Fuel hedge impact	19		9		(25)		44		0.02		0.02		(0.02)		0.04
Refinery segment impact	(97)		28		(49)		(48)		(0.12)		0.07		(0.04)		(0.08)
Total fuel expense	$	1,552	$	486	$	2,239	$	(687)	$	1.97	$	1.25	$	1.94	$	0.03

(1)Market price for jet fuel at airport locations, including related taxes and transportation costs.

Ancillary Businesses and Refinery. Ancillary businesses and refinery includes expenses associated with refinery sales to third parties, aircraft maintenance services we provide to third parties and our vacation wholesale operations. Increased expenses were primarily related to refinery sales to third parties, which are at or near cost. ~~Due to the decrease in demand for jet fuel, the refinery has shifted production to more non-jet fuel products, which increased the sales to third parties compared to the March 2019 quarter.~~ The refinery cost of sales increased ~~approximately $540~~$455 million and ~~approximately $490~~$866 million compared to the ~~March~~September 2020 and ~~March~~September 2019 quarters, respectively. The increase in third-party refinery ~~costs~~sales compared to the September 2019 quarter resulted from the refinery's shift to producing and selling more non-jet fuel products due to the decline in demand for jet fuel compared to pre-pandemic levels. The increase compared to the September 2020 quarter was ~~partially offset~~driven by higher pricing during the September 2021 quarter, with lower production and demand for both jet and non-jet fuel products in the September 2020 quarter. Compared to the September 2019 quarter, expenses related to aircraft maintenance services we provide to third parties decreased due to the reduction in flights operated ~~worldwide.~~worldwide; however, compared to the September 2020 quarter these expenses increased due to higher levels of flying. In addition, ~~$44~~$43 million of costs related to services performed by Delta Private Jets in the ~~March~~September 2019 quarter were recorded in ancillary businesses and refinery prior to the combination of that business with Wheels Up in January 2020.

Depreciation and Amortization. Depreciation and amortization decreased compared to the September 2020 and September 2019 quarters primarily due to the aircraft that were retired or impaired during 2020.

Regional Carrier Expense. Regional carrier expense decreased compared to the ~~March 2020 and March~~September 2019 ~~quarters~~quarter due to lower utilization of these carriers as a result of the overall reduced ~~capacity.~~capacity and increased compared to the September 2020 quarter due to an increase in utilization as a result of the increased demand discussed above.

We previously allocated certain costs (such as landing fees and other rents, salaries and related costs and contracted services) to regional carrier expense in our income statement based on relevant statistics (such as passenger counts). Beginning in the March 2021 quarter we ~~are no longer~~ceased performing this allocation and have reclassified the costs presented in prior periods to align with this presentation. This reclassification better reflects the nature of, and how management views, these regional carrier related expenses. This allocation was approximately $900 million in 2020, including ~~$325~~approximately $200 million in the ~~March~~September 2020 quarter, and $1.4 billion in 2019, including ~~$355~~approximately $360 million in the ~~March~~September 2019 quarter. The remaining amounts in regional carrier expense represent the accrual of payments to our regional carriers under capacity purchase agreements and the expenses of our wholly owned regional subsidiary, Endeavor Air, Inc.

Aircraft Maintenance Materials and Outside Repairs. Maintenance expense increased compared to both the September 2019 and September 2020 quarters as we returned aircraft to service and to support our operational reliability. The increase compared to the September 2020 quarter was particularly pronounced due to the significantly reduced capacity during the September 2020 quarter and the large number of aircraft we had parked during that time.

Delta Air Lines, Inc. September 2021 Form 10-Q 26

Item 2. MD&A - Results of Operations

Aircraft Rent. Most aircraft operating lease expenses are recorded in aircraft rent and are contractually fixed. Therefore, the change in aircraft rent ~~did not decline as~~was more muted than our other operating expense line items, ~~did~~when compared to the ~~March~~September 2019 and September 2020 ~~and March 2019~~ quarters.

Restructuring ~~charges.~~Charges. During 2020, we recorded restructuring charges ~~including certain accruals,~~for items such as fleet impairments and voluntary early retirement and separation programs following strategic business decisions in response to the COVID-19 pandemic. In the ~~March~~September 2021 quarter, we recognized ~~$44~~$33 million of net adjustments to increase certain of those restructuring charges, representing changes in our estimates.

Government Grant Recognition. ~~In January~~During the nine months ended September 30, 2021, we ~~entered into~~received a total of $6.4 billion under payroll support program extension ~~agreement~~agreements with the U.S. Department of the ~~Treasury. In the March 2021 quarter,~~Treasury, which we ~~received $2.9 billion in payroll support payments, which must be used~~were required to use exclusively for the payment of employee wages, salaries and benefits. The support payments included ~~a grant of $2.0~~grants totaling $4.5 billion that ~~is being~~were recognized as contra-expense in 2021 over the period that the funds ~~are expected to benefit. We expect to~~were used. Following the recognition of $2.7 billion during the six months ended June 30, 2021, we fully ~~recognize~~recognized the ~~grant proceeds from this first payroll support program extension by the end~~remaining $1.8 billion of the ~~June~~PSP3 grant during the three months ended September 30, 2021. The amount recognized in the September 2021 ~~quarter.~~

~~Delta Air Lines, Inc. 2021 March Form 10-Q 23~~

~~Item 2. MD&A - Results of Operations~~

~~We additionally expect~~quarter exceeded the amount recognized from PSP1 during the September 2020 quarter due to ~~receive approximately $2.7 billion, including a grant of $1.9 billion, under a second extension of~~ the ~~payroll support program. The grant will also be recognized~~increase in eligible salaries and related costs, as contra-expense in 2021 over the period that the funds are expected to benefit. The amounts of the second extension of the payroll support program are estimated based on our share, and the structure of, the first extension of the payroll support program although actual amounts could differ from our estimates.discussed above. See Note 5 of the Notes to the Condensed Consolidated Financial Statements for additional information on the payroll support program extensions.

Delta Air Lines, Inc. September 2021 Form 10-Q 27

Item 2. MD&A - Results of Operations

Results of Operations - Nine Months Ended September 30, 2021, 2020 and 2019

Operating Revenue


	Nine Months Ended September 30,									2021 vs. 2020 % Increase (Decrease)		2021 vs. 2019 % Increase (Decrease)
(in millions)(1)	2021			2020			2019
Ticket - Main cabin	$	7,939		$	5,229		$	16,680		52	%	(52)	%
Ticket - Business cabin and premium products	5,128			3,483			11,306			47	%	(55)	%
Loyalty travel awards	1,213			731			2,174			66	%	(44)	%
Travel-related services	998			742			1,872			35	%	(47)	%
Total passenger revenue	$	15,278		$	10,185		$	32,032		50	%	(52)	%
Cargo	728			403			567			81	%	28	%
Other	4,423			2,534			2,969			75	%	49	%
Total operating revenue	$	20,429		$	13,122		$	35,568		56	%	(43)	%

TRASM (cents)	14.31		¢	13.42		¢	16.94		¢	7	%	(16)	%
Third-party refinery sales(2)	(1.53)			(0.73)			(0.05)			110	%	NM
Delta Private Jets Adjustment	—			—			(0.07)			—	%	(100)	%
TRASM, adjusted	12.78		¢	12.70		¢	16.83		¢	1	%	(24)	%

(1)Total amounts in the table above may not calculate exactly due to rounding.

(2)For additional information on adjustments to TRASM, see "Supplemental Information" below.

Unless otherwise discussed below, the changes in operating revenue line items, as well as the underlying reasons for these changes, compared to the nine months ended September 30, 2020 and September 30, 2019, respectively, are consistent with the discussion above under Results of Operations - Three Months Ended September 30, 2021, 2020 and 2019.

Operating Revenue

Compared to the nine months ended September 30, 2019, our operating revenue decreased $15.1 billion, or 43%, due to reduced demand resulting from the COVID-19 pandemic. The decrease in operating revenue, on a 32% decrease in capacity, resulted in a 16% decrease in TRASM and a 24% decrease in TRASM, adjusted compared to the nine months ended September 30, 2019.

Compared to the nine months ended September 30, 2020, our operating revenue increased $7.3 billion, or 56%, due to increased demand in 2021 compared to 2020. The increase in operating revenue, on a 46% increase in capacity, generated a 7% increase in TRASM and a 1% increase in TRASM, adjusted compared to the nine months ended September 30, 2020.

See "Refinery Segment" below for additional details on the refinery's operations, including third-party refinery sales recorded in other revenue, during each period.

Passenger Revenue by Geographic Region


			Increase (Decrease) vs. Nine Months Ended September 30, 2020
(in millions)	Nine Months Ended September 30, 2021		Passenger Revenue		RPMs (Traffic)		ASMs (Capacity)		Passenger Mile Yield		PRASM		Load Factor
Domestic	$	12,517	60	%	80	%	47	%	(11)	%	9	%	13	pts
Atlantic	1,160		14	%	16	%	29	%	(2)	%	(11)	%	(6)	pts
Latin America	1,313		49	%	70	%	100	%	(12)	%	(25)	%	(11)	pts
Pacific	288		(40)	%	(66)	%	(4)	%	79	%	(37)	%	(39)	pts
Total	$	15,278	50	%	62	%	46	%	(7)	%	3	%	6	pts

Delta Air Lines, Inc. September 2021 Form 10-Q 28

Item 2. MD&A - Results of Operations


			Increase (Decrease) vs. Nine Months Ended September 30, 2019
(in millions)	Nine Months Ended September 30, 2021		Passenger Revenue		RPMs (Traffic)		ASMs (Capacity)		Passenger Mile Yield		PRASM		Load Factor
Domestic	$	12,517	(45)	%	(35)	%	(20)	%	(16)	%	(31)	%	(16)	pts
Atlantic	1,160		(77)	%	(77)	%	(63)	%	(1)	%	(37)	%	(31)	pts
Latin America	1,313		(43)	%	(35)	%	(8)	%	(11)	%	(37)	%	(25)	pts
Pacific	288		(85)	%	(92)	%	(68)	%	92	%	(53)	%	(65)	pts
Total	$	15,278	(52)	%	(48)	%	(32)	%	(8)	%	(30)	%	(20)	pts

Domestic

Domestic passenger unit revenue for the nine months ended September 30, 2021 decreased 31% with capacity down 20% compared to the nine months ended September 30, 2019 as a result of reduced demand due to the COVID-19 pandemic and our policy to block middle seats on flights through April 30, 2021. The revenue increase in the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020 is attributable to the low levels of capacity and demand during the prior year period due to the COVID-19 pandemic and the ongoing recovery in the nine months ended September 30, 2021.

International

International passenger revenue for the nine months ended September 30, 2021 decreased 70% with capacity down 52% compared to the nine months ended September 30, 2019. Compared to the nine months ended September 30, 2020, international passenger revenue increased 16% with an increase in capacity of 43%. The underlying reasons for these changes are consistent with the discussion above under Results of Operations - Three Months Ended September 30, 2021, 2020 and 2019.

Other Revenue


	Nine Months Ended September 30,						2021 vs. 2020 % Increase (Decrease)		2021 vs. 2019 % Increase (Decrease)
(in millions)	2021		2020		2019
Refinery	$	2,189	$	709	$	94	209	%	NM
Loyalty program	1,260		1,086		1,443		16	%	(13)	%
Ancillary businesses	586		476		896		23	%	(35)	%
Miscellaneous	388		263		536		48	%	(28)	%
Total other revenue	$	4,423	$	2,534	$	2,969	75	%	49	%

Refinery. This represents refinery sales to third parties. These sales, which are at or near cost, increased by $1.5 billion and $2.1 billion compared to the nine months ended September 30, 2020 and September 30, 2019, respectively. See "Refinery Segment" below for additional details on the refinery's operations, including third-party refinery sales recorded in other revenue, during each period.

Ancillary Businesses. Ancillary businesses revenue includes aircraft maintenance services we provide to third parties and our vacation wholesale operations. Results for the nine months ended September 30, 2019 included approximately $150 million of revenue from Delta Private Jets, which was combined with Wheels Up in January 2020 and is no longer reflected in ancillary businesses.

Delta Air Lines, Inc. September 2021 Form 10-Q 29

Item 2. MD&A - Results of Operations

Operating Expense


	Nine Months Ended September 30,						2021 vs. 2020 % Increase (Decrease)		2021 vs. 2019 % Increase (Decrease)
(in millions)	2021		2020		2019
Salaries and related costs	$	7,096	$	7,000	$	8,555	1	%	(17)	%
Aircraft fuel and related taxes	4,056		2,453		6,508		65	%	(38)	%
Ancillary businesses and refinery	2,724		1,181		945		131	%	188	%
Contracted services	1,723		1,536		2,200		12	%	(22)	%
Depreciation and amortization	1,494		1,813		1,960		(18)	%	(24)	%
Landing fees and other rents	1,477		1,430		1,638		3	%	(10)	%
Regional carrier expense	1,258		1,204		1,622		4	%	(22)	%
Aircraft maintenance materials and outside repairs	1,014		618		1,334		64	%	(24)	%
Passenger commissions and other selling expenses	640		548		1,668		17	%	(62)	%
Passenger service	520		456		988		14	%	(47)	%
Aircraft rent	313		295		318		6	%	(2)	%
Restructuring charges	(3)		7,798		—		(100)	%	NM
Government grant recognition	(4,512)		(2,595)		—		74	%	NM
Profit sharing	—		—		1,256		—	%	(100)	%
Other	1,006		996		1,357		1	%	(26)	%
Total operating expense	$	18,806	$	24,733	$	30,349	(24)	%	(38)	%

Unless otherwise discussed below, the changes in operating expense line items, as well as the underlying reasons for these changes, compared to the nine months ended September 30, 2020 and September 30, 2019, respectively, are consistent with the discussion above under Results of Operations - Three Months Ended September 30, 2021, 2020 and 2019.

Aircraft Fuel and Related Taxes. Fuel expense decreased $2.5 billion compared to the nine months ended September 30, 2019 primarily due to a 37% decrease in consumption and an 8% decrease in the market price of jet fuel. Consumption decreased due to a combination of reduced capacity and improved fuel efficiency on an available seat mile basis.

Fuel expense increased $1.6 billion compared to the nine months ended September 30, 2020 due to a 41% increase in consumption and a 15% increase in the market price per gallon of jet fuel. Consumption increased with capacity during the nine months ended September 30, 2021 as described above; however, the impact was partially mitigated by improved fuel efficiency on an available seat mile basis.

Additionally, during the nine months ended September 30, 2021, we purchased and retired $69 million of carbon offset credits, which relate to 13 million metric tons of carbon emissions generated by our airline segment from March 1 to December 31, 2020 as well as a portion of our 2021 carbon emissions. In the table below, these costs are shown in environmental sustainability impact.


Fuel expense and average price per gallon
									Average Price Per Gallon
	Nine Months Ended September 30,						2021 vs. 2019 Increase (Decrease)		Nine Months Ended September 30,						2021 vs. 2019 Increase (Decrease)
(in millions, except per gallon data)	2021		2020		2019				2021		2020		2019
Fuel purchase cost(1)	$	3,781	$	2,324	$	6,568	$	(2,787)	$	1.87	$	1.62	$	2.04	$	(0.17)
Environmental sustainability impact	69		—		—		69		0.03		—		—		0.03
Fuel hedge impact	20		16		(8)		28		0.01		0.01		—		0.01
Refinery segment impact	186		113		(52)		238		0.09		0.08		(0.01)		0.10
Total fuel expense	$	4,056	$	2,453	$	6,508	$	(2,452)	$	2.00	$	1.71	$	2.03	$	(0.03)

(1)Market price for jet fuel at airport locations, including related taxes and transportation costs.

Delta Air Lines, Inc. September 2021 Form 10-Q 30

Item 2. MD&A - Results of Operations

Ancillary Businesses and Refinery. The changes in ancillary business and refinery expenses were primarily related to refinery sales to third parties, which increased by $1.5 billion and $2.1 billion compared to the nine months ended September 30, 2020 and September 30, 2019, respectively. In addition, approximately $130 million of costs related to services performed by Delta Private Jets in the nine months ended September 30, 2019 were recorded in ancillary businesses and refinery prior to the combination of that business with Wheels Up in January 2020.

Restructuring Charges. During 2020, we recorded restructuring charges for items such as fleet impairments and voluntary early retirement and separation programs following strategic business decisions in response to the COVID-19 pandemic. In the nine months ended September 30, 2021, we recognized $3 million of net adjustments to decrease certain of those restructuring charges, representing changes in our estimates.

Non-Operating Results


	Three Months Ended September 30,						2021 vs. 2020		2021 vs. 2019
(in millions)	2021		2020		2019		Favorable (Unfavorable)		Favorable (Unfavorable)
Interest expense, net	$	(314)	$	(291)	$	(70)	$	(23)	$	(244)
Impairments and equity method (losses)/gains	(49)		(114)		27		65		(76)
Gain/(loss) on investments, net	(223)		(95)		(35)		(128)		(188)
Loss on extinguishment of debt	(183)		—		—		(183)		(183)
Miscellaneous, net	96		27		(46)		69		142
Total non-operating expense, net	$	(673)	$	(473)	$	(124)	$	(200)	$	(549)

Three Months Ended March 31, 2021 vs. 2020 2021 vs. 2019
(in millions) 2021 2020 2019 Favorable (Unfavorable) Favorable (Unfavorable)
Interest expense, net $ (361) $ (79) $ (83) $ (282) $ (278)
Impairments and equity method losses (54) (260) (54) 206 —
Gain/(loss) on investments, net 262 (112) 100 374 162
Miscellaneous, net 36 254 (37) (218) 73
Total non-operating expense, net $ (117) $ (197) $ (74) $ 80 $ (43)


	Nine Months Ended September 30,						2021 vs. 2020		2021 vs. 2019
(in millions)	2021		2020		2019		Favorable (Unfavorable)		Favorable (Unfavorable)
Interest expense, net	$	(1,014)	$	(564)	$	(228)	$	(450)	$	(786)
Impairments and equity method losses	(102)		(2,432)		(44)		2,330		(58)
Gain/(loss) on investments, net	251		(199)		(17)		450		268
Loss on extinguishment of debt	(266)		—		—		(266)		(266)
Miscellaneous, net	301		327		(130)		(26)		431
Total non-operating expense, net	$	(830)	$	(2,868)	$	(419)	$	2,038	$	(411)

Interest expense, net. Interest expense increased compared to the prior year periods as a result of financing arrangements entered into during 2020. See Note 5 of the Notes to the Condensed Consolidated Financial Statements for additional information on recent financings. As a result of the increase in our outstanding debt since the onset of the COVID-19 pandemic, interest expense, net was $314 million in the ~~March~~September 2021 quarter ~~was $361 million. However, we~~and $1.0 billion in the nine months ended September 30, 2021. We have begun reducing the total amount of interest expense by ~~paying down~~pre-paying our debt in addition to periodic amortization payments and scheduled maturities.This began with early repayments made during the December 2020 quarter and continued with the early repayment of our $1.5 billion secured term loan in the March 2021 ~~quarter. We expect interest expense~~quarter, approximately $450 million of various EETCs in the June 2021 quarter, and approximately $850 million of certain notes through a cash tender offer and $262 million of other secured certificates, unsecured notes and a portion of the SkyMiles Term Loan through repurchases on the open market in the September 2021 quarter. Interest expense, net on our outstanding debt as of September 30, 2021 is expected to be approximately ~~$350 million.~~$310 million during the December 2021 quarter. We continue to seek selective opportunities to pre-pay our debt, in addition to periodic amortization and scheduled maturities, during the remainder of 2021 and beyond.

Impairments and equity method losses. Impairments and equity method losses ~~reflects~~in 2020 reflected our share of LATAM's and Grupo Aeroméxico's equity method results prior to their respective bankruptcy filings, ~~and~~ our share of Virgin Atlantic's equity method ~~results.~~results and the impairments reducing the basis of these investments to zero during the June 2020 quarter. See Note 4 of the Notes to the Condensed Consolidated Financial Statements for additional information on our equity investments.

Gain/(loss) on investments, net. Gain/(loss) on investments, net reflects the gains and losses on our equity investments measured at fair value on a recurring basis. The March 2021 quarter gain is primarily due to the mark-to-market adjustment on our investment in Wheels Up. See Note 4 of the Notes to the Condensed Consolidated Financial Statements for additional information on our equity ~~investments.~~investments measured at fair value on a recurring basis.

Delta Air Lines, Inc. September 2021 Form 10-Q 31

Item 2. MD&A - Non-Operating Results

Loss on extinguishment of debt. Loss on extinguishment of debt reflects the losses incurred in the early repayment of the notes, outstanding term loan and EETCs mentioned above. See Note 5 of the Notes to the Condensed Consolidated Financial Statements for additional information on the early repayment of debt.

Miscellaneous, net. Miscellaneous, net primarily includes pension and related benefit/(expense), foreign exchange gains/(losses) and charitable contributions. The ~~March~~nine months ended September 30, 2020 ~~quarter~~ included the $240 million gain recognized as a result of the combination of Delta Private Jets with Wheels Up in January 2020.

Income Taxes

During 2021 interim periods, we ~~will calculate~~are calculating our income tax expense by applying to any pre-tax ~~loss/income~~income/(loss) an effective tax rate determined as if the year to date period is the annual period. Using this method, for the three and nine months ended ~~March 31,~~September 30, 2021, our effective tax rate was ~~22%.~~21% and 13%, respectively. We believe that, at this time, this method for determining the effective tax rate is more reliable than projecting an annual effective tax rate due to the uncertainty of estimating annual pre-tax ~~loss/income~~income/(loss) due to the impact of the COVID-19 pandemic.

~~Delta Air Lines, Inc. 2021 March Form 10-Q 24~~

~~Item 2. MD&A - Refinery Segment~~

Refinery Segment

The refinery operated by our subsidiaries Monroe Energy, LLC and MIPC, LLC (collectively, "Monroe") primarily produces gasoline, diesel and jet fuel. Monroe exchanges the non-jet fuel products the refinery produces with third parties for jet fuel consumed in our airline operations. Historically, the jet fuel produced and procured through exchanging gasoline and diesel fuel produced by the refinery provided approximately 200,000 barrels per day, or approximately 75%, of our pre-COVID-19 pandemic consumption, for use in our airline operations. We believe that the jet fuel supply resulting from the refinery's operation contributes to reducing the market price of jet fuel and thus lowers our cost of jet fuel compared to what it otherwise would be.

The refinery’s production has also been altered by the dramatic change in economic conditions caused by the COVID-19 pandemic. During the ~~March~~nine months ended September 30, 2021, ~~quarter,~~ the refinery ~~operated~~progressively increased operations, ending the period at ~~60% – 90% of normal~~close to pre-pandemic production levels, ~~largely due~~which we expect to ~~the significant decrease in the demand for jet fuel, and expects production levels at the high end of that range~~continue during the ~~June~~December 2021 quarter, subject to market conditions. Additionally, due to the decrease in demand for jet fuel, the refinery has shifted production to more non-jet fuel products. We plan to continue to exchange those non-jet fuel products for jet fuel to the extent needed based on jet fuel demand.


Refinery segment financial information	Refinery segment financial information											Refinery segment financial information
		Three Months Ended March 31,						2021 vs. 2020		2021 vs. 2019			Three Months Ended September 30,						2021 vs. 2020		2021 vs. 2019
(in millions, except per gallon data)	(in millions, except per gallon data)	2021		2020		2019		% Increase (Decrease)				(in millions, except per gallon data)	2021		2020		2019		% Increase (Decrease)
Exchange products	Exchange products	$	503	$	831	$	732	(39)	%	(31)	%	Exchange products	$	629	$	249	$	1,143	153	%	(45)	%
Sales of refined products	Sales of refined products	4		143		232		(97)	%	(98)	%	Sales of refined products	12		3		52		300	%	(77)	%
Sales to airline segment	Sales to airline segment	—		210		271		NM				Sales to airline segment	183		—		304		NM		(40)	%
Third party refinery sales	Third party refinery sales	540		—		48		NM				Third party refinery sales	872		417		6		109	%	NM
Operating revenue	Operating revenue	$	1,047	$	1,184	$	1,283	(12)	%	(18)	%	Operating revenue	$	1,696	$	669	$	1,505	154	%	13	%

Operating (loss)/income		$	(125)	$	29	$	(34)	NM
Operating income (loss)												Operating income (loss)	$	97	$	(28)	$	49	NM		98	%
Refinery segment impact on average price per fuel gallon	Refinery segment impact on average price per fuel gallon	$	0.23	$	(0.03)	$	0.04	NM				Refinery segment impact on average price per fuel gallon	$	(0.12)	$	0.07	$	(0.04)	NM		200	%

Delta Air Lines, Inc. September 2021 Form 10-Q 32

Item 2. MD&A - Refinery Segment



	Nine Months Ended September 30,						2021 vs. 2020		2021 vs. 2019
(in millions, except per gallon data)	2021		2020		2019		% Increase (Decrease)		% Increase (Decrease)
Exchange products	$	1,667	$	1,144	$	2,953	46	%	(44)	%
Sales of refined products	29		299		360		(90)	%	(92)	%
Sales to airline segment	292		214		882		36	%	(67)	%
Third party refinery sales	2,189		709		94		209	%	NM
Operating revenue	$	4,177	$	2,366	$	4,289	77	%	(3)	%

Operating (loss) income	$	(186)	$	(113)	$	52	65	%	NM
Refinery segment impact on average price per fuel gallon	$	0.09	$	0.08	$	(0.01)	13	%	NM

Refinery revenues increased compared to the three months ended September 30, 2019 due to increased sales to third parties and increased compared to the three and nine months ended September 30, 2020 due to higher pricing and increased production and demand experienced since the prior year period. The refinery revenues slightly decreased compared to the ~~March 2020 and March~~nine months ended September 30, 2019 ~~quarters~~ due to lower refinery run rates ~~during the quarter, as well as~~and lower pricing for refined ~~products. The operating loss~~products in the first half of 2021. Operating income was higher in the ~~March~~three months ended September 30, 2021 ~~quarter~~ as compared to ~~the March 2019 quarter, which was mainly driven by the reduction in revenue~~prior periods due to increased production and ~~an increase in~~pricing, and lower Renewable Identification Numbers ("RINs") compliance costs discussed below. The operating loss was higher in the nine months ended September 30, 2021 as compared to the prior periods, mainly driven by an increase in RINs compliance costs discussed below, ~~and~~which was partially offset by cost savings resulting from decreased production ~~levels.~~levels compared to the nine months ended September 2019.

A refinery is subject to annual U.S. Environmental Protection Agency requirements to blend renewable fuels into the gasoline and on-road diesel fuel it produces. Alternatively, a refinery may purchase RINs from third parties in the secondary market. The Monroe refinery purchases the majority of its RINs ~~requirement~~ in the secondary market. Observable RINs prices increased ~~throughout~~through the ~~March~~first half of 2021, ~~quarter, with~~and declined during the September 2021 quarter. Monroe ~~incurring $158~~incurred $44 million and $453 million in RINs compliance costs during the ~~March~~three and nine months ended September 30, 2021 ~~quarter~~ as compared to ~~$27~~$25 million and ~~$15~~$78 million in the ~~March~~three and nine months ended September 30, 2020, ~~and March 2019 quarters,~~ respectively.

For more information regarding the refinery's results, see Note 9 of the Notes to the Condensed Consolidated Financial Statements.

Delta Air Lines, Inc. September 2021 ~~March~~ Form 10-Q 2533

Item 2. MD&A - Operating Statistics

Operating Statistics


	Three Months Ended September 30,									2021 vs. 2020 % Increase (Decrease)		2021 vs. 2019 % Increase (Decrease)
Consolidated(1)	2021			2020			2019
Revenue passenger miles (in millions) ("RPM")	43,057			11,545			66,862			273	%	(36)	%
Available seat miles (in millions) ("ASM")	54,083			28,290			75,742			91	%	(29)	%
Passenger mile yield	16.70		¢	16.78		¢	17.07		¢	—	%	(2)	%
Passenger revenue per available seat mile ("PRASM")	13.30		¢	6.85		¢	15.06		¢	94	%	(12)	%
Total revenue per available seat mile ("TRASM")	16.93		¢	10.82		¢	16.58		¢	56	%	2	%
TRASM, adjusted(2)	15.31		¢	9.35		¢	16.51		¢	64	%	(7)	%
Cost per available seat mile ("CASM")	12.85		¢	33.40		¢	13.85		¢	(62)	%	(7)	%
CASM-Ex(2)	11.67		¢	15.96		¢	10.15		¢	(27)	%	15	%

Passenger load factor	80		%	41		%	88		%	39	pts	(8)	pts
Fuel gallons consumed (in millions)	789			391			1,154			102	%	(32)	%
Average price per fuel gallon(3)	$	1.97		$	1.25		$	1.94		58	%	2	%
Average price per fuel gallon, adjusted(2)(3)	$	1.94		$	1.25		$	1.96		55	%	(1)	%

Three Months Ended March 31, 2021 vs. 2020 % Increase
(Decrease) 2021 vs. 2019 % Increase
(Decrease)
Consolidated(1)
2021 2020 2019
Revenue passenger miles (in millions) 17,948 43,062 51,617 (58) % (65) %
Available seat miles (in millions) 40,118 58,885 62,416 (32) % (36) %
Passenger mile yield 15.31 ¢ 17.58 ¢ 17.93 ¢ (13) % (15) %
PRASM 6.85 ¢ 12.85 ¢ 14.83 ¢ (47) % (54) %
TRASM 10.34 ¢ 14.59 ¢ 16.78 ¢ (29) % (38) %
TRASM, adjusted(2)
9.00 ¢ 14.59 ¢ 16.63 ¢ (38) % (46) %
CASM 13.83 ¢ 15.30 ¢ 15.14 ¢ (10) % (9) %
CASM-Ex(2)
13.01 ¢ 12.58 ¢ 11.49 ¢ 3 % 13 %
CASM, adjusted(2)
15.61 ¢ 15.30 ¢ 14.99 ¢ 2 % 4 %
Passenger load factor 45 % 73 % 83 % (28) pts (38) pts
Fuel gallons consumed (in millions) 545 880 962 (38) % (43) %
Average price per fuel gallon(3)
$ 1.87 $ 1.81 $ 2.06 3 % (9) %
Average price per fuel gallon, adjusted(2)(3)
$ 1.91 $ 1.82 $ 2.04 5 % (6) %


	Nine Months Ended September 30,									2021 vs. 2020 % Increase (Decrease)		2021 vs. 2019 % Increase (Decrease)
Consolidated(1)	2021			2020			2019
Revenue passenger miles (in millions)	94,290			58,229			181,652			62	%	(48)	%
Available seat miles (in millions)	142,730			97,771			209,911			46	%	(32)	%
Passenger mile yield	16.20		¢	17.49		¢	17.63		¢	(7)	%	(8)	%
PRASM	10.70		¢	10.42		¢	15.26		¢	3	%	(30)	%
TRASM	14.31		¢	13.42		¢	16.94		¢	7	%	(16)	%
TRASM, adjusted(2)	12.78		¢	12.70		¢	16.83		¢	1	%	(24)	%
CASM	13.18		¢	25.30		¢	14.46		¢	(48)	%	(9)	%
CASM-Ex(2)	11.96		¢	16.74		¢	10.66		¢	(29)	%	12	%

Passenger load factor	66		%	60		%	87		%	6	pts	(21)	pts
Fuel gallons consumed (in millions)	2,023			1,437			3,215			41	%	(37)	%
Average price per fuel gallon(3)	$	2.00		$	1.71		$	2.03		17	%	(1)	%
Average price per fuel gallon, adjusted(2)(3)	$	1.99		$	1.70		$	2.02		17	%	(1)	%

(1)Includes the operations of our regional carriers under capacity purchase agreements.

(2)Non-GAAP financial ~~measure~~measures defined and reconciled to TRASM, CASM and average fuel price per gallon, respectively, in "Supplemental Information" below.

(3)Includes the impact of fuel hedge activity, refinery segment results and environmental sustainability activity.

Delta Air Lines, Inc. September 2021 ~~March~~ Form 10-Q 2634

Item 2. MD&A - Fleet Information

Fleet Information

Our operating aircraft fleet, purchase commitments and options at ~~March 31,~~September 30, 2021 are summarized in the following table. As described above, we have been experiencing a recovery in demand from the COVID-19 pandemic, which has led to an increase in our capacity and utilization of ~~March 31,~~our aircraft. Accordingly, as of September 30, 2021, less than ~~10%~~5% of our mainline and regional aircraft were temporarily ~~parked.~~parked compared to 30% as of September 30, 2020.


Mainline aircraft information by fleet type	Mainline aircraft information by fleet type								Mainline aircraft information by fleet type
		Current Fleet(1)					Commitments(2)			Current Fleet(1)					Commitments(2)
Fleet Type	Fleet Type	Owned	Finance Lease	Operating Lease	Total	Average Age (Years)	Purchase	Options	Fleet Type	Owned	Finance Lease	Operating Lease	Total	Average Age (Years)	Purchase	Options
B-717-200	B-717-200	9	30	11	50	20.0			B-717-200	9	37	8	54	20.3
B-737-800	B-737-800	73	4	—	77	19.6			B-737-800	73	4	—	77	20.1
B-737-900ER	B-737-900ER	81	—	49	130	4.6			B-737-900ER	83	—	49	132	5.1	27
B-757-200	B-757-200	93	7	—	100	23.6			B-757-200	99	1	—	100	24.2
B-757-300	B-757-300	16	—	—	16	18.1			B-757-300	16	—	—	16	18.6
B-767-300ER	B-767-300ER	36	—	—	36	24.4			B-767-300ER	40	—	—	40	25.1
B-767-400ER	B-767-400ER	21	—	—	21	20.3			B-767-400ER	21	—	—	21	20.8
A220-100	A220-100	37	4	—	41	1.5	4		A220-100	37	4	—	41	2.0	4
A220-300	A220-300	7	—	—	7	0.4	43	50	A220-300	9	—	—	9	0.8	41	50
A319-100	A319-100	55	—	2	57	19.1			A319-100	55	2	—	57	19.6
A320-200	A320-200	51	—	4	55	25.1			A320-200	52	4	—	56	25.7
A321-200	A321-200	55	22	36	113	2.6	14		A321-200	65	22	36	123	2.9	4
A321-200neo	A321-200neo	—	—	—	—	—	100	100	A321-200neo	—	—	—	—	—	155	70
A330-200	A330-200	11	—	—	11	16.0			A330-200	11	—	—	11	16.5
A330-300	A330-300	28	—	3	31	12.2			A330-300	28	—	3	31	12.7
A330-900neo	A330-900neo	3	1	4	8	1.2	29		A330-900neo	3	3	5	11	1.3	26
A350-900	A350-900	13	—	2	15	2.7	20		A350-900	13	—	5	18	3.1	26
Total	Total	589	68	111	768	13.7	210	150	Total	614	77	106	797	13.9	283	120

(1)Excludes certain aircraft we own or lease or that are operated by regional carriers on our behalf shown in the table below.

(2)Purchase commitments include ~~one A330-900neo~~six A350-900 lease ~~commitment~~commitments in 2021 incremental to our order book with Airbus.

The table below summarizes the aircraft operated by regional carriers on our behalf at ~~March 31,~~September 30, 2021.


Regional aircraft information by carrier
Regional aircraft information by fleet type and carrier								Regional aircraft information by fleet type and carrier
		Fleet Type							Fleet Type
Carrier	Carrier	CRJ-200	CRJ-700	CRJ-900	Embraer 170	Embraer 175	Total	Carrier	CRJ-200	CRJ-700	CRJ-900	Embraer 170	Embraer 175	Total
Endeavor Air, Inc.(1)	Endeavor Air, Inc.(1)	45	13	101	—	—	159	Endeavor Air, Inc.(1)	47	13	113	—	—	173
SkyWest Airlines, Inc.	SkyWest Airlines, Inc.	—	5	40	—	68	113	SkyWest Airlines, Inc.	—	5	40	—	71	116
Republic Airline, Inc.		—	—	—	18	41	59
Republic Airways, Inc.								Republic Airways, Inc.	—	—	—	8	46	54
Total	Total	45	18	141	18	109	331	Total	47	18	153	8	117	343

(1)Endeavor Air, Inc. is a wholly owned subsidiary of Delta.

Delta Air Lines, Inc. September 2021 ~~March~~ Form 10-Q 2735

Item 2. MD&A - Financial Condition and Liquidity

Financial Condition and Liquidity

As of ~~March 31,~~September 30, 2021, we had ~~$16.6~~$15.8 billion in cash, cash equivalents, short-term investments and aggregate principal amount committed and available to be drawn under our revolving credit facilities. We expect to meet our liquidity needs for the next twelve months with cash and cash equivalents, short-term investments, ~~government assistance under the payroll support program extensions,~~ restricted cash equivalents and cash flows from operations. We expect to meet our long-term liquidity needs with cash flows from operations and financing arrangements. We are continuing to evaluate the appropriate level of liquidity to maintain following the COVID-19 pandemic though, at least in the near term, we expect this level to be higher than the liquidity maintained prior to the pandemic.

Sources and Uses of Liquidity

Operating Activities

Operating activities in the ~~three~~nine months ended ~~March 31,~~September 30, 2021 provided ~~$691 million~~$2.7 billion compared to using $2.5 billion and providing ~~$1.9~~$7.5 billion in the ~~three~~nine months ended ~~March 31, 2019.~~September 30, 2020 and 2019, respectively. As described above, we are ~~planning for~~experiencing a domestic demand recovery ~~throughout 2021, with sustained demand improvement expected during~~and expect this to continue through the ~~second half~~end of 2021. If the demand environment ~~evolves~~continues to evolve in ~~that~~this manner, we expect to generate positive cash flows from operations, including funds received from the government support programs described in "Financing Activities" below, during 2021.

Our operating cash flow is impacted by the following factors:

Seasonality of Advance Ticket Sales. We sell tickets for air travel in advance of the customer's travel date. When we receive a cash payment at the time of sale, we record the cash received on advance sales as deferred revenue in air traffic liability. The air traffic liability typically increases during the winter and spring months as advanced ticket sales grow prior to the summer peak travel season and decreases during the summer and fall months. However, the ~~current~~ reduction in demand for air travel due to the COVID-19 pandemic ~~has~~ resulted in a lower level of advance bookings and the associated cash received than we have historically ~~experienced.~~experienced, which has impacted the typical seasonal trend of air traffic liability since March 2020.

Domestic demand has improved ~~throughout~~since the latter half of the March 2021 quarter as consumers ~~gained~~have regained confidence to travel and ~~began buying tickets~~increased ticket purchases for travel further in advance. ~~New bookings for travel departures beyond 60 days nearly equaled our historical booking patterns, driving an extension~~We experienced a small moderation in demand growth in August and September 2021 due to a rise in COVID-19 cases attributable to a variant of the ~~booking curve and reversing a three-quarter trend~~COVID-19 virus; however, in the month of ~~decline in our air traffic liability. Travel credits represented approximately 50% of the~~September 2021, domestic leisure bookings approached September 2019 levels. Our air traffic liability remains above historical September quarter levels with travel credits representing approximately 40% of the balance as of ~~March 31,~~September 30, 2021. ~~See Note 2 of the Notes to the Condensed Consolidated Financial Statements for additional information on travel credits and our air traffic liability.~~

Fuel. Fuel expense represented approximately ~~18%~~22% of our total operating expense for the ~~three~~nine months ended ~~March 31,~~September 30, 2021. The market price for jet fuel is volatile, which can impact the comparability of our periodic cash flows from operations. During the nine months ended September 30, 2021, our average fuel price per gallon was slightly below the same period of 2019, but fuel prices have recently increased and our average fuel price per gallon is projected to be higher in the December 2021 quarter than the nine months ended September 30, 2021. As demand ~~increases~~continues to increase and capacity returns, we expect fuel consumption in the December 2021 quarter to increase compared to the ~~comparable period of~~December 2020 quarter, although we still expect it to be lower than the ~~comparable period in 2019.~~December 2019 quarter.

Employee Benefit Obligations. We sponsor defined benefit pension plans for eligible employees and retirees. These plans are closed to new entrants and are frozen for future benefit accruals. Our funding obligations for these plans are governed by the Employee Retirement Income Security Act, as modified by the Pension Protection Act of 2006. We have no minimum funding requirements for our defined benefit pension plans in 2021. However, we voluntarily contributed ~~$1.0~~$1.5 billion to these plans during ~~April~~the June 2021 ~~and we are evaluating up to $1.0 billion of additional voluntary contributions later in the year.~~quarter. At this level of funding, investment returns are expected to satisfy future benefit payments, which we believe would eliminate further material voluntary or required cash contributions to the plans, under the terms of the Pension Protection Act of 2006. Further, based on this level of funding, we have modified, and continue to evaluate, the asset allocation mix to reduce the investment risk of the portfolio and protect the plans' funded status. Estimates of future funding requirements are based on various assumptions and could vary materially from actual funding requirements. Assumptions include, among other things, the actual and projected market performance of assets, statutory requirements and demographic data for participants.

Voluntary Separation Programs. In 2020, we recorded a $3.4 billion charge associated with voluntary early retirement and separation programs and other employee benefit charges. ~~Approximately $150~~In the nine months ended September 30, 2021, $435 million of this charge was disbursed in cash payments to participants in ~~the March 2021 quarter.~~addition to $720 million disbursed in 2020. We anticipate that a total of approximately $600 million in cash payments will be made to participants in 2021 and approximately $500 million in 2022 with the remaining payments in ~~2022~~2023 and beyond.

Delta Air Lines, Inc. September 2021 Form 10-Q 36

Item 2. MD&A - Financial Condition and Liquidity

Government Support Programs. See "Financing Activities" below for discussion of the impact to our liquidity from the payroll support program extensions. The $4.5 billion of grants received during the nine months ended September 30, 2021 are included in our operating cash flow.

~~Delta Air Lines, Inc. 2021 March Form 10-Q 28~~

~~Item 2. MD&A - Financial Condition and Liquidity~~

Investing Activities

Short-Term Investments. During the ~~three~~nine months ended ~~March 31,~~September 30, 2021, we redeemed a net of ~~$210 million~~$1.4 billion in short-term investments. See Note 3 of the Notes to the Condensed Consolidated Financial Statements for further information on these investments.

Capital Expenditures. Our capital expenditures were ~~$438 million~~$2.0 billion and ~~$1.4~~$3.9 billion for the ~~three~~nine months ended ~~March 31,~~September 30, 2021 and 2019, respectively. Our capital expenditures during the ~~three~~nine months ended ~~March 31,~~September 30, 2021 were primarily related to ~~our airport redevelopment projects, the~~ purchases of aircraft, fleet modifications, our airport redevelopment projects and technology enhancements.

We have committed to future aircraft purchases and have obtained, but are under no obligation to use, long-term financing commitments for a substantial portion of the purchase price of the aircraft. Excluding the New York-LaGuardia airport project discussed below, our expected 2021 capital expenditures of approximately ~~$2.5~~$3.2 billion, which may vary depending on financing decisions, will be primarily for aircraft, including deliveries and advance deposit payments, as well as ~~aircraft~~fleet modifications and technology enhancements.

New York-LaGuardia Redevelopment. As part of the terminal redevelopment project at LaGuardia Airport, we are partnering with the Port Authority of New York and New Jersey (“Port Authority”) to replace Terminals C and D with a new state-of-the-art terminal facility. Construction is underway and will be phased to limit passenger ~~inconvenience and, due~~inconvenience. Due to an acceleration effort that commenced in 2020, completion is now expected inby 2025.

We currently expect our project costs to be approximately $3.5 billion and we bear the risks of project construction, including any potential cost over-runs. Using funding primarily provided by existing financing arrangements, we expect to spend approximately $900 million on this project during 2021, of which ~~$218~~$709 million was incurred in the ~~three~~nine months ended ~~March 31,~~September 30, 2021.

Financing Activities

Debt and Finance Leases. In the ~~three~~nine months ended ~~March 31,~~September 30, 2021, we ~~repaid~~had cash outflows of approximately ~~$1.8~~$4.7 billion onrelated to repayments of our debt and finance leases, ~~of which $1.5~~including approximately $3.3 billion ~~was~~for the early repayment of the term loan secured by certain of our slots, gates and ~~routes.~~routes, various EETCs, certain notes through a cash tender offer and other various unsecured notes, secured certificates and SkyMiles term loan. We ~~plan~~continue to ~~continue paying down~~seek selective opportunities to pre-pay our debt, in addition to periodic amortization and scheduled maturities, during the remainder of ~~2021.~~2021 and beyond.

The principal amount of our debt and finance leases was ~~$29.3~~$28.0 billion at ~~March 31,~~September 30, 2021.

Government Support Programs. The Consolidated Appropriations Act, 2021 was enacted on December 27, 2020, and included an extension of the payroll support program created under the Coronavirus Aid, Relief and Economic Security Act ("CARES Act") providing an additional $15 billion in grants and loans to be used for airline employee wages, salaries and benefits. In January 2021, we entered into a payroll support program extension agreement with the U.S. Department of the Treasury. InDuring the ~~March~~six months ended June 30, 2021, ~~quarter,~~ we received ~~$2.9~~a total of $3.3 billion in payroll support payments which must be used exclusively for the payment of employee wages, salaries and benefits and is conditioned on our agreement to refrain from conducting involuntary employee layoffs or furloughs from the date of theunder this extension agreement through March 2021. Other conditions include prohibitions on share repurchases and dividends through March 2022 and certain limitations on executive compensation until October 2022. The Department of Transportation also has the authority until March 1, 2022 to require airlines that received payroll support program funds to maintain scheduled air service deemed necessary to any point served by the airline before March 1, 2020.

agreement. These support payments consisted of ~~approximately $2.0~~$2.3 billion in a grant and ~~$828~~$957 million in an unsecured 10-year low interest loan. ~~The loan bears interest at an annual rate of 1.00% for the first five years and the applicable Secured Overnight Financing Rate ("SOFR") plus 2.00% in the final five years.~~ In return, we entered into a promissory note for the ~~$828 million~~loan and issued warrants to the U.S. Department of the Treasury to acquire approximately ~~2.1~~2.4 million shares of Delta common ~~stock, representing approximately 0.3% of our outstanding shares. These warrants have an initial exercise price of $39.73 per share, subject to adjustment in certain cases, and~~stock.

In April 2021, we entered into a ~~five-year term. We have recorded~~Payroll Support Program 3 Agreement with the ~~value~~U.S. Department of the Treasury. During the June 2021 quarter, we received a total of $3.1 billion in payroll support payments under this agreement. These support payments consisted of $2.2 billion in a grant and $891 million in an unsecured 10-year low interest loan. In return, we entered into a promissory note for the loan and issued warrants to the U.S. Department of the Treasury to acquire approximately 1.9 million shares of Delta common stock.

For more information on ~~a relative fair value basis as $784 million~~these programs, see Note 5 of ~~noncurrent debt, net of discount, and $44 million in additional paid in capital, respectively.~~the Notes to the Condensed Consolidated Financial Statements.

Delta Air Lines, Inc. September 2021 ~~March~~ Form 10-Q 2937

Item 2. MD&A - Financial Condition and Liquidity

The American Rescue Plan Act of 2021 was enacted on March 11, 2021, and included a second extension of the payroll support program providing an additional $14 billion in grants and loans to be used for airline employee wages, salaries and benefits. We expect to enter into similar agreements as those discussed above with the U.S. Department of the Treasury. Based on the share of funds we received from the first extension of the payroll support program, and the similar structures of both extensions, we estimate that we will receive approximately $2.7 billion, consisting of $1.9 billion in a grant and $800 million in an unsecured 10-year low interest loan. However, the actual amounts received and the allocation between the grant and loan could differ from our estimates. These payments are expected to be conditioned on our agreement to refrain from conducting involuntary employee layoffs or furloughs through September 2021 or the date on which assistance provided under the agreement is exhausted, whichever is later. Other conditions would include prohibitions on share repurchases and dividends through September 2022 and certain limitations on executive compensation until April 2023. In return, we expect to enter into a promissory note for the amount of the loan and to issue warrants to the U.S. Department of the Treasury to acquire shares of Delta common stock in an amount to be determined consistent with the structure of the prior warrant issuances.

Undrawn Lines of Credit

Covenants

We were in compliance with the covenants in ~~these~~our debt agreements at ~~March 31,~~September 30, 2021.

Critical Accounting Estimates

For information regarding our Critical Accounting Estimates, see the "Critical Accounting Estimates" section of "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Form 10-K.

Delta Air Lines, Inc. September 2021 ~~March~~ Form 10-Q 3038

Item 2. MD&A - Supplemental Information

Supplemental Information

We sometimes use information ~~("non-GAAP financial measures")~~ that is derived from the Condensed Consolidated Financial Statements but that is not presented in accordance with ~~GAAP.~~GAAP ("non-GAAP financial measures"). Under the Securities and Exchange Commission rules, non-GAAP financial measures may be considered in addition to results prepared in accordance with GAAP but should not be considered a substitute for or superior to GAAP results. The reconciliations presented below of the non-GAAP measures used in this Form 10-Q may not calculate exactly due to rounding.

Pre-tax income/(loss)~~/income,~~, adjusted

The following table shows a reconciliation of pre-tax income/(loss)~~/income~~ (a GAAP measure) to pre-tax income/(loss)~~/income,~~, adjusted (a non-GAAP financial measure). ~~In the current period, pre-tax~~ Pre-tax income/(loss)~~/income,~~, adjusted excludes the following items directly related to the impact of COVID-19 and our response for comparability with the prior period:

•Restructuring charges. During 2020, we recorded restructuring charges ~~including certain accruals,~~for items such as fleet impairments and voluntary early retirement and separation programs following strategic business decisions in response to the COVID-19 pandemic. In the ~~March~~September 2021 quarter, we recognized ~~$44~~$33 million of adjustments to certain of those restructuring charges, representing changes in our estimates.

•Government grant recognition. We recognized ~~$1.2~~$1.8 billion of the grant proceeds from the ~~first~~ payroll support program ~~extension~~extensions as ~~a contra-expense.~~contra-expense during the September 2021 quarter. We ~~are recognizing~~recognized the grant proceeds as contra-expense based on the periods that the funds ~~are~~were intended to compensate and ~~expect to use~~have fully used all proceeds from the ~~first~~ payroll support program ~~extension by~~extensions as of the end of the ~~June~~September 2021 quarter.

•Impairments and equity method losses. These adjustments relate to recording our share of the losses recorded by our equity method investees.

•Pension settlement charges. These charges were recognized in connection with the voluntary early retirement and separation programs that were offered to our employees in the September 2020 quarter.

•Loss on extinguishment of debt. This adjustment relates to early termination of a portion of our ~~debt that was incurred during the COVID-19 pandemic.~~debt.

We also regularly adjust pre-tax income/(loss)~~/income~~ for the following items to determine pre-tax income/(loss)~~/income,~~, adjusted for the reasons described below.

•MTM adjustments and settlements on hedges. Mark-to-market ("MTM") adjustments are defined as fair value changes recorded in periods other than the settlement period. Such fair value changes are not necessarily indicative of the actual settlement value of the underlying hedge in the contract settlement period. Settlements represent cash received or paid on hedge contracts settled during the applicable period.

•Equity investment MTM adjustments. We adjust for our proportionate share of our equity method investee, Virgin Atlantic’s, hedge portfolio MTM adjustments (recorded in non-operating expense) to allow investors to understand and analyze our core operational performance in the periods shown.

•MTM adjustments on investments. Unrealized gains/losses result from our equity investments that are accounted for at fair value in non-operating expense. These gains/losses are driven by changes in stock prices, ~~foreign currency fluctuations and~~ other valuation techniques for investments in companies without publicly-traded ~~shares.~~shares and foreign currency fluctuations. Adjusting for these gains/losses allows investors to better understand and analyze our core operational performance in the periods shown.

•Delta Private Jets adjustment. Because we combined Delta Private Jets with Wheels Up in January 2020, we have excluded the impact of Delta Private Jets from 2019 results for comparability.

Delta Air Lines, Inc. September 2021 ~~March~~ Form 10-Q 3139

Item 2. MD&A - Supplemental Information


Pre-tax (loss)/income, adjusted reconciliation
Pre-tax income/(loss), adjusted reconciliation								Pre-tax income/(loss), adjusted reconciliation
		Three Months Ended March 31,							Three Months Ended September 30,
(in millions)	(in millions)	2021		2020		2019		(in millions)	2021		2020		2019
Pre-tax (loss)/income		$	(1,515)	$	(607)	$	946
Pre-tax income/(loss)								Pre-tax income/(loss)	$	1,532	$	(6,859)	$	1,947
Adjusted for:	Adjusted for:							Adjusted for:
Restructuring charges	Restructuring charges	(44)		—		—		Restructuring charges	33		5,345		—
Government grant recognition	Government grant recognition	(1,186)		—		—		Government grant recognition	(1,822)		(1,315)		—
Impairments and equity method losses	Impairments and equity method losses	54		—		—		Impairments and equity method losses	49		114		—
Pension settlement charges								Pension settlement charges	—		30		—
Loss on extinguishment of debt	Loss on extinguishment of debt	56		—		—		Loss on extinguishment of debt	183		—		—
MTM adjustments and settlements on hedges	MTM adjustments and settlements on hedges	(23)		(7)		8		MTM adjustments and settlements on hedges	19		(3)		(25)
Equity investment MTM adjustments	Equity investment MTM adjustments	—		69		(21)		Equity investment MTM adjustments	—		—		10
MTM adjustments on investments	MTM adjustments on investments	(262)		123		(100)		MTM adjustments on investments	223		99		35
Delta Private Jets adjustment	Delta Private Jets adjustment	—		—		(1)		Delta Private Jets adjustment	—		—		1
Pre-tax (loss)/income, adjusted		$	(2,919)	$	(422)	$	831
Pre-tax income/(loss), adjusted								Pre-tax income/(loss), adjusted	$	216	$	(2,589)	$	1,968

Operating Expense, adjusted

The following table shows a reconciliation of operating expense (a GAAP measure) to operating expense, adjusted (a non-GAAP financial measure). ~~In the current period, operating~~Operating expense, adjusted excludes restructuring charges and government grant recognition, which, as discussed above under the heading pre-tax income/(loss)~~/income,~~, adjusted, are directly related to the impact of the COVID-19 pandemic and our response. We also adjust operating expense for MTM adjustments and settlements on hedges and the impact of Delta Private Jets for the same reasons described above under the heading pre-tax income/(loss)~~/income,~~, adjusted. We also adjust operating expense for the following item for the ~~reasons~~reason described ~~below.~~below:

•Third-party refinery sales. Refinery sales to third parties, and related expenses, are not related to our airline segment. Operating expense, adjusted therefore provides a more meaningful comparison of operating expenses from our airline operations to the rest of the airline industry.


Operating expense, adjusted reconciliation	Operating expense, adjusted reconciliation							Operating expense, adjusted reconciliation
		Three Months Ended March 31,								Three Months Ended September 30,
(in millions)	(in millions)	2021		2020		2019			(in millions)		2021		2020		2019
Operating expense	Operating expense	$	5,548	$	9,002	$	9,452		Operating expense		$	6,949	$	9,448	$	10,489
Adjusted for:	Adjusted for:								Adjusted for:
Restructuring charges	Restructuring charges	44		—		—			Restructuring charges		(33)		(5,345)		—
Government grant recognition	Government grant recognition	1,186		—		—			Government grant recognition		1,822		1,315		—
MTM adjustments and settlements on hedges	MTM adjustments and settlements on hedges	23		7		(8)			MTM adjustments and settlements on hedges		(19)		3		25
Third-party refinery sales	Third-party refinery sales	(540)		—		(48)			Third-party refinery sales		(872)		(417)		(6)
Delta Private Jets adjustment	Delta Private Jets adjustment	—		—		(42)			Delta Private Jets adjustment		—		—		(49)
Operating expense, adjusted	Operating expense, adjusted	$	6,261	$	9,009	$	9,354		Operating expense, adjusted		$	7,846	$	5,004	$	10,460

Delta Air Lines, Inc. September 2021 ~~March~~ Form 10-Q 3240

Item 2. MD&A - Supplemental Information

Fuel ~~Expense,~~expense, adjusted and Average fuel price per gallon, adjusted

The following table shows a reconciliation of fuel expense (a GAAP measure) to fuel expense, adjusted (a non-GAAP financial measure). We adjust for MTM adjustments and settlements on hedges and the impact of Delta Private Jets for the same reasons described under the heading pre-tax income/(loss)~~/income,~~, adjusted.


Fuel expense, adjusted reconciliation	Fuel expense, adjusted reconciliation													Fuel expense, adjusted reconciliation
								Average Price Per Gallon															Average Price Per Gallon
		Three Months Ended March 31,						Three Months Ended March 31,							Three Months Ended September 30,						Three Months Ended September 30,
(in millions, except per gallon data)	(in millions, except per gallon data)	2021		2020		2019		2021		2020		2019				(in millions, except per gallon data)	2021		2020		2019		2021		2020		2019
Total fuel expense	Total fuel expense	$	1,017	$	1,595	$	1,978	$	1.87	$	1.81	$	2.06			Total fuel expense	$	1,552	$	486	$	2,239	$	1.97	$	1.25	$	1.94
Adjusted for:																Adjusted for:
MTM adjustments and settlements on hedges	MTM adjustments and settlements on hedges	23		7		(8)		0.04		0.01		(0.01)				MTM adjustments and settlements on hedges	(19)		3		25		(0.02)		0.01		0.02
Delta Private Jets adjustment	Delta Private Jets adjustment	—		—		(7)		—		—		(0.01)				Delta Private Jets adjustment	—		—		(7)		—		—		(0.01)
Total fuel expense, adjusted	Total fuel expense, adjusted	$	1,040	$	1,602	$	1,963	$	1.91	$	1.82	$	2.04			Total fuel expense, adjusted	$	1,533	$	489	$	2,257	$	1.94	$	1.25	$	1.96



							Average Price Per Gallon
	Nine Months Ended September 30,						Nine Months Ended September 30,
(in millions, except per gallon data)	2021		2020		2019		2021		2020		2019
Total fuel expense	$	4,056	$	2,453	$	6,508	$	2.00	$	1.71	$	2.03
Adjusted for:
MTM adjustments and settlements on hedges	(20)		(4)		8		(0.01)		(0.01)		—
Delta Private Jets adjustment	—		—		(22)		—		—		(0.01)
Total fuel expense, adjusted	$	4,037	$	2,449	$	6,494	$	1.99	$	1.70	$	2.02

TRASM, adjusted

The following table shows a reconciliation of TRASM (a GAAP measure) to TRASM, adjusted (a non-GAAP financial measure). We adjust TRASM for refinery sales to third parties for the same reason described above under the heading operating expense, adjusted. We adjust for the impact of Delta Private Jets for the same reason described above under the heading pre-tax income/(loss)~~/income,~~, adjusted.


TRASM, adjusted reconciliation	TRASM, adjusted reconciliation							TRASM, adjusted reconciliation
		Three Months Ended March 31,							Three Months Ended September 30,								Nine Months Ended September 30,
		2021		2020		2019					2021		2020		2019			2021		2020		2019
TRASM (cents)	TRASM (cents)	10.34	¢	14.59	¢	16.78	¢			TRASM (cents)	16.93	¢	10.82	¢	16.58	¢		14.31	¢	13.42	¢	16.94	¢
Adjusted for:	Adjusted for:									Adjusted for:
Third-party refinery sales	Third-party refinery sales	(1.35)		—		(0.08)				Third-party refinery sales	(1.61)		(1.47)		(0.01)			(1.53)		(0.73)		(0.05)
Delta Private Jets adjustment	Delta Private Jets adjustment	—		—		(0.07)				Delta Private Jets adjustment	—		—		(0.06)			—		—		(0.07)
TRASM, adjusted	TRASM, adjusted	9.00	¢	14.59	¢	16.63	¢			TRASM, adjusted	15.31	¢	9.35	¢	16.51	¢		12.78	¢	12.70	¢	16.83	¢

Delta Air Lines, Inc. September 2021 ~~March~~ Form 10-Q 3341

Item 2. MD&A - Supplemental Information

CASM-Ex

The following table shows a reconciliation of operating cost per available seat mile ("CASM") (a GAAP measure) to CASM-Ex (a non-GAAP financial measure). ~~In the current period,~~ CASM-Ex excludes restructuring charges and government grant recognition, which, as discussed above under the heading pre-tax income/(loss)~~/income,~~, adjusted, are directly related to the impact of the COVID-19 pandemic and our response. We ~~adjusted~~adjust for refinery sales to third parties for the same reason described above under the heading operating expense, adjusted. We adjust for the impact of Delta Private Jets for the same reason described above under the heading pre-tax income/(loss)~~/income,~~, adjusted. We also adjust CASM for the following items to determine CASM-Ex for the reasons described ~~below.~~below:

•Aircraft fuel and related taxes. The volatility in fuel prices impacts the comparability of year-over-year financial performance. The adjustment for aircraft fuel and related taxes allows investors to better understand and analyze our non-fuel costs and year-over-year financial performance.

•Profit sharing. We adjust for profit sharing because this adjustment allows investors to better understand and analyze our recurring cost performance and provides a more meaningful comparison of our core operating costs to the airline industry.


CASM-Ex reconciliation	CASM-Ex reconciliation							CASM-Ex reconciliation
		Three Months Ended March 31,							Three Months Ended September 30,								Nine Months Ended September 30,
		2021		2020		2019					2021		2020		2019			2021		2020		2019
CASM (cents)	CASM (cents)	13.83	¢	15.30	¢	15.14	¢			CASM (cents)	12.85	¢	33.40	¢	13.85	¢		13.18	¢	25.30	¢	14.46	¢
Adjusted for:	Adjusted for:									Adjusted for:
Restructuring charges	Restructuring charges	0.11		—		—				Restructuring charges	(0.06)		(18.89)		—			—		(7.98)		—
Government grant recognition	Government grant recognition	2.96		—		—				Government grant recognition	3.37		4.65		—			3.16		2.65		—
Aircraft fuel and related taxes	Aircraft fuel and related taxes	(2.54)		(2.72)		(3.17)				Aircraft fuel and related taxes	(2.87)		(1.72)		(2.96)			(2.84)		(2.51)		(3.10)
Third-party refinery sales	Third-party refinery sales	(1.35)		—		(0.08)				Third-party refinery sales	(1.61)		(1.47)		(0.01)			(1.53)		(0.73)		(0.05)
Profit sharing	Profit sharing	—		—		(0.35)				Profit sharing	—		—		(0.68)			—		—		(0.60)
Delta Private Jets adjustment	Delta Private Jets adjustment	—		—		(0.05)				Delta Private Jets adjustment	—		—		(0.05)			—		—		(0.06)
CASM-Ex	CASM-Ex	13.01	¢	12.58	¢	11.49	¢			CASM-Ex	11.67	¢	15.96	¢	10.15	¢		11.96	¢	16.74	¢	10.66	¢

~~CASM, adjusted~~

The following table shows a reconciliation of CASM (a GAAP measure) to CASM, adjusted (a non-GAAP financial measure). In the current period, CASM, adjusted excludes restructuring charges and government grant recognition, which, as discussed above under the heading pre-tax (loss)/income, adjusted, are directly related to the impact of the COVID-19 pandemic and our response. We also adjust CASM for MTM adjustments and settlements on hedges and for Delta Private Jets for the same reason described above under the heading pre-tax (loss)/income, adjusted. We adjust for refinery sales to third parties for the same reason described above under the heading operating expense, adjusted.

CASM, adjusted reconciliation
Three Months Ended March 31,
2021 2020 2019
CASM (cents) 13.83 ¢ 15.30 ¢ 15.14 ¢
Adjusted for:
Restructuring charges 0.11 — —
Government grant recognition 2.96 — —
MTM adjustments and settlements on hedges 0.06 0.01 (0.01)
Third-party refinery sales (1.35) — (0.08)
Delta Private Jets adjustment — — (0.07)
CASM, adjusted 15.61 ¢ 15.30 ¢ 14.99 ¢

Delta Air Lines, Inc. September 2021 ~~March~~ Form 10-Q 3442

Item 2. MD&A - Supplemental Information

Free Cash Flow

The following table shows a reconciliation of net cash provided by/(used in) operating activities (a GAAP measure) to free cash flow (a non-GAAP financial measure). We present free cash flow because management believes this metric is helpful to investors to evaluate the company's ability to generate cash that is available for use for debt service or general corporate initiatives. Adjustments include:

•Net ~~redemptions~~(redemptions)/purchases of short-term investments. Net ~~redemptions~~(redemptions)/purchases of short-term investments represent the net purchase and sale activity of investments and marketable securities in the period, including gains and losses. We adjust for this activity to provide investors a better understanding of the company's free cash flow generated by our operations.

•Strategic investments and related. Cash flows related to our investments in and related transactions with other airlines are included in our GAAP investing activities. We adjust for this activity because it provides a more meaningful comparison to our airline industry peers.

•Net cash flows related to certain airport construction projects and other. Cash flows related to certain airport construction projects are included in our GAAP operating activities and capital expenditures. We have adjusted for these items, which were primarily funded by cash restricted for airport construction, to provide investors a better understanding of the company's free cash flow and capital expenditures that are core to our operational performance in the periods shown.


Free cash flow reconciliation	Free cash flow reconciliation							Free cash flow reconciliation
		Three Months Ended March 31,							Three Months Ended September 30,
(in millions)	(in millions)	2021		2020		2019		(in millions)	2021		2020		2019
Net cash provided by operating activities		$	691	$	358	$	1,942
Net cash provided by/(used in) operating activities								Net cash provided by/(used in) operating activities	$	151	$	(2,575)	$	2,245
Net cash used in investing activities	Net cash used in investing activities	(60)		(2,971)		(1,096)		Net cash used in investing activities	(384)		(1,144)		(1,125)
Adjusted for:	Adjusted for:							Adjusted for:
Net redemptions of short-term investments		(210)		—		(206)
Net (redemptions)/purchases of short-term investments								Net (redemptions)/purchases of short-term investments	(452)		745		—
Strategic investments and related	Strategic investments and related	(19)		2,099		—		Strategic investments and related	—		235		81
Net cash flows related to certain airport construction projects and other	Net cash flows related to certain airport construction projects and other	308		353		111		Net cash flows related to certain airport construction projects and other	222		208		221
Total free cash flow		$	710	$	(161)	$	751
Free cash flow								Free cash flow	$	(463)	$	(2,531)	$	1,422

Delta Air Lines, Inc. September 2021 ~~March~~ Form 10-Q 3543

Item 3. Market Risk

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes in market risk from the information provided in "Item 7A. Quantitative and Qualitative Disclosures About Market Risk" in our Form 10-K.

ITEM 4. CONTROLS AND PROCEDURES

Our management, including our Chief Executive Officer and ~~Interim Co-Chief~~Chief Financial ~~Officers,~~Officer, performed an evaluation of our disclosure controls and procedures, which have been designed to permit us to effectively identify and timely disclose important information. Our management, including our Chief Executive Officer and ~~Interim Co-Chief~~Chief Financial ~~Officers,~~Officer, concluded that the controls and procedures were effective as of ~~March 31,~~September 30, 2021 to ensure that material information was accumulated and communicated to our management, including our Chief Executive Officer and ~~Interim Co-Chief~~Chief Financial ~~Officers,~~Officer, as appropriate to allow timely decisions regarding required disclosure.

During the three months ended ~~March 31,~~September 30, 2021, we did not make any changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

"Item 3. Legal Proceedings" of our Form 10-K includes a discussion of our legal proceedings. There have been no material changes from the legal proceedings described in our Form 10-K.

ITEM 1A. RISK FACTORS

“Item 1A. Risk Factors” of our Form 10-K includes a discussion of our known material risk factors, other than risks that could apply to any issuer or offering. There have been no material changes from the risk factors described in our Form 10-K.

Delta Air Lines, Inc. September 2021 ~~March~~ Form 10-Q 3644

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table presents information with respect to purchases of common stock we made during the ~~March~~September 2021 quarter. The table reflects shares withheld from employees to satisfy certain tax obligations due in connection with grants of stock under the Delta Air Lines, Inc. Performance Compensation Plan (the "Plan"). The Plan provides for the withholding of shares to satisfy tax obligations. It does not specify a maximum number of shares that can be withheld for this purpose. The shares of common stock withheld to satisfy tax withholding obligations may be deemed to be "issuer purchases" of shares that are required to be disclosed pursuant to this Item.

Shares purchased / withheld from employee awards during the March 2021 quarter
Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans Approximate Dollar Value (in millions) of Shares That May
Yet be Purchased Under the
Plan
January 2021 18,484 $ 40.17 18,484 $ —
February 2021 508,982 $ 38.24 508,982 $ —
March 2021 2,511 $ 47.23 2,511 $ —
Total 529,977 529,977


Shares purchased / withheld from employee awards during the September 2021 quarter
Period	Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans	Approximate Dollar Value (in millions) of Shares That May Yet be Purchased Under the Plan
July 2021	11,558	$	44.50	11,558	$	—
August 2021	2,562	$	40.19	2,562	$	—
September 2021	7,652	$	43.03	7,652	$	—
Total	21,772			21,772

Delta Air Lines, Inc. September 2021 ~~March~~ Form 10-Q 3745

ITEM 6. EXHIBITS

(a) Exhibits

~~3.1(a)~~ ~~Delta's Amended and Restated Certificate of Incorporation (Filed as Exhibit 3.1 to Delta's Current Report on~~ ~~Form 8-K as filed on April 30, 2007).~~*

~~3.1 (b)~~10.1 Amendment No. 4 dated August 20, 2021 to ~~Amended~~Airbus A321 NEO Aircraft Purchase Agreement, dated as of December 15, 2017 between Airbus S.A.S. and Restated Certificate of Incorporation (Filed as Exhibit 3.1 to Delta's Current Report on Form 8-K as filed on June 27, 2014).*

~~3.2~~ Delta's Bylaws (Filed as Exhibit 3.1 to Delta's Current Report on Form 8-K as filed on February 8, 2019).*

~~10.1~~ ~~Model Award Agreement for the~~ Delta Air Lines, Inc. (“~~2021~~Amendment No. 4 ”)*

10.2 Amended and Restated Letter Agreements No. 3 related to Amendment No. 4 ~~Long-Term Incentive Plan~~dated August 20 , 2021*

15 Letter from Ernst & Young LLP regarding unaudited interim financial information

31.1 Certification by Delta's Chief Executive Officer with respect to Delta's Quarterly Report on Form 10-Q for the quarterly period ended ~~March 31~~September ~~, 20~~21 30, 2021

31.2 Certification by Delta's ~~Interim Co-~~Chief Financial Officer ~~and Senior Vice President - Finance and Controller~~ with respect to Delta's Quarterly Report on Form 10-Q for the quarterly period ended ~~March 31,~~September 30, 2021

~~31.3~~ ~~Certification by Delta's Interim Co-Chief Financial Officer and Senior Vice President - Business Development and Financial Planning with respect to Delta's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2021~~

32 Certification pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code by Delta's Chief Executive Officer and ~~Senior~~ ~~Vice President~~s ~~and~~ ~~Interim Co-~~Chief Financial Officer s with respect to Delta's Quarterly Report on Form 10-Q for the quarterly period ended ~~March 31,~~September 30, 2021

101.INS Inline XBRL Instance Document - The instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document.

101.SCH Inline XBRL Taxonomy Extension Schema Document

101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB Inline XBRL Taxonomy Extension Labels Linkbase Document

101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document

104 The cover page from this Quarterly Report on Form 10-Q for the quarter ended ~~March 31,~~September 30, 2021, formatted in Inline XBRL (included in Exhibit 101)

~~____________~~_______________

* ~~Incorporated by reference.~~

Portions of this exhibit have been redacted pursuant to item 601(b)(10)(iv) of Regulation S-K.

Delta Air Lines, Inc. September 2021 ~~March~~ Form 10-Q 3846

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


			Delta Air Lines, Inc.
			(Registrant)

			/s/ William C. Carroll
			William C. Carroll
			~~Interim Co-Chief Financial Officer and~~ Senior Vice President - ~~Finance and~~ Controller
			(~~Co-Principal Financial Officer and~~ Principal Accounting Officer)
~~April 15,~~October 13, 2021

Delta Air Lines, Inc. September 2021 ~~March~~ Form 10-Q 3947


Table of Contents

			Page
Forward Looking Statements			1
Report of Independent Registered Public Accounting Firm			2

Part I. Financial Information
Item 1. Financial Statements			3
Consolidated Balance Sheets			3
Condensed Consolidated Statements of Operations and Comprehensive Income/(Loss ~~Loss~~)			4
Condensed Consolidated Statements of Cash Flows			5
Consolidated Statements of Stockholders' Equity			6
Notes to the Condensed Consolidated Financial Statements			7
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			1820
Item 3. Quantitative and Qualitative Disclosures About Market Risk			3644
Item 4. Controls and Procedures			3644

Part II. Other Information
Item 1. Legal Proceedings			3644
Item 1A. Risk Factors			3644
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			3745
Item 6. Exhibits			3846

Signature			3947


Summary of payroll support program activity
(in millions, except percentages)	Total Amount		Grant		Loan		Number of Warrants	Percentage of Outstanding Shares at March 31, 2021
Payroll Support Program (PSP1)	$	5,594	$	3,946	$	1,648	6.8	1.1	%
First Payroll Support Program Extension (PSP2) (1)	2,861		2,033		828		2.1	0.3	%


Basic and diluted loss per share
	Three Months Ended March 31,
(in millions, except per share data)	2021		2020
Net loss	$	(1,177)	$	(534)

Basic weighted average shares outstanding	636		637
Dilutive effect of share-based awards	0		0
Diluted weighted average shares outstanding	636		637

Basic loss per share	$	(1.85)	$	(0.84)
Diluted loss per share	$	(1.85)	$	(0.84)


CASM, adjusted reconciliation
	Three Months Ended March 31,
	2021		2020		2019
CASM (cents)	13.83	¢	15.30	¢	15.14	¢
Adjusted for:
Restructuring charges	0.11		—		—
Government grant recognition	2.96		—		—
MTM adjustments and settlements on hedges	0.06		0.01		(0.01)
Third-party refinery sales	(1.35)		—		(0.08)
Delta Private Jets adjustment	—		—		(0.07)
CASM, adjusted	15.61	¢	15.30	¢	14.99	¢