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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☑
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2023
Or
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 001-5424
deltacra01a01a01a02a58.jpg
DELTA AIR LINES, INC.
(Exact name of registrant as specified in its charter)
Delaware58-0218548
(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 classTrading SymbolName of each exchange on which registered
Common Stock, par value $0.0001 per shareDALNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes ☑ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes ☑ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer☑Accelerated filer ☐Non-accelerated filer ☐
Smaller reporting company☐Emerging growth company☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No ☑
Number of shares outstanding by each class of common stock, as of September 30, 2023:
Common Stock, $0.0001 par value - 643,463,433 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, 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. | September 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 September 30, 2023, the related condensed consolidated statements of operations and comprehensive income and consolidated statements of stockholders' equity for the three-month and nine-month periods ended September 30, 2023 and 2022, condensed consolidated statements of cash flows for the nine-month periods ended September 30, 2023 and 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, 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 10, 2023, we expressed an unqualified audit opinion on those Consolidated Financial Statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of December 31, 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 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
October 12, 2023

Delta Air Lines, Inc. | September 2023 Form 10-Q                                 2
Financial Statements

DELTA AIR LINES, INC.
Consolidated Balance Sheets
(Unaudited)
(in millions, except share data)September 30,
2023		December 31,
2022
ASSETS
Current Assets:
Cash and cash equivalents$2,835 $3,266 
Short-term investments2,170 3,268 
Accounts receivable, net of allowance for uncollectible accounts of $17 and $23
3,214 3,176 
Fuel, expendable parts and supplies inventories, net of allowance for obsolescence of $128 and $136
1,507 1,424 
Prepaid expenses and other2,529 1,877 
Total current assets12,255 13,011 
Noncurrent Assets:
Property and equipment, net of accumulated depreciation and amortization of $21,235 and $20,370
34,593 33,109 
Operating lease right-of-use assets6,962 7,036 
Goodwill9,753 9,753 
Identifiable intangibles, net of accumulated amortization of $909 and $902
5,985 5,992 
Equity investments2,291 2,128 
Other noncurrent assets1,408 1,259 
Total noncurrent assets60,992 59,277 
Total assets$73,247 $72,288 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current maturities of debt and finance leases$1,981 $2,359 
Current maturities of operating leases728 714 
Air traffic liability8,738 8,160 
Accounts payable5,320 5,106 
Accrued salaries and related benefits4,003 3,288 
Loyalty program deferred revenue3,917 3,434 
Fuel card obligation1,100 1,100 
Other accrued liabilities1,769 1,779 
Total current liabilities27,556 25,940 
Noncurrent Liabilities:
Debt and finance leases17,532 20,671 
Pension, postretirement and related benefits3,618 3,707 
Loyalty program deferred revenue4,456 4,448 
Noncurrent operating leases6,558 6,866 
Other noncurrent liabilities4,301 4,074 
Total noncurrent liabilities36,465 39,766 
Commitments and Contingencies
Stockholders' Equity:
Common stock at $0.0001 par value; 1,500,000,000 shares authorized, 654,674,447 and 651,800,786
shares issued
— — 
Additional paid-in capital11,613 11,526 
Retained earnings3,613 1,170 
Accumulated other comprehensive loss(5,660)(5,801)
Treasury stock, at cost, 11,211,014 and 10,535,033 shares
(340)(313)
Total stockholders' equity9,226 6,582 
Total liabilities and stockholders' equity$73,247 $72,288 
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
Delta Air Lines, Inc. | September 2023 Form 10-Q                                 3
Financial Statements
DELTA AIR LINES, INC.
Condensed Consolidated Statements of Operations and Comprehensive Income
(Unaudited)
Three Months Ended September 30,
Nine Months Ended September 30,
(in millions, except per share data)2023202220232022
Operating Revenue:
Passenger$13,119 $11,464 $36,735 $29,329 
Cargo154 240 535 801 
Other2,215 2,271 6,555 7,017 
Total operating revenue15,488 13,975 43,825 37,147 
Operating Expense:
Salaries and related costs3,760 3,050 10,838 8,832 
Aircraft fuel and related taxes2,936 3,318 8,128 8,633 
Ancillary businesses and refinery1,128 1,349 3,427 4,449 
Contracted services1,004 881 3,009 2,425 
Landing fees and other rents679 562 1,880 1,611 
Aircraft maintenance materials and outside repairs661 487 1,860 1,474 
Passenger commissions and other selling expenses618 546 1,770 1,385 
Depreciation and amortization594 538 1,731 1,554 
Regional carrier expense546 528 1,664 1,547 
Passenger service449 406 1,307 1,050 
Profit sharing417 237 1,084 291 
Pilot agreement and related expenses— — 864 — 
Aircraft rent131 131 395 380 
Other581 486 1,669 1,325 
Total operating expense13,504 12,519 39,626 34,956 
Operating Income1,984 1,456 4,199 2,191 
Non-Operating Expense:
Interest expense, net(196)(248)(627)(791)
Gain/(loss) on investments, net(206)(245)45 (613)
Loss on extinguishment of debt(13)(34)(63)(100)
Pension and related (expense)/benefit(61)73 (183)218 
Miscellaneous, net13 (40)(38)(111)
Total non-operating expense, net(463)(494)(866)(1,397)
Income Before Income Taxes1,521 962 3,333 794 
Income Tax Provision(413)(267)(761)(305)
Net Income$1,108 $695 $2,572 $489 
Basic Earnings Per Share$1.73 $1.09 $4.03 $0.77 
Diluted Earnings Per Share$1.72 $1.08 $4.00 $0.76 
Comprehensive Income$1,157 $757 $2,713 $673 
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

Delta Air Lines, Inc. | September 2023 Form 10-Q                                 4
Financial Statements
DELTA AIR LINES, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Nine Months Ended September 30,
(in millions)20232022
Net Cash Provided by Operating Activities$5,919 $5,175 
Cash Flows from Investing Activities:
Property and equipment additions:
Flight equipment, including advance payments(2,560)(2,852)
Ground property and equipment, including technology(1,161)(1,314)
Purchase of short-term investments(2,312)(575)
Redemption of short-term investments3,488 2,584 
Acquisition of strategic investments(152)(153)
Other, net84 121 
Net cash used in investing activities(2,613)(2,189)
Cash Flows from Financing Activities:
Payments on debt and finance lease obligations(3,710)(4,190)
Cash dividends(64)— 
Other, net(36)(40)
Net cash used in financing activities(3,810)(4,230)
Net Decrease in Cash, Cash Equivalents and Restricted Cash Equivalents(504)(1,244)
Cash, cash equivalents and restricted cash equivalents at beginning of period3,473 8,569 
Cash, cash equivalents and restricted cash equivalents at end of period$2,969 $7,325 
Non-Cash Transactions:
Right-of-use assets acquired under operating leases$443 $372 
Flight and ground equipment acquired under finance leases37 84 
Operating leases converted to finance leases53 279 
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:
September 30,
(in millions)20232022
Current assets:
Cash and cash equivalents$2,835 $7,023 
Restricted cash included in prepaid expenses and other134 149 
Noncurrent assets:
Restricted cash included in other noncurrent assets— 153 
Total cash, cash equivalents and restricted cash equivalents$2,969 $7,325 
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.


Delta Air Lines, Inc. | September 2023 Form 10-Q                                 5
Financial Statements
DELTA AIR LINES, INC.
Consolidated Statements of Stockholders' Equity
(Unaudited)
Common StockAdditional
Paid-In Capital		Retained EarningsAccumulated Other Comprehensive LossTreasury Stock
(in millions, except per share data)SharesAmountSharesAmountTotal
Balance at December 31, 2022
652 $— $11,526 $1,170 $(5,801)11 $(313)$6,582 
Net loss— — — (363)— — — (363)
Other comprehensive income— — — — 47 — — 47 
Common stock issued for employee equity awards(1)
2 — 18 — — — (24)(6)
Balance at March 31, 2023
654 $— $11,544 $807 $(5,754)11 $(337)$6,260 
Net income— — — 1,827 — — — 1,827 
Dividends declared ($0.10 per share)
— — — (65)— — — (65)
Other comprehensive income— — — — 45 — — 45 
Common stock issued for employee equity awards(1)
1 — 34 — — — (1)33 
Balance at June 30, 2023
655 $— $11,578 $2,569 $(5,709)11 $(338)$8,100 
Net income— — — 1,108 — — — 1,108 
Dividends declared ($0.10 per share)
— — — (64)— — — (64)
Other comprehensive income— — — — 49 — — 49 
Common stock issued for employee equity awards(1)
— — 35 — — — (2)33 
Balance at September 30, 2023
655 $— $11,613 $3,613 $(5,660)11 $(340)$9,226 
(1)Treasury shares were withheld for payment of taxes, at a weighted average price per share of $39.73, $36.76 and $45.34 in the March 2023 quarter, June 2023 quarter and September 2023 quarter, respectively.


Common StockAdditional
Paid-In Capital		Retained Earnings/(Accumulated Deficit)Accumulated Other Comprehensive LossTreasury Stock
(in millions, except per share data)SharesAmountSharesAmountTotal
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 
Net income— — — 735 — — — 735 
Other comprehensive income— — — — 63 — — 63 
Common stock issued for employee equity awards(1)
— — 23 — — — (1)22 
Balance at June 30, 2022
652 $— $11,485 $(353)$(7,008)11 $(313)$3,811 
Net income— — — 695 — — — 695 
Other comprehensive income— — — — 62 — — 62 
Common stock issued for employee equity awards(1)
— — 22 — — — — 22 
Balance at September 30, 2022
652 $— $11,507 $342 $(6,946)11 $(313)$4,590 
(1)Treasury shares were withheld for payment of taxes, at a weighted average price per share of $41.00, $38.11 and $30.66 in the March 2022 quarter, June 2022 quarter and September 2022 quarter, respectively.

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
Delta Air Lines, Inc. | September 2023 Form 10-Q                                 6
Notes to the Condensed 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, 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 seasonal variations in the demand for air travel, the volatility of aircraft fuel prices and other factors, operating results for the three and nine months ended September 30, 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 September 30,
Nine Months Ended September 30,
(in millions)2023202220232022
Ticket$11,733 $10,247 $32,801 $26,005 
Loyalty travel awards902 786 2,547 2,073 
Travel-related services484 431 1,387 1,251 
Passenger revenue$13,119 $11,464 $36,735 $29,329 

Ticket

We recognized approximately $6.7 billion and $3.9 billion in passenger revenue during the nine months ended September 30, 2023 and 2022, respectively, that had been recorded in our air traffic liability balance at the beginning of those periods.

As of September 30, 2023, all of our air traffic liability was recorded as a current liability. As of December 31, 2022, our air traffic liability was $8.3 billion, of which $100 million was included in other noncurrent liabilities on our Consolidated Balance Sheet ("balance sheet").

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 nine months ended September 30, 2023 and 2022, total cash sales from marketing agreements related to our loyalty program were $5.2 billion and $4.1 billion, respectively, which are allocated to travel and other performance obligations.

Delta Air Lines, Inc. | September 2023 Form 10-Q                                 7
Notes to the Condensed 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
(in millions)20232022
Balance at January 1$7,882 $7,559 
Miles earned3,164 2,496 
Miles redeemed for air travel(2,547)(2,073)
Miles redeemed for non-air travel and other(126)(122)
Balance at September 30
$8,373 $7,860 

Travel-Related Services

Travel-related services are primarily composed of services performed in conjunction with a passenger’s flight and include baggage fees, administrative fees, and on-board sales.

Other Revenue
Three Months Ended September 30,
Nine Months Ended September 30,
(in millions)2023202220232022
Refinery$935 $1,134 $2,817 $3,835 
Loyalty program791 655 2,291 1,877 
Ancillary businesses212 249 657 665 
Miscellaneous277 233 790 640 
Other revenue$2,215 $2,271 $6,555 $7,017 

Refinery. This represents refinery sales to third parties. See Note 9, "Segments," for more information on revenue recognition within our refinery segment.

Loyalty Program. Loyalty program 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 derived from the total cash sales from marketing agreements, discussed above.

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

Miscellaneous. Miscellaneous is primarily composed of revenues related to Delta Sky Club lounge access, including access provided to certain American Express cardholders, and codeshare agreements.

Delta Air Lines, Inc. | September 2023 Form 10-Q                                 8
Notes to the Condensed 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
Three Months Ended September 30,
Nine Months Ended September 30,
(in millions)2023202220232022
Domestic$8,662 $8,154 $25,200 $22,035 
Atlantic3,110 2,313 7,157 4,553 
Latin America788 659 2,846 2,084 
Pacific559 338 1,532 657 
Total$13,119 $11,464 $36,735 $29,329 

Operating revenue by geographic region
Operating Revenue
Three Months Ended September 30,
Nine Months Ended September 30,
(in millions)2023202220232022
Domestic$10,461 $10,118 $30,607 $28,322 
Atlantic3,497 2,705 8,223 5,538 
Latin America891 752 3,208 2,417 
Pacific639 400 1,787 870 
Total$15,488 $13,975 $43,825 $37,147 


NOTE 3. FAIR VALUE MEASUREMENTS

Assets/(Liabilities) Measured at Fair Value on a Recurring Basis
(in millions)September 30,
2023		Level 1Level 2Level 3
Cash equivalents$1,854 $1,854 $— $— 
Restricted cash equivalents134 134 — — 
Short-term investments
U.S. Government securities1,162 239 923 — 
Corporate obligations857 — 857 — 
Asset-backed securities86 — 86 — 
Other fixed income securities65 — 65 — 
Long-term investments and related1,647 1,342 130 175 
Fuel hedge contracts12 — 12 — 
Delta Air Lines, Inc. | September 2023 Form 10-Q                                 9
Notes to the Condensed Consolidated Financial Statements
(in millions)December 31,
2022		Level 1Level 2Level 3
Cash equivalents$2,021 $2,021 $— $— 
Restricted cash equivalents206 206 — — 
Short-term investments
U.S. Government securities1,587 122 1,465 — 
Corporate obligations1,614 — 1,614 — 
Other fixed income securities67 — 67 — 
Long-term investments1,450 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 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. Restricted cash equivalents are recorded in prepaid expenses and other 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. The fair values of 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 September 30, 2023, the estimated fair value of our short-term investments was $2.2 billion. Of these investments, $2.1 billion are expected to mature in one year or less, with the remainder maturing by the first quarter of 2026. 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 and Related. 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. As of September 30, 2023 our equity investment in Wheels Up Experience Inc. ("Wheels Up") is classified as Level 3 in the fair value hierarchy. In prior periods, this investment was classified as Level 1. We determined the quoted price of its publicly-traded shares does not represent fair value after the closing of Wheels Up's $500 million credit facility on September 20, 2023. In addition to the quoted price, the valuation of our equity investment in Wheels Up considered certain unobservable inputs, including Wheels Up's financial projections, using both market and income approach valuation techniques. 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 the transaction with Wheels Up and our other 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 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 losses of $140 million and $96 million on our fuel hedge contracts in aircraft fuel and related taxes on our Condensed Consolidated Statements of Operations and Comprehensive Income ("income statement") for the three and nine months ended September 30, 2023, respectively, compared to gains of $139 million and losses of $339 million for the three and nine months ended September 30, 2022, respectively. The losses recognized during the first nine months of 2023 were composed of $59 million of mark-to-market gains and $155 million of settlement losses on contracts. Gains and losses on settled contracts are reflected within Monroe's operating results. See Note 9, "Segments," for further information on our Monroe refinery segment.


Delta Air Lines, Inc. | September 2023 Form 10-Q                                 10
Notes to the Condensed 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 certain companies, particularly those 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
Accounting TreatmentOwnership InterestCarrying Value
(in millions)September 30, 2023December 31, 2022September 30, 2023December 31, 2022
Air France-KLMFair Value3 %3 %$92 $97 
China EasternFair Value2 %2 %159 189 
CLEARFair Value5 %5 %158 227 
Grupo Aeroméxico
Equity Method(1)
20 %20 %459 412 
Hanjin KAL
Fair Value(2)
15 %15 %313 296 
LATAMFair Value10 %10 %548 403 
Unifi Aviation
Equity Method(3)
49 %49 %174 165 
Wheels Up
Fair Value(4)
39 %21 %59 54 
Other investmentsVarious329 285 
Equity investments$2,291 $2,128 
(1)Results are included in miscellaneous, net in our income statement under non-operating expense.
(2)At September 30, 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.
(4)See below for additional information about our ownership interest and voting rights.

Wheels Up. We, along with Certares Management LLC, Knighthead Capital Management LLC and Cox Enterprises, Inc. announced the closing on September 20, 2023 of an expanded strategic partnership with Wheels Up, which includes an agreement for a $500 million credit facility to Wheels Up. At closing, the credit facility was comprised of a $350 million term loan, of which we contributed $150 million, and a $100 million liquidity facility that we made available to Wheels Up in the event the company's liquidity falls below $100 million. The terms of the credit facility permit one or more new lenders to provide an aggregate incremental $50 million term loan after the closing date. In connection with the closing, the term loan investors received newly issued shares of Wheels Up's common stock representing 80% of Wheels Up's outstanding equity as of the closing of the credit facility on a fully diluted basis. Upon approval by Wheels Up's stockholders of an amendment to its certificate of incorporation, Wheels Up is expected to issue to the lenders additional new shares such that the lenders will own 95% of Wheels Up's outstanding equity as of the closing of the credit facility on a fully diluted basis.

The $150 million cash contribution was reflected as an investing outflow in our Condensed Consolidated Statement of Cash Flows and allocated on a relative fair value basis to a loan receivable within other noncurrent assets and an equity investment on our balance sheet. Combined with our previous ownership stake, this new investment provides us with a 39% equity stake in Wheels Up calculated based on Wheels Up's outstanding equity as of September 20, 2023. Our current percentage ownership does not reflect the anticipated dilutive effect from the additional shares to be issued to the lenders (including potentially to one or more new lenders under the term loan) upon approval by Wheels Up's stockholders and common stock grants expected to be made under Wheels Up's equity compensation plans. Furthermore, Delta's voting rights with respect to its Wheels Up equity stake are capped at 29.9%.

Delta Air Lines, Inc. | September 2023 Form 10-Q                                 11
Notes to the Condensed Consolidated Financial Statements
As a result of the transaction, we concluded that Wheels Up is a variable interest entity ("VIE"). A VIE requires consolidation by the entity’s primary beneficiary. We determined that we are not the primary beneficiary after assessing the decision-making process for the significant activities of Wheels Up, concluding that Wheels Up's Board of Directors continues to possess the decision-making authority over the significant activities, and we do not control Wheels Up's Board. Based on this assessment, Wheels Up is not consolidated in our financial statements.

We continue to account for our equity interest under the fair value option, as originally elected as part of our initial acquisition of Wheels Up shares in 2020. We will also account for our loan receivable at fair value, as the fair value option is applied to all of an investor's financial interests in the same entity. None of the $100 million liquidity facility has been drawn as of September 30, 2023.


NOTE 5. DEBT

Summary of outstanding debt by category
MaturityInterest Rate(s) Per Annum atSeptember 30,December 31,
(in millions)DatesSeptember 30, 202320232022
Unsecured Payroll Support Program Loans2030to20311.00%$3,496 $3,496 
Unsecured notes2024to20292.90%to7.38%2,590 2,997 
Financing arrangements secured by SkyMiles assets:
SkyMiles Notes(1)
2023to20284.50%and4.75%4,655 5,144 
SkyMiles Term Loan(1)(2)
2023to20279.08%1,882 2,820 
NYTDC Special Facilities Revenue Bonds(1)
2024to20454.00%to5.00%2,778 2,838 
Financing arrangements secured by aircraft:
Certificates(1)
2023to20282.00%to8.00%1,632 1,802 
Notes(1)(2)
2023to20336.76%to8.00%173 813 
Financing arrangements secured by slots, gates and/or routes:
2020 Senior Secured Notes20257.00%838 1,542 
2018 Revolving Credit Facility(2)
2024to2025Undrawn— — 
Other financings(1)(2)
2023to20302.51%to5.00%67 67 
Other revolving credit facilities(2)
2023to2024Undrawn— — 
Total secured and unsecured debt$18,111 $21,519 
Unamortized (discount)/premium and debt issue cost, net and other(83)(138)
Total debt$18,028 $21,381 
Less: current maturities(1,681)(2,055)
Total long-term debt$16,347 $19,326 
(1)Due in installments during the years shown above.
(2)Certain financings are comprised of variable rate debt. All variable rates are equal to Secured Overnight Financing Rate ("SOFR") (generally subject to a floor) or another index rate, plus a specified margin.

Availability Under Revolving Credit Facilities

As of September 30, 2023, we had approximately $2.8 billion undrawn and available under our revolving credit facilities. In addition, we had approximately $400 million outstanding letters of credit as of September 30, 2023 that did not affect the availability of our revolving credit facilities.

Early Settlement of Outstanding Notes

During the nine months ended September 30, 2023, we repurchased a principal amount of $1.4 billion of various secured and unsecured notes and a portion of the SkyMiles Term Loan on the open market and made early principal repayments of $585 million on various notes secured by aircraft. These payments resulted in a $63 million loss on extinguishment of debt recorded in non-operating expense in our income statement.

Delta Air Lines, Inc. | September 2023 Form 10-Q                                 12
Notes to the Condensed 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)September 30,
2023		December 31,
2022
Net carrying amount$18,028 $21,381 
Fair value$17,300 $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 September 30, 2023.


NOTE 6. EMPLOYEE BENEFIT PLANS

Employee benefit plans net periodic cost (benefit)
Pension BenefitsOther Postretirement and Postemployment Benefits
(in millions)2023202220232022
Three Months Ended September 30,
Service cost$— $— $18 $18 
Interest cost213 153 50 32 
Expected return on plan assets(264)(330)— (4)
Amortization of prior service credit— — (1)(1)
Recognized net actuarial loss60 64 3 13 
Net periodic cost (benefit)$9 $(113)$70 $58 
Nine Months Ended September 30,
Service cost$— $— $54 $53 
Interest cost638 459 150 96 
Expected return on plan assets(791)(990)(1)(12)
Amortization of prior service credit— — (4)(4)
Recognized net actuarial loss179 191 10 41 
Net periodic cost (benefit)$26 $(340)$209 $174 

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


Delta Air Lines, Inc. | September 2023 Form 10-Q                                 13
Notes to the Condensed Consolidated Financial Statements
NOTE 7. COMMITMENTS AND CONTINGENCIES

Aircraft Purchase Commitments

Our future aircraft purchase commitments totaled approximately $17.8 billion at September 30, 2023.

Aircraft purchase commitments(1)
(in millions)Total
Three months ending December 31, 2023$920 
20243,520 
20255,410 
20263,850 
20272,720 
Thereafter1,410 
Total$17,830 
(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 September 30, 2023:

Aircraft purchase commitments by fleet type
Aircraft TypePurchase Commitments
A220-30068 
A321-200neo113 
A330-900neo16 
A350-90016 
B-737-10100 
Total313 

Aircraft Orders

During the June 2023 quarter, we agreed to acquire one A330-900 with delivery expected to occur in 2025. We also exercised purchase rights for 12 A220-300 with delivery expected to start in 2027.

Legal Contingencies

We are involved in various legal proceedings related to employment practices, environmental issues, commercial disputes, antitrust and other regulatory 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.

Employees Under Collective Bargaining Agreements

In the March 2023 quarter, 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 made 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.


Delta Air Lines, Inc. | September 2023 Form 10-Q                                 14
Notes to the Condensed Consolidated Financial Statements
NOTE 8. ACCUMULATED OTHER COMPREHENSIVE LOSS

Components of accumulated other comprehensive loss
(in millions)Pension and Other Benefit LiabilitiesOtherTax EffectTotal
Balance at January 1, 2023
$(6,624)$41 $782 $(5,801)
Changes in value— (1)— (1)
Reclassifications into earnings(1)
185 — (43)142 
Balance at September 30, 2023
$(6,439)$40 $739 $(5,660)
Balance at January 1, 2022
$(8,355)$41 $1,184 $(7,130)
Reclassifications into earnings(1)
240 — (56)184 
Balance at September 30, 2022
$(8,115)$41 $1,128 $(6,946)
(1)Amounts reclassified from accumulated other comprehensive loss for pension and other benefit liabilities are recorded in pension and related (expense)/benefit in non-operating expense in our income statement.


Delta Air Lines, Inc. | September 2023 Form 10-Q                                 15
Notes to the Condensed 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 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 non-jet fuel products produced by the refinery for jet fuel consumed in our airline operations. The gross fair value of the products exchanged under these agreements during the three and nine months ended September 30, 2023 was $519 million and $1.8 billion, respectively, compared to $834 million and $2.6 billion for the three and nine months ended September 30, 2022, respectively.

Segment Reporting

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

Financial information by segment
(in millions)AirlineRefineryIntersegment Sales/OtherConsolidated
Three Months Ended September 30, 2023
Operating revenue:$14,553 $1,886 $15,488 
Sales to airline segment$(385)
(1)
Exchanged products(519)
(2)
Sales of refined products(47)
Depreciation and amortization594 23 (23)
(3)
594 
Operating income1,865 119 
(3)
— 1,984 
Interest expense, net196 6 (6)196 
Total assets, end of period69,851 3,397 (1)73,247 
Net fair value obligations, end of period— (9)— (9)
Capital expenditures1,201 68 — 1,269 
Three Months Ended September 30, 2022
Operating revenue:$12,841 $2,599 $13,975 
Sales to airline segment$(504)
(1)
Exchanged products(834)
(2)
Sales of refined products(127)
Depreciation and amortization538 23 (23)
(3)
538 
Operating income1,264 192 
(3)
— 1,456 
Interest expense, net248 3 (3)248 
Total assets, end of period69,680 2,977 (61)72,596 
Net fair value obligations, end of period— (291)— (291)
Capital expenditures1,393 49 — 1,442 
(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.
(2)Represents value of products delivered under our exchange agreements, as discussed above, determined on a market price basis.
(3)Refinery segment operating results, including depreciation and amortization, are included within aircraft fuel and related taxes in our income statement.


Delta Air Lines, Inc. | September 2023 Form 10-Q                                 16
Notes to the Condensed Consolidated Financial Statements
Financial information by segment
(in millions)AirlineRefineryIntersegment Sales/OtherConsolidated
Nine Months Ended September 30, 2023
Operating revenue:$41,008 $6,274 $43,825 
Sales to airline segment$(1,346)
(1)
Exchanged products(1,848)
(2)
Sales of refined products(263)
Depreciation and amortization1,731 69 (69)
(3)
1,731 
Operating income3,814 385 
(3)
— 4,199 
Interest expense, net627 14 (14)627 
Capital expenditures3,594 127 — 3,721 
Nine Months Ended September 30, 2022
Operating revenue:$33,312 $8,265 $37,147 
Sales to airline segment$(1,557)
(1)
Exchanged products(2,623)
(2)
Sales of refined products(250)
Depreciation and amortization1,554 70 (70)
(3)
1,554 
Operating income1,676 515 
(3)
— 2,191 
Interest expense, net791 7 (7)791 
Capital expenditures4,069 97 — 4,166 
(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.
(2)Represents value of products delivered under our exchange agreements, as discussed above, determined on a market price basis.
(3)Refinery segment operating results, including depreciation and amortization, are included within aircraft fuel and related taxes in our income statement.


Fair Value Obligations

The net fair value obligations presented in the table above are related to renewable fuel compliance costs and 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 September 30, 2023 was calculated using the U.S. Environmental Protection Agency's ("EPA") Renewable Fuel Standard ("RFS") volume requirements, which were finalized in 2022 for the 2021 and 2022 obligations, and proposed in 2022 for 2023 obligations. In the March 2023 quarter, we settled a portion of our 2021 Renewable Identification Numbers ("RINs") obligation with the EPA. We expect to settle the remaining 2021 and our entire 2022 RINs obligation by the 2022 compliance deadline in the December 2023 quarter.

Delta Air Lines, Inc. | September 2023 Form 10-Q                                 17
Notes to the Condensed Consolidated Financial Statements
NOTE 10. EARNINGS PER SHARE

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

Basic and diluted earnings per share
Three Months Ended September 30,
Nine Months Ended September 30,
(in millions, except per share data)2023202220232022
Net income$1,108 $