What changed in this filing

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Item 1. Business

2022-02-11 compared with 2021-02-12 · 218 added, 119 removed, 162 unchanged (68% of the section changed)

Environmental Regulation and Related Matters

Our operations are subject to a number of international, federal, state and local laws and regulations governing protection of the environment, including regulation of greenhouse gases and other air emissions, noise reduction, water discharges, aircraft drinking water, storage and use of petroleum and other regulated substances, and the management and disposal of hazardous waste, substances and materials.

Carbon emissions by the aviation industry and their impact on climate change have become a particular focus in the international community and within the U.S.

For several years, the European Union has required its member states to implement regulations to include aviation in its Emissions Trading Scheme ("ETS").

Under these regulations, any airline with flights originating or landing in the European Union is subject to the ETS and, beginning in 2012, was required to purchase emissions allowances if the airline exceeds the number of free allowances allocated to it under the ETS.

The ETS was amended to apply only to flights within the European Economic Area from 2013 through 2016.

In 2017, the EU extended the exemption for foreign flights through 2023 based on the International Civil Aviation Organization’s ("ICAO") adoption of a global market-based program.

In 2016, ICAO formally adopted a global, market-based emissions offset program known as the Carbon Offsetting and Reduction Scheme for International Aviation ("CORSIA").

This program establishes a medium-term goal for the aviation industry of achieving carbon-neutral growth in international aviation beginning in 2021, based on a 2019 baseline.

A pilot phase of the offset program will begin in 2021, followed by a first phase of the program beginning in 2024 and a second phase beginning in 2027.

Countries can voluntarily participate in the pilot and first phase, and the United States has agreed to participate in these voluntary phases.

Environmental Regulation

Environmental Compliance Obligations .

Our operations are subject to numerous international, federal, state and local laws and regulations governing protection of the environment, including regulation of greenhouse gases and other air emissions, noise reduction, water discharges, aircraft drinking water, storage and use of petroleum and other regulated substances, and the management and disposal of hazardous waste, substances and materials.

We are also subject to certain environmental laws and contractual obligations governing the management and release of regulated substances, which may require the investigation and remediation of affected sites.

Soil and/or ground water impacts have been identified at certain of our current or former leaseholds at several domestic airports.

To address these impacts, we have a program in place to investigate and, if appropriate, remediate these sites.

Although the ultimate outcome of these matters cannot be predicted with certainty, we believe that the resolution of these matters will not have a material adverse effect on our Consolidated Financial Statements.

GHG Emissions .

Aviation industry GHG emissions, particularly carbon emissions, and their impact on climate change have become a focus in the international community and within the U.S.

In 2016, the International Civil Aviation Organization ("ICAO") formally adopted a global, market-based emissions offset program known as the Carbon Offsetting and Reduction Scheme for International Aviation ("CORSIA").

This program establishes a goal for the aviation industry to achieve carbon-neutral growth in international aviation beginning in 2021.

Any growth above the baseline would need to be addressed using either eligible carbon offset credits or a lower carbon fuel.

The baseline for establishing airlines’ offset obligations under CORSIA was originally set as an average of 2019 and 2020 emissions.

However, given the COVID-19 pandemic and resulting unprecedented reduction in international travel, ICAO removed 2020 from the baseline calculation for the first phases of CORSIA, from 2021 to 2027.

ICAO has yet to decide how to apply the baseline beyond 2027.

Some countries and other stakeholders, however, have advocated for reestablishing 2020 in the baseline and for using 2020 for the future baseline calculation, which, if adopted, would significantly increase the airline industry’s projected obligations under the program and the cost of compliance.

A pilot phase of the CORSIA program runs from 2021 to 2023, followed by a first phase of the program beginning in 2024 and a second phase beginning in 2027.

Countries can voluntarily participate in the pilot and first phase, and the United States agreed to participate in these voluntary phases.

Participation in the second phase is mandatory for certain countries, including the United States.

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operators participate in CORSIA.

However, Delta submitted our CORSIA Emissions Monitoring Plan to the FAA in 2019 and in 2020, submitted our verified emissions report for 2019 international emissions.

In 2017, ICAO also adopted new aircraft certification standards to reduce carbon dioxide (CO2) emissions from aircraft.

The new aircraft certification standards apply to new fleet types in 2020 and to new in-production aircraft starting in 2023 but no later than 2028.

Nonetheless, Delta has voluntarily submitted verified emissions reports for our 2019 and 2020 international emissions.

Additionally, the European Union ("EU") requires its member states to implement regulations to include aviation in its Emissions Trading Scheme ("ETS").

Under these regulations, any airline with flights originating or landing in the European Economic Area ("EEA") is subject to the ETS and, beginning in 2012, was required to purchase emissions allowances if the airline exceeds the number of free allowances allocated to it under the ETS.

The scope of the ETS has been narrowed so that it currently applies only to flights within the EEA through 2023 to align with the pilot phase of CORSIA.

However, its scope may be expanded in the future.

As a result of the UK’s withdrawal from the EU, UK flights are no longer part of the EU ETS and will fall under a separate UK ETS scheme.

UK ETS is applicable to UK domestic flights and flights from the UK to EEA countries.

In 2017, ICAO also adopted aircraft certification standards to reduce carbon dioxide ("CO 2 ") emissions from new aircraft.

The new aircraft certification standards applied to new fleet types in 2020 and will apply to in-production aircraft starting in 2023 but no later than 2028.

These standards will not apply to existing in-service aircraft.

However, exemption from the certification requirement could affect how these aircraft are treated under other programs governing CO2 emissions.

In 2016, the U.S.

Environmental Protection Agency ("EPA") issued a final finding under the Clean Air Act that greenhouse gases threaten the public health and welfare, and further determined that certain classes of aircraft engines cause or contribute to greenhouse gases.

The endangerment finding did not establish standards, but triggered an obligation for the EPA to regulate greenhouse gas emissions from certain aircraft engines.

In January 2021, the EPA finalized greenhouse gas emission standards for new aircraft engines designed to implement the ICAO standards on the same timeframe contemplated by ICAO.

Environmental Protection Agency (“EPA”) issued a final finding under the Clean Air Act that GHGs threaten the public health and welfare, and further determined that certain classes of aircraft engines cause or contribute to GHGs.

The endangerment finding did not establish standards but triggered an obligation for the EPA to regulate GHG emissions from certain aircraft engines.

In January 2021, the EPA finalized GHG emission standards for new aircraft engines designed to implement the ICAO standards on the same timeframe contemplated by ICAO.

Like the ICAO standards, the final EPA standards would not apply to engines on in-service aircraft.

The final standards have been challenged by several states and environmental groups, and the Biden administration has announced plans to review these final standards along with others issued by the prior administration.

The outcome of the legal challenge and administrative review cannot be predicted at this time.

The final standards have been challenged by several states and environmental groups.

On November 15, 2021, the EPA announced that it plans to defend the current standards while simultaneously calling for ambitious new international CO 2 standards at the upcoming round of ICAO negotiations.

The outcome of the legal challenge cannot be predicted at this time.

Delta Air Lines, Inc.

2021 Form 10-K 14

The airline industry may face additional regulation of aircraft emissions in the U.S.

and abroad and become subject to further taxes, charges or additional requirements to obtain permits or purchase allowances or emission credits for greenhouse gas emissions in various jurisdictions.

and abroad and become subject to further taxes, charges or additional requirements to obtain permits or purchase allowances or emission credits for GHG emissions in various jurisdictions.

For example, in 2021 the European Commission proposed legislation that could expand the reach of the EU ETS to include flights into and out of the EEA beginning in 2027 under certain circumstances, increase the stringency of the program, and establish a sustainable aviation fuel blending mandate for aviation fuel suppliers beginning in 2025, among other requirements.

Individual EU member states have been developing their own requirements, including for example, a SAF mandate in France that will be phased in beginning in 2022.

In the United States, various exploratory discussions continue around approaches to address climate change, such as carbon pricing, without a clear legislative path forward.

Additional regulation could result in taxation, regulatory or permitting requirements from multiple jurisdictions for the same operations and significant costs for us and the airline industry.

In addition to direct costs, such regulation could result in increased fuel costs passed through from fuel suppliers affected by any such regulations.

Certain airports have also adopted, and others could in the future adopt, greenhouse gas emission or climate-related goals and requirements that could impact our operations or require us to make changes or investments in our infrastructure.

Certain airports have also adopted, and others could in the future adopt, GHG emission or climate-related goals and requirements that could impact our operations or require us to make changes or investments in our infrastructure.

We are monitoring and evaluating the potential impact of such developments.

In February 2020, we announced plans to invest $1 billion in the next ten years in our effort to achieve carbon neutrality.

As part of this plan, we seek to minimize the impact of carbon emissions from our operations and build on the reductions realized since 2005.

We have improved the fuel efficiency of our aircraft through the retirement of older aircraft and their replacement with newer, more fuel efficient aircraft.

In addition, we have implemented fuel saving procedures in our flight and ground support operations that further reduce carbon emissions.

We are also supporting efforts to develop sustainable alternative fuels and efforts to modernize the air traffic control system in the U.S.

to further reduce our emissions and minimize our impact on the environment.

Beyond carbon reduction efforts, we expect carbon removal through investment in innovative projects and technologies and stakeholder engagement through coalitions intended to advance carbon reduction to be important aspects of our journey to carbon neutrality.

Delta Air Lines, Inc.

2020 Form 10-K 12

The Airport Noise and Capacity Act of 1990 recognizes the rights of operators of airports with noise problems to implement local noise abatement programs so long as such programs do not interfere unreasonably with interstate or foreign commerce or the national air transportation system.

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While we have had sufficient scheduling flexibility to accommodate local noise restrictions in the past, our operations could be adversely impacted if locally imposed regulations become more restrictive or widespread.

In addition, foreign governments may allow airports to enact similar restrictions, which could adversely impact our international operations or require significant expenditure in order for our aircraft to comply with the restrictions.

In addition, foreign governments may allow airports to enact similar restrictions, which could adversely impact our international operations or require significant expenditures in order for our aircraft to comply with the restrictions.

Refinery Matters .

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economy by mandating the blending of renewable fuels into gasoline and on-road diesel ("Transportation Fuels").

Renewable Identification Numbers ("RINs") are assigned to renewable fuels produced or imported into the U.S.

Renewable Identification Numbers ("RINs") are assigned to renewable fuels produced by or imported into the U.S.

that are blended into Transportation Fuels to demonstrate compliance with this obligation.

A refinery may meet its obligation under RFS by blending the necessary volumes of renewable fuels with Transportation Fuels or by purchasing RINs in the open market or through a combination of blending and purchasing RINs.

Because Monroe is able to blend only a small amount of renewable fuels, it must purchase the majority of its RINs requirement in the secondary market or obtain a waiver from the EPA.

Market prices for RINs have been volatile, marked by periods of sharp increases and decreases primarily in response to predictions about what the EPA and/or the U.S.

A refinery may meet its obligation under RFS by blending the necessary volumes of renewable fuels with Transportation Fuels, by purchasing RINs in the open market or through a combination of blending and purchasing RINs.

Because Monroe is able to blend only a small amount of renewable fuels, it must purchase the majority of its RINs requirement in the secondary market.

Market prices for RINs have been volatile, marked by periods of sharp increases and decreases primarily in response to speculation about what the EPA and/or the U.S.

Congress will do with respect to compliance obligations.

Other Environmental Matters .

We are subject to certain environmental laws and contractual obligations governing the management and release of regulated substances, which may require the investigation and remediation of affected sites.

Soil and/or ground water impacts have been identified at certain of our current or former leaseholds at several domestic airports.

To address these impacts, we have a program in place to investigate and, if appropriate, remediate these sites.

In December 2021, the EPA issued proposed RFS volume requirements for 2020, 2021 and 2022, which are expected to be finalized in the first half of 2022.

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.

Civil Reserve Air Fleet Program

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We have agreed to make available under the CRAF Program a portion of our international aircraft during the contract period ending September 30, 2022.

The CRAF Program has only been activated twice since it was created in 1951.

The CRAF Program has only been activated three times since it was created in 1951, most recently in 2021 to support the military’s effort to evacuate people from Afghanistan following the withdrawal of U.S.

troops from the country.

Delta played a central role in transporting 10,000 Afghan refugees that were evacuated from Afghanistan and delivering needed supplies.

Delta Air Lines, Inc.

2021 Form 10-K 15

Information About Our Executive Officers

Bastian, Age 64:

Chief Executive Officer of Delta since May 2016;

President of Delta (September 2007 - May 2016);

President of Delta and Chief Executive Officer Northwest Airlines, Inc.

(October 2008 - December 2009);

President and Chief Financial Officer of Delta (September 2007 - October 2008);

Executive Vice President and Chief Financial Officer of Delta (July 2005 - September 2007);

Chief Financial Officer of Acuity Brands (June 2005 - July 2005);

Senior Vice President - Finance and Controller of Delta (2000 - April 2005);

Vice President and Controller of Delta (1998 - 2000).

Hauenstein, Age 61:

President of Delta since May 2016;

Executive Vice President - Chief Revenue Officer of Delta (August 2013 - May 2016);

Executive Vice President - Network Planning and Revenue Management of Delta (April 2006 - July 2013);

Executive Vice President and Chief of Network and Revenue Management of Delta (August 2005 - April 2006);

Vice General Director - Chief Commercial Officer and Chief Operating Officer of Alitalia (2003 - 2005);

Senior Vice President- Network of Continental Airlines (2003);

Senior Vice President - Scheduling of Continental Airlines (2001 - 2003);

Vice President Scheduling of Continental Airlines (1998 - 2001).

Ausband, Age 59:

Executive Vice President - Chief Customer Experience Officer of Delta since June 2021;

Senior Vice President - In-Flight Service of Delta (September 2014 - May 2021);

Vice President - Reservation Sales and Customer Care of Delta (January 2010 - September 2014).

Alain Bellemare, Age 60:

President - International of Delta since January 2021;

Chief Executive Officer of Bombardier (February 2015 - March 2020);

President and Chief Executive Officer of United Technologies Corporation Propulsion & Aerospace Systems (June 2011 - February 2015).

Carter, Age 58:

Executive Vice President - Chief Legal Officer of Delta since July 2015;

Partner of Dorsey & Whitney LLP (1999 - 2015), including co-chair of Securities Litigation and Enforcement practice group, chair of Policy Committee and chair of trial department.

Janki, Age 53:

Executive Vice President - Chief Financial Officer of Delta since July 2021;

Senior Vice President of General Electric Company (GE) and Chief Executive Officer of GE Power Portfolio (October 2020 - June 2021);

Senior Vice President, Business and Portfolio Transformation of GE (2018 - 2020);

Senior Vice President, Treasurer and Global Business Operations of GE (2014 - 2017);

Senior Vice President, CEO of GE Energy Management (2012 - 2013).

Laughter, Age 51:

Executive Vice President - Chief of Operations of Delta since June 2021;

Senior Vice President and Chief of Operations of Delta (October 2020 - June 2021);

Senior Vice President - Flight Operations of Delta (March 2020 - October 2020);

Senior Vice President - Corporate Safety, Security and Compliance of Delta (August 2013 - March 2020);

Senior Vice President - Maintenance Operations of Delta (March 2008 - July 2013);

Vice President - Maintenance of Delta (December 2005 - March 2008).

Rahul Samant, Age 55:

Executive Vice President - Chief Information Officer of Delta since January 2018;

Senior Vice President and Chief Information Officer of Delta (February 2016 - December 2017);

Senior Vice President and Chief Digital Officer of American International Group, Inc.

(January 2015 - February 2016);

Senior Vice President and Global Head, Application Development and Management of American International Group, Inc.

(September 2012 - December 2014);

Managing Director of Bank of America (1999 - September 2012).

Sear, Age 56:

Executive Vice President - Global Sales of Delta since February 2016;

Senior Vice President - Global Sales of Delta (December 2011 - February 2016);

Vice President - Global Sales of Delta (October 2008 - December 2011);

Vice President - Sales & Customer Care of Northwest Airlines, Inc.

(June 2005 - October 2008).

Smith, Age 63:

Executive Vice President and Chief People Officer of Delta since October 2014;

Senior Vice President - In-Flight Service of Delta (March 2007 - September 2014);

Vice President - Marketing of Delta (November 2005 - February 2007);

President of Song (January 2005 - October 2005);

Vice President - Marketing and Customer Service of Song (November 2002 - December 2004).

Additional Information

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Risk Factors Relating to Delta

The rapid spread of the COVID-19 virus, the persistence of the resulting pandemic and measures implemented to combat it have had, and will continue to have, a material adverse effect on our business.

Moreover, the longer the pandemic persists, the more material the ultimate effects are likely to be.

It is likely that there will be future negative effects that we cannot presently predict, including near term effects.

The rapid spread of COVID-19 and the persistence of the resulting pandemic, as well as the measures governments and private parties have implemented in order to stem the spread of this pandemic, have had, and are continuing to have a material adverse effect on the demand for worldwide air travel, and consequently upon our business.

The rapid spread of the COVID-19 virus, the continuing spread of its variants, the persistence of the resulting pandemic and measures implemented to combat it have had, and will continue to have, a material adverse effect on our business.

It is possible that there will be future negative effects that we cannot presently predict, including near-term effects.

The rapid spread of the COVID-19 virus in 2020 and variants of the virus in 2021, the persistence of the resulting pandemic, the measures governments and private parties have implemented in order to stem the spread of this pandemic, and the general concern about the virus among travelers have had, and are continuing to have, a material adverse effect on the demand for worldwide air travel compared to historical levels, and consequently upon our business.

Among other effects of the COVID-19 pandemic affecting air travel and our business:

• In the United States, which is our primary market, the federal government has discouraged travel and encouraged social distancing efforts and limits on gathering size.

• Numerous travel advisories and restrictions have been implemented, some of which remain in place, between the United States and specific countries, and many foreign governments have placed restrictions or quarantines on citizens of other countries, including citizens of the U.S., flying into their countries.

• In the United States, which is our primary market, the federal government discouraged travel and encouraged social distancing efforts and limits on gathering size for an extended period.

In addition, state and local governments issued travel restrictions, quarantines and health-related curfews or “shelter in place” orders which dissuaded or restricted air travel.

• Numerous travel advisories and restrictions were implemented, some of which remain in place or have been reinstated, between the United States and specific countries, and many foreign governments have placed restrictions or quarantines on citizens of other countries, including citizens of the U.S., flying into their countries.

For instance, the U.S.

and numerous other countries are now requiring airline passengers to provide negative COVID-19 test results prior to travel into their countries.

• State and local governments have issued travel restrictions, quarantines and advisories and health-related curfews or “shelter in place” orders which dissuade or restrict air travel.

• Employers in both the public and private sectors have issued instructions to employees to work from home and/or are otherwise dissuading or restricting air travel.

• Business conventions and conferences, concerts and similar entertainment have been and continue to be cancelled.

Many popular tourist destinations have been, and remain, closed, or operations are curtailed.

Significant sporting events have been, and occasionally continue to be, cancelled or held with limited or no spectators.

All of these adjustments reduce the demand for both business air travel (which has historically driven our most profitable ticket sales) and leisure air travel.

• Travelers are discouraged from air travel to destinations where COVID-19 is particularly virulent.

• Widespread consumer confidence in air travel may not return until large-scale vaccination has occurred, and contagion or virus-related deaths linked or alleged to be linked to travel on aircraft, whether accurate or not, may hinder restoration of this confidence and, if related to our aircraft, injure our reputation.

and numerous other countries have required and in some instances continue to require airline passengers to provide negative COVID-19 test results prior to travel into their countries.

• Employers in both the public and private sectors have issued instructions to employees to work from home and/or have otherwise dissuaded or restricted air travel.

• Business conventions and conferences, concerts and similar entertainment have been and occasionally continue to be cancelled.

Many popular tourist destinations were closed, or operations curtailed.

Significant sporting events were, and occasionally continue to be, cancelled or held with limited or no spectators.

• Travelers have been discouraged from air travel to destinations where COVID-19 is particularly virulent.

• Travelers may be dissuaded from flying due to possible enhanced COVID-19-related screening measures, which have been implemented to varying degrees and in different ways across multiple markets we serve, or due to the concern that additional travel restrictions implemented between their departure and return may affect their ability to return to their homes.

These effects related to the COVID-19 pandemic are negatively impacting air travel in general, which in turn are materially adversely affecting our revenues, results of operations and financial condition.

Although certain of the restrictions above have eased in some places, the ongoing pandemic, including large outbreaks, resurgences of COVID-19 in various regions and appearances of new variants of the virus, has resulted, and may continue to result, in their reinstitution.

The effectiveness of the available vaccines against certain of these new variants is also unknown.

Moreover, additional currently unknown restrictions or other events dissuading air travel may occur in the future as a result of the pandemic (including possibly in the near term), lengthening the negative effects of the COVID-19 pandemic on our business.

For example, the federal government is contemplating whether to require COVID-19 testing in advance of domestic travel.

These effects related to the COVID-19 pandemic have negatively impacted air travel in general, which in turn has materially adversely affected our revenues, results of operations and financial condition.

Although vaccines have generally proved to be effective and certain of the restrictions above have been eased in some places, the ongoing pandemic, including large outbreaks, resurgences of COVID-19 in various regions and appearances of new variants of the virus, has resulted, and may continue to result, in their reinstitution.

The effectiveness of vaccines against future variants that may develop is also unknown.

Moreover, additional currently unknown restrictions or other events dissuading air travel may occur in the future as a result of an increase in COVID-19 case levels or other factors related to the pandemic (including possibly in the near term), lengthening the negative effects of the pandemic on our business.

Our operations have been, and could in the future be, negatively affected further if our employees are quarantined or sickened as a result of exposure to COVID-19, or if they are subject to additional governmental COVID-19 curfews or “shelter in place” health orders or similar restrictions.

Measures restricting the ability of our airport or in-flight employees to come to work may cause a further deterioration in our service or operations, all of which could negatively affect our business.

Measures restricting the ability of our airport or in-flight employees to come to work negatively impact our service or operations, all of which could negatively affect our business.

Delta Air Lines, Inc.

2021 Form 10-K 17

In response to the crisis, we have taken steps to mitigate the effects on our business, which themselves may have negative consequences with respect to our business and operations.

For example, we have significantly reduced our flight capacity and have blocked middle seats on flights through at least April 30, 2021.

However, the cost savings achievable with temporary capacity reductions will not completely eliminate the costs related to unused capacity.

In addition, to protect the safety of our employees and customers, we have implemented significant additional cleaning measures on all of our aircraft and at the airports in which we operate.

Furthermore, we have waived air travel booking change fees to a broad extent and extended the ability to rebook that travel through December 2022 in order to encourage travelers to book air travel (or not cancel already booked travel) despite the inherent uncertainty caused by the COVID-19 pandemic.

Despite these efforts, we have experienced significant ticket cancellations.

Cancellations, the waiver, and in many cases elimination, of change fees and other refunds have negatively affected our revenues and liquidity.

Ultimately, cost-saving measures that we implemented in 2020, or may consider in the future, have not made up, and will not in the future make-up, for the loss in cash as a result of decreased ticket sales and cancellations and could also negatively affect our service to customers.

The pandemic is also having a material adverse effect on third parties whose services we utilize, including other carriers with which we have commercial relationships (international carriers and regional carriers in the Delta Connection program) and providers of ground services at some airports, which may also negatively affect our service to customers.

We are unable to predict how long conditions related to the pandemic will persist, when effective vaccines will be broadly available, when vaccination will be widespread globally, when travel advisories and restrictions will be lifted, what additional measures may be introduced by governments or private parties or what effect any such additional measures may have on air travel and our business.

In response to the crisis, we took steps to mitigate the effects on our business, which themselves may have negative consequences with respect to our business and operations.

For example, we took cost-saving actions to significantly reduce our capacity in 2020 but were not able to eliminate all costs related to unused capacity.

Ultimately, cost-saving measures that we implemented to date, or may consider in the future, have not made up, and will not in the future make up, for the loss in revenue as a result of decreased ticket sales and cancellations.

In addition, to protect the safety of our employees and customers, we have implemented significant additional cleaning measures on all of our aircraft and at the airports in which we operate which have increased our costs.

We are unable to predict how long conditions related to the pandemic will persist.

The overall situation remains fluid, and it is impossible to predict the timing of future material developments and whether they will occur in the near, medium or long term.

Depending on the duration of the pandemic, such negative developments may occur over the entirety of the pandemic.

At this time, we are also not able to predict the extent to which the COVID-19 pandemic may result in permanent changes to our customers' behavior, with such changes including but not limited to a permanent reduction in business travel as a result of increased usage of "virtual" meetings and "teleconferencing" products and more broadly, a general reluctance to travel by consumers, each of which could have a material impact on our business.

At this time, we are also not able to predict the extent to which the COVID-19 pandemic may result in permanent changes to our customers’ behavior, with such changes including but not limited to a permanent reduction in business travel as a result of increased usage of virtual meetings, and videoconferencing and teleconferencing products and more broadly, a general reluctance to travel, each of which could have a material impact on our business.

Collectively, the foregoing circumstances have had, and are continuing to have, a material adverse effect on our business, results of operations and financial condition.

Future disease outbreaks or similar public health threats could have similar effects.

The impact of the COVID-19 pandemic may also exacerbate other risks discussed in this Form 10-K and in other filings we make from time to time with the SEC.

We have a significant amount of fixed obligations and incurred significant amounts of new debt in a short period in response to the COVID-19 pandemic.

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We have a significant amount of existing fixed obligations, including aircraft lease and debt financings, leases of airport property and other facilities, and other material cash obligations.

In response to the effects that the COVID-19 pandemic is having on our business, we have incurred and may continue to seek significant amounts of additional liquidity through the issuance of debt securities or through bilateral and syndicated secured and/or unsecured credit facilities and through the entry into sale-leaseback transactions.

In addition, we have substantial commitments for capital expenditures.

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If our liquidity is materially diminished, we might not be able to timely pay our leases and debts or comply with certain financial covenants in our financing and credit card processing agreements or with other material provisions of our contractual obligations.

Delta Air Lines, Inc.

2020 Form 10-K 15

Agreements governing our debt, including our credit facilities and our SkyMiles financing agreements, include financial and other covenants.

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The acceleration of significant indebtedness could require us to seek to renegotiate, repay or refinance the obligations under our financing arrangements, and there is no assurance that such renegotiation or refinancing efforts would be successful.

Delta Air Lines, Inc.

2021 Form 10-K 18

We are at risk of losses and adverse publicity stemming from a serious accident involving our aircraft or aircraft of our airline partners.

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In addition, any accident involving an aircraft that we operate or an aircraft that is operated by an airline that is one of our regional carriers or codeshare, alliance or joint venture partners could create a negative public perception about safety and reliability for aviation authorities and the public, which could harm our reputation, resulting in air travelers being reluctant to fly on our aircraft and therefore harm our business.

Breaches or lapses in the security of the technology systems we use and rely on and the data stored within them could compromise sensitive information and expose us to liability, possibly having a material adverse effect on our business.

Breaches or lapses in the security of the technology systems we use and rely on and the data stored within them, as well as ever-evolving global privacy and security regulatory obligations, could have a material adverse effect on our business.

As a regular part of our ordinary business operations, we collect and store sensitive data, including information necessary for our operations, personal information of our passengers and employees and information of our business partners.

The secure operation of the networks and systems on which this type of information is stored, processed and maintained is critical to our business operations and strategy.

Our information systems and those of our service providers are subject to an increasing threat of continually evolving cybersecurity risks, and the increase in work-from-home arrangements since the onset of the COVID-19 pandemic has the potential to enhance these risks.

We expect unauthorized parties to continue to attempt to gain access to our systems or information, or those of our business partners and service providers, including through fraud or other means of deception, or introduction of malicious code, such as viruses, worms, Trojan horses and ransomware.

We expect unauthorized parties to continue attempting to gain access to our systems or information, or those of our business partners and service providers, including through fraud or other means of deception, or introduction of malicious code, such as viruses, worms, Trojan horses and ransomware.

If successful, these actions could cause harm to our computer systems or compromise data stored on our computer networks or those of our business partners and service providers.

Hardware or software we or our business partners or service providers develop, acquire or use in connection with our systems may contain defects that could unexpectedly compromise information security.

For example, we were notified in 2018 that a third-party vendor of chat services for Delta and other companies determined we had been involved in a cyber incident for a short period in 2017.

We have incurred remedial, legal and other costs in connection with this incident but the costs are not material to our financial position or results of operations.

Delta Air Lines, Inc.

2020 Form 10-K 16

We have incurred remedial, legal and other costs in connection with this incident but the costs were not material to our financial position or results of operations.

The methods used to obtain unauthorized access, disable or degrade service or sabotage systems are constantly evolving and may be difficult to anticipate or to detect for long periods of time.

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However, the constantly changing nature of the threats means that we may not be able to prevent all information security breaches or misuse of data.

The compromise of our or our business partners’ or service providers’ technology systems resulting in the loss, disclosure, misappropriation of, or access to, our information or that of our customers, employees or business partners or failure to comply with ever-evolving regulatory obligations or contractual obligations with respect to such information could result in legal claims or proceedings, liability or regulatory penalties under laws protecting the privacy of personal information, disruption to our operations and damage to our reputation, any or all of which could adversely affect our business.

The compromise of our or our business partners’ or service providers’ technology systems resulting in the loss, disclosure, misappropriation of, or access to, our information or that of our customers, employees or business partners could result in legal claims or proceedings, liability or regulatory penalties under laws protecting the privacy and security of personal information, disruption to our operations and damage to our reputation, any or all of which could adversely affect our business.

The costs to remediate breaches and similar system compromises that do occur could be material.

In addition, as cybercriminals become more sophisticated, the cost of proactive defensive measures continues to increase.

Delta Air Lines, Inc.

2021 Form 10-K 19

Disruptions of our information technology infrastructure could interfere with our operations, possibly having a material adverse effect on our business.

Disruptions in our information technology network could result from a technology error or failure impacting our internal systems, whether hosted internally at our data centers or externally at third-party locations, or large scale external interruption in technology infrastructure support on which we depend, such as power, telecommunications or the internet.

Disruptions in our information technology capability could result from a technology error or failure impacting our internal systems, whether hosted internally at our data centers or externally at third-party locations, or large scale external interruption in technology infrastructure support on which we depend, such as power, telecommunications or the internet.

The operation of our technology systems and the use of related data may also be vulnerable to a variety of other sources of interruption, including natural disasters, terrorist attacks, computer viruses, hackers and other security issues.

A significant individual, sustained or repeated failure of our information technology infrastructure, including third-party networks we utilize and on which we depend, could impact our operations and our customer service, result in increased costs and damage our reputation.

While we have in place initiatives to prevent disruptions and disaster recovery plans (including the creation of a back-up data center) and continue to invest in improvements to these initiatives and plans, we have previously experienced infrastructure disruptions and these measures may not be adequate to prevent a future business disruption and any material adverse financial and reputational consequences to our business.

While we have in place initiatives to prevent disruptions and disaster recovery plans and continue to invest in improvements to these initiatives and plans, we have previously experienced infrastructure disruptions and these measures may not be adequate to prevent a future business disruption and any material adverse financial and reputational consequences to our business as recent outages of large cloud providers whom we rely on has shown.

Failure of the technology we use to perform effectively could have a material adverse effect on our business.

We are dependent on technology initiatives to provide customer service and operational effectiveness in order to compete in the current business environment.

For example, substantially all of our tickets are issued to our customers as electronic tickets, and a growing number of our customers check in using our website, airport kiosks and our mobile device applications.

We have made and continue to make significant investments in customer facing technology such as delta.com, mobile device applications, in-flight wireless internet, check-in kiosks, customer service applications, application of biometric technology, airport information displays and related initiatives, including security for these initiatives.

We are dependent on technology initiatives and capabilities to provide customer service and operational effectiveness in order to compete in the current business environment.

We have made and continue to make significant investments in customer facing technology such as delta.com, the FlyDelta mobile application, in-flight wireless internet, check-in kiosks, customer service applications, application of biometric technology, airport information displays and related initiatives, including security for these initiatives.

We are also investing in significant upgrades to technology infrastructure and other supporting systems and transitioning to cloud-based technologies.

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We are dependent on these other carriers for significant aspects of our network in the regions in which they operate.

Delta Air Lines, Inc.

2020 Form 10-K 17

The COVID-19 pandemic has significantly impacted the operations of our airline partners and could adversely affect the expansion of strategic relationships in the future.

These carriers have incurred significant financial losses as a result of the pandemic, and some have been or may be forced to seek protection under applicable bankruptcy laws.

For example, since the onset of the pandemic, LATAM Airlines and Grupo Aeroméxico filed voluntary proceedings to reorganize under Chapter 11 of the United States bankruptcy code, Virgin Australia entered voluntary administration in Australia in order to recapitalize its business and repudiated our joint venture agreement, and Virgin Atlantic undertook a voluntary recapitalization process in the U.K.

and instituted ancillary proceedings in support of that process in the U.S.

As discussed further in Note 5 of the Notes to the Consolidated Financial Statements, the effects of the COVID-19 pandemic, along with these actions, caused us to reduce our carrying value in the equity investments we have in certain of these carriers to zero.

If any airline partners that seek to restructure are unable to do so successfully or if our commercial arrangements with these partners are not maintained, any investments or other assets associated with those partners could become impaired, and our business and results of operations could be materially adversely affected.

For example, following the onset of the pandemic, LATAM and Grupo Aeroméxico filed voluntary proceedings to reorganize under Chapter 11 of the United States bankruptcy code and Virgin Atlantic undertook a voluntary recapitalization process in the United Kingdom ("U.K.") and instituted ancillary proceedings in support of that process in the U.S.

As discussed further in Note 4 of the Notes to the Consolidated Financial Statements, due to the effects of the COVID-19 pandemic, along with these actions, the carrying value of our equity investments in these three carriers has been reduced to, and remained, zero as of December 31, 2021.

During the December 2021 quarter, we announced additional investments in each of these carriers, which with respect to LATAM and Grupo Aeroméxico, remain subject to completion of their respective reorganizations and related terms, conditions and approvals.

If any airline partners that seek to restructure or recapitalize are unable to do so successfully or if our commercial arrangements with these partners are not maintained, any investments or other assets associated with those partners could become impaired, and our business and results of operations could be materially adversely affected.

Delta Air Lines, Inc.

2021 Form 10-K 20

A significant disruption in, or other problems with respect to, the operations or performance of third parties on which we rely, including third-party carriers, could have a material adverse effect on our business and results of operations.

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While we have agreements with certain of these third parties that define expected service performance, we do not have direct control over their operations.

To the extent that the operations of a third party on which we rely is significantly disrupted, or if these third parties experience significant performance issues (including failing to satisfy any applicable performance standards) or fail to meet any applicable compliance requirements, our revenue may be reduced, our expenses may be increased and our reputation may be harmed, any or all of which could result in a material adverse effect on our business and results of operations.

To the extent that the operations of a third party on which we rely is significantly disrupted, including as a result of the pandemic, or if these third parties experience significant performance issues (including failing to satisfy any applicable performance standards) or fail to meet any applicable compliance requirements, our revenue may be reduced, our expenses may be increased and our reputation may be harmed, any or all of which could result in a material adverse effect on our business and results of operations.

Some regional carriers, including our wholly-owned subsidiary, Endeavor, have faced a shortage of qualified pilots.

If this shortage becomes more widespread, third-party regional carriers may not be able to comply with their obligations to us, and Endeavor may not be able to perform as expected, which could reduce our capacity (available seat miles) and revenue, resulting in a material adverse effect on our business and results of operations.

We may never realize the full value of our intangible assets or our long-lived assets, causing us to record impairments that may materially adversely affect our results of operations.

In accordance with applicable accounting standards, we are required to test our goodwill and other indefinite-lived intangible assets for impairment on an annual basis, or more frequently where there is an indication of impairment.

In addition, we are required to test certain of our other assets for impairment where there is any indication that an asset may be impaired.

In addition, we are required to test certain of our other assets for impairment where there is an indication that an asset may be impaired.

During the fiscal year ended December 31, 2020, we recorded significant impairment and related charges related to acceleration of our fleet simplification strategy and the write-down of investments in certain airline partners, stemming from the impact of the COVID-19 pandemic.

We may be required to recognize losses in the future due to, among other factors, extreme fuel price volatility, tight credit markets, government regulatory changes, decline in the fair values of certain tangible or intangible assets, such as aircraft, route authorities, and airport slots, unfavorable trends in historical or forecasted results of operations and cash flows and an uncertain economic environment, as well as other uncertainties.

A further impairment charge could have a material adverse effect on our results of operations.

We may be required to recognize losses in the future due to, among other factors, extreme fuel price volatility, tight credit markets, government regulatory changes, decline in the fair values of certain tangible or intangible assets, such as aircraft, route authorities, and airport slots, unfavorable trends in forecasted results of operations and cash flows and an uncertain economic environment, as well as other uncertainties.

Further impairment charges could have a material adverse effect on our results of operations.

Employee strikes and other labor-related disruptions may have a material adverse effect on our operations.

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Separately, the NLRA governs Monroe’s relations with the union representing their employees, which generally allows self help after a collective bargaining agreement expires.

Delta Air Lines, Inc.

2020 Form 10-K 18

If we or our subsidiaries are unable to reach agreement with any of our unionized work groups on future negotiations regarding the terms of their collective bargaining agreements or if additional segments of our workforce become unionized, we may be subject to work interruptions or stoppages, subject to the requirements of the Railway Labor Act or the NLRA, as the case may be.

If we or our subsidiaries are unable to reach agreement with any of our unionized work groups in future negotiations regarding the terms of their collective bargaining agreements or if additional segments of our workforce become unionized, we may be subject to work interruptions or stoppages, subject to the requirements of the Railway Labor Act or the NLRA, as the case may be.

Strikes or labor disputes with our unionized employees may have a material adverse effect on our ability to conduct business.

Likewise, if third-party regional carriers with which we have contract carrier agreements are unable to reach agreement with their unionized work groups in current or future negotiations regarding the terms of their collective bargaining agreements, those carriers may be subject to work interruptions or stoppages, subject to the requirements of the Railway Labor Act, which could have a material adverse effect on our operations.

Delta Air Lines, Inc.

2021 Form 10-K 21

Our results can fluctuate due to the effects of weather, natural disasters and seasonality.

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These events decrease revenue and can also increase costs.

In addition, increases in the frequency, severity or duration of thunderstorms, hurricanes, typhoons or other severe weather events, including from changes in the global climate, could result in increases in delays and cancellations, turbulence-related injuries and fuel consumption to avoid such weather, any of which could result in loss of revenue and higher costs.

In addition, increases in the frequency, severity or duration of thunderstorms, hurricanes, typhoons, floods or other severe weather events, including from changes in the global climate and rising global temperatures, could result in increases in delays and cancellations, turbulence-related injuries and fuel consumption to avoid such weather, any of which could result in loss of revenue and higher costs.

In addition, demand for air travel is typically higher in the June and September quarters, particularly in our international markets, because there is more vacation travel during these periods than during the remainder of the year.

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From 2019 to 2021, our average annual fuel price per gallon, including the impact of fuel hedges, has varied from $1.64 to $2.02 with year to year variations ranging from a decrease of 19% to an increase of 23%.

We acquire a significant amount of jet fuel from Monroe and through strategic agreements that Monroe has with third parties.

We acquire a significant amount of jet fuel from Monroe and through strategic agreements associated with the refinery that Monroe has with third parties.

The cost of the fuel we purchase under these arrangements remains subject to volatility in the cost of crude oil and jet fuel.

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Significant extended disruptions in the supply of aircraft fuel, including from Monroe, could have a material adverse effect on our operations and results of operations.

Weather-related events, natural disasters, political disruptions or wars involving oil-producing countries, changes in governmental policy concerning aircraft fuel production, transportation or taxes, changes in refining capacity, environmental concerns and other unpredictable events may impact crude oil and fuel supply and could result in shortages in the future.

Weather-related events, natural disasters, political disruptions or disputes involving oil-producing countries, changes in governmental policy concerning aircraft fuel production, transportation or taxes, changes in refining capacity, environmental concerns and other unpredictable events may impact crude oil and fuel supply and could result in shortages in the future.

Shortages in fuel supplies could have negative effects on our results of operations and financial condition.

Because we acquire a significant amount of our jet fuel from Monroe, the disruption or interruption of production at the refinery could have an impact on our ability to acquire jet fuel needed for our operations.

The disruption or interruption of production at the refinery could have a negative impact on our ability to acquire jet fuel needed for our operations.

Disruptions or interruptions of production at the refinery could result from various sources including a major accident or mechanical failure, interruption of supply or delivery of crude oil, work stoppages relating to organized labor issues, or damage from severe weather or other natural or man-made disasters, including acts of terrorism.

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In addition, the financial benefits from the operation of the refinery could be materially adversely affected (to the extent not recoverable through insurance) because of lost production and repair costs.

If Monroe's cost of producing non-jet fuel products exceeds the value it receives for those products, the financial benefits we expect to achieve through the ownership of the refinery and our consolidated results of operations could be materially adversely affected.

Delta Air Lines, Inc.

2021 Form 10-K 22

An environmental or other incident associated with the operation of the Monroe refinery could have a material adverse effect on our consolidated financial results if insurance is unable to cover a significant liability.

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The operation of the refinery by Monroe is subject to significant environmental regulation.

Failure to comply with environmental regulations or the enactment of additional regulation could have a material adverse effect on our consolidated financial results.

Failure to comply with environmental regulations or the enactment of additional regulation applicable to Monroe could have a material adverse effect on our consolidated financial results.

Monroe’s operations are subject to extensive environmental, health and safety laws and regulations, including those relating to the discharge of materials into the environment, waste management, pollution prevention measures and greenhouse gas emissions, which are subject to change over time.

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that are blended into Transportation Fuels to demonstrate compliance with this obligation.

Because Monroe is able to blend only a small amount of renewable fuels, it must purchase the majority of its RIN requirement in the secondary market or obtain a waiver from the EPA.

Because Monroe is able to blend only a small amount of renewable fuels, it must purchase the majority of its RINs requirement in the secondary market.

As a result, Monroe is exposed to the market price of RINs.

Market prices for RINs have been volatile, marked by periods of sharp increases and decreases primarily in response to predictions about what the EPA and/or the U.S.

Market prices for RINs have been volatile, marked by periods of sharp increases and decreases primarily in response to speculation about what the EPA and/or the U.S.

Congress will do with respect to compliance obligations.

We cannot predict these actions or the future prices of RINs.

During 2020, Monroe's operating loss was driven in part by an increase in RINs prices.

During 2021 and 2020, Monroe's operating losses were driven in part by an increase in RINs costs.

Monroe’s purchase of RINs at elevated prices in the future could have a material impact on our consolidated results of operations and cash flows.

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2021 Form 10-K 23

Significant damage to our reputation and brand, including as a result of significant adverse publicity, could materially adversely affect our business and financial results.

Maintaining our reputation and global brand are critical to our business.

We operate in a highly visible, public environment with significant, real-time exposure to traditional and social media.

Significant damage to our reputation and brand, including as a result of significant adverse publicity or inability to achieve certain sustainability goals, could materially adversely affect our business and financial results.

Maintaining our reputation and global brand is critical to our business.

We operate in a highly visible and public environment with significant real-time exposure to traditional and social media.

Adverse publicity, whether justified or not, can rapidly spread, including through social or digital media.

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Our reputation and brand could also be adversely impacted by, among other things, failure to make progress toward and achieve our environmental sustainability and diversity, equity and inclusion goals, as well as public pressure from investors or policy groups to change our policies or negative public perception of the environmental impact of air travel.

Significant damage to our reputation and brand could have a material adverse effect on our business and financial results.

For example, we intend to invest $1.0 billion through 2030 toward airline carbon neutrality and to establish ambitious new medium- and long-term goals to reduce our emissions, but we are unable to achieve the latter goals using our existing fleet, current technologies and available fuel sources.

We are diligently working to establish a reasonable transition plan with respect to our medium- and long-term climate goals;

however, our ability to execute on such a plan is subject to substantial risks and uncertainties, as it is dependent on the actions of governments and third parties and will require, among other things, significant capital investment, including from third parties, research and development from manufacturers and other stakeholders, along with government policies and incentives to reduce the cost, and incent production, of SAF and other technologies that are not presently in existence or available at scale.

Significant damage to our reputation and brand could have a material adverse effect on our business and financial results, including as a result of litigation related to any of these matters.

Delta Air Lines, Inc.

2021 Form 10-K 24

Risk Factors Relating to the Airline Industry

Terrorist attacks, geopolitical conflict or security events may adversely affect our business, financial condition and results of operations.

Terrorist attacks, geopolitical conflict or security events, or the fear or threat of any of these events, could have a significant adverse effect on our business.

Despite significant security measures at airports and airlines, the airline industry remains a high profile target for terrorist groups.

We rely on government provided threat intelligence and utilize private sources to constantly monitor for threats from terrorist groups and individuals, including from violent extremists both internationally and domestically, with respect to direct threats against our operations and in ways not directly related to the airline industry.

In addition, the impact on our operations of avoiding areas of the world, including airspace, in which there are geopolitical conflicts and the targeting of commercial aircraft by parties to those conflicts can be significant.

Security events, primarily from external sources but also from potential insider threats, also pose a significant risk to our passenger and cargo operations.

These events could include random acts of violence and could occur in public areas that we cannot control.

Terrorist attacks, geopolitical conflict or security events, or the fear or threat of any of these events, even if not made directly on or involving the airline industry, could have a significant negative impact on us by discouraging passengers from flying, leading to decreased ticket sales and increased refunds.

In addition, potential costs from these types of events include increased security costs, impacts from avoiding flight paths over areas in which conflict is occurring or could occur, such as flight redirections or cancellations, reputational harm and other costs.

If any or all of these types of events occur, they could have a material adverse effect on our business, financial condition and results of operations.

The global airline industry is highly competitive and, if we cannot successfully compete in the marketplace, our business, financial condition and results of operations will be materially adversely affected.

The airline industry is highly competitive, marked by significant competition with respect to routes, fares, schedules (both timing and frequency), operational reliability, services, products, customer service and loyalty programs.

Consolidation in the airline industry, changes in international alliances, the creation of immunized joint ventures and the rise of subsidized government-sponsored international carriers have altered and will continue to alter the competitive landscape in the industry, resulting in the formation of airlines and alliances with increased financial resources, more extensive global networks and competitive cost structures.

Our domestic operations are subject to significant competition from traditional network carriers, including American Airlines and United Airlines, national point-to-point carriers, including Alaska Airlines, JetBlue Airways and Southwest Airlines, and other discount or ultra-low-cost carriers, including Spirit Airlines, Frontier Airlines and Allegiant Air, some of which may have lower costs than we do and provide service at low fares to destinations served by Delta.

In particular, we face significant competition at our domestic hubs and key airports either directly at those airports or at the hubs of other airlines that are located in close proximity.

We also face competition in smaller to medium-sized markets from regional jet operations of other carriers.

Our ability to compete in the domestic market effectively depends, in part, on our ability to maintain a competitive cost structure.

If we cannot maintain our costs at a competitive level, then our business, financial condition and results of operations could be materially adversely affected.

Our international operations are subject to competition from both foreign and domestic carriers, including from point-to-point carriers on certain international routes.

Through alliance and other marketing and codesharing agreements with foreign carriers, U.S.

carriers have increased their ability to sell international transportation, such as services to and beyond traditional European and Asian gateway cities.

Similarly, foreign carriers have obtained increased access to interior U.S.

passenger traffic beyond traditional U.S.

gateway cities through these relationships.

In particular, several joint ventures among U.S.

and foreign carriers, including several of our joint ventures as well as those of our competitors, have received grants of antitrust immunity allowing the participating carriers to coordinate schedules, pricing, sales and inventory.

In addition, alliances formed by domestic and foreign carriers, including SkyTeam, the Star Alliance (among United Airlines, Lufthansa German Airlines, Air Canada and others) and the oneworld alliance (among American Airlines, British Airways, Qantas and others) have enhanced competition in international markets.

The airline industry also faces competition from surface transportation and technological alternatives such as virtual meetings, teleconferencing or videoconferencing, and the intensity of this competition has likely increased, at least in the near term, as a result of the COVID-19 pandemic.

Increased competition in both the domestic and international markets may have a material adverse effect on our business, financial condition and results of operations.

Delta Air Lines, Inc.

2021 Form 10-K 25

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business