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 ~~September 30, 2021~~March 31, 2022


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 ~~September 30, 2021:~~March 31, 2022:

Common Stock, $0.0001 par value - ~~640,013,818~~641,076,463 shares outstanding

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


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			2018
Item 3. Quantitative and Qualitative Disclosures About Market Risk			4435
Item 4. Controls and Procedures			4435

Part II. Other Information
Item 1. Legal Proceedings			4435
Item 1A. Risk Factors			4435
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			4536
Item 5. Other Information			36
Item 6. Exhibits			4637

Signature			4738

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~~2021 ("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 2022 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 ~~September 30, 2021,~~March 31, 2022, the related condensed consolidated statements of operations and comprehensive ~~income/(loss)~~loss, condensed consolidated statements of cash flows, and consolidated statements of stockholders' equity for the three-month ~~and nine-month~~ periods ended ~~September 30,~~March 31, 2022 and 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,~~2021, the related consolidated statements of operations, comprehensive ~~loss,~~income/(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,~~11, 2022, 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,~~2021, 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
~~October~~April 13, ~~2021~~2022

Delta Air Lines, Inc. ~~September 2021~~March 2022 Form 10-Q 2

Financial Statements

DELTA AIR LINES, INC.

Consolidated Balance Sheets

(Unaudited)


(in millions, except share data)	(in millions, except share data)	September 30, 2021		December 31, 2020		(in millions, except share data)	March 31, 2022		December 31, 2021
ASSETS	ASSETS					ASSETS
Current Assets:	Current Assets:					Current Assets:
Cash and cash equivalents	Cash and cash equivalents	$	8,785	$	8,307	Cash and cash equivalents	$	7,705	$	7,933
Short-term investments	Short-term investments	4,417		5,789		Short-term investments	2,250		3,386
Accounts receivable, net of an allowance for uncollectible accounts of $78 and $89		2,183		1,396
Fuel inventory		641		377
Expendable parts and supplies inventories, net of an allowance for obsolescence of $174 and $188		371		355
Accounts receivable, net of allowance for uncollectible accounts of $40 and $50						Accounts receivable, net of allowance for uncollectible accounts of $40 and $50	3,039		2,404
Fuel, expendable parts and supplies inventories, net of allowance for obsolescence of $157 and $176						Fuel, expendable parts and supplies inventories, net of allowance for obsolescence of $157 and $176	1,292		1,098
Prepaid expenses and other	Prepaid expenses and other	1,074		1,180		Prepaid expenses and other	1,434		1,119
Total current assets	Total current assets	17,471		17,404		Total current assets	15,720		15,940
Noncurrent Assets:	Noncurrent Assets:					Noncurrent Assets:
Property and equipment, net of accumulated depreciation and amortization of $18,693 and $17,511		27,816		26,529
Property and equipment, net of accumulated depreciation and amortization of $19,136 and $18,671						Property and equipment, net of accumulated depreciation and amortization of $19,136 and $18,671	30,042		28,749
Operating lease right-of-use assets	Operating lease right-of-use assets	5,827		5,733		Operating lease right-of-use assets	7,402		7,237
Goodwill	Goodwill	9,753		9,753		Goodwill	9,753		9,753
Identifiable intangibles, net of accumulated amortization of $890 and $883		6,004		6,011
Cash restricted for airport construction		713		1,556
Identifiable intangibles, net of accumulated amortization of $895 and $893						Identifiable intangibles, net of accumulated amortization of $895 and $893	5,999		6,001
Equity investments	Equity investments	1,919		1,665		Equity investments	1,999		1,712
Deferred income taxes, net	Deferred income taxes, net	1,813		1,988		Deferred income taxes, net	1,534		1,294
Other noncurrent assets	Other noncurrent assets	1,467		1,357		Other noncurrent assets	1,299		1,773
Total noncurrent assets	Total noncurrent assets	55,312		54,592		Total noncurrent assets	58,028		56,519
Total assets	Total assets	$	72,783	$	71,996	Total assets	$	73,748	$	72,459

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	$	2,296	$	1,732	Current maturities of debt and finance leases	$	1,116	$	1,782
Current maturities of operating leases	Current maturities of operating leases	636		678		Current maturities of operating leases	744		703
Air traffic liability	Air traffic liability	6,246		4,044		Air traffic liability	8,809		6,228
Accounts payable	Accounts payable	4,017		2,840		Accounts payable	4,810		4,240
Accrued salaries and related benefits	Accrued salaries and related benefits	2,198		2,086		Accrued salaries and related benefits	2,288		2,457
Loyalty program deferred revenue	Loyalty program deferred revenue	2,619		1,777		Loyalty program deferred revenue	3,038		2,710
Fuel card obligation	Fuel card obligation	1,100		1,100		Fuel card obligation	1,100		1,100
Other accrued liabilities	Other accrued liabilities	1,812		1,670		Other accrued liabilities	2,155		1,746
Total current liabilities	Total current liabilities	20,924		15,927		Total current liabilities	24,060		20,966
Noncurrent Liabilities:	Noncurrent Liabilities:					Noncurrent Liabilities:
Debt and finance leases	Debt and finance leases	25,523		27,425		Debt and finance leases	24,441		25,138
Noncurrent air traffic liability	Noncurrent air traffic liability	130		500		Noncurrent air traffic liability	300		130
Pension, postretirement and related benefits	Pension, postretirement and related benefits	8,408		10,630		Pension, postretirement and related benefits	5,862		6,035
Loyalty program deferred revenue	Loyalty program deferred revenue	4,837		5,405		Loyalty program deferred revenue	4,606		4,849
Noncurrent operating leases	Noncurrent operating leases	5,742		5,713		Noncurrent operating leases	7,199		7,056
Other noncurrent liabilities	Other noncurrent liabilities	4,613		4,862		Other noncurrent liabilities	4,289		4,398
Total noncurrent liabilities	Total noncurrent liabilities	49,253		54,535		Total noncurrent liabilities	46,697		47,606

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, 649,758,099 and 647,352,203 shares issued		—		—
Common stock at $0.0001 par value; 1,500,000,000 shares authorized, 651,562,278 and 649,720,387 shares issued						Common stock at $0.0001 par value; 1,500,000,000 shares authorized, 651,562,278 and 649,720,387 shares issued	—		—
Additional paid-in capital	Additional paid-in capital	11,428		11,259		Additional paid-in capital	11,462		11,447
Retained earnings/(accumulated deficit)		259		(428)
Accumulated deficit						Accumulated deficit	(1,088)		(148)
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(8,800)		(9,038)		Accumulated other comprehensive loss	(7,071)		(7,130)
Treasury stock, at cost, 9,744,281 and 9,169,683 shares		(281)		(259)
Treasury stock, at cost, 10,485,815 and 9,752,872 shares						Treasury stock, at cost, 10,485,815 and 9,752,872 shares	(312)		(282)
Total stockholders' equity	Total stockholders' equity	2,606		1,534		Total stockholders' equity	2,991		3,887
Total liabilities and stockholders' equity	Total liabilities and stockholders' equity	$	72,783	$	71,996	Total liabilities and stockholders' equity	$	73,748	$	72,459
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 2022 Form 10-Q 3

Financial Statements

DELTA AIR LINES, INC.

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

(Unaudited)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
(in millions, except per share data)	(in millions, except per share data)	2021		2020		2021		2020		(in millions, except per share data)	2022		2021
Operating Revenue:	Operating Revenue:									Operating Revenue:
Passenger	Passenger	$	7,191	$	1,938	$	15,278	$	10,185	Passenger	$	6,907	$	2,748
Cargo	Cargo	262		142		728		403		Cargo	289		215
Other	Other	1,701		982		4,423		2,534		Other	2,152		1,187
Total operating revenue	Total operating revenue	9,154		3,062		20,429		13,122		Total operating revenue	9,348		4,150

Operating Expense:	Operating Expense:									Operating Expense:
Salaries and related costs	Salaries and related costs	2,566		2,012		7,096		7,000		Salaries and related costs	2,826		2,202
Aircraft fuel and related taxes	Aircraft fuel and related taxes	1,552		486		4,056		2,453		Aircraft fuel and related taxes	2,092		1,017
Ancillary businesses and refinery	Ancillary businesses and refinery	1,079		561		2,724		1,181		Ancillary businesses and refinery	1,382		706
Contracted services	Contracted services	634		419		1,723		1,536		Contracted services	753		519
Depreciation and amortization	Depreciation and amortization	501		545		1,494		1,813		Depreciation and amortization	506		492
Landing fees and other rents	Landing fees and other rents	524		458		1,477		1,430		Landing fees and other rents	504		493
Regional carrier expense	Regional carrier expense	453		290		1,258		1,204		Regional carrier expense	491		401
Aircraft maintenance materials and outside repairs	Aircraft maintenance materials and outside repairs	433		106		1,014		618		Aircraft maintenance materials and outside repairs	465		294
Passenger commissions and other selling expenses	Passenger commissions and other selling expenses	308		100		640		548		Passenger commissions and other selling expenses	312		110
Passenger service	Passenger service	226		92		520		456		Passenger service	275		118
Aircraft rent	Aircraft rent	105		99		313		295		Aircraft rent	122		104
Restructuring charges	Restructuring charges	33		5,345		(3)		7,798		Restructuring charges	(5)		(44)
Government grant recognition	Government grant recognition	(1,822)		(1,315)		(4,512)		(2,595)		Government grant recognition	—		(1,186)
Other	Other	357		250		1,006		996		Other	408		322
Total operating expense	Total operating expense	6,949		9,448		18,806		24,733		Total operating expense	10,131		5,548

Operating Income/(Loss)		2,205		(6,386)		1,623		(11,611)
Operating Loss										Operating Loss	(783)		(1,398)

Non-Operating Expense:	Non-Operating Expense:									Non-Operating Expense:
Interest expense, net	Interest expense, net	(314)		(291)		(1,014)		(564)		Interest expense, net	(274)		(361)
Impairments and equity method losses		(49)		(114)		(102)		(2,432)
Equity method results										Equity method results	—		(54)
Gain/(loss) on investments, net	Gain/(loss) on investments, net	(223)		(95)		251		(199)		Gain/(loss) on investments, net	(147)		262
Loss on extinguishment of debt	Loss on extinguishment of debt	(183)		—		(266)		—		Loss on extinguishment of debt	(25)		(56)
Pension and related benefit/(expense)										Pension and related benefit/(expense)	73		107
Miscellaneous, net	Miscellaneous, net	96		27		301		327		Miscellaneous, net	(44)		(15)
Total non-operating expense, net	Total non-operating expense, net	(673)		(473)		(830)		(2,868)		Total non-operating expense, net	(417)		(117)

Income/(Loss) Before Income Taxes		1,532		(6,859)		793		(14,479)
Loss Before Income Taxes										Loss Before Income Taxes	(1,200)		(1,515)

Income Tax (Provision)/Benefit		(320)		1,480		(105)		2,849
Income Tax Benefit										Income Tax Benefit	260		338

Net Income/(Loss)		$	1,212	$	(5,379)	$	688	$	(11,630)
Net Loss										Net Loss	$	(940)	$	(1,177)

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)
Basic Loss Per Share										Basic Loss Per Share	$	(1.48)	$	(1.85)
Diluted Loss Per Share										Diluted Loss Per Share	$	(1.48)	$	(1.85)
Cash Dividends Declared Per Share	Cash Dividends Declared Per Share	$	—	$	—	$	—	$	0.40	Cash Dividends Declared Per Share	$	—	$	—

Comprehensive Income/(Loss)		$	1,294	$	(5,381)	$	926	$	(11,580)
Comprehensive Loss										Comprehensive Loss	$	(881)	$	(1,099)

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 2022 Form 10-Q 4

Financial Statements

DELTA AIR LINES, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)


		Nine Months Ended September 30,					Three Months Ended March 31,
(in millions)	(in millions)	2021		2020		(in millions)	2022		2021
Net Cash Provided by/(Used in) Operating Activities		$	2,708	$	(2,507)
Net Cash Provided by Operating Activities						Net Cash Provided by Operating Activities	$	1,771	$	691

Cash Flows from Investing Activities:	Cash Flows from Investing Activities:					Cash Flows from Investing Activities:
Property and equipment additions:	Property and equipment additions:					Property and equipment additions:
Flight equipment, including advance payments	Flight equipment, including advance payments	(961)		(594)		Flight equipment, including advance payments	(1,276)		(132)
Ground property and equipment, including technology	Ground property and equipment, including technology	(1,068)		(757)		Ground property and equipment, including technology	(490)		(306)
Proceeds from sale-leaseback transactions		—		465

Purchase of short-term investments	Purchase of short-term investments	(10,799)		(8,700)		Purchase of short-term investments	(226)		(3,161)
Redemption of short-term investments	Redemption of short-term investments	12,158		3,654		Redemption of short-term investments	1,346		3,371
Purchase of equity investments	Purchase of equity investments	—		(2,099)		Purchase of equity investments	(100)		—

Other, net	Other, net	252		(159)		Other, net	(3)		168
Net cash used in investing activities	Net cash used in investing activities	(418)		(8,190)		Net cash used in investing activities	(749)		(60)

Cash Flows from Financing Activities:	Cash Flows from Financing Activities:					Cash Flows from Financing Activities:
Proceeds from short-term obligations		—		3,261

Proceeds from long-term obligations	Proceeds from long-term obligations	1,902		22,481		Proceeds from long-term obligations	—		924
Proceeds from sale-leaseback transactions		—		2,306

Payments on debt and finance lease obligations	Payments on debt and finance lease obligations	(4,685)		(2,318)		Payments on debt and finance lease obligations	(1,443)		(1,775)
Repurchase of common stock		—		(344)
Cash dividends		—		(260)
Fuel card obligation		—		364

Other, net	Other, net	98		(177)		Other, net	(13)		61
Net cash (used in)/provided by financing activities		(2,685)		25,313
Net cash used in financing activities						Net cash used in financing activities	(1,456)		(790)

Net (Decrease)/Increase in Cash, Cash Equivalents and Restricted Cash Equivalents		(395)		14,616
Net Decrease in Cash, Cash Equivalents and Restricted Cash Equivalents						Net Decrease in Cash, Cash Equivalents and Restricted Cash Equivalents	(434)		(159)
Cash, cash equivalents and restricted cash equivalents at beginning of period	Cash, cash equivalents and restricted cash equivalents at beginning of period	10,055		3,730		Cash, cash equivalents and restricted cash equivalents at beginning of period	8,569		10,055
Cash, cash equivalents and restricted cash equivalents at end of period	Cash, cash equivalents and restricted cash equivalents at end of period	$	9,660	$	18,346	Cash, cash equivalents and restricted cash equivalents at end of period	$	8,135	$	9,896

Non-Cash Transactions:	Non-Cash Transactions:					Non-Cash Transactions:
Flight and ground equipment acquired under finance leases	Flight and ground equipment acquired under finance leases	$	904	$	347	Flight and ground equipment acquired under finance leases	$	42	$	473
Right-of-use assets acquired under operating leases	Right-of-use assets acquired under operating leases	536		1,062		Right-of-use assets acquired under operating leases	359		20
Other financings		240		115
Equity investments and other financings						Equity investments and other financings	330		200
											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,					March 31,
(in millions)	(in millions)	2021		2020		(in millions)	2022		2021
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	8,785	$	16,477	Cash and cash equivalents	$	7,705	$	8,460
Restricted cash included in prepaid expenses and other	Restricted cash included in prepaid expenses and other	162		189		Restricted cash included in prepaid expenses and other	170		213
Noncurrent assets:	Noncurrent assets:					Noncurrent assets:
Cash restricted for airport construction		713		1,680
Restricted cash included in other noncurrent assets						Restricted cash included in other noncurrent assets	260		1,223
Total cash, cash equivalents and restricted cash equivalents	Total cash, cash equivalents and restricted cash equivalents	$	9,660	$	18,346	Total cash, cash equivalents and restricted cash equivalents	$	8,135	$	9,896

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 2022 Form 10-Q 5

Financial Statements

DELTA AIR LINES, INC.

Consolidated Statements of Stockholders' Equity

(Unaudited)


		Common Stock			Additional Paid-In Capital		Retained Earnings / (Accumulated Deficit)		Accumulated Other Comprehensive Loss		Treasury Stock						Common Stock			Additional Paid-In Capital		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		647	$	—	$	11,259	$	(428)	$	(9,038)	9	$	(259)	$	1,534
Balance at December 31, 2021																Balance at December 31, 2021	650	$	—	$	11,447	$	(148)	$	(7,130)	10	$	(282)	$	3,887
Net loss	Net loss	—	—		—		(1,177)		—		—	—		(1,177)		Net loss	—	—		—		(940)		—		—	—		(940)

Other comprehensive income	Other comprehensive income	—	—		—		—		78		—	—		78		Other comprehensive income	—	—		—		—		59		—	—		59
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	—		15		—		—		1	(30)		(15)

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

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

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

Other comprehensive income		—	—		—		—		82		—	—		82
Common stock issued for employee equity awards(1)		—	—		32		—		—		—	(1)		31
Balance at March 31, 2022																Balance at March 31, 2022	652	$	—	$	11,462	$	(1,088)	$	(7,071)	11	$	(312)	$	2,991

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 $41.00 in the March 2022 quarter.


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

Other comprehensive income	—	—		—		—		78		—	—		78
Common stock issued for employee equity awards(1)	2	—		23		—		—		1	(20)		3
Government grant warrant issuance	—	—		44		—		—		—	—		44
Balance at March 31, 2021	649	$	—	$	11,326	$	(1,605)	$	(8,960)	10	$	(279)	$	482

(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, June 2021 quarter and September 2021 quarter, respectively.~~

Common Stock Additional
Paid-In Capital Retained
Earnings Accumulated
Other
Comprehensive Loss Treasury Stock
(in millions, except per share data) Shares Amount Shares Amount Total
Balance at December 31, 2019 652 $ — $ 11,129 $ 12,454 $ (7,989) 9 $ (236) $ 15,358
Net loss — — — (534) — — — (534)
Dividends declared — — — (257) — — — (257)
Other comprehensive income — — — — 91 — — 91
Common stock issued for employee equity awards(1)
1 — 29 — — 1 (34) (5)
Stock purchased and retired (6) — (104) (240) — — — (344)
Balance at March 31, 2020 647 $ — $ 11,054 $ 11,423 $ (7,898) 10 $ (270) $ 14,309
Net loss — — — (5,717) — — — (5,717)
Other comprehensive loss — — — — (39) — — (39)
Common stock issued for employee equity awards(1)
— — 38 — — — (1) 37
Government grant warrant issuance — — 100 — — — — 100
Balance at June 30, 2020 647 $ — $ 11,192 $ 5,706 $ (7,937) 10 $ (271) $ 8,690
Net loss — — — (5,379) — — — (5,379)
Other comprehensive loss — — — — (2) — — (2)
Common stock issued for employee equity awards(1)
— — 35 — — — (1) 34
Government grant warrant issuance — — 14 — — — — 14
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, June 2020 quarter and September 2020 quarter, respectively.quarter.

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

Delta Air Lines, Inc. ~~September 2021~~March 2022 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.~~2021.

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~~ongoing 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 ~~September 30, 2021~~March 31, 2022 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 Income/(Loss) ("income statement") based on relevant statistics (such as passenger counts). Beginning in the March 2021 quarter we 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 approximately $200 million in the September 2020 quarter, and $1.4 billion in 2019, including approximately $360 million in the 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 Form 10-Q 7~~

~~Notes to the Consolidated Financial Statements~~

NOTE 2. REVENUE RECOGNITION

Passenger Revenue


		Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
(in millions)	(in millions)	2021		2020		2021		2020			(in millions)	2022		2021
Ticket	Ticket	$	6,237	$	1,634	$	13,067	$	8,712		Ticket	$	5,986	$	2,277
Loyalty travel awards	Loyalty travel awards	544		143		1,213		731			Loyalty travel awards	543		241
Travel-related services	Travel-related services	410		161		998		742			Travel-related services	378		230
Total passenger revenue	Total passenger revenue	$	7,191	$	1,938	$	15,278	$	10,185		Total passenger revenue	$	6,907	$	2,748

Ticket

We recognized approximately ~~$1.8~~$2.2 billion and ~~$3.0 billion~~$822 million in passenger revenue during the ~~nine~~three months ended ~~September 30,~~March 31, 2022 and 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,~~order to provide our customers more flexibility and time to plan or rebook their travel, in January 2022, we announced that all existing travel credit holders will have until December 31, 2023 to rebook their ticket for travel throughout 2024. Additionally, all Delta customers with upcoming 2022 travel or who purchase a ticket in 2022 will also have the ~~extension~~flexibility to rebook their ticket through December 31, 2023, and travel throughout 2024. The air traffic liability classified as current as of ~~the validity~~March 31, 2022 represents our estimate of ~~all passenger~~ tickets and travel credits purchased or expiring in 2021 to December 31, 2022. Additionally, with the exception of Basic Economy 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.~~used within one year. We will continue to monitor our customers' travel behavior and may adjust our estimates in the future.

We estimate the value of tickets that will expire unused (“ticket breakage”) and recognize the related revenue at the scheduled flight date. Our ticket breakage estimates are primarily based on historical experience, ticket contract terms and customers’ travel behavior. Given the ~~change~~impact of the COVID-19 pandemic on customer behavior and changes made in ticket validity terms, ~~made in 2021 and~~as well as the ~~uncertainty caused by the COVID-19 pandemic,~~elimination of change fees for most tickets, our estimates of revenue that will be recognized from the air traffic liability for unused tickets may vary in future periods.

~~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

Delta Air Lines, Inc. March 2022 Form 10-Q 7

Notes to the Consolidated Financial Statements

Loyalty Travel Awards

~~Refinery.~~ ~~This represents refinery sales to third parties, 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 ~~nine~~three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ total cash sales from marketing agreements related to our loyalty program were ~~$2.9~~$1.2 billion and ~~$2.2 billion,~~$767 million, respectively, which are allocated to travel and other performance obligations. Loyalty travel awards revenue is related to the redemption of miles for air travel.

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

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)	2022		2021
Balance at January 1	Balance at January 1	$	7,182	$	6,728	Balance at January 1	$	7,559	$	7,182
Miles earned	Miles earned	1,541		1,132		Miles earned	658		354
Miles redeemed for air travel	Miles redeemed for air travel	(1,213)		(731)		Miles redeemed for air travel	(543)		(241)
Miles redeemed for non-air travel and other	Miles redeemed for non-air travel and other	(54)		(40)		Miles redeemed for non-air travel and other	(30)		(10)
Balance at September 30		$	7,456	$	7,089
Balance at March 31						Balance at March 31	$	7,644	$	7,285

~~The timing~~Travel-Related Services

Travel-related services are primarily composed of ~~mile redemptions can vary widely; however,~~services performed in conjunction with a passenger’s flight and include baggage fees, on-board sales and administrative fees.

Other Revenue



	Three Months Ended March 31,
(in millions)	2022		2021
Refinery	$	1,187	$	540
Loyalty program	571		368
Ancillary businesses	209		186
Miscellaneous	185		93
Total other revenue	$	2,152	$	1,187

Refinery. This represents refinery sales to third parties, which are at or near cost; accordingly, the ~~majority~~margin on these sales is de minimis.

Loyalty Program. Loyalty program revenues relate to brand usage by third parties and other performance obligations embedded in miles sold, including redemption of miles ~~have historically been redeemed~~for non-air travel and other awards. These revenues are mainly included within ~~two years of being earned.~~the total cash sales from marketing agreements, discussed above.

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

Miscellaneous. Miscellaneous revenue is primarily composed of lounge access, including access provided to certain American Express cardholders, and codeshare revenues.

Delta Air Lines, Inc. March 2022 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 September 30,				Nine Months Ended September 30,						Three Months Ended March 31,
(in millions)	(in millions)	2021		2020		2021		2020					(in millions)	2022		2021
Domestic	Domestic	$	5,759	$	1,647	$	12,517	$	7,812				Domestic	$	5,563	$	2,280
Atlantic	Atlantic	730		132		1,160		1,014					Atlantic	539		142
Latin America	Latin America	564		97		1,313		879					Latin America	680		264
Pacific	Pacific	138		62		288		480					Pacific	125		62
Total	Total	$	7,191	$	1,938	$	15,278	$	10,185				Total	$	6,907	$	2,748


Operating revenue by geographic region	Operating revenue by geographic region									Operating revenue by geographic region
		Operating Revenue									Operating Revenue
		Three Months Ended September 30,				Nine Months Ended September 30,						Three Months Ended March 31,
(in millions)	(in millions)	2021		2020		2021		2020					(in millions)	2022		2021
Domestic	Domestic	$	7,311	$	2,585	$	16,572	$	10,116				Domestic	$	7,549	$	3,368
Atlantic	Atlantic	954		240		1,688		1,353					Atlantic	776		267
Latin America	Latin America	653		126		1,620		1,015					Latin America	811		381
Pacific	Pacific	236		111		549		638					Pacific	212		134
Total	Total	$	9,154	$	3,062	$	20,429	$	13,122				Total	$	9,348	$	4,150

Delta Air Lines, Inc. ~~September 2021~~March 2022 Form 10-Q 9

Notes to the Consolidated Financial Statements

NOTE 3. FAIR VALUE MEASUREMENTS

~~Assets~~Assets/(Liabilities) Measured at Fair Value on a Recurring Basis


(in millions)	(in millions)	September 30, 2021		Level 1		Level 2		Level 3		(in millions)	March 31, 2022		Level 1		Level 2		Level 3
Cash equivalents	Cash equivalents	$	6,098	$	6,098	$	—	$	—	Cash equivalents	$	5,132	$	5,132	$	—	$	—
Restricted cash equivalents	Restricted cash equivalents	874		874		—		—		Restricted cash equivalents	429		429		—		—
Short-term investments	Short-term investments	4,417		2,291		2,126		—		Short-term investments	2,250		681		1,569		—
Long-term investments	Long-term investments	1,659		1,525		37		97		Long-term investments	1,312		1,179		36		97
Fuel hedge contracts										Fuel hedge contracts	(14)		—		(14)		—


(in millions)	(in millions)	December 31, 2020		Level 1		Level 2		Level 3		(in millions)	December 31, 2021		Level 1		Level 2		Level 3
Cash equivalents	Cash equivalents	$	5,755	$	5,755	$	—	$	—	Cash equivalents	$	5,450	$	5,450	$	—	$	—
Restricted cash equivalents	Restricted cash equivalents	1,747		1,747		—		—		Restricted cash equivalents	635		635		—		—
Short-term investments	Short-term investments	5,789		3,919		1,870		—		Short-term investments	3,386		1,376		2,010		—
Long-term investments	Long-term investments	1,417		948		38		431		Long-term investments	1,459		1,326		36		97
Fuel hedge contracts										Fuel hedge contracts	(18)		—		(18)		—

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~~other noncurrent assets on our Consolidated Balance Sheet ("balance sheet"). 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.

As of ~~September 30, 2021,~~March 31, 2022, the estimated fair value of our short-term investments was ~~$4.4~~$2.2 billion. Of these investments, ~~$3.7~~$1.6 billion are expected to mature in one year or less, with the remainder maturing ~~by the first half of~~during 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 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 September 2021 quarter, Wheels Up Experience Inc. ("Wheels Up") became publicly traded and, as of September 30, 2021, our investment in Wheels Up is classified as Level 1. In the June 2021 quarter, Clear Secure, Inc. ("CLEAR") became publicly traded and our investment is classified as Level 1. In addition, ourOur 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.

Fuel Hedge Contracts. Our derivative contracts to hedge the financial risk from changing fuel prices are primarily related to inventory at our wholly-owned subsidiary, Monroe Energy, LLC ("Monroe"). Our fuel hedge portfolio may consist of a combination of options, swaps or futures. Option and swap contracts are valued under income approaches using option pricing models and discounted cash flow models, respectively, based on data either readily observable in public markets, derived from public markets or provided by counterparties who regularly trade in public markets. Futures contracts and options on futures contracts are traded on a public exchange and valued based on quoted market prices. We recognized losses of $240 million and $57 million on our fuel hedge contracts in aircraft fuel and related taxes on our Condensed Consolidated Statements of Operations and Comprehensive Loss ("income statement") for three months ended March 31, 2022 and 2021, respectively. The losses recognized during the March 2022 quarter are composed of $244 million of settlements on contracts and $4 million of mark-to-market adjustments. Expense from the settlement of closed contracts is offset by higher operating profits at Monroe from higher pricing. See Note 9, "Segments," for further information on our Monroe refinery segment.

Delta Air Lines, Inc. March 2022 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.

Fair Value Investments. 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, foreign currency fluctuations and other valuation techniques for investments in companies without publicly-traded ~~shares and foreign currency fluctuations.~~shares.

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

~~Notes to the Consolidated Financial Statements~~

~~Our~~Equity Method Investments. We record our share of ~~Unifi Aviation's~~our equity method investees' financial results ~~is recorded~~in our income statement as described in the table below.


Equity investments ownership interest and carrying value
	Accounting Treatment	Ownership Interest				Carrying Value
(in millions)		March 31, 2022		December 31, 2021		March 31, 2022		December 31, 2021
Air France-KLM	Fair Value	6	%	6	%	$	170	$	165
China Eastern	Fair Value	2	%	2	%	157		177
CLEAR	Fair Value	6	%	6	%	223		260
Grupo Aeroméxico	Equity Method(1)	20	%	51	%	432		—
Hanjin-KAL	Fair Value	13	%	13	%	450		455
Unifi Aviation	Equity Method(2)	49	%	49	%	159		159
Wheels Up	Fair Value(3)	21	%	21	%	162		241
Other investments	Various					246		255
Equity investments						$	1,999	$	1,712

(1)Results are included in equity method results in our income statement under non-operating expense.

(2)Results are included 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) 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

locations.

~~Wheels Up.~~ (3)In July 2021, Wheels Up became a publicly-traded company through a merger with Aspirational Consumer Lifestyle Corp ("Aspirational"). Aspirational subsequently changed its name to Wheels Up Experience Inc. and its common stock trades on the New York Stock Exchange under the symbol UP. We account for our investment under the fair value ~~option and are using the stock price to recognize fair value adjustments beginning in the September 2021 quarter.~~option.

~~CLEAR.~~Grupo Aeroméxico. InOn March 17, 2022, Grupo Aeroméxico ("Aeroméxico") emerged from its voluntary proceedings to reorganize under Chapter 11 of the ~~June 2021 quarter, CLEAR completed an initial public offering~~United States bankruptcy code ("bankruptcy process"). At the conclusion of ~~Class A common~~the bankruptcy process, Aeroméxico's previously outstanding capital stock was consolidated and exchanged for less than 0.01% of new capital stock, which ~~trades~~effectively eliminated our historical 51% ownership stake. Upon emergence, Delta received a 20% equity stake in the newly restructured Aeroméxico in exchange for (1) our receivables under Aeroméxico's debtor-in-possession financing, (2) $100 million (recorded as an investing outflow on ~~the New York Stock Exchange under the symbol YOU.~~our Condensed Consolidated Statements of Cash Flows ("cash flows statement")), and (3) our agreement to provide expanded commercial services to Aeroméxico in future periods. 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 converted basis. Wewill account for our investment in Aeroméxico under the ~~fair value~~equity method of accounting and ~~are using the stock price to recognize fair value adjustments.~~record our share of Aeroméxico's financial results in equity method results in our income statement.

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 therein~~

Virgin Atlantic. Virgin Atlantic has completed an out-of-court restructuring, during which we provided and continue to provide strategic and operational assistance. The carrying value of our investment in Virgin Atlantic remains zero as of March 31, 2022. We maintained our 49% equity interest and continue to track our share of Virgin Atlantic's losses under the equity method of accounting, which are ~~our~~only recorded to the extent we make additional investments in ~~Grupo Aeroméxico,~~Virgin Atlantic.

LATAM. LATAM Airlines Group S.A. ("LATAM") ~~and Virgin Atlantic, all~~is undergoing voluntary proceedings to reorganize under Chapter 11 of ~~which are undergoing in-court or out-of-court restructurings,~~the United States bankruptcy code, and the carrying ~~values~~value of ~~these investments have been reduced to and remain~~our investment in LATAM remains zero as of ~~September 30, 2021.~~March 31, 2022. In order to support our ~~relationships~~relationship with ~~these carriers,~~LATAM, we ~~have provided them with~~are providing strategic and operational assistance through ~~their restructurings. As of September 30, 2021, we had notes payable of approximately $525~~the bankruptcy process. We have a $175 million ~~which were recorded in current maturities of debt and finance leases, and receivables from those 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 portionreceivable outstanding associated with LATAM's debtor-in-possession financing. Upon completion of its ~~obligations.~~

~~GOL.~~ ~~During 2020,~~bankruptcy process, we ~~loaned GOL Linhas Aéreas Inteligentes, the parent company of GOL Linhas Aéreas (operating as GOL), $250 million~~expect to ~~be used exclusively to repay the term loan we had previously guaranteed. In the June 2021 quarter, GOL repaid the outstanding balance of this loan~~receive an approximately 10% equity stake in ~~full.~~

LATAM in exchange for an additional investment in LATAM.

Delta Air Lines, Inc. ~~September 2021~~March 2022 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			September 30,		December 31,			Maturity			Interest Rate(s) Per Annum at			March 31,		December 31,
(in millions)	(in millions)	Dates			September 30, 2021			2021		2020		(in millions)	Dates			March 31, 2022			2022		2021
Unsecured Payroll Support Program Loans												Unsecured Payroll Support Program Loans	2030	to	2031	1.00%			$	3,496	$	3,496
Unsecured notes	Unsecured notes	2022	to	2029	2.90%	to	7.38%	$	4,460	$	5,350	Unsecured notes	2023	to	2029	2.90%	to	7.38%	3,308		4,354
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%			2,865		3,000		SkyMiles Term Loan(1)(2)	2023	to	2027	4.75%			2,820		2,820
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%			2,823		3,500		2020 Senior Secured Notes	2025			7.00%			2,459		2,589
2020 Term Loan		n/a						—		1,493
2018 Revolving Credit Facility(2)	2018 Revolving Credit Facility(2)	2022	to	2023	Undrawn			—		—		2018 Revolving Credit Facility(2)	2023	to	2024	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	8.00%	1,990		2,633		Certificates(1)	2022	to	2028	2.00%	to	8.00%	1,920		1,932
Notes(1)(2)	Notes(1)(2)	2021	to	2033	0.70%	to	5.75%	1,208		1,284		Notes(1)(2)	2022	to	2033	1.39%	to	5.75%	1,054		1,139
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)		2022	to	2036	4.00%	to	5.00%	1,383		1,383
NYTDC Special Facilities Revenue Bonds(1)												NYTDC Special Facilities Revenue Bonds(1)	2023	to	2045	4.00%	to	5.00%	2,838		2,894
Other financings(1)(2)	Other financings(1)(2)	2021	to	2030	2.25%	to	8.00%	592		412		Other financings(1)(2)	2022	to	2030	2.51%	to	5.00%	68		68
Other revolving credit facilities(2)	Other revolving credit facilities(2)	2022			Undrawn			—		—		Other revolving credit facilities(2)	2022	to	2024	Undrawn			—		—
Total secured and unsecured debt	Total secured and unsecured debt							26,328		28,214		Total secured and unsecured debt							23,963		25,292
Unamortized (discount)/premium and debt issue cost, net and other	Unamortized (discount)/premium and debt issue cost, net and other							(227)		(240)		Unamortized (discount)/premium and debt issue cost, net and other							(193)		(208)
Total debt	Total debt							26,101		27,974		Total debt							23,770		25,084
Less: current maturities	Less: current maturities							(2,024)		(1,443)		Less: current maturities							(831)		(1,502)
Total long-term debt	Total long-term debt							$	24,077	$	26,531	Total long-term debt							$	22,939	$	23,582

(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 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 CARES Act providing an additional $15 billion in grants and loans to the airline industry. In January 2021, we entered into a payroll support program extension agreement with the U.S. Department of the Treasury. During the six months ended June 30, 2021, we received a total of $3.3 billion in payroll support payments under this extension agreement, which we were required to use exclusively for the payment of employee wages, salaries and benefits and were 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 $2.3 billion in a grant and $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. The 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 $905 million of noncurrent debt, net of discount, and $52 million in additional paid in capital, respectively.

~~Payroll Support Program 3 (PSP3).~~ The American Rescue Plan Act of 2021 was enacted on March 11, 2021, and included a further extension of the payroll support program providing an additional $14 billion in grants and loans to the airline industry. In April 2021, we entered into a Payroll Support Program 3 Agreement with the 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, which we were required to use exclusively for the payment of employee wages, salaries and benefits and was 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 we have expended all of the payroll support, whichever is later. Other conditions 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 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. 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 initial exercise price of $47.80 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 $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 loss on extinguishment of debt in non-operating expense in 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 ~~September 30, 2021,~~March 31, 2022, we had approximately ~~$2.6~~$2.9 billion undrawn and available under our revolving credit facilities. In addition, we had approximately $400 millionoutstanding letters of credit as of ~~September 30, 2021, including approximately $300 million that reduced the availability under our revolving credit facilities and approximately $300 million~~March 31, 2022 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	Fair value of outstanding debt					Fair value of outstanding debt
(in millions)	(in millions)	September 30, 2021		December 31, 2020		(in millions)	March 31, 2022		December 31, 2021
Net carrying amount	Net carrying amount	$	26,101	$	27,974	Net carrying amount	$	23,770	$	25,084
Fair value	Fair value	$	28,300	$	29,800	Fair value	$	24,200	$	26,900

Covenants

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

March 31, 2022.

Delta Air Lines, Inc. ~~September 2021~~March 2022 Form 10-Q 1412

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)	2022		2021		2022		2021
Three Months Ended September 30,
Three Months Ended March 31,										Three Months Ended March 31,
Service cost	Service cost	$	—	$	—	$	21	$	24	Service cost	$	—	$	—	$	18	$	21
Interest cost	Interest cost	146		175		29		30		Interest cost	153		146		32		29
Expected return on plan assets	Expected return on plan assets	(381)		(343)		(9)		(11)		Expected return on plan assets	(330)		(375)		(4)		(9)
Amortization of prior service credit	Amortization of prior service credit	—		—		(2)		(2)		Amortization of prior service credit	—		—		(1)		(2)
Recognized net actuarial loss	Recognized net actuarial loss	88		74		15		10		Recognized net actuarial loss	64		89		13		15
Special termination benefits		—		—		—		1,260

Settlements		1		30		—		—

Net periodic (benefit) cost	Net periodic (benefit) cost	$	(146)	$	(64)	$	54	$	1,311	Net periodic (benefit) cost	$	(113)	$	(140)	$	58	$	54

Nine Months Ended September 30,
Service cost		$	—	$	—	$	64	$	72
Interest cost		437		526		88		86
Expected return on plan assets		(1,142)		(1,030)		(26)		(33)
Amortization of prior service credit		—		—		(5)		(7)
Recognized net actuarial loss		266		223		42		32
Special termination benefits		—		—		—		1,260
Settlements		1		33		—		—
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~~pension and related benefit/(expense) under non-operating expense.

WeExpected Long-Term Rate of Return. Based on our level of funding at year-end, we have ~~no minimum funding requirements for~~modified the strategic asset allocation mix to reduce the investment risk of the portfolio. As a result of the lower risk profile of the portfolio, the weighted average expected long-term rate of return on our defined benefit pension ~~plans in 2021, however we voluntarily contributed $1.5 billion to these plans in the June 2021 quarter.~~plan assets for 2022 net periodic benefit cost is 7.0%.

~~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 ~~$16.9~~$15.3 billion at 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.March 31, 2022.


Aircraft purchase commitments	Aircraft purchase commitments			Aircraft purchase commitments
(in millions)	(in millions)	Total		(in millions)	Total
Three months ending December 31, 2021		$	550
2022		3,670
Nine months ending December 31, 2022				Nine months ending December 31, 2022	$	2,640
2023	2023	3,100		2023	3,170
2024	2024	3,260		2024	3,290
2025	2025	2,880		2025	2,910
2026				2026	2,340
Thereafter	Thereafter	3,430		Thereafter	990
Total	Total	$	16,890	Total	$	15,340

Our future aircraft purchase commitments included the following aircraft at ~~September 30, 2021:~~March 31, 2022:


Aircraft purchase commitments by fleet type
Aircraft Type			Purchase Commitments
~~A220-100~~			4
A220-300			41
~~A321-200~~			440
A321-200neo			~~155~~154
A330-900neo			2623
A350-900~~(1)~~			2618
B-737-900ER			275
CRJ-900			3
Total			~~283~~243

~~(1)Includes 6 A350-900 lease commitments in 2021 incremental~~

Delta Air Lines, Inc. March 2022 Form 10-Q 13

Notes 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.Consolidated Financial Statements

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 Form 10-Q 16~~

~~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.

Delta Air Lines, Inc. March 2022 Form 10-Q 14

Notes to the Consolidated Financial Statements

NOTE 8. ACCUMULATED OTHER COMPREHENSIVE LOSS

Components of accumulated other comprehensive loss
(in millions)
Pension and Other Benefit Liabilities(2)
Other Total
Balance at January 1, 2021 (net of tax effect of $1,764) $ (9,078) $ 40 $ (9,038)
Changes in value (net of tax effect of $1) 3 — 3
Reclassifications into earnings (net of tax effect of $71)(1)
235 — 235
Balance at September 30, 2021 (net of tax effect of $1,692) $ (8,840) $ 40 $ (8,800)


Components of accumulated other comprehensive loss
(in millions)	Pension and Other Benefit Liabilities		Other		Total
Balance at January 1, 2022 (net of tax effect of $1,184)	$	(7,170)	$	40	$	(7,130)

Reclassifications into earnings (net of tax effect of $18)(1)	59		—		59
Balance at March 31, 2022 (net of tax effect of $1,166)	$	(7,111)	$	40	$	(7,071)

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)


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		—		78
Balance at March 31, 2021 (net of tax effect of $1,741)	$	(9,000)	$	40	$	(8,960)

(1)Amounts reclassified from accumulated other comprehensive loss for pension and other benefit liabilities are recorded in ~~miscellaneous, net~~pension and related benefit/(expense) 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.

Delta Air Lines, Inc. ~~September 2021~~March 2022 Form 10-Q 1715

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. 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 ~~September 30,~~March 31, 2022 and 2021 was ~~$629~~$809 million and ~~$1.7 billion, respectively, compared to $249~~$503 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 September 30, 2021
Three Months Ended March 31, 2022											Three Months Ended March 31, 2022
Operating revenue:	Operating revenue:	$	8,282	$	1,696				$	9,154	Operating revenue:	$	8,161	$	2,313				$	9,348
Sales to airline segment	Sales to airline segment					$	(183)	(1)			Sales to airline segment					$	(291)	(1)
Exchanged products	Exchanged products					(629)		(2)			Exchanged products					(809)		(2)
Sales of refined products	Sales of refined products					(12)		(3)			Sales of refined products					(26)		(3)
Operating income		2,108		97		—			2,205
Operating (loss)/income											Operating (loss)/income	(836)		53		—			(783)
Interest expense, net	Interest expense, net	312		2		—			314		Interest expense, net	274		2		(2)			274
Depreciation and amortization	Depreciation and amortization	501		24		(24)		(4)	501		Depreciation and amortization	506		23		(23)		(4)	506
Restructuring charges		33		—		—			33

Total assets, end of period	Total assets, end of period	70,771		2,012		—			72,783		Total assets, end of period	71,392		2,382		(26)			73,748
Net fair value obligations, end of period(5)		—		(547)		—			(547)
Net fair value obligations, end of period											Net fair value obligations, end of period	—		(430)		—			(430)
Capital expenditures	Capital expenditures	818		12		—			830		Capital expenditures	1,749		17		—			1,766

Three Months Ended September 30, 2020
Three Months Ended March 31, 2021											Three Months Ended March 31, 2021
Operating revenue:	Operating revenue:	$	2,645	$	669				$	3,062	Operating revenue:	$	3,610	$	1,047				$	4,150
Sales to airline segment	Sales to airline segment					$	—	(1)			Sales to airline segment					$	—	(1)
Exchanged products	Exchanged products					(249)		(2)			Exchanged products					(503)		(2)
Sales of refined products	Sales of refined products					(3)		(3)			Sales of refined products					(4)		(3)
Operating loss	Operating loss	(6,358)		(28)		—			(6,386)		Operating loss	(1,273)		(125)		—			(1,398)
Interest expense, net	Interest expense, net	288		3		—			291		Interest expense, net	361		1		(1)			361
Depreciation and amortization	Depreciation and amortization	545		25		(25)		(4)	545		Depreciation and amortization	492		24		(24)		(4)	492
Restructuring charges		5,345		—		—			5,345

Total assets, end of period	Total assets, end of period	77,558		1,518		—			79,076		Total assets, end of period	71,508		1,578		(3)			73,083
Net fair value obligations, end of period(5)		—		(68)		—			(68)
Net fair value obligations, end of period											Net fair value obligations, end of period	—		(285)		—			(285)
Capital expenditures	Capital expenditures	130		3		—			133		Capital expenditures	425		13		—			438

~~(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~~.

~~(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 Form 10-Q 18~~

~~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

(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.

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

Delta Air Lines, Inc. March 2022 Form 10-Q 16

Notes to the Consolidated Financial Statements

Fair Value Obligations

The net fair value obligations presented in the table above are related to renewable fuel compliance costs and are based on quoted market prices and other observable information and are therefore classified as Level 2 in the fair value hierarchy. Our obligation as of March 31, 2022 was calculated using the U.S. Environmental Protection Agency's ("EPA") proposed Renewable Fuel Standard ("RFS") volume requirements, which were issued in December 2021. The EPA has not finalized the compliance deadlines to retire our obligations for 2020 and 2021, but we expect those deadlines to be within one year of the effective date of the new RFS volume requirements.

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

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


Basic and diluted earnings/(loss) per share
Basic and diluted loss per share										Basic and diluted loss per share
		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
(in millions, except per share data)	(in millions, except per share data)	2021		2020		2021		2020		(in millions, except per share data)	2022		2021
Net income/(loss)		$	1,212	$	(5,379)	$	688	$	(11,630)
Net loss										Net loss	$	(940)	$	(1,177)

Basic weighted average shares outstanding	Basic weighted average shares outstanding	637		635		636		636		Basic weighted average shares outstanding	637		636
Dilutive effect of share-based awards	Dilutive effect of share-based awards	4		—		5		—		Dilutive effect of share-based awards	—		—
Diluted weighted average shares outstanding	Diluted weighted average shares outstanding	641		635		641		636		Diluted weighted average shares outstanding	637		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)
Basic loss per share										Basic loss per share	$	(1.48)	$	(1.85)
Diluted loss per share										Diluted loss per share	$	(1.48)	$	(1.85)

Delta Air Lines, Inc. ~~September 2021~~March 2022 Form 10-Q 1917

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~~2021 Form 10-K.

March 2022 Quarter Financial Overview

Our business and operating results ~~for 2021 continue~~continued to be ~~significantly~~ impacted by the COVID-19 ~~pandemic. However, as described further below, we~~pandemic in the March 2022 quarter. We have seen continued improvement in our business ~~beginning in~~during the March ~~2021 and progressing through the September 2021~~2022 quarter, which we expect to ~~continue.~~continue throughout 2022. Given the drastic and unprecedented impact of the COVID-19 pandemic on our operating results in 2021 and 2020, we believe that ~~for the financial overview discussion below,~~ a comparison of our results in the March 2022 quarter to both the March 2021 toand March 2019 quarters in this overview section allows for a 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~~

The table below shows selected key financial and ~~analysis, we present results~~statistical measures for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022, 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.

~~September 2021 Quarter Financial Overview~~


	Three Months Ended March 31,						2022 vs. 2021 % Increase (Decrease) (1)		2022 vs. 2019 % Increase (Decrease) (1)
(in millions)	2022		2021		2019
Total operating revenue	$	9,348	$	4,150	$	10,472	125	%	(11)	%
Total operating expense	10,131		5,548		9,452		83	%	7	%
Operating (loss)/income	(783)		(1,398)		1,020		(44)	%	NM



Available seat miles ("ASM")	51,810		40,118		62,416		29	%	(17)	%

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

Our ~~pre-tax income~~operating loss for the ~~September 2021~~March 2022 quarter was ~~$1.5 billion, including the $1.8 billion benefit related to recognition~~$783 million, an improvement of ~~the remaining PSP3 grant during the quarter. This represents a $415~~$615 million ~~decrease in pre-tax income~~ compared to the ~~September 2019 quarter~~March 2021 quarter. This improvement was primarily due to a ~~27% reduction~~$4.2 billion, or 151%, increase in ~~operating~~passenger revenue as a result of increased demand and capacity, partially offset by a $1.1 billion increase in fuel expense, $1.2 billion of Payroll Support Programs ("PSP") grant proceeds recognized during the ~~recognition~~March 2021 quarter and increases in other volume related expenses as we continue to restore our operation.

Compared to operating income of $1.0 billion in the March 2019 quarter, our operating loss primarily resulted from the continued impact of the ~~remaining PSP3 grant. Pre-tax income, adjusted (a non-GAAP financial measure) was $216 million,~~COVID-19 pandemic on our business which led to a 25% decrease ~~of $1.8 billion compared to the September 2019 quarter.~~in passenger revenue.

Revenue. Compared to the ~~September 2019~~March 2021 quarter, our operating revenue ~~decreased $3.4~~increased $5.2 billion, or ~~27%~~125%, due primarily to ~~reduced~~increased travel demand ~~resulting~~and higher refinery third party sales.

Compared to the March 2019 quarter, our operating revenue was $1.1 billion lower, or 11%, on 17% lower system capacity, due primarily to the continued impact of the COVID-19 pandemic on travel demand, partially offset by higher refinery third party sales. We expect system capacity to be approximately 85% recovered in the June 2022 quarter compared to the June 2019 quarter. We have the ability to return to 2019 capacity levels by the end of 2022, if demand warrants.

Beginning in the latter half of the March 2021 quarter, we began to see bookings, primarily among domestic consumers, improve from the low levels of 2020. Throughout 2021, demand continued to improve, with some variability in periods of rising COVID-19 ~~pandemic.~~cases attributable to variants of the virus. Consumer demand accelerated through the March 2022 quarter, highlighted by strong spring break performance. As the omicron variant faded, offices reopened and travel restrictions were lifted, leading to improved demand for business travel and a strengthened fare environment. The sale of tickets to domestic business customers (i.e., both corporate and contracted small- and medium-sized enterprises), including tickets for travel during and beyond the quarter (“domestic corporate advance sales”), significantly improved during the March 2022 quarter. We remain optimistic about the ultimate recovery of business travel; however, we are unable to fully predict the pace of that recovery.

Delta Air Lines, Inc. March 2022 Form 10-Q 18

Item 2. MD&A

International revenue continues to lag the recovery in domestic travel due to certain international testing requirements and travel restrictions, but improved in the March 2022 quarter to approximately 55% recovered compared to the March 2019 quarter. During the March 2022 quarter, many European countries removed entry testing requirements for vaccinated travelers. The sale of tickets to international business customers (i.e., both corporate and contracted small- and medium-sized enterprises), including tickets for travel during and beyond the quarter (“international corporate advance sales”), significantly improved during the March 2022 quarter. Despite the recent policy changes and improved advance sales, we expect the lower international revenue environment to continue through at least the second quarter of 2022, with the recovery of international revenue continuing to trail domestic revenue.

Operating Expense. Total operating expense in the ~~September 2021~~March 2022 quarter ~~decreased $3.5~~increased $4.6 billion, or ~~34%~~83%, compared to the ~~September 2019~~March 2021 quarter, primarily resulting from ~~recognition of the remaining PSP3 grant, lower~~increased fuel costs due to both an increase in fuel price and increased capacity and higher volume-related expenses associated with the increase in capacity and demand, mainly ~~fuel~~aircraft maintenance and ~~passenger commissions and other selling expenses, lower~~higher salaries and related ~~costs~~costs. The increase also resulted from $1.2 billion of PSP grant proceeds recognized during the March 2021 quarter, which reduced expenses 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 ~~September 2021~~March 2022 quarter ~~decreased $2.6~~increased $2.7 billion, or ~~25%~~43%, compared to the ~~September 2019~~March 2021 quarter. Adjustments were primarily to exclude expenses related to refinery sales to third parties and PSP grant proceeds in the March 2021 quarter.

~~Non-Operating Results.~~Total ~~non-operating~~operating expense ~~was $673 million~~ in the ~~September 2021~~March 2022 quarter ~~$549~~increased $679 million, ~~higher than~~or 7%, compared to the ~~September~~March 2019 quarter, primarily ~~due~~resulting from increased expenses related to ~~higher interest~~refinery sales to third parties, reflected in ancillary business and refinery expense. Total operating expense, ~~as a result of our increased debt due~~adjusted (a non-GAAP financial measure) for the March 2022 quarter decreased $400 million, or 4%, compared to ~~financing arrangements entered into in 2020, losses on debt extinguishment and mark-to-market losses on certain of our equity investments.~~the March 2019 quarter. Adjustments were primarily to exclude expenses related to refinery sales to third parties.

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") as of ~~September 30, 2021~~March 31, 2022 was ~~$15.8~~$12.8 billion. During the ~~September 2021~~March 2022 quarter, operating activities generated ~~$151 million.~~ $1.8 billion.

During the March 2022 quarter, the air traffic liability increased approximately $2.8 billion. We sell tickets for air travel in advance of the customer's travel date and the cash received on these advance sales is recorded as deferred revenue in our air traffic liability. Passenger revenue is recognized and the air traffic liability is reduced when we provide transportation services. The increase in the air traffic liability exceeds our historical seasonal increase, reflecting the continued restoration of our business.

As discussed above, consumer demand for travel accelerated through the quarter. Domestic corporate advance sales for the March 2022 quarter were approximately 50% recovered compared to the March 2019 quarter and the month of March was approximately 70% recovered versus 2019. The domestic corporate advance sales recovery was also nearly 40 percentage points higher in the March 2022 quarter compared to the March 2021 quarter. International corporate advance sales for the March 2022 quarter were approximately 35% recovered compared to the March 2019 quarter, with the month of March improving to approximately 50% compared to March 2019. Internationally, Transatlantic improved the most as European countries reopened. The international corporate advance sales recovery was also nearly 30 percentage points higher in the March 2022 quarter compared to the March 2021 quarter.

Additionally, total cash sales to American Express were $1.2 billion in the March 2022 quarter up 25% compared to the March 2019 quarter.

Also during the quarter, investing activities used ~~$384~~a net of $749 million, primarily 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 and technology enhancements.~~ These activities resulted in ~~$463~~$197 million of ~~negative~~ free cash flow (a non-GAAP financial measure) in the ~~September 2021~~March 2022 quarter. Also, during the ~~September 2021~~March 2022 quarter we had cash outflows of approximately ~~$1.6~~$1.4 billion related to repayments of our debt and finance ~~leases, including approximately $1.3 billion for early repayments and the remainder from scheduled maturities.~~leases.

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

Delta Air Lines, Inc. ~~September 2021~~March 2022 Form 10-Q 2019

Item 2. MD&A

Environmental Sustainability. ~~In February 2020,~~During 2022, we ~~announced plans~~are continuing to ~~invest $1.0 billion over~~develop our climate transition plan and to have our medium- and long-term climate goals, including our goal of achieving net zero greenhouse gas emissions no later than 2050, validated by the ~~next 10 years~~Science Based Targets initiative, as described in our ~~effort~~2021 Form 10-K. We expect our path toward achievement of these goals 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 includes the purchase and retirement of carbon offset credits as well asdepend heavily on increased use of sustainable aviation fuel ("SAF") which is not presently available at scale or at prices competitive to jet fuel, and improved fuel efficiency from fleet renewal and operational initiatives. In the ~~first nine~~three months ~~of 2021,~~ended March 31, 2022, we also incurred ~~$69~~$47 million of expense related to carbon offset ~~credits. This amount consists of $30 million 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, ~~as well as an additional $39 million for the purchase and retirement of carbon offset credits related~~which relates to a portion of our airline segment's 2021 carbon emissions. In September 2021, we committed to setting net zero 2050 and interim goals through the 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 2022 Form 10-Q 2120

Item 2. MD&A - Results of Operations

Results of Operations - Three Months Ended ~~September 30,~~March 31, 2022 and 2021 ~~2020 and 2019~~

Operating Revenue


		Three Months Ended September 30,										2021 vs. 2020 % Increase (Decrease)(2)		2021 vs. 2019 % Increase (Decrease)(2)			Three Months Ended March 31,						Increase (Decrease)	% Increase (Decrease)
(in millions)(1)	(in millions)(1)	2021			2020			2019			2021 vs. 2020 % Increase (Decrease)(2)					2022	2021			Increase (Decrease)
Ticket - Main cabin	Ticket - Main cabin	$	3,742		$	1,057		$	6,021			254	%	(38)	%	Ticket - Main cabin	$	3,448						$	2,095		155	%
Ticket - Business cabin and premium products		2,495			577			4,008				332	%	(38)	%
Ticket - Premium products																Ticket - Premium products	2,538			924				1,614			175	%
Loyalty travel awards	Loyalty travel awards	544			143			732				280	%	(26)	%	Loyalty travel awards	543			241				302			125	%
Travel-related services	Travel-related services	410			161			649				155	%	(37)	%	Travel-related services	378			230				148			64	%
Total passenger revenue	Total passenger revenue	$	7,191		$	1,938		$	11,410			271	%	(37)	%	Total passenger revenue	$	6,907		$	2,748			$	4,159		151	%
Cargo	Cargo	262			142			189				85	%	39	%	Cargo	289			215				74			34	%
Other	Other	1,701			982			961				73	%	77	%	Other	2,152			1,187				965			81	%
Total operating revenue	Total operating revenue	$	9,154		$	3,062		$	12,560			199	%	(27)	%	Total operating revenue	$	9,348		$	4,150			$	5,198		125	%

TRASM (cents)	TRASM (cents)	16.93		¢	10.82		¢	16.58		¢		56	%	2	%	TRASM (cents)	18.04		¢	10.34		¢		7.70		¢	74	%
Third-party refinery sales~~(3)~~	Third-party refinery sales~~(3)~~	(1.61)			(1.47)			(0.01)				10	%	NM		Third-party refinery sales~~(3)~~	(2.29)			(1.35)				(0.94)			70	%
Delta Private Jets adjustment(3)		—			—			(0.06)				—	%	(100)	%

TRASM, adjusted(2)	TRASM, adjusted(2)	15.31		¢	9.35		¢	16.51		¢		64	%	(7)	%	TRASM, adjusted(2)	15.75		¢	9.00		¢		6.75		¢	75	%

(1)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)~~TRASM, adjusted is a non-GAAP financial measure. For additional information on adjustments to TRASM, see "Supplemental Information" below.

Operating Revenue

Compared to the ~~September 2019~~March 2021 quarter, our operating revenue ~~decreased $3.4~~increased $5.2 billion, or ~~27%~~125%, due ~~primarily~~ to ~~reduced~~the continued recovery in demand ~~resulting~~ from the COVID-19 ~~pandemic.~~pandemic and higher refinery third party sales. The ~~decline~~increase in operating revenue, on a 29% ~~decrease~~increase in capacity, resulted in a 2%74% increase in total revenue per available seat mile ("TRASM") and a ~~7% decrease~~75% increase in TRASM, adjusted compared to the ~~September 2019~~March 2021 quarter.

~~Our operating~~ The growth in passenger revenue ~~increased $6.1 billion compared to the September 2020 quarter~~was due to ~~the continued~~increased demand in both main cabin and premiums products, with premium products experiencing a quicker recovery in demand that began in the September 2020 quarter, following the depth of the COVID-19 pandemic impact in the June 2020 quarter. The increase in operating revenue, which outpaced the 91% increase in capacity, resulted in a 56% increase in TRASM and a 64% increase in TRASM, adjusted.than main cabin.

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

The length and severity of the reduction in travel demand due to the COVID-19 pandemic 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 return of business travel as many companies are pausing or delaying return to office plans. We continue to expect domestic demand recovery to lead international demand recovery. We believe international demand recovery will continue to be uneven in 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.revenue.

We have historically generated cargo ~~revenue~~revenues in domestic and international markets through the use of cargo space on regularly scheduled passenger aircraft. ~~Reduced industry capacity as a result~~In 2020 and 2021, following the onset of the COVID-19 pandemic, reduced industry cargo capacity drove a significant increase in our cargo yield, and ~~our~~we also generated cargo revenue through the operation of cargo-only charter flights (i.e., using aircraft in our fleet not being utilized for passenger travel to fly cargo internationally). The higher cargo yield trend has continued into the ~~September 2021~~March 2022 quarter driving the increase in revenue compared to the ~~September 2019~~March 2021 quarter. ~~Compared~~We expect capacity constraints and elevated market yields to continue through 2022 while the ~~September 2020 quarter, our cargo revenue in the September 2021 quarter increased due~~industry rebuilds international networks to ~~continued higher yields as well as higher volume.~~pre-pandemic levels.

~~Delta Air Lines, Inc. September 2021 Form 10-Q 22~~

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

Passenger Revenue by Geographic Region

Increase (Decrease)
vs. Three Months Ended September 30, 2020
(in millions) Three Months Ended September 30, 2021 Passenger Revenue
RPMs (Traffic)
ASMs (Capacity)
Passenger Mile Yield PRASM Load Factor
Domestic $ 5,759 250 % 242 % 74 % 2 % 101 % 41 pts
Atlantic 730 455 % 559 % 179 % (16) % 99 % 41 pts
Latin America 564 482 % 469 % 226 % 2 % 79 % 34 pts
Pacific 138 121 % 73 % 50 % 28 % 47 % 4 pts
Total $ 7,191 271 % 273 % 91 % — % 94 % 39 pts

Increase (Decrease)
vs. Three Months Ended September 30, 2019
(in millions) Three Months Ended September 30, 2021 Passenger Revenue
RPMs (Traffic)
ASMs (Capacity)
Passenger Mile Yield PRASM Load Factor
Domestic $ 5,759 (28) % (20) % (16) % (10) % (15) % (4) pts
Atlantic 730 (65) % (65) % (56) % 1 % (20) % (18) pts
Latin America 564 (16) % (15) % (7) % (1) % (10) % (8) pts
Pacific 138 (80) % (90) % (67) % 101 % (39) % (60) pts
Total $ 7,191 (37) % (36) % (29) % (2) % (12) % (9) pts

In the March 2021 quarter, we announced the extension of the validity of all passenger tickets and travel credits purchased or expiring in 2021 to December 31, 2022. Additionally, with the exception of Basic Economy 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 the updated change fee policies to materially affect our revenue in future 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.


			Increase (Decrease) vs. Three Months Ended March 31, 2021
(in millions)	Three Months Ended March 31, 2022		Passenger Revenue		RPMs (Traffic)		ASMs (Capacity)		Passenger Mile Yield		PRASM		Load Factor
Domestic	$	5,563	144	%	105	%	29	%	19	%	90	%	29	pts
Atlantic	539		281	%	320	%	108	%	(9)	%	83	%	33	pts
Latin America	680		158	%	93	%	(1)	%	33	%	160	%	38	pts
Pacific	125		100	%	106	%	3	%	(3)	%	95	%	17	pts
Total	$	6,907	151	%	116	%	29	%	17	%	95	%	30	pts

Domestic

Domestic passenger unit revenue ("PRASM") ~~for~~increased in the ~~September 2021~~March 2022 quarter ~~decreased 15% with capacity down 16%~~ compared to the ~~September 2019~~March 2021 quarter as a result of ~~reduced demand due to~~ the ~~COVID-19 pandemic. The revenue increase in the September 2021 quarter compared to the September 2020 quarter is attributable to the low~~higher levels of capacity and demand during the ~~September 2020~~March 2022 quarter due to ~~the COVID-19 pandemic and~~ the ongoing recovery in the ~~September 2021 quarter.~~period.

Delta Air Lines, Inc. March 2022 Form 10-Q 21

Item 2. MD&A - Results of Operations

The ~~September~~March 2022 quarter domestic consumer revenue was above March 2021 quarter ~~began~~levels. After starting with ~~domestic leisure~~somewhat muted demand ~~near September 2019 quarter levels. This strong demand moderated slightly in the second half of the quarter~~recovery due to ~~a rise in~~rising COVID-19 cases attributable to ~~a variant~~variants of the ~~virus. However,~~virus, revenue recovery accelerated during the quarter as ~~cases begin~~consumers continued to ~~decline, leisure and business bookings are increasing.~~ show increased confidence in travel.

We also remain optimistic about the ultimate recovery of business ~~travel; however, in the September 2021 quarter we experienced a pause in~~travel, which is comprised of both corporate managed travel and small- and medium-sized businesses, and expect the recovery of ~~this demand. We expect this~~both of these components to continue to increase throughout 2022. Business travel demand ~~to improve modestly~~ in the ~~December 2021~~March 2022 quarter ~~but accelerate in~~was the ~~first half~~highest since the onset of ~~2022 as more corporate offices reopen; we are, however, unable to fully predict~~ the ~~pace of that recovery.~~COVID-19 pandemic.

International

International passenger revenue for the ~~September 2021~~March 2022 quarter ~~decreased 58% with capacity down 50%~~increased compared to the ~~September 2019 quarter. Compared to the September 2020~~March 2021 quarter ~~passenger revenue has increased~~ as travel to certain destinations has resumed or increased. The decreases in revenue and capacity compared to the September 2019 quarter resulted from continued reduced demand, including as a result of government travel directives and quarantines significantly limiting or suspending air travel due to the COVID-19 pandemic. Additionally, whileWhile some countries have removed or eased travel restrictions, many countries ~~maintained or reinstituted~~still maintain international testing requirements and travel restrictions, which have restrained demand in the ~~short-term but are expected to enable the long-term recovery of international air travel.~~short-term.

~~Delta Air Lines, Inc. September~~In November 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~~for fully vaccinated foreign visitors to the United States ~~beginning in November 2021.~~were lifted. This action ~~will make~~made travel to the U.S. by many foreign nationals possible for the first time in 18 months. Despite this policy change, we expect the ~~significantly~~ lower international ~~demand~~revenue environment to continue through at least ~~into early~~the second quarter of 2022, with the recovery ~~pace~~of international revenue continuing to trail domestic ~~travel. In each of the international regions, we continue to monitor government travel directives and customer demand and~~revenue. We will continue to ~~adjust flight schedules accordingly.~~be nimble in the restoration of our international network based on changes in government restrictions and consumer demand.

The Atlantic ~~and Pacific regions continue~~region continues to beimprove, despite the ~~most impacted by the restrictions described above. However,~~conflict in ~~the September 2021 quarter,~~Ukraine, as western European countries remove or ease travel restrictions. In February 2022, we suspended our codeshare services operated in conjunction with Russian national airline, Aeroflot, which is not expected to have ~~continued~~a material impact on our ~~service to certain countries in the~~ Atlantic region ~~based on their lifting or easing~~revenues as Russia and Ukraine represent less than one percent of ~~travel restrictions. These countries include Croatia, France, Germany, Greece, Iceland, Italy, the Netherlands, Portugal and Spain. Travel in the Pacific~~our Atlantic region ~~is largely limited to essential travel, and we expect only small demand improvements until vaccine distribution improves and government restrictions ease.~~traffic.

The Latin America region has shown the most recovery of the international regions, with 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 this trend to continue ~~through the remainder of 2021~~throughout 2022 with the recovery in Latin America leading the Atlantic and Pacific ~~regions lagging behind Latin America.~~regions.

The Pacific region continues to be the most impacted by the restrictions described above. Travel in the Pacific region remains largely limited to essential travel, and we expect only small demand improvements until government restrictions ease, such as South Korea's recent announcement that vaccinated travelers would be able to enter the country without quarantine beginning on April 1, 2022.

Ticket Validity Flexibility

In order to provide our customers more flexibility and time to plan or rebook their travel, in January 2022, we announced that all existing travel credit holders will have until December 31, 2023 to rebook their ticket for travel throughout 2024. Additionally, all Delta customers with upcoming 2022 travel or who purchase a ticket in 2022 will also have the flexibility to rebook their ticket through December 31, 2023, and travel throughout 2024.

We estimate the value of ticket breakage and recognize the related revenue at the scheduled flight date. Our ticket breakage estimates are primarily based on historical experience, ticket contract terms and customers’ travel behavior. Given the impact of the COVID-19 pandemic on customer behavior and changes made in ticket validity terms, as well as the elimination of change fees for most tickets, our estimates of revenue that will be recognized from the air traffic liability for unused tickets may vary in future periods.

Delta Air Lines, Inc. March 2022 Form 10-Q 22

Item 2. MD&A - Results of Operations

Other Revenue


		Three Months Ended September 30,							2021 vs. 2020 % Increase (Decrease)		2021 vs. 2019 % Increase (Decrease)			Three Months Ended March 31,				Increase (Decrease)	% Increase (Decrease)
(in millions)	(in millions)	2021		2020		2019		2021 vs. 2020 % Increase (Decrease)					2022	2021		Increase (Decrease)
Refinery	Refinery	$	872	$	417	$	6		109	%	NM		Refinery	$	1,187				$	647	120	%
Loyalty program	Loyalty program	453		343		485			32	%	(7)	%	Loyalty program	571		368			203		55	%
Ancillary businesses	Ancillary businesses	215		155		285			39	%	(25)	%	Ancillary businesses	209		186			23		12	%
Miscellaneous	Miscellaneous	161		67		185			140	%	(13)	%	Miscellaneous	185		93			92		99	%
Total other revenue	Total other revenue	$	1,701	$	982	$	961		73	%	77	%	Total other revenue	$	2,152	$	1,187		$	965	81	%

Refinery. This represents refinery sales to third parties. These sales, which are at or near cost, increased ~~$455 million and $866~~$647 million compared to the ~~September 2020 and September 2019 quarters, respectively.~~March 2021 quarter. The increase in third-party refinery sales resulted from higher pricing and production during the March 2022 quarter 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 driven by higher pricing during the SeptemberMarch 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~~third party refinery sales recorded in other ~~revenue, during each period.~~revenue.

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~~As co-brand card spend and card acquisitions continue to be strong, revenues from our relationship with American Express increased in the ~~September 2021~~March 2022 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.2021.

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 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, including access provided to certain American Express cardholders, and codeshare revenues. The volume of these transactions has ~~fallen~~increased compared to the ~~September 2019~~March 2021 quarter due to the ~~impact~~ongoing recovery of ~~and our response to, the COVID-19 pandemic, including reduced capacity. However, compared to the September 2020 quarter, these transactions have increased due to the general recovery in~~ our business that continued to materialize in the ~~September 2021~~March 2022 quarter. Our ~~full~~ network of Delta Sky Club lounges was fully reopened by the end of July ~~2021.~~2021 after some lounges temporarily closed at the onset of the pandemic in 2020.

Delta Air Lines, Inc. ~~September 2021~~March 2022 Form 10-Q 2423

Item 2. MD&A - Results of Operations

Operating Expense


		Three Months Ended September 30,							2021 vs. 2020 % Increase (Decrease)		2021 vs. 2019 % Increase (Decrease)			Three Months Ended March 31,				Increase (Decrease)	% Increase (Decrease)
(in millions)	(in millions)	2021		2020		2019		2021 vs. 2020 % Increase (Decrease)					2022	2021		Increase (Decrease)
Salaries and related costs	Salaries and related costs	$	2,566	$	2,012	$	2,976		28	%	(14)	%	Salaries and related costs	$	2,826				$	624	28	%
Aircraft fuel and related taxes	Aircraft fuel and related taxes	1,552		486		2,239			219	%	(31)	%	Aircraft fuel and related taxes	2,092		1,017			1,075		106	%
Ancillary businesses and refinery	Ancillary businesses and refinery	1,079		561		279			92	%	287	%	Ancillary businesses and refinery	1,382		706			676		96	%
Contracted services	Contracted services	634		419		760			51	%	(17)	%	Contracted services	753		519			234		45	%
Depreciation and amortization	Depreciation and amortization	501		545		631			(8)	%	(21)	%	Depreciation and amortization	506		492			14		3	%

Landing fees and other rents	Landing fees and other rents	524		458		566			14	%	(7)	%	Landing fees and other rents	504		493			11		2	%
Regional carrier expense	Regional carrier expense	453		290		543			56	%	(17)	%	Regional carrier expense	491		401			90		22	%
Aircraft maintenance materials and outside repairs	Aircraft maintenance materials and outside repairs	433		106		424			308	%	2	%	Aircraft maintenance materials and outside repairs	465		294			171		58	%
Passenger commissions and other selling expenses	Passenger commissions and other selling expenses	308		100		597			208	%	(48)	%	Passenger commissions and other selling expenses	312		110			202		184	%
Passenger service	Passenger service	226		92		360			146	%	(37)	%	Passenger service	275		118			157		133	%
Aircraft rent	Aircraft rent	105		99		110			6	%	(5)	%	Aircraft rent	122		104			18		17	%
Restructuring charges	Restructuring charges	33		5,345		—			(99)	%	NM		Restructuring charges	(5)		(44)			39		(89)	%
Government grant recognition	Government grant recognition	(1,822)		(1,315)		—			39	%	NM		Government grant recognition	—		(1,186)			1,186		(100)	%
Profit sharing		—		—		517			—	%	(100)	%

Other	Other	357		250		487			43	%	(27)	%	Other	408		322			86		27	%
Total operating expense	Total operating expense	$	6,949	$	9,448	$	10,489		(26)	%	(34)	%	Total operating expense	$	10,131	$	5,548		$	4,583	83	%

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 remain significantly lower in the September 2021 quarter than in the September 2019 quarter. Operating expense decreased primarily due to recognition of the 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 taken across all aspects of our operation in response to the COVID-19 pandemic. During the September 2021 quarter, as distribution of effective vaccines continued, travel restrictions and advisories eased and customer confidence continued to grow despite the negative impact of a variant of the COVID-19 virus, we saw revenue and capacity return and related operating expense line 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 September 2020 and September 2019 quarters that were not primarily driven by the change in capacity or revenue. These include many of what are expected to be structural cost reduction measures and programs we implemented in response to the COVID-19 pandemic.

Salaries and Related Costs. ~~Actions taken as a result~~During 2021, we continued to offer voluntary unpaid leaves of ~~decreased demand for air travel due~~absence in response to the COVID-19 pandemic ~~had~~for periods ranging from 30 days up to 12 months and approximately 13,000 of our employees elected to take a ~~significant impact on salaries and related costs, leading to a decrease compared to~~leave of absence during the ~~September 2019~~March 2021 quarter. In the ~~second half~~March 2022 quarter we no longer offered these leaves of ~~2020, approximately 18,000 employees elected to participate in voluntary separation programs, which initially reduced our workforce~~absence as the program terminated by ~~approximately 20%, though some~~the end of ~~those positions have subsequently been filled. Since~~ the ~~beginning of~~September 2021 quarter. Additionally, we ~~have~~ hired approximately ~~8,000~~15,000 employees since the March 2021 quarter, of which approximately 4,000 were in the March 2022 quarter, in certain areas, including flight operations, ~~and~~ reservations and customer care and airport customer service, 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 have recalled approximately 1,700 pilots from inactive status back to active service. Additionally, approximately 40,000 employees took voluntary unpaid leaves of absence during the September 2020 quarter.returns. These actions resulted in higher salaries and related costs induring the ~~September 2021~~March 2022 quarter compared to the ~~September 2020~~March 2021 quarter.

In March 2022, we announced that eligible employees will receive a 4% base pay increase, effective May 1, 2022.

~~Delta Air Lines, Inc. September 2021 Form 10-Q 25~~

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

Aircraft Fuel and Related Taxes. Fuel expense ~~decreased $687 million~~increased $1.1 billion compared to the ~~September 2019~~March 2021 quarter primarily due to a ~~32% decrease in consumption, partially offset by a 1%~~71% increase in the market price of jet ~~fuel. Consumption decreased due to~~fuel and 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%~~38% increase in consumption on a comparable increase in ~~capacity, and a 75% increase in the~~capacity. We expect this elevated jet fuel cost to continue throughout 2022 due to recent market ~~price of jet fuel.~~disruptions, further exacerbated by geopolitical events.

Additionally, during the ~~September 2021~~March 2022 quarter, we purchased and retired ~~$29~~$47 million of carbon offset credits which relate to a portion of our airline segment's 2021 carbon ~~emissions generated by our airline segment.~~emissions. In the table below, these costs are shown in ~~environmental sustainability impact.~~the carbon offset costs line item.


Fuel expense and average price per gallon	Fuel expense and average price per gallon																	Fuel expense and average price per gallon
										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)			Three Months Ended March 31,				Increase (Decrease)	Three Months Ended March 31,				Increase (Decrease)
(in millions, except per gallon data)	(in millions, except per gallon data)	2021		2020		2019				2021		2020		2019				(in millions, except per gallon data)	2022		2021					2022				2021
Fuel purchase cost(1)	Fuel purchase cost(1)	$	1,601	$	449	$	2,313	$	(712)	$	2.03	$	1.16	$	2.00	$	0.03	Fuel purchase cost(1)	$	2,102	$	895		$	1,207	$	2.81	$	1.64		$	1.17
Environmental sustainability impact		29		—		—		29		0.04		—		—		0.04
Carbon offset costs																		Carbon offset costs	47		20			27		0.06		0.04			0.02
Fuel hedge impact	Fuel hedge impact	19		9		(25)		44		0.02		0.02		(0.02)		0.04		Fuel hedge impact	(4)		(23)			19		(0.01)		(0.04)			0.03
Refinery segment impact	Refinery segment impact	(97)		28		(49)		(48)		(0.12)		0.07		(0.04)		(0.08)		Refinery segment impact	(53)		125			(178)		(0.07)		0.23			(0.30)
Total fuel expense	Total fuel expense	$	1,552	$	486	$	2,239	$	(687)	$	1.97	$	1.25	$	1.94	$	0.03	Total fuel expense	$	2,092	$	1,017		$	1,075	$	2.79	$	1.87		$	0.92

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

Delta Air Lines, Inc. March 2022 Form 10-Q 24

Item 2. MD&A - Results of Operations

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. The refinery cost of sales increased ~~$455 million and $866~~$647 million compared to the ~~September 2020 and September 2019 quarters, respectively.~~March 2021 quarter. The increase in third-party refinery sales resulted from higher pricing and production during the March 2022 quarter 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 driven by higher pricing during the SeptemberMarch 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; however, compared to the September 2020 quarter these expenses increased due to higher levels of flying. In addition, $43 million of costs related to services performed by Delta Private Jets in the September 2019 quarter were recorded in ancillary businesses and refinery prior to the combination of that business with Wheels Up in January 2020.

~~Depreciation~~Contracted Services. During the March 2022 quarter, demand and ~~Amortization.~~ ~~Depreciation and amortization decreased~~capacity increased compared to the ~~September 2020 and September 2019 quarters primarily~~March 2021 quarter due to the ~~aircraft that were retired or impaired during 2020.~~ongoing recovery from the COVID-19 pandemic as discussed above. The continued restoration of our operations was the primary driver for the increase in contracted services.

Regional Carrier Expense. Regional carrier expense ~~decreased compared to the September 2019 quarter due to lower utilization of these carriers as a result of the overall reduced capacity and~~ increased compared to the ~~September 2020~~March 2021 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 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 approximately $200 million in the September 2020 quarter, and $1.4 billion in 2019, including approximately $360 million in the 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~~March 2021 quarter 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~~Passenger commissions and other selling expenses. Compared to the March 2021 ~~Form 10-Q 26~~

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

quarter, passenger revenue increased 151% in the March 2022 quarter, which was the primary reason for the increase in passenger commissions and other selling expenses.

~~Aircraft Rent.~~

Passenger service. Most aircraft operating lease expenses are recorded in aircraft rent and are contractually fixed. Therefore, the change in aircraft rent was more muted than our other operating expense line items, whenPassenger service increased compared to the ~~September 2019 and September 2020 quarters.~~March 2021 quarter due to the increased traffic discussed above.

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 ~~September 2021~~March 2022 quarter, we recognized ~~$33~~$5 million of net adjustments to ~~increase~~ certain of those restructuring charges, representing changes in our ~~estimates.~~estimates, compared to $44 million of net adjustments in the March 2021 quarter.

Government Grant Recognition. During the ~~nine months ended September 30,~~March 2021 quarter, we ~~received a total~~recognized $1.2 billion of ~~$6.4 billion under payroll support program extension agreements with the U.S. Department of the Treasury, which we~~government PSP grant proceeds as contra-expense that were ~~required to use~~used exclusively for the payment of employee wages, salaries and benefits. The support payments included grants totaling $4.5 billion that were recognized as contra-expense in 2021 over the period that the funds were used. Following the recognition of $2.7 billion during the six months ended June 30, 2021, we fully recognized the remaining $1.8 billion of the PSP3 grant during the three months ended September 30, 2021. The amount recognized in the September 2021 quarter exceeded the amount recognized from PSP1 during the September 2020 quarter due to the increase in eligible salaries and related costs, as 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)


		Nine Months Ended September 30,						2021 vs. 2020		2021 vs. 2019			Three Months Ended March 31,
(in millions)	(in millions)	2021		2020		2019		Favorable (Unfavorable)				(in millions)	2022		2021		Favorable (Unfavorable)
Interest expense, net	Interest expense, net	$	(1,014)	$	(564)	$	(228)	$	(450)	$	(786)	Interest expense, net	$	(274)	$	(361)	$	87
Impairments and equity method losses		(102)		(2,432)		(44)		2,330		(58)
Equity method results												Equity method results	—		(54)		54
Gain/(loss) on investments, net	Gain/(loss) on investments, net	251		(199)		(17)		450		268		Gain/(loss) on investments, net	(147)		262		(409)
Loss on extinguishment of debt	Loss on extinguishment of debt	(266)		—		—		(266)		(266)		Loss on extinguishment of debt	(25)		(56)		31
Pension and related benefit/(expense)												Pension and related benefit/(expense)	73		107		(34)
Miscellaneous, net	Miscellaneous, net	301		327		(130)		(26)		431		Miscellaneous, net	(44)		(15)		(29)
Total non-operating expense, net	Total non-operating expense, net	$	(830)	$	(2,868)	$	(419)	$	2,038	$	(411)	Total non-operating expense, net	$	(417)	$	(117)	$	(300)

Interest expense, net. Interest expense, ~~increased~~net includes interest expense and interest income. This decreased compared to the ~~prior year periods~~March 2021 quarter 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 reduction initiatives since the ~~onset~~December 2020 quarter. During 2021, we made payments of ~~the COVID-19 pandemic, interest expense, net was $314 million in the September 2021 quarter~~approximately $5.8 billion related to our debt and ~~$1.0~~finance leases, which included approximately $3.8 billion ~~in the nine months ended September 30, 2021.~~for early repayments. We have ~~begun reducing the total amount of interest expense by pre-paying~~continued to pay down our debt in ~~addition to periodic amortization~~the March 2022 quarter with $1.4 billion of payments on debt and ~~scheduled maturities.This began with early repayments made during the December 2020 quarter and continued with~~finance lease obligations, including $199 million for the early ~~repayment of our $1.5 billion secured term loan in the March 2021 quarter, approximately $450 million~~repurchase 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~~unsecured notes 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 $310 million during the December 2021 quarter.~~market. We continue to seek ~~selective~~ opportunities to pre-pay our debt, in addition to periodic amortization and scheduled maturities, during the remainder of ~~2021~~2022 and beyond.

~~Impairments and equity~~Equity method ~~losses.~~results. ~~Impairments and equity method losses in 2020 reflected our share of LATAM's and Grupo Aeroméxico's equity~~Equity method results ~~prior to their respective bankruptcy filings,~~in 2021 reflected our share of Virgin Atlantic's equity method ~~results and the impairments reducing the basis of these investments to zero during the June 2020 quarter.~~losses. See Note 4 of the Notes to the Condensed Consolidated Financial Statements for additional information on our equity investments.

Delta Air Lines, Inc. March 2022 Form 10-Q 25

Item 2. MD&A - Non-Operating Results

Gain/(loss) on investments, net. Changes in the valuation of investments accounted for at fair value are recorded in gain/(loss) on investments, net and are driven by changes in stock prices, foreign currency fluctuations and other valuation techniques for investments in companies without publicly-traded shares. See Note 4 of the Notes to the Condensed Consolidated Financial Statements for additional information on our equity 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~~mentioned above.

Pension and ~~EETCs mentioned above. See Note 5~~related benefit/(expense). Pension and related benefit/(expense) reflects the net periodic benefit/(cost) of our pension and other postretirement and postemployment benefit plans. Based on our level of funding at year-end, we have modified the strategic asset allocation mix to reduce the investment risk of the ~~Notes to~~portfolio. As a result of the ~~Condensed Consolidated Financial Statements~~lower risk profile of the portfolio, the weighted average expected long-term rate of return on our defined benefit pension plan assets for ~~additional information on the early repayment of debt.~~2022 net periodic benefit cost is 7.0%.

Miscellaneous, net. Miscellaneous, net primarily includes ~~pension and related benefit/(expense),~~ foreign exchange gains/(losses) and charitable contributions. ~~The nine months ended September 30, 2020 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~~We project that our annual effective tax rate for 2022 will be approximately 25%. In certain interim periods, we ~~are calculating~~may have adjustments to our ~~income~~net deferred tax ~~expense by applying to any pre-tax income/(loss) an effective~~assets as a result of changes in prior year estimates and tax ~~rate determined as if~~laws enacted during the ~~year to date~~ period, is the annual period. Using this method, for the three and nine months ended September 30, 2021, our effective tax rate was 21% and 13%, respectively. We believe that, at this time, this method for determiningwhich will impact the effective tax rate ~~is more reliable than projecting an annual effective tax rate due to the uncertainty of estimating annual pre-tax income/(loss) due to the impact of the COVID-19 pandemic.~~for that interim period.

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 ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2022, the refinery ~~progressively increased operations, ending the period~~operated at ~~close to~~near pre-pandemic production levels ~~which we expect to continue during~~and a summary of the ~~December 2021 quarter, subject to market conditions.~~refinery results is shown below.


Refinery segment financial information	Refinery segment financial information											Refinery segment financial information
		Three Months Ended September 30,						2021 vs. 2020		2021 vs. 2019			Three Months Ended March 31,
(in millions, except per gallon data)	(in millions, except per gallon data)	2021		2020		2019		% Increase (Decrease)				(in millions, except per gallon data)	2022		2021		Increase (Decrease)		% Increase (Decrease)
Exchange products	Exchange products	$	629	$	249	$	1,143	153	%	(45)	%	Exchange products	$	809	$	503	$	306	61	%
Sales of refined products	Sales of refined products	12		3		52		300	%	(77)	%	Sales of refined products	26		4		22		NM
Sales to airline segment	Sales to airline segment	183		—		304		NM		(40)	%	Sales to airline segment	291		—		291		NM
Third party refinery sales	Third party refinery sales	872		417		6		109	%	NM		Third party refinery sales	1,187		540		647		120	%
Operating revenue	Operating revenue	$	1,696	$	669	$	1,505	154	%	13	%	Operating revenue	$	2,313	$	1,047	$	1,266	121	%

Operating income (loss)		$	97	$	(28)	$	49	NM		98	%
Refinery segment impact on average price per fuel gallon		$	(0.12)	$	0.07	$	(0.04)	NM		200	%
Operating income/(loss)												Operating income/(loss)	$	53	$	(125)	$	178	NM
Refinery segment impact on airline average price per fuel gallon												Refinery segment impact on airline average price per fuel gallon	$	(0.07)	$	0.23	$	(0.30)	NM

Refinery revenues increased compared to the three months ended March 31, 2021 due primarily to higher pricing and production during the March 2022 quarter compared to the March 2021 quarter. The refinery generated operating income of $53 million in the March 2022 quarter compared to an operating loss of $125 million in the March 2021 quarter which was driven by the revenue increase described above, and partially offset by increased expense associated with the higher levels of production.

Delta Air Lines, Inc. ~~September 2021~~March 2022 Form 10-Q 3226

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 nine months ended September 30, 2019 due to lower refinery run rates and lower pricing for refined products in the first half of 2021. Operating income was higher in the three months ended September 30, 2021 as compared to prior periods due to increased production and 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, which was partially offset by cost savings resulting from decreased production levels compared to the nine months ended September 2019.

A refinery is subject to annual U.S. Environmental Protection Agency ("EPA") requirements to blend renewable fuels into the gasoline and on-road diesel fuel it produces. Alternatively, a refinery may purchase ~~RINs~~Renewable Identification Numbers ("RINs") from third parties in the secondary market. The Monroe refinery purchases the majority of its RINs in the secondary market. Observable RINs prices increased ~~through the first half of 2021, and declined~~slightly during the ~~September 2021 quarter.~~March 2022 quarter and Monroe incurred ~~$44 million and $453~~$85 million in RINs compliance costs during the three ~~and nine~~ months ended ~~September 30, 2021 as~~March 31, 2022 compared to ~~$25 million and $78~~$158 million in the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021. The higher expense in the March 2021 quarter resulted from a larger increase in observable RINs prices during that period compared to the slight increase in the March 2022 quarter.

At March 31, 2022, we had a net fair value obligation of $430 million related to RINs compliance costs. Our obligation as of March 31, 2022 was calculated using the proposed Renewable Fuel Standard ("RFS") volume requirements, which were issued in December 2021. The EPA has not finalized the compliance deadlines to retire our obligations for 2020 ~~respectively.~~and 2021, but we expect those deadlines to be within one year of the effective date of the new RFS volume requirements.

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 Form 10-Q 33~~

~~Item 2. MD&A - Operating Statistics~~

Operating Statistics


		Three Months Ended September 30,									2021 vs. 2020 % Increase (Decrease)		2021 vs. 2019 % Increase (Decrease)			Three Months Ended March 31,						2022 vs. 2021 Increase (Decrease)						2022 vs. 2019 Increase (Decrease)
Consolidated(1)	Consolidated(1)	2021			2020			2019							Consolidated(1)	2022	2021		2019
Revenue passenger miles (in millions) ("RPM")	Revenue passenger miles (in millions) ("RPM")	43,057			11,545			66,862			273	%	(36)	%				Revenue passenger miles (in millions) ("RPM")	38,700			17,948			51,617			116	%	(25)	%
Available seat miles (in millions) ("ASM")	Available seat miles (in millions) ("ASM")	54,083			28,290			75,742			91	%	(29)	%				Available seat miles (in millions) ("ASM")	51,810			40,118			62,416			29	%	(17)	%
Passenger mile yield	Passenger mile yield	16.70		¢	16.78		¢	17.07		¢	—	%	(2)	%				Passenger mile yield	17.85		¢	15.31		¢	17.93		¢	17	%	—	%
Passenger revenue per available seat mile ("PRASM")	Passenger revenue per available seat mile ("PRASM")	13.30		¢	6.85		¢	15.06		¢	94	%	(12)	%				Passenger revenue per available seat mile ("PRASM")	13.33		¢	6.85		¢	14.83		¢	95	%	(10)	%
Total revenue per available seat mile ("TRASM")	Total revenue per available seat mile ("TRASM")	16.93		¢	10.82		¢	16.58		¢	56	%	2	%				Total revenue per available seat mile ("TRASM")	18.04		¢	10.34		¢	16.78		¢	74	%	8	%
TRASM, adjusted(2)	TRASM, adjusted(2)	15.31		¢	9.35		¢	16.51		¢	64	%	(7)	%				TRASM, adjusted(2)	15.75		¢	9.00		¢	16.63		¢	75	%	(5)	%
Cost per available seat mile ("CASM")	Cost per available seat mile ("CASM")	12.85		¢	33.40		¢	13.85		¢	(62)	%	(7)	%				Cost per available seat mile ("CASM")	19.56		¢	13.83		¢	15.14		¢	41	%	29	%
CASM-Ex(2)	CASM-Ex(2)	11.67		¢	15.96		¢	10.15		¢	(27)	%	15	%				CASM-Ex(2)	13.24		¢	13.01		¢	11.49		¢	2	%	15	%

Passenger load factor	Passenger load factor	80		%	41		%	88		%	39	pts	(8)	pts				Passenger load factor	75		%	45		%	83		%	30	pts	(8)	pts
Fuel gallons consumed (in millions)	Fuel gallons consumed (in millions)	789			391			1,154			102	%	(32)	%				Fuel gallons consumed (in millions)	751			545			962			38	%	(22)	%
Average price per fuel gallon(3)	Average price per fuel gallon(3)	$	1.97		$	1.25		$	1.94		58	%	2	%				Average price per fuel gallon(3)	$	2.79		$	1.87		$	2.06		49	%	35	%
Average price per fuel gallon, adjusted(2)(3)	Average price per fuel gallon, adjusted(2)(3)	$	1.94		$	1.25		$	1.96		55	%	(1)	%				Average price per fuel gallon, adjusted(2)(3)	$	2.79		$	1.91		$	2.04		46	%	37	%

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 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 ~~environmentalsustainability activity.~~carbon offset costs.

Delta Air Lines, Inc. ~~September 2021~~March 2022 Form 10-Q 3427

Item 2. MD&A - Fleet Information

Fleet Information

Our operating aircraft fleet, purchase commitments and options at ~~September 30, 2021~~March 31, 2022 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 our aircraft. Accordingly, as of September 30, 2021, less than 5% of our mainline and regional aircraft were temporarily parked compared to 30% as of September 30, 2020.

Mainline aircraft information by fleet type
Current Fleet(1)
Commitments(2)
Fleet Type Owned Finance Lease Operating Lease Total Average Age (Years) Purchase Options
B-717-200 9 37 8 54 20.3
B-737-800 73 4 — 77 20.1
B-737-900ER 83 — 49 132 5.1 27
B-757-200 99 1 — 100 24.2
B-757-300 16 — — 16 18.6
B-767-300ER 40 — — 40 25.1
B-767-400ER 21 — — 21 20.8
A220-100 37 4 — 41 2.0 4
A220-300 9 — — 9 0.8 41 50
A319-100 55 2 — 57 19.6
A320-200 52 4 — 56 25.7
A321-200 65 22 36 123 2.9 4
A321-200neo — — — — — 155 70
A330-200 11 — — 11 16.5
A330-300 28 — 3 31 12.7
A330-900neo 3 3 5 11 1.3 26
A350-900 13 — 5 18 3.1 26
Total 614 77 106 797 13.9 283 120


Mainline aircraft information by fleet type
	Current Fleet(1)					Commitments
Fleet Type	Owned	Finance Lease	Operating Lease	Total	Average Age (Years)	Purchase	Options
A220-100	41	4	—	45	2.3
A220-300	10	—	—	10	1.2	40	50
A319-100	55	2	—	57	20.1
A320-200	56	—	—	56	26.2
A321-200	69	22	36	127	3.3
A321-200neo	1	—	—	1	—	154	70
A330-200	11	—	—	11	17.0
A330-300	28	—	3	31	13.2
A330-900neo	6	3	5	14	1.5	23
A350-900	15	—	11	26	3.6	18
B-717-200	10	46	4	60	20.7
B-737-800	73	4	—	77	20.6
B-737-900ER	104	1	49	154	6.1	5
B-757-200	100	—	—	100	24.6
B-757-300	16	—	—	16	19.1
B-767-300ER	41	—	—	41	25.6
B-767-400ER	21	—	—	21	21.3
Total	657	82	108	847	14.0	240	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 six A350-900 lease commitments in 2021 incremental to our order book with Airbus.~~ Includes both active and temporarily parked aircraft.

The table below summarizes the aircraft operated by regional carriers on our behalf at ~~September 30, 2021.~~March 31, 2022.


Regional aircraft information by fleet type and carrier	Regional aircraft information by fleet type and carrier							Regional aircraft information by fleet type and carrier
		Fleet Type							Fleet Type(1)
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)~~(2)	Endeavor Air, Inc.~~(1)~~(2)	47	13	113	—	—	173	Endeavor Air, Inc.~~(1)~~(2)	51	18	124	—	—	193
SkyWest Airlines, Inc.	SkyWest Airlines, Inc.	—	5	40	—	71	116	SkyWest Airlines, Inc.	9	6	44	—	71	130
Republic Airways, Inc.	Republic Airways, Inc.	—	—	—	8	46	54	Republic Airways, Inc.	—	—	—	11	46	57
Total	Total	47	18	153	8	117	343	Total	60	24	168	11	117	380

(1)Includes both active and temporarily parked aircraft.

~~(1)~~(2)Endeavor Air, Inc. is a wholly owned subsidiary of Delta.

Delta Air Lines, Inc. ~~September 2021~~March 2022 Form 10-Q 3528

Item 2. MD&A - Financial Condition and Liquidity

Financial Condition and Liquidity

As of ~~September 30, 2021,~~March 31, 2022, we had ~~$15.8~~$12.8 billion in cash, cash equivalents, short-term investments and aggregate principal amount committed and available to be drawn under our revolving credit ~~facilities.~~facilities ("liquidity"). We expect to meet our liquidity needs for the next twelve months with cash and cash equivalents, short-term investments, 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. By 2024, we expect liquidity to be between $5 billion and $6 billion as we work to reduce our financial obligations and reinvest in the business.

Sources and Uses of Liquidity

Operating Activities

Operating activities in the nine months ended September 30, 2021 provided $2.7 billion compared to using $2.5 billion and providing $7.5 billion in the nine months ended September 30, 2020 and 2019, respectively. As described above, we are experiencing a domestic demand recovery and expect this to continue through the end of 2021. If the demand environment continues to evolve in this manner, we expect to generateWe generated positive cash flows from operations ~~including funds received~~of $1.8 billion and $691 million in the three months ended March 31, 2022 and 2021, respectively. We expect to continue generating positive cash flows from operations during the ~~government support programs described in "Financing Activities" below, during 2021.~~remainder of 2022.

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~~advance ticket sales grow prior to the summer peak travel season and decreases during the summer and fall months. ~~However,~~

Since the ~~reduction~~beginning of the COVID-19 pandemic in the March 2020 quarter, reduced 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, which has ~~impacted~~been impacting the typical seasonal trend of air traffic ~~liability since March 2020.~~

~~Domestic~~liability. However, domestic demand ~~has improved since the latter half of~~continued to improve throughout the March ~~2021~~2022 quarter as consumers have regained confidence to travel and increased ticket purchases for travel further in advance. ~~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~~Air traffic liability increased approximately $2.8 billion during the March 2022 quarter, which exceeds our historical seasonal build, reflecting the continued restoration of ~~the COVID-19 virus; however, in the month of September 2021, domestic leisure bookings approached September 2019 levels.~~our business. Our air traffic liability remains above historical ~~September quarter~~ levels with no material change to the travel ~~credits representing approximately 40% of the~~credit balance ~~as of September 30,~~compared to December 31, 2021.

Fuel. Fuel expense represented approximately ~~22%~~21% and 18% of our total operating expense for the ~~nine~~three months ended ~~September 30, 2021.~~March 31, 2022 and 2021, respectively. 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~~The average fuel price per gallon increased substantially during the March 2022 quarter. We expect this elevated jet fuel cost to continue throughout 2022 due to recent market disruptions, further exacerbated by geopolitical events. Fuel consumption 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~~also higher in the ~~December 2021~~March 2022 quarter ~~than the nine months ended September 30, 2021. As demand continues to increase and capacity returns, we expect fuel consumption in the December 2021 quarter to increase~~ compared to the ~~December 2020~~March 2021 quarter ~~although~~due to the increase in capacity. We expect that fuel consumption will continue to increase throughout 2022 as we ~~still~~ expect it to ~~be lower than the December 2019 quarter.~~return closer to pre-pandemic levels of capacity and demand for air travel, partially offset by increases in fuel efficiency of our fleet.

~~Employee Benefit Obligations.~~ New York-JFK Airport Expansion.~~We sponsor defined benefit pension~~ During 2021, the Port Authority of New York and New Jersey ("Port Authority") approved modified project plans ~~for eligible employees~~to renovate Terminal 4 and ~~retirees. These plans are closed~~add 10 new gates and other facilities enabling us to ~~new entrants~~move out of Terminal 2 and ~~are frozen for future benefit accruals. Our funding obligations for these plans are governed~~consolidate our operations at Terminal 4. The project is estimated to cost approximately $1.5 billion and will be funded primarily with bonds issued in April 2022 by the ~~Employee Retirement Income Security Act, as modified~~New York Transportation Development Corporation ("NYTDC") for which our landlord, JFK International Air Terminal LLC, is the obligor. Additionally, in April 2022, we amended our sublease to provide for the Terminal 4 expansion project, including the adjustment of our subleased space and rentals. We have not completed our assessment of the project accounting, but we expect that this will increase our lease payments and lease liability and associated ROU asset in 2023. Construction started in late 2021, with Delta's portion of the project estimated to be complete by the ~~Pension Protection Act~~end of 2006. We have no minimum funding requirements for our defined benefit pension plans in 2021. However, we voluntarily contributed $1.5 billion to these plans during the June 2021 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. In the nine months ended September 30, 2021, $435 million of this charge was disbursed in cash payments to participants in 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 2023 and beyond.2023.

Delta Air Lines, Inc. ~~September 2021~~March 2022 Form 10-Q 3629

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.

Investing Activities

Short-Term Investments. During the ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2022, we redeemed a net of ~~$1.4~~$1.1 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 ~~$2.0~~$1.8 billion and ~~$3.9 billion~~$438 million for the ~~nine~~three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2019,~~ respectively. Our capital expenditures ~~during the nine months ended September 30, 2021 were~~are primarily related to the purchases of aircraft, airport construction projects, 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~~2022 capital expenditures of approximately ~~$3.2~~$6.0 billion ~~which may vary depending on financing decisions,~~ will be primarily for aircraft, including deliveries and advance deposit payments, as well as fleet modifications and technology ~~enhancements.~~enhancements and may vary depending on financing decisions.

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~~is being phased to limit passenger inconvenience. Due to an acceleration effort that commenced in 2020, completion is ~~now~~ expected by 2025.

We currently expect our net 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~~$750 million on this project during ~~2021,~~2022, of which ~~$709~~$223 million was incurred in the ~~nine~~three months ended ~~September 30, 2021.~~March 31, 2022.

Los Angeles International Airport ("LAX"). We have an ongoing terminal redevelopment project at LAX to modernize, update and provide post-security connection to Terminals 2 and 3. Construction is expected to be completed in 2023. The project is expected to cost approximately $2.3 billion. A substantial majority of the project costs are being funded through the Regional Airports Improvement Corporation ("RAIC"), a California public benefit corporation, using a revolving credit facility provided by a group of lenders. The credit facility was executed in 2017 and we have guaranteed the obligations of the RAIC under the credit facility. The revolving credit facility agreement was amended in January 2022, increasing the revolver capacity from $800 million to $1.1 billion.

Financing Activities

Debt and Finance Leases. In the ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2022, we had cash outflows of approximately ~~$4.7~~$1.4 billion related to repayments of our debt and finance ~~leases,~~lease obligations, including ~~approximately $3.3 billion~~$199 million for the early ~~repayment~~repurchase of ~~the term loan~~various secured ~~by certain of our slots, gates~~notes and ~~routes, various EETCs, certain notes through a cash tender offer and other various~~ unsecured ~~notes, secured certificates and SkyMiles term loan.~~notes. We continue to seek ~~selective~~ opportunities to pre-pay our debt, in addition to periodic amortization and scheduled maturities, during the remainder of ~~2021~~2022 and beyond.

The principal amount of our debt and finance leases was ~~$28.0~~$25.8 billion at ~~September 30, 2021.~~March 31, 2022.

~~Government Support Programs.~~ In January 2021, we entered into a payroll support program extension agreement with the U.S. Department of the Treasury. During the six months ended June 30, 2021, we received a total of $3.3 billion in payroll support payments under this extension agreement. These support payments consisted of $2.3 billion in a grant and $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.

In April 2021, we entered into a Payroll Support Program 3 Agreement with the 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 these programs, see Note 5 of the Notes to the Condensed Consolidated Financial Statements.~~

~~Delta Air Lines, Inc. September 2021 Form 10-Q 37~~

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

Undrawn Lines of Credit

Covenants

We were in compliance with the covenants in our debt agreements at ~~September~~March 31, 2022.

Delta Air Lines, Inc. March 2022 Form 10-Q 30 ~~2021.~~

Item 2. MD&A - Critical Accounting Estimates

Critical Accounting Estimates

~~For~~Except as set forth below, 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.

Defined Benefit Pension Plans

Expected Long-Term Rate of Return. Based on our level of funding at year-end, we have modified the strategic asset allocation mix to reduce the investment risk of the portfolio. As a result of the lower risk profile of the portfolio, the weighted average expected long-term rate of return on our defined benefit pension plan assets for 2022 net periodic benefit cost is 7.0%.

Delta Air Lines, Inc. ~~September 2021~~March 2022 Form 10-Q 3831

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 ("non-GAAP financial measures").~~GAAP. Under the U.S. 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~~

Included below are reconciliations ~~presented below~~ of ~~the~~ non-GAAP measures used inwithin this Form 10-Q to the most directly comparable GAAP financial measures. Reconciliations below may not calculate exactly due to rounding.

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

~~The following table shows a reconciliation of pre-tax income/(loss) (a~~ These reconciliations include certain adjustments to GAAP ~~measure) to pre-tax income/(loss), adjusted (a non-GAAP financial measure). Pre-tax income/(loss), adjusted excludes the following items~~measures, which are directly related to the impact of COVID-19 and our ~~response for~~response. These adjustments are made to provide comparability ~~with~~between the ~~prior period:~~reported periods, if applicable, as indicated below:

•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 ~~September 2021~~March 2022 quarter, we recognized ~~$33~~$5 million of net adjustments to certain of those restructuring charges, representing changes in our ~~estimates.~~estimates, compared to $44 million of net adjustments in the March 2021 quarter.

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

We also regularly adjust ~~pre-tax income/(loss)~~certain GAAP measures for the following items, ~~to determine pre-tax income/(loss), adjusted~~if applicable, for the reasons ~~described below.~~indicated 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.~~period, and therefore we remove this impact to allow investors to better understand and analyze our core performance. 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, other valuation techniques for investments in companies without publicly-traded 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 Form 10-Q 39~~

~~Item 2. MD&A - Supplemental Information~~

Pre-tax income/(loss), adjusted reconciliation
Three Months Ended September 30,
(in millions) 2021 2020 2019
Pre-tax income/(loss) $ 1,532 $ (6,859) $ 1,947
Adjusted for:
Restructuring charges 33 5,345 —
Government grant recognition (1,822) (1,315) —
Impairments and equity method losses 49 114 —
Pension settlement charges — 30 —
Loss on extinguishment of debt 183 — —
MTM adjustments and settlements on hedges 19 (3) (25)
Equity investment MTM adjustments — — 10
MTM adjustments on investments 223 99 35
Delta Private Jets adjustment — — 1
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). Operating expense, adjusted excludes restructuring charges and government grant recognition, which, as discussed above under the heading pre-tax income/(loss), 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), adjusted. We also adjust operating expense for the following item for the reason described below:

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

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

~~Delta Air Lines, Inc. September 2021 Form 10-Q 40~~

~~Item 2. MD&A - Supplemental Information~~

~~Fuel 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), adjusted.

Fuel expense, adjusted reconciliation
Average Price Per Gallon
Three Months Ended September 30, Three Months Ended September 30,
(in millions, except per gallon data) 2021 2020 2019 2021 2020 2019
Total fuel expense $ 1,552 $ 486 $ 2,239 $ 1.97 $ 1.25 $ 1.94
Adjusted for:
MTM adjustments and settlements on hedges (19) 3 25 (0.02) 0.01 0.02
Delta Private Jets adjustment — — (7) — — (0.01)
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), adjusted.

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

~~Delta Air Lines, Inc. September 2021 Form 10-Q 41~~

~~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). CASM-Ex excludes restructuring charges and government grant recognition, which, as discussed above under the heading pre-tax income/(loss), adjusted, are directly related to the impact of the COVID-19 pandemic and our response. We 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), adjusted. We also adjust CASM for the following items to determine CASM-Ex for the reasons described 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
Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2019 2021 2020 2019
CASM (cents) 12.85 ¢ 33.40 ¢ 13.85 ¢ 13.18 ¢ 25.30 ¢ 14.46 ¢
Adjusted for:
Restructuring charges (0.06) (18.89) — — (7.98) —
Government grant recognition 3.37 4.65 — 3.16 2.65 —
Aircraft fuel and related taxes (2.87) (1.72) (2.96) (2.84) (2.51) (3.10)
Third-party refinery sales (1.61) (1.47) (0.01) (1.53) (0.73) (0.05)
Profit sharing — — (0.68) — — (0.60)
Delta Private Jets adjustment — — (0.05) — — (0.06)
CASM-Ex 11.67 ¢ 15.96 ¢ 10.15 ¢ 11.96 ¢ 16.74 ¢ 10.66 ¢
•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.


Operating expense, adjusted reconciliation
	Three Months Ended March 31,
(in millions)	2022		2021		2019
Operating expense	$	10,131	$	5,548	$	9,452
Adjusted for:
Restructuring charges	5		44		—
Government grant recognition	—		1,186		—
MTM adjustments and settlements on hedges	4		23		(8)
Third-party refinery sales	(1,187)		(540)		(48)
Delta Private Jets adjustment	—		—		(42)
Operating expense, adjusted	$	8,954	$	6,261	$	9,354

Delta Air Lines, Inc. March 2022 Form 10-Q 32

Item 2. MD&A - Supplemental Information


Fuel expense, adjusted reconciliation
							Average Price Per Gallon
	Three Months Ended March 31,						Three Months Ended March 31,
(in millions, except per gallon data)	2022		2021		2019		2022		2021		2019
Total fuel expense	$	2,092	$	1,017	$	1,978	$	2.79	$	1.87	$	2.06
Adjusted for:
MTM adjustments and settlements on hedges	4		23		(8)		0.01		0.04		(0.01)
Delta Private Jets adjustment	—		—		(7)		—		—		(0.01)
Total fuel expense, adjusted	$	2,097	$	1,040	$	1,963	$	2.79	$	1.91	$	2.04


TRASM, adjusted reconciliation
	Three Months Ended March 31,
	2022		2021		2019
TRASM (cents)	18.04	¢	10.34	¢	16.78	¢
Adjusted for:
Third-party refinery sales	(2.29)		(1.35)		(0.08)
Delta Private Jets adjustment	—		—		(0.07)
TRASM, adjusted	15.75	¢	9.00	¢	16.63	¢


CASM-Ex reconciliation
	Three Months Ended March 31,
	2022		2021		2019
CASM (cents)	19.56	¢	13.83	¢	15.14	¢
Adjusted for:
Restructuring charges	0.01		0.11		—
Government grant recognition	—		2.96		—
Aircraft fuel and related taxes	(4.04)		(2.54)		(3.17)
Third-party refinery sales	(2.29)		(1.35)		(0.08)
Profit sharing	—		—		(0.35)
Delta Private Jets adjustment	—		—		(0.05)
CASM-Ex	13.24	¢	13.01	¢	11.49	¢

Delta Air Lines, Inc. ~~September 2021~~March 2022 Form 10-Q 4233

Item 2. MD&A - Supplemental Information

Free Cash Flow

The following table shows a reconciliation of net cash provided ~~by/(~~by or used ~~in)~~in operating and investing 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)/purchases~~redemptions of short-term investments. Net ~~(redemptions)/purchases~~redemptions 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~~because management believes investors should be informed that a portion of these capital expenditures from airport construction projects are either reimbursed by a third party or funded with restricted cash specific 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.~~these projects.


Free cash flow reconciliation	Free cash flow reconciliation							Free cash flow reconciliation
		Three Months Ended September 30,							Three Months Ended March 31,
(in millions)	(in millions)	2021		2020		2019		(in millions)	2022		2021		2019
Net cash provided by/(used in) operating activities		$	151	$	(2,575)	$	2,245
Net cash provided by operating activities								Net cash provided by operating activities	$	1,771	$	691	$	1,942
Net cash used in investing activities	Net cash used in investing activities	(384)		(1,144)		(1,125)		Net cash used in investing activities	(749)		(60)		(1,096)
Adjusted for:	Adjusted for:							Adjusted for:
Net (redemptions)/purchases of short-term investments		(452)		745		—
Net redemptions of short-term investments								Net redemptions of short-term investments	(1,120)		(210)		(206)
Strategic investments and related	Strategic investments and related	—		235		81		Strategic investments and related	107		(19)		—
Net cash flows related to certain airport construction projects and other	Net cash flows related to certain airport construction projects and other	222		208		221		Net cash flows related to certain airport construction projects and other	188		308		111
Free cash flow	Free cash flow	$	(463)	$	(2,531)	$	1,422	Free cash flow	$	197	$	710	$	751

Delta Air Lines, Inc. ~~September 2021~~March 2022 Form 10-Q 4334

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 Chief Financial 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 Chief Financial Officer, concluded that the controls and procedures were effective as of ~~September 30, 2021~~March 31, 2022 to ensure that material information was accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

During the three months ended ~~September 30, 2021,~~March 31, 2022, 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 2022 Form 10-Q 4435

Item 2. Unregistered Sales of Equity Securities

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 ~~September 2021~~March 2022 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 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


Shares purchased / withheld from employee awards during the March 2022 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 2022	24,568	$	39.43	24,568	$	—
February 2022	706,901	$	41.06	706,901	$	—
March 2022	1,474	$	37.49	1,474	$	—
Total	732,943			732,943

ITEM 5. OTHER INFORMATION

Anchor Tenant Agreement Supplement

We previously announced plans to enhance and expand our facilities at Terminal 4 at JFK to strengthen our competitive position and customer service in New York City and to enable Delta to move out of Terminal 2 and consolidate our operations at Terminal 4. The Terminal 4 expansion project includes ten new gates, certain other new or expanded facilities and enhancements to existing terminal facilities. The project is estimated to cost approximately $1.5 billion, and construction started in late 2021 with Delta's portion of the project estimated to be complete by the end of 2023.

As previously disclosed, we are the sublessee under an Anchor Tenant Agreement with JFK International Air Terminal LLC (“IAT”), a private party that operates Terminal 4 at JFK under a long term lease with the Port Authority of New York and New Jersey (the “Port Authority”). Delta has a non-controlling membership interest in the sole member of IAT. The Anchor Tenant Agreement covers our occupancy of Terminal 4, both before and after completion of the Terminal 4 expansion.

On April 8, 2022, the New York Transportation Development Corporation (the “Issuer”) issued approximately $1.32 billion of tax-exempt special facility revenue bonds (the “Series 2022 Bonds”), the proceeds of which will be used in part to fund a portion of the costs of the Terminal 4 expansion project. Payments of principal and interest on the Series 2022 Bonds will be payable from payments to be made by IAT to the Issuer pursuant to a loan agreement between the two parties, and such payments will be made from the revenues derived from IAT’s operation and management of Terminal 4 at JFK, after payment of certain expenses.

On April 8, 2022, we entered into the Sixth Supplement to the Anchor Tenant Agreement with IAT pursuant to which we will be obligated to pay additional rentals to IAT that allow IAT to (i) recover from us an amount equal to the allocable debt service on the Series 2022 Bonds and (ii) recover from us an amount equal to our share of IAT’s costs allocated to any additional common/shared areas of Terminal 4. In addition to our monthly rental obligations, we will also pay for a portion of the costs of the Terminal 4 expansion project through direct payment of certain costs by us.

We currently estimate that the annual rent under the Anchor Tenant Agreement for 2024 (the first full year following completion of Delta’s portion of the Terminal 4 expansion) will be approximately $300 million. The actual amount will depend on various factors, including, among others, the actual costs of construction, our share of activity at Terminal 4, including passenger and baggage counts, and IAT’s actual expenses of operating Terminal 4.

Delta Air Lines, Inc. ~~September 2021~~March 2022 Form 10-Q 4536

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) Amendment to Amended 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).*

4.1 Description of Registrant's Securities (Filed as Exhibit 4.1 to Delta's Annual Report on Form 10-K for the year ended December 31, 2020).*

10.1 ~~Amendment No. 4 dated August 20, 2021 to Airbus A321 NEO Aircraft Purchase~~Model Award Agreement ~~dated as of December 15, 2017 between Airbus S.A.S. and~~for the Delta Air Lines, Inc. (“2022 ~~Amendment No.~~ 4 ”)*

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

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 ~~September~~March 31 ~~30, 2021~~, 20 2 2

31.2 Certification by Delta's Chief Financial Officer with respect to Delta's Quarterly Report on Form 10-Q for the quarterly period ended ~~September~~M ~~30, 2021~~arch 31 , 202 2

32 Certification pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code by Delta's Chief Executive Officer and Chief Financial Officer with respect to Delta's Quarterly Report on Form 10-Q for the quarterly period ended ~~September~~March 31 ~~30, 2021~~, 202 2

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 ~~September 30, 2021,~~March 31, 2022, formatted in Inline XBRL (included in Exhibit 101)

_______________

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

Delta Air Lines, Inc. ~~September 2021~~March 2022 Form 10-Q 4637

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
			Senior Vice President - Controller
			(Principal Accounting Officer)
~~October~~April 13, ~~2021~~2022

Delta Air Lines, Inc. ~~September 2021~~March 2022 Form 10-Q 4738


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

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

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

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

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


Components of accumulated other comprehensive loss
(in millions)	Pension and Other Benefit Liabilities(2)		Other		Total
Balance at January 1, 2021 (net of tax effect of $1,764)	$	(9,078)	$	40	$	(9,038)
Changes in value (net of tax effect of $1)	3		—		3
Reclassifications into earnings (net of tax effect of $71)(1)	235		—		235
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 $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)


			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


Mainline aircraft information by fleet type
	Current Fleet(1)					Commitments(2)
Fleet Type	Owned	Finance Lease	Operating Lease	Total	Average Age (Years)	Purchase	Options
B-717-200	9	37	8	54	20.3
B-737-800	73	4	—	77	20.1
B-737-900ER	83	—	49	132	5.1	27
B-757-200	99	1	—	100	24.2
B-757-300	16	—	—	16	18.6
B-767-300ER	40	—	—	40	25.1
B-767-400ER	21	—	—	21	20.8
A220-100	37	4	—	41	2.0	4
A220-300	9	—	—	9	0.8	41	50
A319-100	55	2	—	57	19.6
A320-200	52	4	—	56	25.7
A321-200	65	22	36	123	2.9	4
A321-200neo	—	—	—	—	—	155	70
A330-200	11	—	—	11	16.5
A330-300	28	—	3	31	12.7
A330-900neo	3	3	5	11	1.3	26
A350-900	13	—	5	18	3.1	26
Total	614	77	106	797	13.9	283	120