UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


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

For the quarterly period ended March 31, ~~2022~~2023


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

Commission File Number 001-5424

DELTA AIR LINES, INC.

(Exact name of registrant as specified in its charter)


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

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

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

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

Title of each class

Trading Symbol

Name of each exchange on which registered

Common Stock, par value $0.0001 per share

DAL

New York Stock Exchange

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

Yes ☑ No ☐

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

Yes ☑ No ☐

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

Large accelerated filer

☑

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

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

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

Yes ☐ No ☑

Number of shares outstanding by each class of common stock, as of March 31, ~~2022:~~2023:

Common Stock, $0.0001 par value - ~~641,076,463~~642,716,623 shares outstanding

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

Forward Looking Statements

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

FORWARD-LOOKING STATEMENTS

Statements in this Form 10-Q (or otherwise made by us or on our behalf) that are not historical facts, including statements about our estimates, expectations, beliefs, intentions, projections, goals, aspirations, commitments or strategies for the future, may be "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from historical experience or our present expectations. Known material risk factors applicable to Delta are described in "Item 1A. Risk Factors" of our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2021~~2022 ("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. | March ~~2022~~2023 Form 10-Q 1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

Delta Air Lines, Inc.

Results of Review of Interim Financial Statements

We have reviewed the accompanying consolidated balance sheet of Delta Air Lines, Inc. (the Company) as of March 31, ~~2022,~~2023, the related condensed consolidated statements of operations and comprehensive loss, condensed consolidated statements of cash flows, and consolidated statements of stockholders' equity for the three-month periods ended March 31, ~~2022~~2023 and ~~2021,~~2022, 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, ~~2021,~~2022, the related consolidated statements of operations, comprehensive 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 ~~11, 2022,~~10, 2023, we expressed an unqualified audit opinion on those ~~consolidated financial statements.~~Consolidated Financial Statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of December 31, ~~2021,~~2022, 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~~Securities and Exchange Commission ("SEC") and the PCAOB. We conducted our review in accordance with the standards of the PCAOB. A review of interim financial statements consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.


			/s/ Ernst & Young LLP
Atlanta, Georgia
April 13, ~~2022~~2023

Delta Air Lines, Inc. | March ~~2022~~2023 Form 10-Q 2

Financial Statements

DELTA AIR LINES, INC.

Consolidated Balance Sheets

(Unaudited)

(in millions, except share data) March 31,
2022 December 31,
2021
ASSETS
Current Assets:
Cash and cash equivalents $ 7,705 $ 7,933
Short-term investments 2,250 3,386
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 1,292 1,098
Prepaid expenses and other 1,434 1,119
Total current assets 15,720 15,940
Noncurrent Assets:
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 7,402 7,237
Goodwill 9,753 9,753
Identifiable intangibles, net of accumulated amortization of $895 and $893 5,999 6,001
Equity investments 1,999 1,712
Deferred income taxes, net 1,534 1,294
Other noncurrent assets 1,299 1,773
Total noncurrent assets 58,028 56,519
Total assets $ 73,748 $ 72,459
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current maturities of debt and finance leases $ 1,116 $ 1,782
Current maturities of operating leases 744 703
Air traffic liability 8,809 6,228
Accounts payable 4,810 4,240
Accrued salaries and related benefits 2,288 2,457
Loyalty program deferred revenue 3,038 2,710
Fuel card obligation 1,100 1,100
Other accrued liabilities 2,155 1,746
Total current liabilities 24,060 20,966
Noncurrent Liabilities:
Debt and finance leases 24,441 25,138
Noncurrent air traffic liability 300 130
Pension, postretirement and related benefits 5,862 6,035
Loyalty program deferred revenue 4,606 4,849
Noncurrent operating leases 7,199 7,056
Other noncurrent liabilities 4,289 4,398
Total noncurrent liabilities 46,697 47,606
Commitments and Contingencies 0 0
Stockholders' Equity:
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 11,462 11,447
Accumulated deficit (1,088) (148)
Accumulated other comprehensive loss (7,071) (7,130)
Treasury stock, at cost, 10,485,815 and 9,752,872 shares (312) (282)
Total stockholders' equity 2,991 3,887
Total liabilities and stockholders' equity $ 73,748 $ 72,459
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.


(in millions, except share data)	March 31, 2023		December 31, 2022
ASSETS
Current Assets:
Cash and cash equivalents	$	3,215	$	3,266
Short-term investments	3,396		3,268
Accounts receivable, net of allowance for uncollectible accounts of $24 and $23	3,224		3,176
Fuel, expendable parts and supplies inventories, net of allowance for obsolescence of $134 and $136	1,379		1,424
Prepaid expenses and other	2,187		1,877
Total current assets	13,401		13,011

Noncurrent Assets:
Property and equipment, net of accumulated depreciation and amortization of $20,881 and $20,370	33,249		33,109
Operating lease right-of-use assets	7,067		7,036
Goodwill	9,753		9,753
Identifiable intangibles, net of accumulated amortization of $904 and $902	5,990		5,992
Equity investments	2,249		2,128
Deferred income taxes, net	432		325
Other noncurrent assets	993		934
Total noncurrent assets	59,733		59,277
Total assets	$	73,134	$	72,288

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current maturities of debt and finance leases	$	2,136	$	2,359
Current maturities of operating leases	724		714
Air traffic liability	11,187		8,160
Accounts payable	4,754		5,106
Accrued salaries and related benefits	2,828		3,288
Loyalty program deferred revenue	3,685		3,434
Fuel card obligation	1,100		1,100
Other accrued liabilities	2,003		1,779
Total current liabilities	28,417		25,940

Noncurrent Liabilities:
Debt and finance leases	19,823		20,671

Pension, postretirement and related benefits	3,730		3,707
Loyalty program deferred revenue	4,413		4,448
Noncurrent operating leases	6,877		6,866
Other noncurrent liabilities	3,614		4,074
Total noncurrent liabilities	38,457		39,766

Commitments and Contingencies

Stockholders' Equity:
Common stock at $0.0001 par value; 1,500,000,000 shares authorized, 653,855,351 and 651,800,786 shares issued	—		—
Additional paid-in capital	11,544		11,526
Retained earnings	807		1,170
Accumulated other comprehensive loss	(5,754)		(5,801)
Treasury stock, at cost, 11,138,728 and 10,535,033 shares	(337)		(313)
Total stockholders' equity	6,260		6,582
Total liabilities and stockholders' equity	$	73,134	$	72,288
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

Delta Air Lines, Inc. | March ~~2022~~2023 Form 10-Q 3

Financial Statements

DELTA AIR LINES, INC.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(Unaudited)


		Three Months Ended March 31,					Three Months Ended March 31,
(in millions, except per share data)	(in millions, except per share data)	2022		2021				(in millions, except per share data)	2023		2022
Operating Revenue:	Operating Revenue:							Operating Revenue:
Passenger	Passenger	$	6,907	$	2,748			Passenger	$	10,411	$	6,907
Cargo	Cargo	289		215				Cargo	209		289
Other	Other	2,152		1,187				Other	2,139		2,152
Total operating revenue	Total operating revenue	9,348		4,150				Total operating revenue	12,759		9,348

Operating Expense:	Operating Expense:							Operating Expense:
Salaries and related costs	Salaries and related costs	2,826		2,202				Salaries and related costs	3,386		2,826
Aircraft fuel and related taxes	Aircraft fuel and related taxes	2,092		1,017				Aircraft fuel and related taxes	2,676		2,092
Ancillary businesses and refinery	Ancillary businesses and refinery	1,382		706				Ancillary businesses and refinery	1,125		1,382
Contracted services	Contracted services	753		519				Contracted services	1,010		753
Pilot agreement and related expenses								Pilot agreement and related expenses	864		—
Aircraft maintenance materials and outside repairs								Aircraft maintenance materials and outside repairs	585		465
Landing fees and other rents								Landing fees and other rents	584		504
Depreciation and amortization	Depreciation and amortization	506		492				Depreciation and amortization	564		506
Landing fees and other rents		504		493
Regional carrier expense	Regional carrier expense	491		401				Regional carrier expense	559		491
Aircraft maintenance materials and outside repairs		465		294
Passenger commissions and other selling expenses	Passenger commissions and other selling expenses	312		110				Passenger commissions and other selling expenses	500		312
Passenger service	Passenger service	275		118				Passenger service	416		275
Aircraft rent	Aircraft rent	122		104				Aircraft rent	132		122
Restructuring charges		(5)		(44)
Government grant recognition		—		(1,186)
Profit sharing								Profit sharing	72		—

Other	Other	408		322				Other	563		403
Total operating expense	Total operating expense	10,131		5,548				Total operating expense	13,036		10,131

Operating Loss	Operating Loss	(783)		(1,398)				Operating Loss	(277)		(783)

Non-Operating Expense:	Non-Operating Expense:							Non-Operating Expense:
Interest expense, net	Interest expense, net	(274)		(361)				Interest expense, net	(227)		(274)
Equity method results		—		(54)

Gain/(loss) on investments, net	Gain/(loss) on investments, net	(147)		262				Gain/(loss) on investments, net	122		(147)
Loss on extinguishment of debt	Loss on extinguishment of debt	(25)		(56)				Loss on extinguishment of debt	(22)		(25)
Pension and related benefit/(expense)		73		107
Pension and related (expense)/benefit								Pension and related (expense)/benefit	(61)		73
Miscellaneous, net	Miscellaneous, net	(44)		(15)				Miscellaneous, net	(41)		(44)
Total non-operating expense, net	Total non-operating expense, net	(417)		(117)				Total non-operating expense, net	(229)		(417)

Loss Before Income Taxes	Loss Before Income Taxes	(1,200)		(1,515)				Loss Before Income Taxes	(506)		(1,200)

Income Tax Benefit	Income Tax Benefit	260		338				Income Tax Benefit	143		260

Net Loss	Net Loss	$	(940)	$	(1,177)			Net Loss	$	(363)	$	(940)

Basic Loss Per Share	Basic Loss Per Share	$	(1.48)	$	(1.85)			Basic Loss Per Share	$	(0.57)	$	(1.48)
Diluted Loss Per Share	Diluted Loss Per Share	$	(1.48)	$	(1.85)			Diluted Loss Per Share	$	(0.57)	$	(1.48)
Cash Dividends Declared Per Share		$	—	$	—

Comprehensive Loss	Comprehensive Loss	$	(881)	$	(1,099)			Comprehensive Loss	$	(316)	$	(881)

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. | March ~~2022~~2023 Form 10-Q 4

Financial Statements

DELTA AIR LINES, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)


		Three Months Ended March 31,					Three Months Ended March 31,
(in millions)	(in millions)	2022		2021		(in millions)	2023		2022
Net Cash Provided by Operating Activities	Net Cash Provided by Operating Activities	$	1,771	$	691	Net Cash Provided by Operating Activities	$	2,235	$	1,771

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	(1,276)		(132)		Flight equipment, including advance payments	(630)		(1,276)
Ground property and equipment, including technology	Ground property and equipment, including technology	(490)		(306)		Ground property and equipment, including technology	(370)		(490)

Purchase of short-term investments	Purchase of short-term investments	(226)		(3,161)		Purchase of short-term investments	(999)		(226)
Redemption of short-term investments	Redemption of short-term investments	1,346		3,371		Redemption of short-term investments	897		1,346
Purchase of equity investments	Purchase of equity investments	(100)		—		Purchase of equity investments	—		(100)

Other, net	Other, net	(3)		168		Other, net	2		(3)
Net cash used in investing activities	Net cash used in investing activities	(749)		(60)		Net cash used in investing activities	(1,100)		(749)

Cash Flows from Financing Activities:	Cash Flows from Financing Activities:					Cash Flows from Financing Activities:

Proceeds from long-term obligations		—		924

Payments on debt and finance lease obligations	Payments on debt and finance lease obligations	(1,443)		(1,775)		Payments on debt and finance lease obligations	(1,166)		(1,443)

Other, net	Other, net	(13)		61		Other, net	(13)		(13)
Net cash used in financing activities	Net cash used in financing activities	(1,456)		(790)		Net cash used in financing activities	(1,179)		(1,456)

Net Decrease in Cash, Cash Equivalents and Restricted Cash Equivalents	Net Decrease in Cash, Cash Equivalents and Restricted Cash Equivalents	(434)		(159)		Net Decrease in Cash, Cash Equivalents and Restricted Cash Equivalents	(44)		(434)
Cash, cash equivalents and restricted cash equivalents at beginning of period	Cash, cash equivalents and restricted cash equivalents at beginning of period	8,569		10,055		Cash, cash equivalents and restricted cash equivalents at beginning of period	3,473		8,569
Cash, cash equivalents and restricted cash equivalents at end of period	Cash, cash equivalents and restricted cash equivalents at end of period	$	8,135	$	9,896	Cash, cash equivalents and restricted cash equivalents at end of period	$	3,429	$	8,135

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	$	42	$	473	Flight and ground equipment acquired under finance leases	$	25	$	33
Right-of-use assets acquired under operating leases	Right-of-use assets acquired under operating leases	359		20		Right-of-use assets acquired under operating leases	208		359
Operating leases converted to finance leases						Operating leases converted to finance leases	30		9
Equity investments and other financings	Equity investments and other financings	330		200		Equity investments and other financings	—		330
											The following table provides a reconciliation of cash, cash equivalents and restricted cash equivalents reported within the Consolidated Balance Sheets to the total of the same such amounts shown above:
		March 31,					March 31,
(in millions)	(in millions)	2022		2021		(in millions)	2023		2022
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	7,705	$	8,460	Cash and cash equivalents	$	3,215	$	7,705
Restricted cash included in prepaid expenses and other	Restricted cash included in prepaid expenses and other	170		213		Restricted cash included in prepaid expenses and other	160		170
Noncurrent assets:	Noncurrent assets:					Noncurrent assets:
Restricted cash included in other noncurrent assets	Restricted cash included in other noncurrent assets	260		1,223		Restricted cash included in other noncurrent assets	54		260
Total cash, cash equivalents and restricted cash equivalents	Total cash, cash equivalents and restricted cash equivalents	$	8,135	$	9,896	Total cash, cash equivalents and restricted cash equivalents	$	3,429	$	8,135

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. | March ~~2022~~2023 Form 10-Q 5

Financial Statements

DELTA AIR LINES, INC.

Consolidated Statements of Stockholders' Equity

(Unaudited)


		Common Stock			Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Treasury Stock						Common Stock			Additional Paid-In Capital		Retained Earnings		Accumulated 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, 2021		650	$	—	$	11,447	$	(148)	$	(7,130)	10	$	(282)	$	3,887
Balance at December 31, 2022																Balance at December 31, 2022	652	$	—	$	11,526	$	1,170	$	(5,801)	11	$	(313)	$	6,582
Net loss	Net loss	—	—		—		(940)		—		—	—		(940)		Net loss	—	—		—		(363)		—		—	—		(363)

Other comprehensive income	Other comprehensive income	—	—		—		—		59		—	—		59		Other comprehensive income	—	—		—		—		47		—	—		47
Common stock issued for employee equity awards(1)	Common stock issued for employee equity awards(1)	2	—		15		—		—		1	(30)		(15)		Common stock issued for employee equity awards(1)	2	—		18		—		—		—	(24)		(6)

Balance at March 31, 2022		652	$	—	$	11,462	$	(1,088)	$	(7,071)	11	$	(312)	$	2,991
Balance at March 31, 2023																Balance at March 31, 2023	654	$	—	$	11,544	$	807	$	(5,754)	11	$	(337)	$	6,260

(1)Treasury shares were withheld for payment of taxes, at a weighted average price per share of $39.73 in the March 2023 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, 2021	650	$	—	$	11,447	$	(148)	$	(7,130)	10	$	(282)	$	3,887
Net loss	—	—		—		(940)		—		—	—		(940)

Other comprehensive income	—	—		—		—		59		—	—		59
Common stock issued for employee equity awards(1)	2	—		15		—		—		1	(30)		(15)

Balance at March 31, 2022	652	$	—	$	11,462	$	(1,088)	$	(7,071)	11	$	(312)	$	2,991

(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 in the March 2021 quarter.~~

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

Delta Air Lines, Inc. | March ~~2022~~2023 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, ~~2021.~~2022.

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 ongoing recovery,~~ seasonal variations in the demand for air travel, the volatility of aircraft fuel prices and other factors, operating results for the three months ended March 31, ~~2022~~2023 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.

NOTE 2. REVENUE RECOGNITION

Passenger Revenue
Three Months Ended March 31,
(in millions) 2022 2021
Ticket $ 5,986 $ 2,277
Loyalty travel awards 543 241
Travel-related services 378 230
Total passenger revenue $ 6,907 $ 2,748



	Three Months Ended March 31,
(in millions)	2023		2022
Ticket	$	9,239	$	5,986
Loyalty travel awards	743		543
Travel-related services	429		378
Total passenger revenue	$	10,411	$	6,907

Ticket

We recognized approximately $3.9 billion and $2.2 billion~~and $822 million~~ in passenger revenue during the three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, respectively, that had been recorded in our air traffic liability balance at the beginning of those periods.

~~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~~As of March 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. Theour air traffic liability ~~classified~~was recorded as a current asliability. As of ~~March~~December 31, 2022, ~~represents~~ our ~~estimate of tickets and travel credits to be 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 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~~was $8.3 billion, of which $100 million was included in ~~future periods.~~other noncurrent liabilities on our Consolidated Balance Sheet ("balance sheet").

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

~~Notes to the Consolidated Financial Statements~~

Loyalty Travel Awards

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. Loyalty travel awards revenue is related to the redemption of miles for air travel. Customers can also earn miles through participating companies, such as credit card companies, hotels, car rental agencies and ridesharing companies, who purchase miles from us. Our most significant contract to sell miles relates to our co-brand credit card relationship with American Express. During the three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, total cash sales from marketing agreements related to our loyalty program were ~~$1.2~~$1.7 billion and ~~$767 million,~~$1.2 billion, respectively, which are allocated to travel and other performance obligations. ~~Loyalty travel awards revenue is related~~

Delta Air Lines, Inc. | March 2023 Form 10-Q 7

Notes to the ~~redemption of miles for air travel.~~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)	2022		2021		(in millions)	2023		2022
Balance at January 1	Balance at January 1	$	7,559	$	7,182	Balance at January 1	$	7,882	$	7,559
Miles earned	Miles earned	658		354		Miles earned	999		658
Miles redeemed for air travel	Miles redeemed for air travel	(543)		(241)		Miles redeemed for air travel	(743)		(543)
Miles redeemed for non-air travel and other	Miles redeemed for non-air travel and other	(30)		(10)		Miles redeemed for non-air travel and other	(40)		(30)
Balance at March 31	Balance at March 31	$	7,644	$	7,285	Balance at March 31	$	8,098	$	7,644

Travel-Related Services

Travel-related services are primarily composed of 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,				Three Months Ended March 31,
(in millions)	(in millions)	2022		2021			(in millions)	2023		2022
Refinery	Refinery	$	1,187	$	540		Refinery	$	916	$	1,187
Loyalty program	Loyalty program	571		368			Loyalty program	726		571
Ancillary businesses	Ancillary businesses	209		186			Ancillary businesses	231		209
Miscellaneous	Miscellaneous	185		93			Miscellaneous	266		185
Total other revenue	Total other revenue	$	2,152	$	1,187		Total other revenue	$	2,139	$	2,152

Refinery. This represents refinery sales to third ~~parties, which are at or near cost; accordingly, the margin~~parties. See Note 9, "Segments," for more information on ~~these sales is~~ ~~de minimis~~.revenue recognition within our refinery segment.

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

Ancillary Businesses. Ancillary businesses ~~includes~~revenue represents revenues from aircraft maintenance services we provide to third parties and our vacation wholesale operations.

Delta Air Lines, Inc. | March ~~2022~~2023 Form 10-Q 8

Notes to the Consolidated Financial Statements

Revenue by Geographic Region

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


Passenger revenue by geographic region	Passenger revenue by geographic region					Passenger revenue by geographic region
		Passenger Revenue							Passenger Revenue
		Three Months Ended March 31,					Three Months Ended March 31,
(in millions)	(in millions)	2022		2021				(in millions)	2023		2022
Domestic	Domestic	$	5,563	$	2,280			Domestic	$	7,594	$	5,563
Atlantic	Atlantic	539		142				Atlantic	1,244		539
Latin America	Latin America	680		264				Latin America	1,132		680
Pacific	Pacific	125		62				Pacific	441		125
Total	Total	$	6,907	$	2,748			Total	$	10,411	$	6,907


Operating revenue by geographic region	Operating revenue by geographic region					Operating revenue by geographic region
		Operating Revenue							Operating Revenue
		Three Months Ended March 31,					Three Months Ended March 31,
(in millions)	(in millions)	2022		2021				(in millions)	2023		2022
Domestic	Domestic	$	7,549	$	3,368			Domestic	$	9,396	$	7,549
Atlantic	Atlantic	776		267				Atlantic	1,548		776
Latin America	Latin America	811		381				Latin America	1,280		811
Pacific	Pacific	212		134				Pacific	535		212
Total	Total	$	9,348	$	4,150			Total	$	12,759	$	9,348

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

~~Notes to the Consolidated Financial Statements~~

NOTE 3. FAIR VALUE MEASUREMENTS

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


(in millions)	(in millions)	March 31, 2022		Level 1		Level 2		Level 3		(in millions)	March 31, 2023		Level 1		Level 2		Level 3
Cash equivalents	Cash equivalents	$	5,132	$	5,132	$	—	$	—	Cash equivalents	$	2,231	$	2,231	$	—	$	—
Restricted cash equivalents	Restricted cash equivalents	429		429		—		—		Restricted cash equivalents	213		213		—		—
Short-term investments	Short-term investments	2,250		681		1,569		—		Short-term investments
U.S. Government securities										U.S. Government securities	1,501		162		1,339		—
Corporate obligations										Corporate obligations	1,756		—		1,756		—
Asset-backed securities										Asset-backed securities	37		—		37		—
Other fixed income securities										Other fixed income securities	102		—		102		—
Long-term investments	Long-term investments	1,312		1,179		36		97		Long-term investments	1,572		1,424		38		110
Fuel hedge contracts	Fuel hedge contracts	(14)		—		(14)		—		Fuel hedge contracts	(6)		—		(6)		—

(in millions) December 31,
2021 Level 1 Level 2 Level 3
Cash equivalents $ 5,450 $ 5,450 $ — $ —
Restricted cash equivalents 635 635 — —
Short-term investments 3,386 1,376 2,010 —
Long-term investments 1,459 1,326 36 97
Fuel hedge contracts (18) — (18) —

Delta Air Lines, Inc. | March 2023 Form 10-Q 9

Notes to the Consolidated Financial Statements


(in millions)	December 31, 2022		Level 1		Level 2		Level 3
Cash equivalents	$	2,021	$	2,021	$	—	$	—
Restricted cash equivalents	206		206		—		—
Short-term investments
U.S. Government securities	1,587		122		1,465		—
Corporate obligations	1,614		—		1,614		—
Other fixed income securities	67		—		67		—
Long-term investments	1,450		1,305		38		107
Fuel hedge contracts	(47)		—		(47)		—

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 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 certain self-insurance obligations and airport commitments as well as 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. Restricted cash equivalents are recorded in prepaid expenses and other and other noncurrent assets on our balance sheet. 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~~our short-term 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 March 31, ~~2022,~~2023, the estimated fair value of our short-term investments was ~~$2.2~~$3.4 billion. Of these investments, ~~$1.6~~$3.0 billion are expected to mature in one year or less, with the remainder maturing ~~during 2023.~~in the second quarter of 2024. 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. Our equity investments in private companies are classified as Level 3 in the fair value hierarchy as their equity is not traded on a public exchange and our valuations incorporate certain unobservable inputs, including non-public equity ~~issuances and forecasts provided by our investees.~~issuances. 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.~~futures contracts, most of which have a duration of less than three months. 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 gains of $31 million and 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 the three months ended March 31, 2023 and 2022, respectively. The gainsrecognized during the three months ended March 31, 2023 were composed of $41 million of mark-to-market gains and ~~2021, respectively.~~$10 million of settlements on contracts. The losses recognized during the March 2022 quarter ~~are~~were composed of $244 million of settlements on contracts and $4 million of mark-to-market ~~adjustments.~~gains. 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~~2023 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.

Equity Method Investments. We record our share of our equity method investees' financial results in our income statement as described in the table below.


Equity investments ownership interest and carrying value	Equity investments ownership interest and carrying value										Equity investments ownership interest and carrying value
		Accounting Treatment	Ownership Interest				Carrying Value					Accounting Treatment	Ownership Interest				Carrying Value
(in millions)	(in millions)		March 31, 2022		December 31, 2021		March 31, 2022		December 31, 2021		(in millions)		March 31, 2023		December 31, 2022		March 31, 2023		December 31, 2022
Air France-KLM	Air France-KLM	Fair Value	6	%	6	%	$	170	$	165	Air France-KLM	Fair Value	3	%	3	%	$	135	$	97
China Eastern	China Eastern	Fair Value	2	%	2	%	157		177		China Eastern	Fair Value	2	%	2	%	184		189
CLEAR	CLEAR	Fair Value	6	%	6	%	223		260		CLEAR	Fair Value	5	%	5	%	217		227
Grupo Aeroméxico	Grupo Aeroméxico	Equity Method(1)	20	%	51	%	432		—		Grupo Aeroméxico	Equity Method(1)	20	%	20	%	410		412
Hanjin-KAL		Fair Value	13	%	13	%	450		455
Hanjin KAL											Hanjin KAL	Fair Value(2)	15	%	15	%	351		296
LATAM											LATAM	Fair Value	10	%	10	%	455		403
Unifi Aviation	Unifi Aviation	Equity Method(2)	49	%	49	%	159		159		Unifi Aviation	Equity Method(3)	49	%	49	%	164		165
Wheels Up	Wheels Up	Fair Value(3)	21	%	21	%	162		241		Wheels Up	Fair Value(4)	21	%	21	%	33		54
Other investments	Other investments	Various					246		255		Other investments	Various					300		285
Equity investments	Equity investments						$	1,999	$	1,712	Equity investments						$	2,249	$	2,128

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

(2)At March 31, 2023, we held 14.8% of the outstanding shares (including common and preferred), and 14.9% of the common shares, of Hanjin KAL.

(3)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 many of our airport locations.

~~(3)~~(4)We elected to account for our investment under the fair value option.

~~Grupo Aeroméxico.~~ On March 17, 2022, Grupo Aeroméxico ("Aeroméxico") emerged from its voluntary proceedings to reorganize under Chapter 11 of the United States bankruptcy code ("bankruptcy process"). At the conclusion of the bankruptcy process, Aeroméxico's previously outstanding capital stock was consolidated and exchanged for less than 0.01% of new capital stock, which 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 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 will account for our investment in Aeroméxico under the equity method of accounting and 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.~~

~~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 only recorded to the extent we make additional investments in Virgin Atlantic.

~~LATAM.~~ LATAM Airlines Group S.A. ("LATAM") is undergoing voluntary proceedings to reorganize under Chapter 11 of the United States bankruptcy code, and the carrying value of our investment in LATAM remains zero as of March 31, 2022. In order to support our relationship with LATAM, we are providing strategic and operational assistance through the bankruptcy process. We have a $175 million noncurrent receivable outstanding associated with LATAM's debtor-in-possession financing. Upon completion of its bankruptcy process, we expect to receive an approximately 10% equity stake in LATAM in exchange for an additional investment in LATAM.

Delta Air Lines, Inc. | March ~~2022~~2023 Form 10-Q 11

Notes to the Consolidated Financial Statements

NOTE 5. DEBT


Summary of outstanding debt by category	Summary of outstanding debt by category											Summary of outstanding debt by category
		Maturity			Interest Rate(s) Per Annum at			March 31,		December 31,			Maturity			Interest Rate(s) Per Annum at			March 31,		December 31,
(in millions)	(in millions)	Dates			March 31, 2022			2022		2021		(in millions)	Dates			March 31, 2023			2023		2022
Unsecured Payroll Support Program Loans	Unsecured Payroll Support Program Loans	2030	to	2031	1.00%			$	3,496	$	3,496	Unsecured Payroll Support Program Loans	2030	to	2031	1.00%			$	3,496	$	3,496
Unsecured notes	Unsecured notes	2023	to	2029	2.90%	to	7.38%	3,308		4,354		Unsecured notes	2023	to	2029	2.90%	to	7.38%	2,997		2,997
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%	5,007		5,144
SkyMiles Term Loan(1)(2)	SkyMiles Term Loan(1)(2)	2023	to	2027	4.75%			2,820		2,820		SkyMiles Term Loan(1)(2)	2023	to	2027	8.56%			2,478		2,820
NYTDC Special Facilities Revenue Bonds(1)												NYTDC Special Facilities Revenue Bonds(1)	2024	to	2045	4.00%	to	5.00%	2,778		2,838
Financing arrangements secured by aircraft:												Financing arrangements secured by aircraft:
Certificates(1)												Certificates(1)	2023	to	2028	2.00%	to	8.00%	1,790		1,802
Notes(1)(2)												Notes(1)(2)	2023	to	2033	6.11%	to	7.22%	553		813
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%			2,459		2,589		2020 Senior Secured Notes	2025			7.00%			1,274		1,542
2018 Revolving Credit Facility(2)	2018 Revolving Credit Facility(2)	2023	to	2024	Undrawn			—		—		2018 Revolving Credit Facility(2)	2024	to	2025	Undrawn			—		—
Financing arrangements secured by aircraft:
Certificates(1)		2022	to	2028	2.00%	to	8.00%	1,920		1,932
Notes(1)(2)		2022	to	2033	1.39%	to	5.75%	1,054		1,139
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)	2022	to	2030	2.51%	to	5.00%	68		68		Other financings(1)(2)	2023	to	2030	2.51%	to	5.00%	67		67
Other revolving credit facilities(2)	Other revolving credit facilities(2)	2022	to	2024	Undrawn			—		—		Other revolving credit facilities(2)	2023			Undrawn			—		—
Total secured and unsecured debt	Total secured and unsecured debt							23,963		25,292		Total secured and unsecured debt							$	20,440	$	21,519
Unamortized (discount)/premium and debt issue cost, net and other	Unamortized (discount)/premium and debt issue cost, net and other							(193)		(208)		Unamortized (discount)/premium and debt issue cost, net and other							(120)		(138)
Total debt	Total debt							23,770		25,084		Total debt							$	20,320	$	21,381
Less: current maturities	Less: current maturities							(831)		(1,502)		Less: current maturities							(1,830)		(2,055)
Total long-term debt	Total long-term debt							$	22,939	$	23,582	Total long-term debt							$	18,490	$	19,326

(1)Due in ~~installments.~~installments during the years shown above.

(2)Certain financings are comprised of variable rate debt. All variable rates are equal to LIBOR (generally subject to a floor), Secured Overnight Financing Rate ("SOFR") or another index rate plus a specified margin.

Availability Under Revolving Credit Facilities

As of March 31, ~~2022,~~2023, we had approximately $2.9 billion undrawn and available under our revolving credit facilities. In addition, we had approximately $400 millionoutstanding letters of credit as of March 31, ~~2022~~2023 that did not affect the availability of our revolving credit facilities.

Early Settlement of Outstanding Notes

In the March 2023 quarter, we repurchased a principal amount of $468 million of various secured notes and a portion of the SkyMiles Term Loan on the open market and made early principal repayments of $227 million on various notes secured by aircraft. These payments resulted in a $22 million loss on extinguishment of debt recorded in non-operating expense in our income statement.

Delta Air Lines, Inc. | March 2023 Form 10-Q 12

Notes to the Consolidated Financial Statements

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 underlying collateral. Debt is primarily classified as Level 2 within the fair value hierarchy.

Fair value of outstanding debt
(in millions) March 31,
2022 December 31,
2021
Net carrying amount $ 23,770 $ 25,084
Fair value $ 24,200 $ 26,900


Fair value of outstanding debt
(in millions)	March 31, 2023		December 31, 2022
Net carrying amount	$	20,320	$	21,381
Fair value	$	19,900	$	20,700

Covenants

Our debt agreements contain various affirmative, negative and financial covenants. We were in compliance with the covenants in our debt agreements at March 31, ~~2022.~~2023.

~~Delta Air Lines, Inc. March 2022 Form 10-Q 12~~

~~Notes to the Consolidated Financial Statements~~

NOTE 6. EMPLOYEE BENEFIT PLANS


Employee benefit plans net periodic (benefit) cost
Employee benefit plans net periodic cost (benefit)										Employee benefit plans net periodic cost (benefit)
		Pension Benefits				Other Postretirement and Postemployment Benefits					Pension Benefits				Other Postretirement and Postemployment Benefits
(in millions)	(in millions)	2022		2021		2022		2021		(in millions)	2023		2022		2023		2022
Three Months Ended March 31,	Three Months Ended March 31,									Three Months Ended March 31,
Service cost	Service cost	$	—	$	—	$	18	$	21	Service cost	$	—	$	—	$	18	$	18
Interest cost	Interest cost	153		146		32		29		Interest cost	213		153		50		32
Expected return on plan assets	Expected return on plan assets	(330)		(375)		(4)		(9)		Expected return on plan assets	(264)		(330)		—		(4)
Amortization of prior service credit	Amortization of prior service credit	—		—		(1)		(2)		Amortization of prior service credit	—		—		(1)		(1)
Recognized net actuarial loss	Recognized net actuarial loss	64		89		13		15		Recognized net actuarial loss	60		64		3		13

Net periodic (benefit) cost		$	(113)	$	(140)	$	58	$	54
Net periodic cost (benefit)										Net periodic cost (benefit)	$	9	$	(113)	$	70	$	58

Service cost is recorded in salaries and related costs in our income statement, while all other components are recorded within pension and related ~~benefit/~~(expense)/benefit under non-operating expense.

~~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. | March 2023 Form 10-Q 13

Notes to the Consolidated Financial Statements

NOTE 7. COMMITMENTS AND CONTINGENCIES

Aircraft Purchase Commitments

Our future aircraft purchase commitments totaled approximately ~~$15.3~~$18.7 billion at March 31, ~~2022.~~2023.

							Aircraft purchase commitments(1)
(in millions)	(in millions)	Total		(in millions)	Total
Nine months ending December 31, 2022		$	2,640
2023		3,170
Nine months ending December 31, 2023				Nine months ending December 31, 2023	$	2,360
2024	2024	3,290		2024	4,460
2025	2025	2,910		2025	4,290
2026	2026	2,340		2026	3,830
2027				2027	2,580
Thereafter	Thereafter	990		Thereafter	1,200
Total	Total	$	15,340	Total	$	18,720

(1)The timing of these commitments is based on our contractual agreements with the aircraft manufacturers and may be subject to change based on modifications to those agreements or changes in delivery schedules.

Our future aircraft purchase commitments included the following aircraft at March 31, ~~2022:~~2023:


Aircraft purchase commitments by fleet type
Aircraft Type			Purchase Commitments
A220-300			4059
A321-200neo			~~154~~130
A330-900neo			2317
A350-900			1816
~~B-737-900ER~~B-737-10			5
~~CRJ-900~~			3100
Total			~~243~~322

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

~~Notes to the Consolidated Financial Statements~~

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.

~~Other Contingencies~~Employees Under Collective Bargaining Agreements

~~General Indemnifications~~In March 2023, Delta pilots ratified a new four-year Pilot Working Agreement effective January 1, 2023. The agreement includes numerous work rule changes and pay rate increases during the four-year term, including an initial pay rate increase of 18%. The agreement also includes a provision for a one-time payment upon ratification in the March 2023 quarter of $735 million. Additionally, we recorded adjustments to other benefit-related items of approximately $130 million.These items are recorded within pilot agreement and related expenses in our income statement.

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~~2023 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 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)


Components of accumulated other comprehensive loss
(in millions)	Pension and Other Benefit Liabilities		Other		Tax Effect		Total
Balance at January 1, 2023	$	(6,624)	$	41	$	782	$	(5,801)

Reclassifications into earnings(1)	62		—		(15)		47
Balance at March 31, 2023	$	(6,562)	$	41	$	767	$	(5,754)

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)


Balance at January 1, 2022	$	(8,355)	$	41	$	1,184	$	(7,130)

Reclassifications into earnings(1)	77		—		(18)		59
Balance at March 31, 2022	$	(8,278)	$	41	$	1,166	$	(7,071)

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

~~Delta Air Lines, Inc. March 2022 Form 10-Q 15~~

~~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~~from 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 months ended March 31, 2023 and 2022 ~~and 2021~~ was ~~$809~~$714 million and ~~$503~~$809 million, respectively.

Delta Air Lines, Inc. | March 2023 Form 10-Q 15

Notes to the Consolidated Financial Statements

Segment Reporting

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


Financial information by segment	Financial information by segment										Financial information by segment
(in millions)	(in millions)	Airline		Refinery		Intersegment Sales/Other			Consolidated		(in millions)	Airline		Refinery			Intersegment Sales/Other			Consolidated
Three Months Ended March 31, 2023											Three Months Ended March 31, 2023
Operating revenue:											Operating revenue:	$	11,843	$	2,352					$	12,759
Sales to airline segment											Sales to airline segment						$	(596)	(1)
Exchanged products											Exchanged products						(714)		(2)
Sales of refined products											Sales of refined products						(126)
Operating (loss)/income											Operating (loss)/income	(499)		222		(3)	—			(277)
Interest expense, net											Interest expense, net	227		4			(4)			227
Depreciation and amortization											Depreciation and amortization	564		23			(23)		(3)	564

Total assets, end of period											Total assets, end of period	70,183		3,005			(54)			73,134
Net fair value obligations, end of period											Net fair value obligations, end of period	—		(38)			—			(38)
Capital expenditures											Capital expenditures	971		29			—			1,000

Three Months Ended March 31, 2022	Three Months Ended March 31, 2022										Three Months Ended March 31, 2022
Operating revenue:	Operating revenue:	$	8,161	$	2,313				$	9,348	Operating revenue:	$	8,161	$	2,313					$	9,348
Sales to airline segment	Sales to airline segment					$	(291)	(1)			Sales to airline segment						$	(291)	(1)
Exchanged products	Exchanged products					(809)		(2)			Exchanged products						(809)		(2)
Sales of refined products	Sales of refined products					(26)		(3)			Sales of refined products						(26)
Operating (loss)/income	Operating (loss)/income	(836)		53		—			(783)		Operating (loss)/income	(836)		53		(3)	—			(783)
Interest expense, net	Interest expense, net	274		2		(2)			274		Interest expense, net	274		2			(2)			274
Depreciation and amortization	Depreciation and amortization	506		23		(23)		(4)	506		Depreciation and amortization	506		23			(23)		(3)	506

Total assets, end of period	Total assets, end of period	71,392		2,382		(26)			73,748		Total assets, end of period	71,392		2,382			(26)			73,748
Net fair value obligations, end of period	Net fair value obligations, end of period	—		(430)		—			(430)		Net fair value obligations, end of period	—		(430)			—			(430)
Capital expenditures	Capital expenditures	1,749		17		—			1,766		Capital expenditures	1,749		17			—			1,766

Three Months Ended March 31, 2021
Operating revenue:		$	3,610	$	1,047				$	4,150
Sales to airline segment						$	—	(1)
Exchanged products						(503)		(2)
Sales of refined products						(4)		(3)
Operating loss		(1,273)		(125)		—			(1,398)
Interest expense, net		361		1		(1)			361
Depreciation and amortization		492		24		(24)		(4)	492

Total assets, end of period		71,508		1,578		(3)			73,083
Net fair value obligations, end of period		—		(285)		—			(285)
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 for jet fuel from the refinery by reference to the market index for the primary delivery location, which is New York ~~Harbor, for jet fuel from the refinery.~~Harbor.

(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~~presented net of any related assets or fixed price purchase agreements. Their value is 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~~2023 was calculated using the U.S. Environmental Protection Agency's ("EPA") ~~proposed~~ Renewable Fuel Standard ("RFS") volume requirements, which were ~~issued~~finalized in ~~December 2021. The~~2022 for 2021 and 2022 obligations, and proposed in 2022 for 2023 obligations. In March 2023, we settled a portion of our 2021 RINs obligation with the EPA. We expect to settle the remaining 2021 and our entire 2022 RINs obligation by the 2022 compliance deadline, which 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.~~yet finalized.

Delta Air Lines, Inc. | March 2023 Form 10-Q 16

Notes to the Consolidated Financial Statements

NOTE 10. LOSS PER SHARE

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


Basic and diluted loss per share	Basic and diluted loss per share					Basic and diluted loss per share
		Three Months Ended March 31,					Three Months Ended March 31,
(in millions, except per share data)	(in millions, except per share data)	2022		2021				(in millions, except per share data)	2023		2022
Net loss	Net loss	$	(940)	$	(1,177)			Net loss	$	(363)	$	(940)

Basic weighted average shares outstanding	Basic weighted average shares outstanding	637		636				Basic weighted average shares outstanding	639		637
Dilutive effect of share-based awards		—		—
Dilutive effect of share-based instruments								Dilutive effect of share-based instruments	—		—
Diluted weighted average shares outstanding	Diluted weighted average shares outstanding	637		636				Diluted weighted average shares outstanding	639		637

Basic loss per share	Basic loss per share	$	(1.48)	$	(1.85)			Basic loss per share	$	(0.57)	$	(1.48)
Diluted loss per share	Diluted loss per share	$	(1.48)	$	(1.85)			Diluted loss per share	$	(0.57)	$	(1.48)

Delta Air Lines, Inc. | March ~~2022~~2023 Form 10-Q 17

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~~Consolidated Financial Statements and related notes included in our ~~2021~~2022 Form 10-K.

March ~~2022~~2023 Quarter Financial Overview

~~Our business and operating results continued to be impacted by~~Given the impact of the COVID-19 pandemic ~~in the March 2022 quarter. We have seen continued improvement in our business~~ during the March 2022 quarter, ~~which we expect~~comparisons discussed below are not indicative of expected full year-over-year results. Compared to ~~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 a comparison of our results in~~ the March ~~2022~~2019 quarter, total revenue increased $2.3 billion, or 22%, and total operating expense increased $3.6 billion, or 38%, with 2% lower capacity. We are planning for our full year 2023 system capacity to ~~both the March 2021 and March~~be close to 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.~~

~~The table below shows selected key financial and statistical measures for the three months ended March 31, 2022, 2021 and 2019.~~

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.~~capacity levels.

Our operating loss for the March ~~2022~~2023 quarter was ~~$783~~$277 million, anrepresenting a $506 million improvement ~~of $615 million~~ compared to the March ~~2021 quarter. This~~2022 quarter primarily resulting from increased revenue from continued improvement ~~was~~in demand and higher capacity. Operating expenses also increased primarily due to ~~a $4.2 billion, or 151%, increase in passenger revenue as a result of increased demand~~the pilot agreement and ~~capacity, partially offset by a $1.1 billion increase in~~related expenses, higher fuel expense ~~$1.2~~and higher salaries and related costs. Operating income, adjusted (a non-GAAP financial measure) was $546 million, an increase of $1.3 billion ~~of Payroll Support Programs ("PSP") grant proceeds recognized during~~compared to the ~~March 2021 quarter~~corresponding prior year quarter. Adjustments are primarily related to the pilot agreement 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 COVID-19 pandemic~~and unrealized gains and losses on our ~~business which led to a 25% decrease in passenger revenue.~~equity investments.

Revenue. Compared to the March ~~2021~~2022 quarter, our operating revenueincreased ~~$5.2~~$3.4 billion, or ~~125%~~36%, due primarily to increased travel demand 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~~yield, as well as a capacity ~~due primarily to the continued impact~~increase 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.

18%.

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 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 March ~~2022~~2023 quarter increased ~~$4.6~~$2.9 billion, or ~~83%~~29%, compared to the March ~~2021~~2022 quarter, primarily resulting from ~~increased~~the pilot agreement and related expenses, higher 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 aircraft maintenance and higher~~ salaries and related ~~costs. The increase also resulted~~costs from ~~$1.2 billion of PSP grant proceeds recognized during the March 2021 quarter, which reduced expenses~~pay rate increases and ~~an increase in expenses related to refinery sales to third parties, reflected in ancillary business and refinery expense.~~increased headcount. Total operating expense, adjusted (a non-GAAP financial measure) ~~for~~in the March ~~2022~~2023 quarter increased ~~$2.7~~$2.3 billion, or ~~43%~~26%, compared to the March ~~2021~~2022 quarter. Adjustments were primarily to exclude expenses related to refinery sales to third parties and ~~PSP grant proceeds in~~ the ~~March 2021 quarter.~~pilot agreement and related expenses.

~~Total~~Our total operating ~~expense in~~cost per available seat mile ("CASM") increased 9% compared to the March 2022 quarter, ~~increased $679 million, or 7%, compared~~primarily due to the ~~March 2019 quarter, primarily resulting from increased expenses related to refinery sales to third parties, reflected~~ higher costs discussed above, partially offset by an 18%increasein ~~ancillary business and refinery expense. Total operating expense, adjusted (a~~capacity. Non-fuel unit costs ("CASM-Ex", a non-GAAP financial measure) ~~for the March 2022 quarter decreased $400 million, or 4%, compared to the March 2019 quarter. Adjustments were primarily to exclude expenses related to refinery sales to third parties.~~increased 4.7%.

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 March 31, ~~2022~~2023 was ~~$12.8~~$9.5 billion. During the March ~~2022~~2023 quarter, operating activities generated ~~$1.8~~$2.2 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~~$1.7 billion in the March ~~2022~~2023 quarter, ~~up 25%~~an increase of approximately 38% compared to the March ~~2019~~2022 quarter.

~~Also during~~During the quarter, investing activities ~~used~~were a net of ~~$749 million,~~$1.1 billion, primarily for capital expenditures ~~partially offset by~~and net ~~redemptions~~purchases of short-term investments. These operating and investing activities ~~resulted in $197 million~~ generated $1.9 billionof free cash flow (a non-GAAP financial measure) in the March ~~2022~~2023 quarter. Also, during the March ~~2022~~2023 quarter we had cash outflows of approximately ~~$1.4~~$1.2 billion related to repayments of our debt and finance leases.

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

~~Delta Air Lines, Inc. March 2022 Form 10-Q 19~~

~~Item 2. MD&A~~

~~Environmental Sustainability.~~ During 2022, we are continuing to 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 Science Based Targets initiative, as described in our 2021 Form 10-K. We expect our path toward achievement of these goals to depend 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 three months ended March 31, 2022, we also incurred $47 million of expense related to carbon offset credits, which relates to a portion of our airline segment's 2021 carbon emissions.

Delta Air Lines, Inc. | March ~~2022~~2023 Form 10-Q 2018

Item 2. MD&A - Results of Operations

Results of Operations - Three Months Ended March 31, ~~2022~~2023 and ~~2021~~2022

Operating Revenue


		Three Months Ended March 31,						Increase (Decrease)	% Increase (Decrease)						Three Months Ended March 31,					Increase (Decrease)			% Increase (Decrease)
(in millions)(1)	(in millions)(1)	2022			2021									(in millions)(1)	2023		2022
Ticket - Main cabin	Ticket - Main cabin	$	3,448		$	1,353			$	2,095		155	%			Ticket - Main cabin	$	5,223		$	3,448			$	1,775		51	%
Ticket - Premium products	Ticket - Premium products	2,538			924				1,614			175	%			Ticket - Premium products	4,016			2,538				1,478			58	%
Loyalty travel awards	Loyalty travel awards	543			241				302			125	%			Loyalty travel awards	743			543				200			37	%
Travel-related services	Travel-related services	378			230				148			64	%			Travel-related services	429			378				51			13	%
Total passenger revenue	Total passenger revenue	$	6,907		$	2,748			$	4,159		151	%			Total passenger revenue	$	10,411		$	6,907			$	3,504		51	%
Cargo	Cargo	289			215				74			34	%			Cargo	209			289				(80)			(28)	%
Other	Other	2,152			1,187				965			81	%			Other	2,139			2,152				(13)			(1)	%
Total operating revenue	Total operating revenue	$	9,348		$	4,150			$	5,198		125	%			Total operating revenue	$	12,759		$	9,348			$	3,411		36	%

TRASM (cents)	TRASM (cents)	18.04		¢	10.34		¢		7.70		¢	74	%			TRASM (cents)	20.80		¢	18.04		¢		2.76		¢	15	%
Third-party refinery sales	Third-party refinery sales	(2.29)			(1.35)				(0.94)			70	%			Third-party refinery sales	(1.49)			(2.29)				0.80			(35)	%

TRASM, adjusted(2)	TRASM, adjusted(2)	15.75		¢	9.00		¢		6.75		¢	75	%			TRASM, adjusted(2)	19.30		¢	15.75		¢		3.55		¢	23	%

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

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

~~Operating Revenue~~

Compared to the March ~~2021~~2022 quarter, our operating revenue increased ~~$5.2~~$3.4 billion, or ~~125%~~36%, due to the continued recovery in demand from the COVID-19 ~~pandemic and higher refinery third party sales.~~pandemic. The increase in operating revenue, on ~~a 29%~~an 18% increase in capacity, resulted in a ~~74%~~15% increase in total revenue per available seat mile ("TRASM") and a ~~75%~~23% increase in TRASM, adjusted compared to the March ~~2021~~2022 quarter. The growth in passenger revenue was due to increased demand, with yield growth in ~~both~~premium products outpacing main cabin, ~~and premiums products, with premium products experiencing a quicker recovery than main cabin.~~in addition to the increased capacity.

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

We have historically generated cargo revenues in domestic and international markets through the use of cargo space on regularly scheduled passenger aircraft. 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 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 March 2022 quarter driving the increase in revenue compared to the March 2021 quarter. We expect capacity constraints and elevated market yields to continue through 2022 while the industry rebuilds international networks to pre-pandemic levels.

Passenger Revenue by Geographic Region


				Increase (Decrease) vs. Three Months Ended March 31, 2021															Increase (Decrease) vs. Three Months Ended March 31, 2022
(in millions)	(in millions)	Three Months Ended March 31, 2022		Passenger Revenue		RPMs (Traffic)		ASMs (Capacity)		Passenger Mile Yield		PRASM		Load Factor		(in millions)	Three Months Ended March 31, 2023		Passenger Revenue		RPMs (Traffic)		ASMs (Capacity)		Passenger Mile Yield		PRASM		Load Factor
Domestic	Domestic	$	5,563	144	%	105	%	29	%	19	%	90	%	29	pts	Domestic	$	7,594	37	%	13	%	7	%	21	%	27	%	4	pts
Atlantic	Atlantic	539		281	%	320	%	108	%	(9)	%	83	%	33	pts	Atlantic	1,244		131	%	93	%	67	%	20	%	38	%	10	pts
Latin America	Latin America	680		158	%	93	%	(1)	%	33	%	160	%	38	pts	Latin America	1,132		66	%	26	%	11	%	33	%	50	%	10	pts
Pacific	Pacific	125		100	%	106	%	3	%	(3)	%	95	%	17	pts	Pacific	441		253	%	335	%	97	%	(19)	%	79	%	41	pts
Total	Total	$	6,907	151	%	116	%	29	%	17	%	95	%	30	pts	Total	$	10,411	51	%	28	%	18	%	17	%	27	%	6	pts

Domestic

Domestic passenger unit revenue ("PRASM") increased in the March ~~2022~~2023 quarter compared to the March ~~2021~~2022 quarter as a result of higher demand, as well as increased yield, during the ~~higher levels of~~March 2023 quarter. Domestic capacity ~~and demand during~~increased seven percent compared to the March 2022 quarter ~~due~~and was fully recovered to ~~the ongoing recovery in the period.~~

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

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

~~The March 2022 quarter domestic consumer revenue was above March 2021 quarter~~pre-pandemic levels. After starting with somewhat muted demand recovery due to rising COVID-19 cases attributable to variants of the virus, revenue recovery accelerated during the quarter as consumers continued to show increased confidence in travel.

We also remain optimistic about the ultimate recovery of business travel, which is comprised of both corporate managed travel and small- and medium-sized businesses, and expect the recovery of both of these components to continue to increase throughout 2022. Business travel demand in the March 2022 quarter was the highest since the onset of the COVID-19 pandemic.

International

International passenger revenue for the March ~~2022~~2023 quarter increased compared to the March ~~2021~~2022 quarter asin each geographic region.

In June 2022, the United States lifted its testing requirement for international travel, ~~to certain destinations~~which has ~~resumed or increased. While some~~had a positive impact on international demand. In addition, other countries in our network have removed or eased travel restrictions, ~~many countries still maintain~~resulting in revenue improvement across all international ~~testing requirements and travel restrictions, which have restrained demand in the short-term.~~

In November 2021, travel restrictions for fully vaccinated foreign visitors to the United States were lifted. This action 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 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. We will continue to be nimble in the restoration of our international network based on changes in government restrictions and consumer demand.

The Atlantic region continues to improve, despite the conflict in 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 a material impact on our Atlantic region revenues as Russia and Ukraine represent less than one percent of our Atlantic region 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. We expect this trend to continue throughout 2022 with the recovery in Latin America leading the Atlantic and Pacific 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~~2023 Form 10-Q 2219

Item 2. MD&A - Results of Operations

In the Atlantic region, revenue and capacity surpassed pre-pandemic levels in the March 2023 quarter as consumers continue to show increased desire for trans-Atlantic travel. This has been led by demand for leisure destinations and improving business demand.

Latin America region revenue exceeded pre-pandemic levels during the March 2023 quarter, with capacity near pre-pandemic levels, due to continued strong demand for leisure destinations in Mexico, the Caribbean and Central America. We expect this trend to continue during the June 2023 quarter as demand for leisure destinations remains strong. We have also continued to implement our joint venture agreement with LATAM, announcing additional new routes between North and South America during the March 2023 quarter.

In the Pacific region, capacity and revenue in countries such as South Korea and Australia were fully recovered to pre-pandemic levels in the March 2023 quarter as travel restrictions were just beginning to ease in the March 2022 quarter. Additionally, China ended most of its pandemic-related travel restrictions in January 2023 and we expect to increase capacity to China based on demand during 2023.

Other Revenue


		Three Months Ended March 31,				Increase (Decrease)	% Increase (Decrease)					Three Months Ended March 31,				Increase (Decrease)		% Increase (Decrease)
(in millions)	(in millions)	2022		2021							(in millions)	2023		2022
Refinery	Refinery	$	1,187	$	540		$	647	120	%			Refinery	$	916	$	1,187		$	(271)	(23)	%
Loyalty program	Loyalty program	571		368			203		55	%			Loyalty program	726		571			155		27	%
Ancillary businesses	Ancillary businesses	209		186			23		12	%			Ancillary businesses	231		209			22		11	%
Miscellaneous	Miscellaneous	185		93			92		99	%			Miscellaneous	266		185			81		44	%
Total other revenue	Total other revenue	$	2,152	$	1,187		$	965	81	%			Total other revenue	$	2,139	$	2,152		$	(13)	(1)	%

Refinery. ~~This represents refinery~~Refinery sales to third ~~parties. These sales, which are at or near cost, increased $647~~parties decreased $271 million compared to the March ~~2021 quarter. The increase in third-party refinery sales resulted from higher pricing and production during the March~~ 2022 quarter ~~compared~~due to ~~the March 2021 quarter.~~lower rates and volume. See "Refinery Segment" below for additional details on the refinery's operations, including third party refinery sales recorded in other revenue.

Loyalty Program. Loyalty program ~~revenues relate~~revenue relates to brand usage by third parties and other performance obligations embedded in miles sold, including redemption of miles for ~~non-travel~~non-air travel and other awards. These revenues are mainly driven by customer spend on American Express cards and new cardholder acquisitions. ~~As co-brand card spend and card acquisitions continue to be strong, revenues~~Revenues from our relationship with American Express increased in the March ~~2022~~2023 quarter compared to ~~2021.~~

~~Ancillary Businesses.~~ ~~Ancillary businesses revenue includes aircraft maintenance services we provide~~the March 2022 quarter, due to ~~third parties~~continued strength in co-brand card spend and ~~our vacation wholesale operations.~~card acquisitions.

Miscellaneous. Miscellaneous ~~revenue~~ is primarily composed of revenues related to Delta Sky Club lounge access, including access provided to certain American Express cardholders, and codeshare ~~revenues.~~agreements. The volume of these transactions has increased compared to the March ~~2021~~2022 quarter due to the ongoing recovery of our business that continued to materialize in the March 2022 quarter. Our network of Delta Sky Club lounges was fully reopened by the end of July 2021 after some lounges temporarily closed at the onset of the pandemic in 2020.

business.

Delta Air Lines, Inc. | March ~~2022~~2023 Form 10-Q 2320

Item 2. MD&A - Results of Operations

Operating Expense


		Three Months Ended March 31,				Increase (Decrease)	% Increase (Decrease)					Three Months Ended March 31,				Increase (Decrease)		% Increase (Decrease)(1)
(in millions)	(in millions)	2022		2021							(in millions)	2023		2022
Salaries and related costs	Salaries and related costs	$	2,826	$	2,202		$	624	28	%			Salaries and related costs	$	3,386	$	2,826		$	560	20	%
Aircraft fuel and related taxes	Aircraft fuel and related taxes	2,092		1,017			1,075		106	%			Aircraft fuel and related taxes	2,676		2,092			584		28	%
Ancillary businesses and refinery	Ancillary businesses and refinery	1,382		706			676		96	%			Ancillary businesses and refinery	1,125		1,382			(257)		(19)	%
Contracted services	Contracted services	753		519			234		45	%			Contracted services	1,010		753			257		34	%
Pilot agreement and related expenses													Pilot agreement and related expenses	864		—			864		NM
Aircraft maintenance materials and outside repairs													Aircraft maintenance materials and outside repairs	585		465			120		26	%
Landing fees and other rents													Landing fees and other rents	584		504			80		16	%
Depreciation and amortization	Depreciation and amortization	506		492			14		3	%			Depreciation and amortization	564		506			58		11	%
Landing fees and other rents		504		493			11		2	%
Regional carrier expense	Regional carrier expense	491		401			90		22	%			Regional carrier expense	559		491			68		14	%
Aircraft maintenance materials and outside repairs		465		294			171		58	%
Passenger commissions and other selling expenses	Passenger commissions and other selling expenses	312		110			202		184	%			Passenger commissions and other selling expenses	500		312			188		60	%
Passenger service	Passenger service	275		118			157		133	%			Passenger service	416		275			141		51	%
Aircraft rent	Aircraft rent	122		104			18		17	%			Aircraft rent	132		122			10		8	%
Restructuring charges		(5)		(44)			39		(89)	%
Government grant recognition		—		(1,186)			1,186		(100)	%
Profit sharing													Profit sharing	72		—			72		NM

Other	Other	408		322			86		27	%			Other	563		403			160		40	%
Total operating expense	Total operating expense	$	10,131	$	5,548		$	4,583	83	%			Total operating expense	$	13,036	$	10,131		$	2,905	29	%

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

Salaries and Related Costs. ~~During 2021,~~In March 2023, Delta pilots ratified a new four-year Pilot Working Agreement effective January 1, 2023. The agreement includes numerous work rule changes and pay rate increases during the four-year term, including an initial pay rate increase of 18%. See the discussion below under pilot agreement and related expenses for additional information about the one-time impacts from this agreement.

Effective May 1, 2022, we ~~continued to offer voluntary unpaid leaves of absence in response to the COVID-19 pandemic~~implemented a 4% base pay increase for ~~periods ranging from 30 days up to 12 months and~~eligible employees. Additionally, we have approximately 13,000 more employees as of ~~our employees elected to take a leave of absence during the~~ March ~~2021 quarter. In the~~31, 2023 than at March 31, 2022 quarter we no longer offered these leaves of absence as the program terminated by the end of the September 2021 quarter. Additionally, we hired approximately 15,000 employees since the March 2021 quarter, of which approximately 4,000 wereprincipally in ~~the March 2022 quarter, in certain areas, including~~ flight operations, in-flight service, reservations and customer care, TechOps and airport customer service, in order to support our operations as demand and capacity ~~returns. These actions resulted~~return. Each of these items contributed to the increase in ~~higher~~ salaries and related costs during the March ~~2022~~2023 quarter compared to the March ~~2021~~2022 quarter.

In the March ~~2022,~~2023 quarter, we announced ~~that eligible employees will receive~~ a 4%5% base pay increase for eligible employees effective ~~May~~April 1, ~~2022.~~2023.

Aircraft Fuel and Related Taxes. Fuel expense increased ~~$1.1 billion~~$584 million compared to the March ~~2021~~2022 quarter primarily due to a ~~71%~~15% increase in the market price of jet fuel and a ~~38%~~18% increase in ~~consumption on a comparable increase in capacity.~~consumption. We expect ~~this elevated~~ jet fuel ~~cost~~prices to ~~continue~~remain volatile throughout ~~2022 due to recent market disruptions, further exacerbated by geopolitical events.~~2023.

~~Additionally, during~~See "Refinery Segment" below for additional details on the March 2022 quarter, we purchased and retired $47 million of carbon offset credits which relate to a portion of our airline segment's 2021 carbon emissions. In the table below, these costs are shown in the carbon offset costs line item.refinery's operations.


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 March 31,				Increase (Decrease)	Three Months Ended March 31,				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)	2022		2021					2022				2021				(in millions, except per gallon data)			2022		Increase (Decrease)			2023		Increase (Decrease)		2022
Fuel purchase cost(1)	Fuel purchase cost(1)	$	2,102	$	895		$	1,207	$	2.81	$	1.64			$	1.17	Fuel purchase cost(1)	$	2,939	$	2,149		$	790	$	3.31				$	0.44
Carbon offset costs		47		20			27		0.06		0.04				0.02

Fuel hedge impact	Fuel hedge impact	(4)		(23)			19		(0.01)		(0.04)				0.03		Fuel hedge impact	(41)		(4)			(37)		(0.05)		(0.01)			(0.04)
Refinery segment impact	Refinery segment impact	(53)		125			(178)		(0.07)		0.23				(0.30)		Refinery segment impact	(222)		(53)			(169)		(0.25)		(0.07)			(0.18)
Total fuel expense	Total fuel expense	$	2,092	$	1,017		$	1,075	$	2.79	$	1.87			$	0.92	Total fuel expense	$	2,676	$	2,092		$	584	$	3.01	$	2.79		$	0.22

(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~~Refinery sales to third parties ~~which are at or near cost. The refinery cost of sales increased $647~~decreased $271 million compared to the March ~~2021 quarter. The increase in third-party refinery sales resulted from higher pricing and production during the March~~ 2022 quarter ~~compared~~due to ~~the March 2021 quarter.~~lower rates and volume.

Delta Air Lines, Inc. | March 2023 Form 10-Q 21

Item 2. MD&A - Results of Operations

Contracted Services. During the March ~~2022~~2023 quarter, demand and capacity increased compared to the March ~~2021~~2022 quarter due to the ongoing recovery ~~from the COVID-19 pandemic as discussed above.~~of our operations. The continued restoration of our operations ~~was~~and associated higher volume-related expenses and inflationary pressures were the primary ~~driver~~drivers for the increase in contracted services.

~~Regional Carrier Expense.~~Pilot agreement and related expenses. ~~Regional carrier expense increased compared~~In addition to the items in salaries and related costs above, the recently ratified pilot agreement also includes a provision for a one-time payment upon ratification in the March ~~2021~~2023 quarter ~~due~~of $735 million. Additionally, we recorded adjustments to ~~an increase in utilization as a result~~other benefit-related items of ~~the increased demand discussed above.~~approximately $130 million.

Aircraft Maintenance Materials and Outside Repairs. Maintenance expense increased compared to the March ~~2021~~2022 quarter as we ~~returned aircraft~~continued to ~~service~~restore our operations and to support our operational reliability.

Passenger ~~commissions~~Commissions and ~~other selling expenses.~~Other Selling Expenses. Compared to the March ~~2021~~2022 quarter, passenger revenue increased ~~151%~~ in the March ~~2022~~2023 quarter which was the primary reason for the increase in passenger commissions and other selling expenses.

Passenger ~~service.~~Service. Passenger service expenses increased compared to the March ~~2021~~2022 quarter due to ~~the~~higher volume-related expenses associated with increased ~~traffic discussed above.~~demand.

~~Restructuring Charges.~~Profit Sharing. ~~During 2020, we recorded restructuring charges~~Our profit sharing program pays 10% to all eligible employees for ~~items such~~the first $2.5 billion of annual pre-tax profit and 20% of annual pre-tax profit above $2.5 billion, as ~~fleet impairments~~defined by the terms of the program. In determining the amount of profit sharing, the program defines profit as pre-tax profit adjusted for profit sharing and voluntary early retirement and separation programs following strategic business decisions in response to the COVID-19 pandemic. In the March 2022 quarter, we recognized $5 million of net adjustments to certain ~~of those restructuring charges, representing changes in our estimates, compared to $44 million of net adjustments in the March 2021 quarter.~~other items.

~~Government Grant Recognition.~~ Other.~~During the March 2021 quarter, we recognized $1.2 billion of government PSP grant proceeds~~ The increase in other is primarily due to higher volume-related expenses, such as ~~contra-expense that were used exclusively for the payment of employee wages, salaries~~travel and ~~benefits.~~

incidental costs, associated with increased demand.

Non-Operating Results
Three Months Ended March 31,
(in millions) 2022 2021 Favorable (Unfavorable)
Interest expense, net $ (274) $ (361) $ 87
Equity method results — (54) 54
Gain/(loss) on investments, net (147) 262 (409)
Loss on extinguishment of debt (25) (56) 31
Pension and related benefit/(expense) 73 107 (34)
Miscellaneous, net (44) (15) (29)
Total non-operating expense, net $ (417) $ (117) $ (300)


	Three Months Ended March 31,				Favorable (Unfavorable)
(in millions)	2023		2022
Interest expense, net	$	(227)	$	(274)	$	47

Gain/(loss) on investments, net	122		(147)		269
Loss on extinguishment of debt	(22)		(25)		3
Pension and related (expense)/benefit	(61)		73		(134)
Miscellaneous, net	(41)		(44)		3
Total non-operating expense, net	$	(229)	$	(417)	$	188

Interest expense, net.Interest expense, net includes interest expense and interest income. This decreased compared to the ~~March 2021 quarter~~prior year period as a result of increased interest income and our debt reduction ~~initiatives since the December 2020 quarter.~~initiatives. During ~~2021,~~2022, we made payments of approximately ~~$5.8~~$4.5 billion related to our debt and finance ~~leases,~~lease obligations, which included approximately ~~$3.8~~$2.3 billion ~~for~~of early ~~repayments.~~repayment activity. We have continued to pay down our debt induring the three months ended March ~~2022 quarter~~31, 2023 with ~~$1.4~~$1.2 billion of payments on debt and finance lease obligations, including ~~$199~~$468 millionof principal amounts for the early repurchase of various secured notes and ~~unsecured notes through repurchases~~a portion of the SkyMiles Term Loan on the open ~~market.~~market and made early principal repayments of $227 million on various notes secured by aircraft. We continue to seek opportunities to pre-pay our debt, in addition to periodic amortization and scheduled ~~maturities, during the remainder of 2022 and beyond.~~maturities.

~~Equity method results.~~ Equity method results in 2021 reflected our share of Virgin Atlantic's equity method 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.

Loss on extinguishment of debt. Loss on extinguishment of debt reflects the losses incurred in the early repayment of the notes mentioned above.

Pension and related ~~benefit/~~(expense)./benefit. Pension and related ~~benefit/~~(expense)/benefit reflects the net periodic ~~benefit/~~(cost)/benefit of our pension and other postretirement and postemployment benefit plans. ~~Based on our level~~The unfavorable movement in pension and related (expense)/benefit is due to lower plan assets as of ~~funding at year-end, we have modified the strategic asset allocation mix~~December 31, 2022, compared to ~~reduce the investment risk of the portfolio. As~~December 31, 2021, primarily 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%.~~broad market declines in 2022.

Delta Air Lines, Inc. | March 2023 Form 10-Q 22

Item 2. MD&A - Income Taxes

Miscellaneous, net. Miscellaneous, net primarily includes foreign exchange gains/(losses), charitable contributions and ~~charitable contributions.~~our share of our equity method investments net results.

Income Taxes

We project ~~that~~ our annual effective tax rate for ~~2022~~2023 will be ~~approximately 25%~~between 23% and 26%. Our effective tax rate in 2023 may be impacted by mark-to-market adjustments on our equity investments which are considered capital assets for tax purposes. In certain interim periods, we may have adjustments to our net deferred tax assets as a result of changes in prior year estimates, changes in our mark-to-market equity investments and tax laws enacted during the period, which will impact the effective tax rate for that interim period.

Refinery Segment

The refinery operated by 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~~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.

~~During~~


Refinery segment financial information
	Three Months Ended March 31,				Increase (Decrease)
(in millions, except per gallon data)	2023		2022
Exchange products	$	714	$	809	$	(95)
Sales of refined products	126		26		100
Sales to airline segment	596		291		305
Third party refinery sales	916		1,187		(271)
Operating revenue	$	2,352	$	2,313	$	39

Operating income	$	222	$	53	$	169
Refinery segment impact on airline average price per fuel gallon	$	(0.25)	$	(0.07)	$	(0.18)

The refinery generated higher operating income in the three months ended March 31, ~~2022, the refinery operated at near pre-pandemic production levels and a summary of the refinery results is shown below.~~

Refinery segment financial information
Three Months Ended March 31,
(in millions, except per gallon data) 2022 2021 Increase (Decrease) % Increase (Decrease)
Exchange products $ 809 $ 503 $ 306 61 %
Sales of refined products 26 4 22 NM
Sales to airline segment 291 — 291 NM
Third party refinery sales 1,187 540 647 120 %
Operating revenue $ 2,313 $ 1,047 $ 1,266 121 %
Operating income/(loss) $ 53 $ (125) $ 178 NM
Refinery segment impact on airline average price per fuel gallon $ (0.07) $ 0.23 $ (0.30) NM

~~Refinery revenues increased~~2023 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,~~increased sales volumes and ~~partially offset by increased expense associated with the~~ higher ~~levels of production~~.realized margins on refined product sales.

~~Delta Air Lines, Inc. March 2022 Form 10-Q 26~~

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

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 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 slightly during the March ~~2022~~2023 quarter and Monroe incurred ~~$85~~$103 million in RINs compliance costs during the three months ended March 31, ~~2022~~2023 compared to ~~$158~~$85 million in the three months ended 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.~~2022.

At March 31, ~~2022,~~2023, we had a net fair value obligation of ~~$430~~$38 million related to RINs compliance costs. Our obligation as of March 31, ~~2022~~2023 was calculated using the ~~proposed~~ Renewable Fuel Standard ("RFS") volume requirements, which were ~~issued~~finalized in ~~December 2021. The~~2022 for 2021 and 2022 obligations, and proposed in 2022 for 2023 obligations. In March 2023, we settled a portion of our 2021 RINs obligation with the EPA. We expect to settle the remaining 2021 and our entire 2022 RINs obligation by the 2022 compliance deadline, which 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.~~yet finalized.

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

Delta Air Lines, Inc. | March 2023 Form 10-Q 23

Item 2. MD&A - Operating Statistics
Three Months Ended March 31, 2022 vs. 2021 Increase
(Decrease) 2022 vs. 2019 Increase
(Decrease)
Consolidated(1)
2022 2021 2019
Revenue passenger miles (in millions) ("RPM") 38,700 17,948 51,617 116 % (25) %
Available seat miles (in millions) ("ASM") 51,810 40,118 62,416 29 % (17) %
Passenger mile yield 17.85 ¢ 15.31 ¢ 17.93 ¢ 17 % — %
Passenger revenue per available seat mile ("PRASM") 13.33 ¢ 6.85 ¢ 14.83 ¢ 95 % (10) %
Total revenue per available seat mile ("TRASM") 18.04 ¢ 10.34 ¢ 16.78 ¢ 74 % 8 %
TRASM, adjusted(2)
15.75 ¢ 9.00 ¢ 16.63 ¢ 75 % (5) %
Cost per available seat mile ("CASM") 19.56 ¢ 13.83 ¢ 15.14 ¢ 41 % 29 %
CASM-Ex(2)
13.24 ¢ 13.01 ¢ 11.49 ¢ 2 % 15 %
Passenger load factor 75 % 45 % 83 % 30 pts (8) pts
Fuel gallons consumed (in millions) 751 545 962 38 % (22) %
Average price per fuel gallon(3)
$ 2.79 $ 1.87 $ 2.06 49 % 35 %
Average price per fuel gallon, adjusted(2)(3)
$ 2.79 $ 1.91 $ 2.04 46 % 37 %

Operating Statistics


	Three Months Ended March 31,						% Increase (Decrease)
Consolidated(1)	2023			2022
Revenue passenger miles (in millions) ("RPM")	49,687			38,700				28	%
Available seat miles (in millions) ("ASM")	61,351			51,810				18	%
Passenger mile yield	20.95		¢	17.85		¢		17	%
Passenger revenue per available seat mile ("PRASM")	16.97		¢	13.33		¢		27	%
Total revenue per available seat mile ("TRASM")	20.80		¢	18.04		¢		15	%
TRASM, adjusted(2)	19.30		¢	15.75		¢		23	%
Cost per available seat mile ("CASM")	21.25		¢	19.56		¢		9	%
CASM-Ex(2)	13.86		¢	13.24		¢		5	%

Passenger load factor	81		%	75		%		6	pts
Fuel gallons consumed (in millions)	888			751				18	%
Average price per fuel gallon(3)	$	3.01		$	2.79			8	%
Average price per fuel gallon, adjusted(2)(3)	$	3.06		$	2.79			10	%

(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 and refinery segment ~~results and carbon offset costs.~~results.

Delta Air Lines, Inc. | March ~~2022~~2023 Form 10-Q 2724

Item 2. MD&A - Fleet Information

Fleet Information

Our operating aircraft fleet, purchase commitments and options at March 31, ~~2022~~2023 are summarized in the following table.


Mainline aircraft information by fleet type	Mainline aircraft information by fleet type								Mainline aircraft information by fleet type
		Current Fleet(1)					Commitments			Current Fleet(1)					Commitments
Fleet Type	Fleet Type	Owned	Finance Lease	Operating Lease	Total	Average Age (Years)	Purchase	Options	Fleet Type	Owned	Finance Lease	Operating Lease	Total	Average Age (Years)	Purchase	Options
A220-100	A220-100	41	4	—	45	2.3			A220-100	41	4	—	45	3.3
A220-300	A220-300	10	—	—	10	1.2	40	50	A220-300	15	—	—	15	1.6	59	26
A319-100	A319-100	55	2	—	57	20.1			A319-100	57	—	—	57	21.1
A320-200	A320-200	56	—	—	56	26.2			A320-200	61	—	—	61	27.5
A321-200	A321-200	69	22	36	127	3.3			A321-200	63	22	42	127	4.3
A321-200neo	A321-200neo	1	—	—	1	—	154	70	A321-200neo	25	—	—	25	0.4	130	70
A330-200	A330-200	11	—	—	11	17.0			A330-200	11	—	—	11	18.0
A330-300	A330-300	28	—	3	31	13.2			A330-300	28	—	3	31	14.2
A330-900neo	A330-900neo	6	3	5	14	1.5	23		A330-900neo	13	3	5	21	1.8	17
A350-900	A350-900	15	—	11	26	3.6	18		A350-900	17	—	11	28	4.3	16
B-717-200	B-717-200	10	46	4	60	20.7			B-717-200	10	53	3	66	21.7
B-737-800	B-737-800	73	4	—	77	20.6			B-737-800	73	4	—	77	21.5
B-737-900ER	B-737-900ER	104	1	49	154	6.1	5		B-737-900ER	112	2	49	163	7.2
B-737-10									B-737-10	—	—	—	—	—	100	30
B-757-200	B-757-200	100	—	—	100	24.6			B-757-200	100	—	—	100	25.6
B-757-300	B-757-300	16	—	—	16	19.1			B-757-300	16	—	—	16	20.1
B-767-300ER	B-767-300ER	41	—	—	41	25.6			B-767-300ER	45	—	—	45	27.0
B-767-400ER	B-767-400ER	21	—	—	21	21.3			B-767-400ER	21	—	—	21	22.2
Total	Total	657	82	108	847	14.0	240	120	Total	708	88	113	909	14.6	322	126

(1)Includes both active and temporarily parked aircraft. Excludes certain aircraft we own or lease or that are operated by regional carriers on our behalf shown in the table below. ~~Includes both active and temporarily parked aircraft.~~

The table below summarizes the aircraft operated by regional carriers on our behalf at March 31, ~~2022.~~2023.


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(1)							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.(2)	Endeavor Air, Inc.(2)	51	18	124	—	—	193	Endeavor Air, Inc.(2)	11	18	123	—	—	152
SkyWest Airlines, Inc.	SkyWest Airlines, Inc.	9	6	44	—	71	130	SkyWest Airlines, Inc.	—	6	38	—	84	128
Republic Airways, Inc.	Republic Airways, Inc.	—	—	—	11	46	57	Republic Airways, Inc.	—	—	—	11	46	57
Total	Total	60	24	168	11	117	380	Total	11	24	161	11	130	337

(1)Includes both active and temporarily parked aircraft. We own 216 and have operating leases for three of these regional aircraft. The remainder are owned or leased by SkyWest Airlines, Inc. or Republic Airways, Inc.

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

Delta Air Lines, Inc. | March ~~2022~~2023 Form 10-Q 2825

Item 2. MD&A - Financial Condition and Liquidity

Financial Condition and Liquidity

As of March 31, ~~2022,~~2023, we had ~~$12.8~~$9.5 billion in cash, cash equivalents, short-term investments and aggregate principal amount committed and available to be drawn under our revolving credit 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

We generated ~~positive~~ cash flows from operations of ~~$1.8~~$2.2 billion and ~~$691 million~~$1.8 billion in the three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, respectively. We expect to continue generating positive cash flows from operations during the remainder of ~~2022.~~2023.

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

Since the beginning of the COVID-19 pandemic in the March 2020 quarter, reduced demand for air travel has resulted in a lower level of advance bookings and the associated cash received than we have historically experienced, which has been impacting the typical seasonal trend of air traffic liability. However, domestic demand continued to improve throughout the March 2022 quarter as consumers have regained confidence to travel and increased ticket purchases for travel further in advance. Air traffic liability increased ~~approximately $2.8 billion~~ during the March ~~2022~~2023 quarter, ~~which exceeds~~as is typical with our ~~historical~~usual seasonal ~~build, reflecting the continued restoration of our business. Our air traffic liability remains above historical levels with no material change to the travel credit balance~~trend. Additionally, we are seeing a shift in customers purchasing flights further in advance compared to ~~December 31, 2021.~~historical patterns, enhancing the positive cash flow from advance ticket sales.

Fuel. Fuel expense represented approximately 21% ~~and 18%~~ of our total operating expense for the three months ended March 31, ~~2022~~2023 and ~~2021, respectively.~~2022. The market price for jet fuel is volatile, which can impact the comparability of our periodic cash flows from operations. ~~The~~Although the average fuel price per gallon ~~increased substantially~~decreased during the three months ended March ~~2022 quarter.~~31, 2023, fuel costs remain higher compared to historical levels. We expect ~~this elevated~~ jet fuel ~~cost~~prices to ~~continue~~remain volatile throughout ~~2022 due to recent market disruptions, further exacerbated by geopolitical events.~~2023. Fuel consumption was also higher induring the three months ended March ~~2022 quarter~~31, 2023 compared to the ~~March 2021 quarter~~prior year period due to the increase in capacity. We expect that fuel consumption will continue to increase throughout ~~2022~~2023, as we ~~expect~~plan for our full year system capacity to ~~return closer~~be close to ~~pre-pandemic~~2019 capacity levels, ~~of capacity and demand for air travel,~~ partially offset by increases in fuel efficiency of our fleet.

~~New York-JFK Airport Expansion.~~Profit Sharing. During 2021, the Port Authority of New York and New Jersey ("Port Authority") approved modified project plans to renovate Terminal 4 and add 10 new gates and other facilities enabling us to move out of Terminal 2 and consolidate our operations at Terminal 4. The project is estimated to cost approximately $1.5 billion and will be funded primarily with bonds issuedOur broad-based employee profit sharing program provides that for each year in ~~April 2022~~which we have an annual pre-tax profit, as defined by the ~~New York Transportation Development Corporation ("NYTDC")~~terms of the program, we will pay a specified portion of that profit to employees. In determining the amount of profit sharing, the program defines profit as pre-tax profit adjusted for ~~which~~profit sharing and certain other items. During the three months ended March 31, 2023, we accrued $72 million in profit sharing expense based on the year-to-date performance and current expectations for 2023 profit.

We paid $563 million in profit sharing in February 2023 related to our ~~landlord, JFK International Air Terminal LLC, is the obligor. Additionally,~~2022 pre-tax profit in ~~April 2022, we amended our sublease to provide for the Terminal 4 expansion project, including the adjustment~~recognition of our ~~subleased space~~employees' contributions toward achieving the year's financial results.

Pilot Agreement Payment. In March 2023, Delta pilots ratified a new four-year Pilot Working Agreement effective January 1, 2023. The agreement includes numerous work rule changes and ~~rentals. We~~pay rate increases during the four-year term, including an initial pay rate increase of 18%. The agreement also includes a provision for a one-time payment upon ratification in the March 2023 quarter of $735 million. Additionally, we recorded adjustments to other benefit-related items of approximately $130 million.

Sale of Miles to Participating Companies. Customers earn miles based on their spending with participating companies such as credit card companies, hotels, car rental agencies and ridesharing companies with which we have ~~not completed~~marketing agreements to sell miles. Payments are typically due to us monthly based on the volume of miles sold during the period. Our most significant contract to sell miles relates to our ~~assessment~~co-brand credit card relationship with American Express. Total cash sales to American Express were $1.7 billion in the March 2023 quarter, an increase of approximately 38% compared to 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 end of 2023.March 2022 quarter.

Delta Air Lines, Inc. | March ~~2022~~2023 Form 10-Q 2926

Item 2. MD&A - Financial Condition and Liquidity

Investing Activities

Short-Term Investments. During the three months ended March 31, ~~2022,~~2023, we ~~redeemed~~purchased a net of ~~$1.1 billion~~$102 million 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 ~~$1.8~~$1.0 billion and ~~$438 million~~$1.8 billion for the three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, respectively. Our capital expenditures are primarily related to the purchases of aircraft, airport construction projects, fleet modifications 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 ~~2022~~2023 capital ~~expenditures~~spend of approximately ~~$6.0~~$5.5 billion will be primarily for aircraft, including deliveries and advance deposit payments, as well as fleet modifications and technology 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 to replace Terminals C and D with a new state-of-the-art terminal facility. Construction is ~~underway~~ongoing and is being phased to limit passenger inconvenience. Due to an acceleration effort that commenced in 2020, completion is expected by 2025.

We currently expect our net project costs to be approximately ~~$3.5~~$4.3 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~~$750~~ $500 million on this project during ~~2022,~~2023, of which ~~$223~~$109 million was incurred in the three months ended March 31, ~~2022.~~2023.

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~~2023 with a total cost of approximately ~~$2.3~~$2.4 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~~We have guaranteed the obligations of the RAIC under the credit ~~facility. The~~facility and the revolving credit facility agreement was most recently amended in January ~~2022, increasing~~2023, decreasing the revolver capacity ~~from $800 million~~ to ~~$1.1 billion.~~$700 million.

Financing Activities

Debt and Finance Leases. In the three months ended March 31, ~~2022,~~2023, we had cash outflows of ~~approximately $1.4~~$1.2 billion related to repayments of our debt and finance lease obligations, including ~~$199~~$468 millionof principal amounts for the early repurchase of various secured notes and ~~unsecured notes.~~a portion of the SkyMiles Term Loan on the open market and made early principal repayments of $227 million on various notes secured by aircraft. We continue to seek opportunities to pre-pay our debt, in addition to periodic amortization and scheduled ~~maturities, during~~maturities. In the ~~remainder of 2022~~March 2023 quarter, both Fitch and ~~beyond.~~S&P credit rating agencies upgraded outlooks for Delta to stable and positive, respectively.

The principal amount of our debt and finance leases was ~~$25.8~~$22.1 billion at March 31, ~~2022.~~2023.

Undrawn Lines of Credit

Covenants

We were in compliance with the covenants in our debt agreements at March 31, ~~2022.~~2023.

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

~~Item 2. MD&A - Critical Accounting Estimates~~

Critical Accounting Estimates

~~Except as set forth below, for information regarding~~There have been no material changes in our Critical Accounting Estimates ~~see~~from the information provided in 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~~

Delta Air Lines, Inc. | March ~~2022~~2023 Form 10-Q 3127

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. 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.

Included below are reconciliations of non-GAAP measures used within this Form 10-Q to the most directly comparable GAAP financial measures. Reconciliations below may not calculate exactly due to rounding. These reconciliations include certain adjustments to GAAP measures ~~which are directly related to the impact of COVID-19 and our response. These adjustments are made~~ to provide comparability between the reported periods, if applicable, asand for the reasons 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 March 2022 quarter, we recognized $5 million of net adjustments to certain of those restructuring charges, representing changes in our estimates, compared to $44 million of net adjustments in the March 2021 quarter.

•~~Government grant recognition.~~ We recognized $1.2 billion of the grant proceeds from the payroll support program extensions as contra-expense during the 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.

~~We also regularly adjust certain GAAP measures for the following items, if applicable, for the reasons 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, 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.

•One-time pilot agreement expenses. In March 2023, Delta pilots ratified a new four-year Pilot Working Agreement effective January 1, 2023. The agreement includes numerous work rule changes and pay rate increases during the four-year term, including an initial pay rate increase of 18%. The agreement also includes a provision for a one-time payment upon ratification in the March 2023 quarter of $735 million. Additionally, we recorded adjustments to other benefit-related items of approximately $130 million. Adjusting for these expenses allows investors to better understand and analyze our core cost performance.

•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. During 2022, we recognized adjustments to certain of those restructuring charges, representing changes in our estimates.

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

•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.

•~~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


Operating income/(loss), adjusted reconciliation
	Three Months Ended March 31,
(in millions)	2023		2022
Operating loss	$	(277)	$	(783)
Adjusted for:
MTM adjustments and settlements on hedges	(41)		(4)
One-time pilot agreement expenses	864		—
Restructuring charges	—		(5)

Operating income/(loss), adjusted	$	546	$	(793)

Delta Air Lines, Inc. | March ~~2022~~2023 Form 10-Q 3228

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 ¢


Operating expense, adjusted reconciliation
	Three Months Ended March 31,
(in millions)	2023		2022
Operating expense	$	13,036	$	10,131
Adjusted for:

MTM adjustments and settlements on hedges	41		4
Third-party refinery sales	(916)		(1,187)
One-time pilot agreement expenses	(864)		—
Restructuring charges	—		5

Operating expense, adjusted	$	11,296	$	8,954


Fuel expense, adjusted reconciliation
						Average Price Per Gallon
	Three Months Ended March 31,				Three Months Ended March 31,
(in millions, except per gallon data)	2023		2022			2023		2022
Total fuel expense	$	2,676	$	2,092		$	3.01	$	2.79
Adjusted for:
MTM adjustments and settlements on hedges	41		4			0.05		0.01

Total fuel expense, adjusted	$	2,718	$	2,097		$	3.06	$	2.79

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 ¢


TRASM, adjusted reconciliation
	Three Months Ended March 31,
	2023		2022
TRASM (cents)	20.80	¢	18.04	¢
Adjusted for:
Third-party refinery sales	(1.49)		(2.29)

TRASM, adjusted	19.30	¢	15.75	¢


CASM-Ex reconciliation
	Three Months Ended March 31,
	2023		2022
CASM (cents)	21.25	¢	19.56	¢
Adjusted for:

Aircraft fuel and related taxes	(4.36)		(4.04)
Third-party refinery sales	(1.49)		(2.29)
Profit sharing	(0.12)		—
One-time pilot agreement expenses	(1.41)		—
Restructuring charges	—		0.01

CASM-Ex	13.86	¢	13.24	¢

Delta Air Lines, Inc. | March ~~2022~~2023 Form 10-Q 3329

Item 2. MD&A - Supplemental Information

Free Cash Flow

The following table shows a reconciliation of net cash provided by ~~or used 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 of short-term investments. Net ~~redemptions~~purchases of short-term investments represent the net purchase and sale activity of investments and marketable securities in the period, including gains and losses. We adjust for this activity to provide investors a better understanding of the company's free cash flow generated by our operations.

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

•Net cash flows related to certain airport construction projects and other. Cash flows related to certain airport construction projects are included in our GAAP operating activities and capital expenditures. We have adjusted for these items 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 these projects.

Free cash flow reconciliation
Three Months Ended March 31,
(in millions) 2022 2021 2019
Net cash provided by operating activities $ 1,771 $ 691 $ 1,942
Net cash used in investing activities (749) (60) (1,096)
Adjusted for:
Net redemptions of short-term investments (1,120) (210) (206)
Strategic investments and related 107 (19) —
Net cash flows related to certain airport construction projects and other 188 308 111
Free cash flow $ 197 $ 710 $ 751
•Financed aircraft acquisitions. This adjustment reflects aircraft deliveries that are leased as capital expenditures. The adjustment is based on their original contractual purchase price or an estimate of the aircraft's fair value and provides a more meaningful view of our investing activities.

•Pilot agreement payment. In March 2023, Delta pilots ratified a new four-year Pilot Working Agreement effective January 1, 2023. The agreement includes numerous work rule changes and pay rate increases during the four-year term, including an initial pay rate increase of 18%. The agreement also includes a provision for a one-time payment upon ratification in the March 2023 quarter of $735 million. We adjust for this item to provide investors a better understanding of our recurring free cash flow generated by our operations.


Free cash flow reconciliation
	Three Months Ended March 31,
(in millions)	2023
Net cash provided by operating activities	$	2,235
Net cash used in investing activities	(1,100)
Adjusted for:
Net purchases of short-term investments	102

Net cash flows related to certain airport construction projects and other	19
Financed aircraft acquisitions	(137)
Pilot agreement payment	735
Free cash flow	$	1,853

Delta Air Lines, Inc. | March ~~2022~~2023 Form 10-Q 3430

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 March 31, ~~2022~~2023 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 March 31, ~~2022,~~2023, 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. March 2022 Form 10-Q 35~~

~~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 March ~~2022~~2023 quarter. The table reflects shares withheld from employees to satisfy certain tax obligations due in connection with grants of stock under the Delta Air Lines, Inc. Performance Compensation Plan (the "Plan"). The Plan provides for the withholding of shares to satisfy tax obligations. It does not specify a maximum number of shares that can be withheld for this purpose. The shares of common stock withheld to satisfy tax withholding obligations may be deemed to be "issuer purchases" of shares that are required to be disclosed pursuant to this Item.

Shares purchased / withheld from employee awards during the March 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


Shares purchased / withheld from employee awards during the March 2023 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 2023	26,294	$	38.80	26,294	$	—
February 2023	575,067	$	39.78	575,067	$	—
March 2023	2,334	$	36.74	2,334	$	—
Total	603,695			603,695

~~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. | March ~~2022~~2023 Form 10-Q 3631

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)~~December 9, 2022 ).*

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~~ ~~Model Award Agreement~~ ~~for the Delta Air Lines, Inc. 2022~~ ~~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 March 31 , 20202 2 23

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 M ~~arch~~March 31,, 202 23

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 March 31 , 202 23

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

101.SCH Inline XBRL Taxonomy Extension Schema Document

101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB Inline XBRL Taxonomy Extension Labels Linkbase Document

101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document

104 The cover page from this Quarterly Report on Form 10-Q for the quarter ended March 31, ~~2022,~~2023, formatted in Inline XBRL (included in Exhibit 101)

_______________

* Incorporated by reference.

** Portions of this exhibit have been omitted as confidential information.

Delta Air Lines, Inc. | March ~~2022~~2023 Form 10-Q 3732

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)
April 13, ~~2022~~2023

Delta Air Lines, Inc. | March ~~2022~~2023 Form 10-Q 3833


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 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			18
Item 3. Quantitative and Qualitative Disclosures About Market Risk			3531
Item 4. Controls and Procedures			3531

Part II. Other Information
Item 1. Legal Proceedings			3531
Item 1A. Risk Factors			3531
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			36
~~Item 5. Other Information~~			3631
Item 6. Exhibits			3732

Signature			3833


(in millions, except share data)	March 31, 2022		December 31, 2021
ASSETS
Current Assets:
Cash and cash equivalents	$	7,705	$	7,933
Short-term investments	2,250		3,386
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	1,292		1,098
Prepaid expenses and other	1,434		1,119
Total current assets	15,720		15,940
Noncurrent Assets:
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	7,402		7,237
Goodwill	9,753		9,753
Identifiable intangibles, net of accumulated amortization of $895 and $893	5,999		6,001
Equity investments	1,999		1,712
Deferred income taxes, net	1,534		1,294
Other noncurrent assets	1,299		1,773
Total noncurrent assets	58,028		56,519
Total assets	$	73,748	$	72,459

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current maturities of debt and finance leases	$	1,116	$	1,782
Current maturities of operating leases	744		703
Air traffic liability	8,809		6,228
Accounts payable	4,810		4,240
Accrued salaries and related benefits	2,288		2,457
Loyalty program deferred revenue	3,038		2,710
Fuel card obligation	1,100		1,100
Other accrued liabilities	2,155		1,746
Total current liabilities	24,060		20,966
Noncurrent Liabilities:
Debt and finance leases	24,441		25,138
Noncurrent air traffic liability	300		130
Pension, postretirement and related benefits	5,862		6,035
Loyalty program deferred revenue	4,606		4,849
Noncurrent operating leases	7,199		7,056
Other noncurrent liabilities	4,289		4,398
Total noncurrent liabilities	46,697		47,606

Commitments and Contingencies	0		0

Stockholders' Equity:
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	11,462		11,447
Accumulated deficit	(1,088)		(148)
Accumulated other comprehensive loss	(7,071)		(7,130)
Treasury stock, at cost, 10,485,815 and 9,752,872 shares	(312)		(282)
Total stockholders' equity	2,991		3,887
Total liabilities and stockholders' equity	$	73,748	$	72,459
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.


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)


	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)	%


	Three Months Ended March 31,									2022 vs. 2021 Increase (Decrease)		2022 vs. 2019 Increase (Decrease)
Consolidated(1)	2022			2021			2019
Revenue passenger miles (in millions) ("RPM")	38,700			17,948			51,617			116	%	(25)	%
Available seat miles (in millions) ("ASM")	51,810			40,118			62,416			29	%	(17)	%
Passenger mile yield	17.85		¢	15.31		¢	17.93		¢	17	%	—	%
Passenger revenue per available seat mile ("PRASM")	13.33		¢	6.85		¢	14.83		¢	95	%	(10)	%
Total revenue per available seat mile ("TRASM")	18.04		¢	10.34		¢	16.78		¢	74	%	8	%
TRASM, adjusted(2)	15.75		¢	9.00		¢	16.63		¢	75	%	(5)	%
Cost per available seat mile ("CASM")	19.56		¢	13.83		¢	15.14		¢	41	%	29	%
CASM-Ex(2)	13.24		¢	13.01		¢	11.49		¢	2	%	15	%

Passenger load factor	75		%	45		%	83		%	30	pts	(8)	pts
Fuel gallons consumed (in millions)	751			545			962			38	%	(22)	%
Average price per fuel gallon(3)	$	2.79		$	1.87		$	2.06		49	%	35	%
Average price per fuel gallon, adjusted(2)(3)	$	2.79		$	1.91		$	2.04		46	%	37	%