What changed in this filing

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Item 1. Business

2023-02-10 compared with 2022-02-11 · 130 added, 116 removed, 264 unchanged (48% of the section changed)

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 .

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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.

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

The baseline for establishing airlines’ 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, in June 2020 ICAO removed 2020 from the baseline calculation for the first phase of CORSIA, from 2021 to 2023.

In 2022, ICAO established a new, more stringent CORSIA baseline of 85% of 2019, which will apply starting in 2024 through 2035.

A pilot phase of the CORSIA program runs from 2021 through 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.

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operators participate in CORSIA.

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").

Nonetheless, Delta has voluntarily submitted verified emissions reports on its annual international emissions.

Additionally, the 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.

In late 2022, the EU agreed on legislative language that would extend the narrow scope of EU ETS through 2026.

Extension beyond 2026 would be conditioned on the performance of CORSIA.

The EU is expected to finalize this legislation in early 2023.

As a result of the United Kingdom's ("UK") withdrawal from the EU, UK flights are no longer part of the EU ETS and are instead regulated under a separate UK ETS scheme.

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

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

In 2016, the U.S.

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.

In 2016, the 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.

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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.

On November 15, 2021, the EPA announced that it would defend the current standards while simultaneously calling for ambitious new international CO 2 standards at the 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 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.

For example, in 2023, the EU is expected to finalize a sustainable aviation fuel blending mandate for aviation fuel suppliers beginning in 2025.

Individual EU member states have been developing their own requirements, including for example, separate SAF mandates in France and Sweden 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.

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

Delta Air Lines, Inc.

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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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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.

For example, in 2022, to reduce noise, the Netherlands announced plans to reduce the maximum number of flights authorized annually at Amsterdam’s Schiphol Airport.

Before implementing the new limitations, the Dutch government must assess alternatives, including noise impact and cost effectiveness.

The outcome cannot be determined at this time.

Refinery Matters .

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Congress will do with respect to compliance obligations.

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.

In November 2022, the EPA issued proposed RFS volume requirements for 2023, 2024 and 2025, which are expected to be finalized by June 2023.

The EPA's proposed ethanol mandates for 2023, 2024, and 2025 are billions of gallons above the projected ethanol demand for those years, which has resulted in an increase to already high prices for RINs.

Civil Reserve Air Fleet Program

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airlines during airlift emergencies, national emergencies or times of war.

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

We have agreed to make available under the CRAF Program a portion of our international aircraft during the contract period that ends on September 30, 2023.

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

| 2022 10-K 14

Information About Our Executive Officers

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Carter, Age 59:

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

Executive Vice President - External Affairs of Delta since October 2022;

Executive Vice President - Chief Legal Officer of Delta (July 2015 - October 2022);

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.

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Additional Information

We make available free of charge on our website at ir.delta.com our Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q, our Current Reports on Form 8-K and amendments to those reports as soon as reasonably practicable after these reports are filed with or furnished to the Securities and Exchange Commission ("SEC").

Information on our website is not incorporated into this Form 10-K or our other securities filings and is not a part of those filings.

Our company website is located at www.delta.com and our investor relations website is located at ir.delta.com.

We make available free of charge on our investor relations website our Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q, our Current Reports on Form 8-K and amendments to those reports as soon as reasonably practicable after these reports are filed with or furnished to the Securities and Exchange Commission ("SEC").

Information on our website, including our investor relations website, is not incorporated into this Form 10-K or our other securities filings and is not a part of those filings.

Delta Air Lines, Inc.

2021 Form 10-K 16

| 2022 10-K 15

In addition to the other information set forth in this report, you should carefully consider the following material risk factors applicable to Delta.

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Risk Factors Relating to Delta

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 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 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 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 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 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.

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.

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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Delta Air Lines, Inc.

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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, as well as ever-evolving global privacy and security regulatory obligations, could have a material adverse effect on our business.

Breaches or lapses in the security of the technology systems we use and rely on could compromise the data stored within them and consequently expose us to liability, disruption to our operations and damage to our reputation, any or all of which 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 could potentially enhance these risks.

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.

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 were not material to our financial position or results of operations.

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

These networks and systems are subject to an increasing threat of continually evolving cybersecurity risks, which we must manage.

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, potentially causing us to incur remedial, legal and other costs, which could be material.

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.

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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 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.

We are also subject to evolving global privacy and security regulatory obligations and an increasing customer focus on privacy issues and data security in the United States and abroad, as well as to geopolitical risks associated with international data transfer.

The compromise of our or our business partners’ or service providers’ technology systems resulting in the loss, interruption, 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.

Delta Air Lines, Inc.

2021 Form 10-K 19

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

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We expect to continue exploring ways to deepen our alliance relationships with other carriers as part of our global business strategy.

These relationships and investments involve significant challenges and risks, including that they may not generate the expected financial results or that we may not realize a satisfactory return on our investment.

These relationships and investments involve significant challenges and risks, including that joint ventures or cooperation agreements such as our agreement with Aeroméxico may be subject to ongoing review and renewal requirements and may not generate the expected financial results, or that we may not realize a satisfactory return on our investments.

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

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, 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.

The COVID-19 pandemic significantly impacted the operations of our airline partners and, similar public health threats that may arise 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 were forced to seek protection under applicable bankruptcy laws.

For example, following the onset of the pandemic, Grupo Aeroméxico and LATAM filed voluntary proceedings to reorganize under Chapter 11 of the United States bankruptcy code ("bankruptcy process"), from which they successfully emerged in the March 2022 quarter and the December 2022 quarter, respectively, and Virgin Atlantic undertook a voluntary recapitalization process in the UK that was completed in September 2020.

During the December 2021 quarter, we announced additional investments in each of these carriers.

As discussed further in Note 4 of the Notes to the Consolidated Financial Statements, due to the effects of the COVID-19 pandemic, the carrying value of our equity investments in these three carriers was reduced to zero prior to our additional investments.

In the future if any airline partner that may seek to restructure or recapitalize is unable to do so successfully or if our commercial arrangements with any of 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.

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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, 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.

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.

Some regional carriers, including our wholly owned subsidiary, Endeavor, are facing a shortage of qualified pilots and experiencing operating constraints as a result.

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 expected capacity and affect our 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.

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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.

During the fiscal year ended December 31, 2020, we recorded significant impairment and related charges resulting from the 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 forecasted results of operations and cash flows and an uncertain economic environment, as well as other uncertainties.

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The Railway Labor Act generally prohibits strikes or other types of self-help actions both before and after a collective bargaining agreement becomes amendable, unless and until the collective bargaining processes required by the Railway Labor Act have been exhausted.

The collective bargaining agreement with our pilots became amendable on December 31, 2019 and we are in discussions with the representative of the pilots regarding terms of the agreement under the auspices of the NMB.

The collective bargaining agreement with our pilots became amendable on December 31, 2019.

In January 2023, a tentative agreement was ratified by ALPA’s Delta Master Executive Council ( " MEC " ) and is subject to ratification by Delta’s pilots through a vote that is scheduled to close on March 1, 2023.

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

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Delta Air Lines, Inc.

2021 Form 10-K 21

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

Our results of operations are impacted by severe weather, natural disasters and seasonality.

Severe weather conditions and natural disasters (or other environmental events) can significantly disrupt service and create air traffic control problems.

These events decrease revenue and can also increase costs.

| 2022 10-K 19

Our results can fluctuate due to seasonality and other factors.

Our results of operations are impacted by a number of factors including seasonality and changing economic and other conditions beyond our control.

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.

The seasonal shifting of demand causes our financial results to vary on a quarterly basis.

Other factors that may affect our results include severe weather conditions and natural disasters (or other environmental events), which could significantly disrupt service and create air traffic control problems.

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.

The seasonal shifting of demand causes our financial results to vary on a seasonal basis.

Because of fluctuations in our results from weather, natural disasters and seasonality, results of operations for a historical period are not necessarily indicative of results of operations for a future period and results of operations for an interim period are not necessarily indicative of results of operations for an entire year.

Because of fluctuations in our results from seasonality and other factors, results of operations for a historical period are not necessarily indicative of results of operations for a future period and results of operations for an interim period are not necessarily indicative of results of operations for an entire year.

Our business and results of operations are dependent on the price of aircraft fuel.

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Over the last decade, fuel prices have been highly volatile and at times have increased substantially.

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%.

From 2020 to 2022, our average annual fuel price per gallon has increased from $1.64 to $3.36 with significant volatility during that period.

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

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At times in the past, we often were not able to increase our fares to offset fully the effect of increases in fuel costs, and we may not be able to do so in the future.

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.

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

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.

Shortages in fuel supplies could have negative effects on our business and results of 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.

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Delta Air Lines, Inc.

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

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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Increases in the volume of renewable fuels that must be blended into Monroe’s products could limit the refinery’s production if sufficient numbers of RINs are not available for purchase or relief from this requirement is not obtained, which could have a material adverse effect on our consolidated financial results.

If we lose senior management and other key employees and they are not replaced by individuals with comparable skills, or we otherwise fail to maintain our company culture, our business and results of operations could be materially adversely affected.

We are dependent on the experience and industry knowledge of our officers and other key employees to design and execute our business plans.

If we experience a substantial turnover in our leadership and other key employees and we are not able to replace these persons with individuals with comparable skills, or we otherwise fail to maintain our company culture, our performance could be materially adversely impacted.

Furthermore, we may be unable to attract and retain additional qualified senior management and other key personnel as needed in the future.

Delta Air Lines, Inc.

2021 Form 10-K 23

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.

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To the extent we are unable to respond in a timely and appropriate manner to adverse publicity, our brand and reputation may be damaged.

Delta Air Lines, Inc.

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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.

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;

For example, we have established ambitious goals to reduce our greenhouse gas emissions, with the long-term goal to achieve net zero greenhouse gas emissions across our airline operation and its value chain by no later than 2050, subject to validation of this long-term goal by SBTi (for which we cannot predict if and when the validation will occur).

Achieving these ambitious goals will require significant capital investment from manufacturers and other stakeholders, as we are unable to achieve these goals using our existing fleet, current technologies and available fuel sources.

We are continuing to develop our climate strategy and transition plan;

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.

We are dependent on the experience and industry knowledge of our officers and other key employees to design and execute our business plans.

Furthermore, we may be unable to attract and retain additional qualified senior management and other key personnel as needed in the future.

Delta Air Lines, Inc.

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| 2022 10-K 22

Risk Factors Relating to the Airline Industry

Disease outbreaks, such as the COVID-19 pandemic or similar public health threats that may arise in the future, and measures implemented to combat them have had, and may in the future have, a material adverse effect on our business.

The COVID-19 pandemic, the measures governments and private parties implemented in order to stem its spread, and the general concern about the virus among travelers had a material adverse effect on the demand for worldwide air travel compared to historical levels, and consequently upon our business.

Similar disease outbreaks or public health threats that may arise in the future could have similarly adverse effects on our business.

Among other effects of the COVID-19 pandemic that affected air travel and our business, the pandemic led governments both in the United States and abroad to issue travel restriction or advisories, and to implement quarantines and health-related curfews or "shelter in place" orders;

led employers to instruct employees to work from home and/or otherwise dissuaded or restricted air travel;

caused business conventions, conferences, concerts, sporting events and similar events to be canceled or held with limited or no attendees;

and discouraged travelers from air travel to destinations where COVID-19 was particularly virulent or due to possible enhanced COVID-19 related screening measures.

These pandemic-related effects negatively impacted air travel in general, which in turn materially adversely affected our revenues, results of operations and financial condition for an extended period of time.

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 a disease outbreak such as COVID-19, or as a result of a similar public health crisis, or if they are subject to additional governmental 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 negatively impact our service or operations, all of which could negatively affect our business.

We are unable to predict the extent to which disease outbreaks or other public health threats that may arise in the future may change our customers' behavior or travel patterns, which could have a material impact on our business.

The degree to which any future disease outbreaks or public health threats may impact our revenues, results of operations and financial condition is uncertain and will depend on future developments.

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

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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.

Delta Air Lines, Inc.

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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.

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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.

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, Allegiant Air, Breeze Airways and Avelo Airlines, 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.

We also face competition in small- 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.

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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.

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

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

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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.

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

Extended interruptions or disruptions in service at major airports in which we operate or significant problems associated with a type of aircraft or engine we operate could have a material adverse effect on our financial condition and results of operations.

The airline industry is heavily dependent on business models that concentrate operations in major airports in the United States and throughout the world.

An interruption or disruption at an airport where we have significant operations, whether resulting from air traffic control delays, failure of computer systems or technology infrastructure, weather events or natural disasters, or performance issues from third-party service providers, if sustained for an extended period of time, could have a material adverse effect on our business, financial condition and results of operations.

Similarly, the airline industry is heavily dependent on a limited number of aircraft and engine manufacturers whose products are subject to extensive regulatory requirements.

Any significant problems associated with an aircraft or engine type that we operate, including new aircraft or engine types, such as design defects, mechanical problems, contractual performance by the manufacturers or adverse perception by the public leading to customer avoidance, or adverse actions by the FAA resulting in limitations on use or grounding could have a negative impact on our operations if we are not able to substitute or replace the affected aircraft or engine type.

Any of the foregoing could have a material adverse effect on our financial condition and results of operations.

Delta Air Lines, Inc.

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The airline industry is subject to extensive government regulation, which is costly and could materially adversely affect our business.

Airlines are subject to extensive regulatory and legal compliance requirements that result in significant costs and may have material adverse effects on our business.

For instance, the FAA from time to time issues directives and other regulations relating to the maintenance and operation of aircraft that necessitate significant expenditures and could carry operational implications.

We expect to continue incurring significant expenses to comply with the FAA’s regulations.

In addition, a directive or other regulation that has a significant operational impact on us could have a material adverse impact on our financial results.

Other laws, regulations, taxes and airport rates and charges have also been imposed from time to time that significantly increase the cost of airline operations, reduce revenues or otherwise impact our business.

The industry is heavily taxed.

Additional taxes and fees, if implemented, could negatively impact our results of operations.

Airport slot access is subject to government regulation and changes in slot regulations or allocations could impose a significant cost on the airlines operating in airports subject to such regulations or allocations or otherwise adversely affect an airline’s business.

Certain of our hubs are among the most congested airports in the United States and have been, and could in the future be, the subject of regulatory action that might limit the number of flights and/or increase costs of operations at certain times or throughout the day.

Air traffic control inefficiencies can also enhance these pressures.

In addition, inefficiencies in the U.S.

air traffic control system, which is regulated by the FAA, can result in delays and disruptions of air traffic, especially during peak travel periods in certain congested markets.

Failure to implement measures to improve the air traffic control system could lead to increased delays and inefficiencies in flight operations as demand for U.S.

air travel increases, having a material adverse effect on our operations.

Failure to update the air traffic control system in a timely manner, and the substantial funding requirements of an updated system that may be imposed on air carriers, may have an adverse impact on our financial condition and results of operations.

As an international carrier, we are subject to a wide variety of U.S.

and foreign laws that affect trade, including tariff and trade policies, export and import requirements, taxes, monetary policies and other restrictions and charges.

In particular, the imposition of significant tariffs with respect to aircraft that we are not able to mitigate could substantially increase our costs, which in turn could have a material adverse effect on our financial results.

In addition, some of our operations are in high-risk legal compliance environments.

Failure to comply with trade sanctions and restrictions, the Foreign Corrupt Practices Act (the "FCPA") and similar anti-bribery laws in non-U.S.

jurisdictions, as well as other applicable laws or regulations could result in litigation, assessment of damages, imposition of penalties or other consequences, any or all of which could harm our reputation and have an adverse effect on our financial results.

In certain circumstances, we also may be subject to consequences of the failure of our airline partners to comply with laws and regulations, including U.S.

laws to which they may be subject such as the FCPA.

We and other U.S.

carriers are subject to U.S.

and foreign laws regarding privacy of passenger and employee data that are not consistent in all countries in which we operate and which are continuously evolving, requiring ongoing monitoring and updates to our privacy and information security programs.

Although we dedicate significant resources to manage compliance with global privacy and information security obligations, this challenging regulatory environment may pose material risks to our business, including increased operational burdens and costs, regulatory enforcement, and legal claims or proceedings.

Delta Air Lines, Inc.

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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