10-Q 1 dal-20220331.htm 10-Q dal-20220331
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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 March 31, 2022
Or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 001-5424
dal-20220331_g1.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 filerAccelerated filer Non-accelerated filer 
Smaller reporting companyEmerging 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:
Common Stock, $0.0001 par value - 641,076,463 shares outstanding
This document is also available through our website at http://ir.delta.com/.




Table of Contents
Page



Forward Looking Statements
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 ("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 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, 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 and 2021, 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, 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, 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, 2021, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

Basis for Review Results

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


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

Delta Air Lines, Inc. March 2022 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 investments2,250 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 other1,434 1,119 
Total current assets15,720 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 assets7,402 7,237 
Goodwill9,753 9,753 
Identifiable intangibles, net of accumulated amortization of $895 and $893
5,999 6,001 
Equity investments1,999 1,712 
Deferred income taxes, net1,534 1,294 
Other noncurrent assets1,299 1,773 
Total noncurrent assets58,028 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 leases744 703 
Air traffic liability8,809 6,228 
Accounts payable4,810 4,240 
Accrued salaries and related benefits2,288 2,457 
Loyalty program deferred revenue3,038 2,710 
Fuel card obligation1,100 1,100 
Other accrued liabilities2,155 1,746 
Total current liabilities24,060 20,966 
Noncurrent Liabilities:
Debt and finance leases24,441 25,138 
Noncurrent air traffic liability300 130 
Pension, postretirement and related benefits5,862 6,035 
Loyalty program deferred revenue4,606 4,849 
Noncurrent operating leases7,199 7,056 
Other noncurrent liabilities4,289 4,398 
Total noncurrent liabilities46,697 47,606 
Commitments and Contingencies
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 capital11,462 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' equity2,991 3,887 
Total liabilities and stockholders' equity$73,748 $72,459 
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

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

Financial Statements
DELTA AIR LINES, INC.
Condensed Consolidated Statements of Operations and Comprehensive Loss
(Unaudited)
Three Months Ended March 31,
(in millions, except per share data)20222021
Operating Revenue:
Passenger$6,907 $2,748 
Cargo289 215 
Other2,152 1,187 
  Total operating revenue9,348 4,150 
Operating Expense:
Salaries and related costs2,826 2,202 
Aircraft fuel and related taxes2,092 1,017 
Ancillary businesses and refinery1,382 706 
Contracted services753 519 
Depreciation and amortization506 492 
Landing fees and other rents504 493 
Regional carrier expense491 401 
Aircraft maintenance materials and outside repairs465 294 
Passenger commissions and other selling expenses312 110 
Passenger service275 118 
Aircraft rent122 104 
Restructuring charges(5)(44)
Government grant recognition (1,186)
Other408 322 
Total operating expense10,131 5,548 
Operating Loss(783)(1,398)
Non-Operating Expense:
Interest expense, net(274)(361)
Equity method results (54)
Gain/(loss) on investments, net(147)262 
Loss on extinguishment of debt(25)(56)
Pension and related benefit/(expense)73 107 
Miscellaneous, net(44)(15)
Total non-operating expense, net(417)(117)
Loss Before Income Taxes(1,200)(1,515)
Income Tax Benefit260 338 
Net Loss$(940)$(1,177)
Basic Loss Per Share$(1.48)$(1.85)
Diluted Loss Per Share$(1.48)$(1.85)
Cash Dividends Declared Per Share$ $ 
Comprehensive Loss$(881)$(1,099)
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

Delta Air Lines, Inc. March 2022 Form 10-Q                                 4

Financial Statements
DELTA AIR LINES, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Three Months Ended March 31,
(in millions)20222021
Net Cash Provided by Operating Activities$1,771 $691 
Cash Flows from Investing Activities:
Property and equipment additions:
Flight equipment, including advance payments(1,276)(132)
Ground property and equipment, including technology(490)(306)
Purchase of short-term investments(226)(3,161)
Redemption of short-term investments1,346 3,371 
Purchase of equity investments(100) 
Other, net(3)168 
Net cash used in investing activities(749)(60)
Cash Flows from Financing Activities:
Proceeds from long-term obligations 924 
Payments on debt and finance lease obligations(1,443)(1,775)
Other, net(13)61 
Net cash used in financing activities(1,456)(790)
Net Decrease in Cash, Cash Equivalents and Restricted Cash Equivalents(434)(159)
Cash, cash equivalents and restricted cash equivalents at beginning of period8,569 10,055 
Cash, cash equivalents and restricted cash equivalents at end of period$8,135 $9,896 
Non-Cash Transactions:
Flight and ground equipment acquired under finance leases$42 $473 
Right-of-use assets acquired under operating leases359 20 
Equity investments and other financings330 200 
The following table provides a reconciliation of cash, cash equivalents and restricted cash equivalents reported within the Consolidated Balance Sheets to the total of the same such amounts shown above:
March 31,
(in millions)20222021
Current assets:
Cash and cash equivalents$7,705 $8,460 
Restricted cash included in prepaid expenses and other170 213 
Noncurrent assets:
Restricted cash included in other noncurrent assets260 1,223 
Total cash, cash equivalents and restricted cash equivalents$8,135 $9,896 
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.


Delta Air Lines, Inc. March 2022 Form 10-Q                                 5

Financial Statements
DELTA AIR LINES, INC.
Consolidated Statements of Stockholders' Equity
(Unaudited)
Common StockAdditional
Paid-In Capital
Accumulated DeficitAccumulated
Other
Comprehensive Loss
Treasury 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 

(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 StockAdditional
Paid-In Capital
Accumulated DeficitAccumulated
Other
Comprehensive Loss
Treasury Stock
(in millions, except per share data)SharesAmountSharesAmountTotal
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 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.

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 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)20222021
Ticket$5,986 $2,277 
Loyalty travel awards543 241 
Travel-related services378 230 
Total passenger revenue$6,907 $2,748 

Ticket

We recognized approximately $2.2 billion and $822 million in passenger revenue during the three months ended March 31, 2022 and 2021, 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 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. The air traffic liability classified as current as of March 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 in future periods.

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. 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 and 2021, total cash sales from marketing agreements related to our loyalty program were $1.2 billion and $767 million, respectively, which are allocated to travel and other performance obligations. Loyalty travel awards revenue is related to the redemption of miles for air travel.

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)20222021
Balance at January 1$7,559 $7,182 
Miles earned658 354 
Miles redeemed for air travel(543)(241)
Miles redeemed for non-air travel and other(30)(10)
Balance at March 31
$7,644 $7,285 

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,
(in millions)20222021
Refinery$1,187 $540 
Loyalty program571 368 
Ancillary businesses209 186 
Miscellaneous185 93 
Total other revenue$2,152 $1,187 

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

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

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

Miscellaneous. Miscellaneous revenue is primarily composed of lounge access, including access provided to certain American Express cardholders, and codeshare revenues.
Delta Air Lines, Inc. March 2022 Form 10-Q                                 8

Notes to the Consolidated Financial Statements
Revenue by Geographic Region

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

Passenger revenue by geographic region
Passenger Revenue
Three Months Ended March 31,
(in millions)20222021
Domestic$5,563 $2,280 
Atlantic539 142 
Latin America680 264 
Pacific125 62 
Total$6,907 $2,748 

Operating revenue by geographic region
Operating Revenue
Three Months Ended March 31,
(in millions)20222021
Domestic$7,549 $3,368 
Atlantic776 267 
Latin America811 381 
Pacific212 134 
Total$9,348 $4,150 


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)March 31,
2022
Level 1Level 2Level 3
Cash equivalents$5,132 $5,132 $ $ 
Restricted cash equivalents429 429   
Short-term investments2,250 681 1,569  
Long-term investments1,312 1,179 36 97 
Fuel hedge contracts(14) (14) 
(in millions)December 31,
2021
Level 1Level 2Level 3
Cash equivalents$5,450 $5,450 $ $ 
Restricted cash equivalents635 635   
Short-term investments3,386 1,376 2,010  
Long-term investments1,459 1,326 36 97 
Fuel hedge contracts(18) (18) 

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

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

As of March 31, 2022, the estimated fair value of our short-term investments was $2.2 billion. Of these investments, $1.6 billion are expected to mature in one year or less, with the remainder maturing during 2023. Investments with maturities beyond one year when purchased are classified as short-term investments if they are expected to be available to support our short-term liquidity needs.

Long-Term Investments. Our long-term investments measured at fair value primarily consist of equity investments, which are valued based on market prices or other observable transactions and inputs, and are recorded in equity investments on our balance sheet. Our equity investments in private companies are classified as Level 3 in the fair value hierarchy as their equity is not traded on a public exchange and our valuations incorporate certain unobservable inputs, including non-public equity issuances and forecasts provided by our investees. Fair value measurement using unobservable inputs is inherently uncertain, and a change in significant inputs could result in different fair values. See Note 4, "Investments," for further information on our equity investments.

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


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

Notes to the Consolidated Financial Statements
NOTE 4. INVESTMENTS

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

Fair Value Investments. Changes in the valuation of investments accounted for at fair value are recorded in gain/(loss) on investments, net in our income statement within non-operating expense and are driven by changes in stock prices, foreign currency fluctuations and other valuation techniques for investments in companies without publicly-traded shares.

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)March 31, 2022December 31, 2021March 31, 2022December 31, 2021
Air France-KLMFair Value6 %6 %$170 $165 
China EasternFair Value2 %2 %157 177 
CLEARFair Value6 %6 %223 260 
Grupo Aeroméxico
Equity Method(1)
20 %51 %432  
Hanjin-KALFair Value13 %13 %450 455 
Unifi Aviation
Equity Method(2)
49 %49 %159 159 
Wheels Up
Fair Value(3)
21 %21 %162 241 
Other investmentsVarious246 255 
Equity investments$1,999 $1,712 
(1)Results are included in equity method results in our income statement under non-operating expense.
(2)Results are included in contracted services in our income statement as this entity is integral to the operations of our business by providing services at our airport locations.
(3)We 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 Form 10-Q                                 11

Notes to the Consolidated Financial Statements
NOTE 5. DEBT

Summary of outstanding debt by category
MaturityInterest Rate(s) Per Annum atMarch 31,December 31,
(in millions)DatesMarch 31, 202220222021
Unsecured Payroll Support Program Loans2030to20311.00%$3,496 $3,496 
Unsecured notes2023to20292.90%to7.38%3,308 4,354 
Financing arrangements secured by SkyMiles assets:
SkyMiles Notes(1)
2023to20284.50%and4.75%6,000 6,000 
SkyMiles Term Loan(1)(2)
2023to20274.75%2,820 2,820 
Financing arrangements secured by slots, gates and/or routes:
2020 Senior Secured Notes20257.00%2,459 2,589 
2018 Revolving Credit Facility(2)
2023to2024Undrawn  
Financing arrangements secured by aircraft:
Certificates(1)
2022to20282.00%to8.00%1,920 1,932 
Notes(1)(2)
2022to20331.39%to5.75%1,054 1,139 
NYTDC Special Facilities Revenue Bonds(1)
2023to20454.00%to5.00%2,838 2,894 
Other financings(1)(2)
2022to20302.51%to5.00%68 68 
Other revolving credit facilities(2)
2022to 2024Undrawn  
Total secured and unsecured debt23,963 25,292 
Unamortized (discount)/premium and debt issue cost, net and other(193)(208)
Total debt23,770 25,084 
Less: current maturities(831)(1,502)
Total long-term debt$22,939 $23,582 
(1)Due in installments.
(2)Certain financings are comprised of variable rate debt. All variable rates are equal to LIBOR (generally subject to a floor) or another index rate plus a specified margin.

Availability Under Revolving Facilities

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

Fair Value of Debt

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

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.

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
Pension BenefitsOther Postretirement and Postemployment Benefits
(in millions)2022202120222021
Three Months Ended March 31,
Service cost$ $ $18 $21 
Interest cost153 146 32 29 
Expected return on plan assets(330)(375)(4)(9)
Amortization of prior service credit  (1)(2)
Recognized net actuarial loss64 89 13 15 
Net periodic (benefit) cost$(113)$(140)$58 $54 

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) 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%.


NOTE 7. COMMITMENTS AND CONTINGENCIES

Aircraft Purchase Commitments

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

Aircraft purchase commitments
(in millions)Total
Nine months ending December 31, 2022$2,640 
20233,170 
20243,290 
20252,910 
20262,340 
Thereafter990 
Total$15,340 

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

Aircraft purchase commitments by fleet type
Aircraft TypePurchase Commitments
A220-30040 
A321-200neo154 
A330-900neo23 
A350-90018 
B-737-900ER5 
CRJ-9003 
Total243 
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

General Indemnifications

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

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

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

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

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

Other

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

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

Notes to the Consolidated Financial Statements
NOTE 8. ACCUMULATED OTHER COMPREHENSIVE LOSS

Components of accumulated other comprehensive loss
(in millions)Pension and Other Benefit LiabilitiesOtherTotal
Balance at January 1, 2022 (net of tax effect of $1,184)
$(7,170)$40 $(7,130)
Reclassifications into earnings (net of tax effect of $18)(1)
59  59 
Balance at March 31, 2022 (net of tax effect of $1,166)
$(7,111)$40 $(7,071)
Balance at January 1, 2021 (net of tax effect of $1,764)
$(9,078)$40 $(9,038)
Reclassifications into earnings (net of tax effect of $23)(1)
78  78 
Balance at March 31, 2021 (net of tax effect of $1,741)
$(9,000)$40 $(8,960)
(1)Amounts reclassified from accumulated other comprehensive loss for pension and other benefit liabilities are recorded in pension and related benefit/(expense) 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 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, 2022 and 2021 was $809 million and $503 million, 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 March 31, 2022
Operating revenue:$8,161 $2,313 $9,348 
Sales to airline segment$(291)
(1)
Exchanged products(809)
(2)
Sales of refined products(26)
(3)
Operating (loss)/income(836)53  (783)
Interest expense, net274 2 (2)274 
Depreciation and amortization506 23 (23)
(4)
506 
Total assets, end of period71,392 2,382 (26)73,748 
Net fair value obligations, end of period (430) (430)
Capital expenditures1,749 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, net361 1 (1)361 
Depreciation and amortization492 24 (24)
(4)
492 
Total assets, end of period71,508 1,578 (3)73,083 
Net fair value obligations, end of period (285) (285)
Capital expenditures425 13  438 
(1)Represents transfers, valued on a market price basis, from the refinery to the airline segment for use in airline operations. We determine market price by reference to the market index for the primary delivery location, which is New York Harbor, for jet fuel from the refinery.
(2)Represents value of products delivered under our exchange agreements, as discussed above, determined on a market price basis.
(3)These sales were at or near cost; accordingly, the margin on these sales is de minimis.
(4)Refinery segment operating results, including depreciation and amortization, are included within aircraft fuel and related taxes in our income statement.

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

Notes to the Consolidated Financial Statements
Fair Value Obligations

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


NOTE 10. 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 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
Three Months Ended March 31,
(in millions, except per share data)20222021
Net loss$(940)$(1,177)
Basic weighted average shares outstanding637 636 
Dilutive effect of share-based awards  
Diluted weighted average shares outstanding637 636 
Basic loss per share$(1.48)$(1.85)
Diluted loss per share$(1.48)$(1.85)
Delta Air Lines, Inc. March 2022 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 and related notes included in our 2021 Form 10-K.

March 2022 Quarter Financial Overview

Our business and operating results continued to be impacted by 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 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 quarter to both the March 2021 and March 2019 quarters in this overview section allows for a better understanding of the full impact of the COVID-19 pandemic and the progress of our recovery.

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)202220212019
Total operating revenue$9,348 $4,150 $10,472 125 %(11)%
Total operating expense10,131 5,548 9,452 83 %