What changed in this filing

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Item 1A. Risk Factors

2023-02-10 compared with 2022-02-11 · 23 added, 50 removed, 69 unchanged (51% of the section changed)

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 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 extended interruption or disruption at an airport where we have significant operations, whether resulting from a discrete event, such as a hurricane, or the manifestation of a chronic physical risk, such as rising sea levels, 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, 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 grounding could have a negative impact on our operations if we are not able to substitute or replace the affected aircraft or engine type and could, in any event, have a material adverse effect on our financial condition and results of operations.

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, the failure of the federal government to upgrade the U.S.

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

The failure 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.

2021 Form 10-K 26

The airline industry is subject to many forms of environmental regulation, including but not limited to increased regulation to reduce emissions and other risks associated with climate change.

2 unchanged sentences

Compliance with existing and future environmental laws and regulations could require capital investment and increase operational costs, and violations can lead to significant fines and penalties and reputational harm.

For example, in 2022 the EPA proposed regulations to define certain per- and polyfluoroalkyl substances ("PFAS") as "hazardous substances" under CERCLA.

Numerous states have adopted regulations governing these substances as well.

PFAS are used in a wide variety of consumer and industrial products, including the firefighting foams used to extinguish fuel-based fires at airports and refineries.

EPA's proposed rule, once finalized, could subject airports, airlines, and refineries, among others, to potential liability for cleanup of historical PFAS contamination associated with use of PFAS-containing firefighting foam.

The ultimate impact and associated cost to Delta of this rulemaking cannot be predicted at this time.

Future regulatory action concerning climate change, aircraft emissions and noise emissions could have a significant effect on the airline industry.

1 unchanged sentence

This program establishes a goal for the aviation industry to achieve carbon-neutral growth in international aviation beginning in 2021 through the use of carbon offsets and/or lower carbon aviation 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.

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.

Certain CORSIA program details remain to be developed and could potentially be affected by political developments in participating countries or the results of the pilot phase of the program, and thus the impact of CORSIA cannot be predicted at this time.

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For example, in 2021 the European Commission proposed legislation that would expand the reach of the EU ETS to include flights into and out of the European Economic Area beginning in 2027 under certain circumstances, increase the stringency of the program, and establish a sustainable aviation fuel blending mandate for aviation fuel suppliers, 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 at the beginning of 2022.

In 2022, the EU reached a deal on proposed legislation that would exclude extra-EU flights from the scope of EU ETS until 2027, however that deal has not yet been approved.

The EU is expected to finalize a SAF mandate on fuel suppliers in 2023 and 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.

8 unchanged sentences

Delta Air Lines, Inc.

2021 Form 10-K 27

| 2022 10-K 26

Because of the global nature of our business, unfavorable economic or political conditions in the markets in which we operate or volatility in currency exchange rates could have a material adverse effect on our business, financial condition and results of operations.

11 unchanged sentences

Delta Air Lines, Inc.

2021 Form 10-K 28

| 2022 10-K 27

Flight Equipment

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

We have been experiencing a recovery in demand from the COVID-19 pandemic, which has led to an increase in our capacity and utilization of our aircraft compared to the year ended December 31, 2020.

Accordingly, as of December 31, 2021, all aircraft in our operating fleet are reflected in the table below compared to approximately 10% that were temporarily parked as of December 31, 2020.

See Note 15 of the Notes to the Consolidated Financial Statements for additional information on the restructuring charges recorded in 2020 related to our fleet retirement plans.

Operating aircraft information by fleet type

Mainline aircraft information by fleet type

Current Fleet (1)

15 unchanged sentences

B-757-200 100 — — 100 25.4 — —

B-757-300 16 — — 16 19.9 — —

B-767-300ER 45 — — 45 26.8 — —

1 unchanged sentence

Total 708 86 108 902 14.4 328 126

(1) Includes both active and temporarily parked aircraft.

Excludes certain aircraft we own or lease that are operated by regional carriers on our behalf shown in the table below.

Includes used aircraft purchases from 2021 that are undergoing modifications and will enter service in the second half of 2022.

The following table summarizes the aircraft operated by regional carriers on our behalf at December 31, 2022.

Regional aircraft information by carrier

Regional aircraft information by fleet type and carrier

Fleet Type (1)

Carrier CRJ-200 CRJ-700 CRJ-900 Embraer 170 Embraer 175 Total

3 unchanged sentences

— 6 38 — 84 128

Republic Airline, Inc.

Republic Airways, Inc.

— — — 11 46 57

Total 26 24 161 11 130 352

(1) Includes both active and temporarily parked aircraft.

We own 231 and have operating leases for three of these regional aircraft.

The remainder are owned or leased by SkyWest Airlines, Inc.

or Republic Airways, Inc.

(2) Endeavor Air, Inc.

1 unchanged sentence

Delta Air Lines, Inc.

2021 Form 10-K 29

| 2022 10-K 28

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 1A. Risk Factors