What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2023-02-10 compared with 2022-02-11 · 420 added, 485 removed, 1234 unchanged (42% of the section changed)

4 unchanged sentences

Consolidated Statements of Operations for the years ended December 31, 20 2 2 , 20 2 1 and 20 20

Consolidated Statements of Comprehensive Income /(L oss) for the years ended December 31, 20 2 1 , 20 20 and 201 9

Consolidated Statements of Comprehensive Income /(Loss) for the years ended December 31, 20 2 2 , 20 2 1 and 20 20

Consolidated Statements of Cash Flows for the years ended December 31, 20 2 2 , 20 2 1 and 20 20

15 unchanged sentences

Note 1 4 - Segments

Note 15 - Restructuring

Note 15 - Government Grants and Restructuring

Note 1 6 - Earnings /(Loss) Per Share

Delta Air Lines, Inc.

2021 Form 10-K 62

| 2022 10-K 58

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

19 unchanged sentences

Critical Audit Matters

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved especially challenging, subjective, or complex judgments.

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Delta Air Lines, Inc.

2021 Form 10-K 63

Employee Benefit Plans

| 2022 10-K 59

Employee Benefit Plans - NAV Asset Valuation

Description of the Matter At December 31, 2022, the fair value of the Company’s benefit plan assets measured at fair value on a recurring basis totaled $15.6 billion, of which $12.3 billion do not have a readily determinable fair value and are measured at net asset value per share ( " NAV assets " ) as a practical expedient.

Management determines the fair value of NAV assets by applying the methodologies described in Note 9 to the consolidated financial statements.

The Company’s expected long-term rate of return on assets for net periodic benefit for the year ended December 31, 2021 was 8.98%.

The expected return on plan assets provided net periodic benefit of $1.5 billion for the year ended December 31, 2021.

As disclosed in Note 9 to the consolidated financial statements, the expected long-term rate of return on plan assets is reviewed annually and is based primarily on plan-specific investment studies using historical market return and volatility data.

Auditing the fair value of the Company’s NAV assets required significant judgment in estimating the fair value of the NAV assets, primarily resulting from the lag in the availability of data provided by the investment fund managers and the use of corroborating data from public markets to estimate fair value.

Auditing the expected long-term rate of return on plan assets required significant judgment due to the subjective nature of certain assumptions.

In particular, the Company incorporated excess return expectations compared to historical market return and volatility data based on the Company’s investment strategy.

Net periodic benefit is sensitive to the expected long-term rate of return on plan assets, which is affected by expectations about future market and economic conditions.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s accounting for its employee benefit plans, including controls over management’s assessment of the significant inputs and estimates included in the fair value measurements of NAV assets and management’s review of the significant assumptions and the inputs used in estimating the expected long-term rate of return on plan assets.

Auditing the Company’s NAV assets required significant judgment in estimating the fair value of the NAV assets, primarily resulting from the lag in the availability of data provided by the investment fund managers and the use of corroborating data from public markets to estimate fair value.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s accounting for the fair value measurement of its NAV assets, including controls over management’s assessment of the significant inputs and estimates affecting the fair value measurement.

To test the fair value of plan assets measured at NAV, our audit procedures included, among others, evaluating the valuation methodologies used by the Company and comparing significant inputs and underlying data used in the Company's valuations to information available from third-party sources and market data.

Additionally, we performed sensitivity analyses to evaluate the changes to the Company’s net periodic benefit that would result from changes in the fair value measurement, and compared the Company’s asset performance results to applicable third-party benchmarks and assessed management’s historical accuracy of estimating fair value by performing retrospective review procedures comparing the Company’s estimates of fair value as of the prior year end to the final fair value NAV in the investment’s audited financial statements made available during the current year.

To test the expected long-term rate of return on plan assets, our audit procedures included, among others, evaluating the methodology used, testing the significant assumptions used in the determination of the expected return and testing the underlying data used by the Company.

We involved an actuarial specialist to assist in evaluating the appropriateness of the Company’s estimate, including independently calculating a range of expected long-term rates of return based on the Company’s current investment portfolio and strategy, and assessed whether management’s assumption was consistent with a range of returns for a portfolio of comparative investments.

Additionally, we tested the completeness and accuracy of the data used by management and performed sensitivity analyses to evaluate the changes to the Company’s net periodic benefit that would result from changes in the expected long-term rate of return on plan assets.

Delta Air Lines, Inc.

2021 Form 10-K 64

Additionally, we performed sensitivity analyses to evaluate the changes to the Company’s net periodic benefit that would result from changes in the fair value measurement, and compared the Company’s asset performance results to applicable third-party benchmarks and assessed management’s historical accuracy of estimating fair value by performing retrospective review procedures comparing the Company’s estimates of fair value as of the prior year end to the fair value NAV in the investment’s audited financial statements made available during the current year.

Loyalty Program - Mileage Breakage

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As disclosed in Note 2 to the consolidated financial statements, the Company defers revenue for mileage credits earned and recognizes loyalty travel awards in passenger revenue as the miles are redeemed and services are provided.

In determining the value of mileage credits earned, the Company applies an estimate of mileage credits earned that are not expected to be redeemed (“mileage breakage”).

In accounting for its loyalty program deferred revenue, the Company estimates the amount of mileage credits outstanding that are not expected to be redeemed ( " mileage breakage " ).

The Company recognizes mileage breakage proportionally during the period in which the remaining mileage credits are actually redeemed.

4 unchanged sentences

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s accounting for its loyalty program, including controls over management’s review of the estimation of the mileage breakage and the completeness and accuracy of the data underlying the mileage breakage estimate.

To test the estimate of breakage of mileage credits, our audit procedures included, among others, involving an actuarial specialist to assist in assessing the method used to develop the mileage breakage estimate and independently developing a range of mileage breakage estimates and comparing them to the Company's estimates.

Additionally, we tested the completeness and accuracy of the underlying mileage data used in the Company’s statistical models and performed sensitivity analyses to evaluate the changes to the Company’s deferred revenue that would result from changes in the mileage breakage estimate.

To test the estimate of breakage of mileage credits, our audit procedures included, among others, involving an actuarial specialist to assist in assessing the method used by the Company to develop the mileage breakage estimate and to independently develop a range of mileage breakage estimates and compare to the Company's estimate.

Additionally, we tested the completeness and accuracy of the underlying mileage data used in the Company’s statistical models.

Delta Air Lines, Inc.

2021 Form 10-K 65

| 2022 10-K 60

Realizability of Deferred Tax Assets

2 unchanged sentences

Deferred tax assets are reduced by a valuation allowance if, based on the weight of all available evidence, in management’s judgment it is more likely than not that some portion, or all, of the deferred tax assets will not be realized.

Auditing management’s assessment of recoverability of deferred tax assets involved subjective estimation and complex auditor judgment in weighing the positive and negative evidence to determine whether a valuation allowance for deferred tax assets is needed, including the Company’s estimate of future taxable income that may be affected by future market and economic conditions.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls that address the risks of material misstatement relating to the realizability of deferred tax assets.

This included controls over management’s scheduling of the future reversal of existing taxable temporary differences, identification and use of available tax planning strategies and estimates of future taxable income.

To test the realizability of the Company’s deferred tax assets, our audit procedures included, among others, evaluating the assumptions used to develop the scheduling of the future reversal of existing taxable temporary differences, evaluating tax planning strategies and evaluating the assumptions used by the Company to develop projections of future taxable income.

We compared the projections of future taxable income with the actual results of prior periods, as well as management’s consideration of current industry and economic trends.

We compared the projections of future taxable income with the actual results of prior periods and evaluated management’s consideration of current industry and economic trends.

We also compared the projections of future taxable income with other forecasted financial information prepared by the Company.

5 unchanged sentences

Delta Air Lines, Inc.

2021 Form 10-K 66

| 2022 10-K 61

Financial Statements

6 unchanged sentences

Accounts receivable, net of an allowance for uncollectible accounts of $ 23 and $ 50

Fuel inventory 694 377

Expendable parts and supplies inventories, net of an allowance for obsolescence of $ 176 and $ 188

Fuel, expendable parts and supplies inventories, net of an allowance for obsolescence of $ 136 and $ 176

Prepaid expenses and other 1,877 1,119

6 unchanged sentences

Identifiable intangibles, net of accumulated amortization of $ 902 and $ 893

Cash restricted for airport construction 473 1,556

Equity investments 2,128 1,712

27 unchanged sentences

Additional paid-in capital 11,526 11,447

Accumulated deficit ( 148 ) ( 428 )

Retained earnings/(accumulated deficit) 1,170 ( 148 )

Accumulated other comprehensive loss ( 5,801 ) ( 7,130 )

5 unchanged sentences

Delta Air Lines, Inc.

2021 Form 10-K 67

| 2022 10-K 62

Financial Statements

19 unchanged sentences

Passenger service 1,453 756 551

Profit sharing 563 108 —

Aircraft rent 508 430 399

Restructuring charges ( 124 ) ( 19 ) 8,219

Profit sharing 108 — 1,643

Government grant recognition — ( 4,512 ) ( 3,946 )

4 unchanged sentences

Interest expense, net ( 1,029 ) ( 1,279 ) ( 929 )

Impairments and equity method losses ( 337 ) ( 2,432 ) ( 62 )

Impairments and equity method results ( 20 ) ( 337 ) ( 2,432 )

Gain/(loss) on investments, net ( 783 ) 56 ( 105 )

Loss on extinguishment of debt ( 100 ) ( 319 ) ( 8 )

Pension and related benefit/(expense) 451 219 ( 65 )

Pension and related benefit 292 451 219

Miscellaneous, net ( 107 ) ( 60 ) 137

8 unchanged sentences

Delta Air Lines, Inc.

2021 Form 10-K 68

| 2022 10-K 63

Financial Statements

5 unchanged sentences

Other comprehensive income/(loss):

Net change in derivative contracts and other — ( 66 ) 6

Net change in pension and other benefits 1,329 1,908 ( 983 )

Net change in other — — ( 66 )

Total Other Comprehensive Income/(Loss) 1,329 1,908 ( 1,049 )

2 unchanged sentences

Delta Air Lines, Inc.

2021 Form 10-K 69

| 2022 10-K 64

Financial Statements

9 unchanged sentences

Deferred income taxes 591 115 ( 3,110 )

Pension, postretirement and postemployment payments less/(greater) than expense ( 2,038 ) 898 ( 922 )

Impairments and equity method losses 337 2,432 62

(Gain)/loss on fair value investments 874 ( 38 ) 88

Pension, postretirement and postemployment payments (greater)/less than expense ( 453 ) ( 2,038 ) 898

Impairments and equity method results 20 337 2,432

Changes in certain assets and liabilities:

1 unchanged sentence

Fuel inventory ( 158 ) ( 318 ) 354

Noncurrent assets ( 76 ) 210 111

Prepaids and other current assets ( 867 ) ( 58 ) —

Air traffic liability 1,902 1,814 ( 572 )

11 unchanged sentences

Purchase of equity investments ( 870 ) — ( 2,099 )

Sale of equity investments — — 279

Purchase of short-term investments ( 2,704 ) ( 12,655 ) ( 13,400 )

19 unchanged sentences

Flight and ground equipment acquired under finance leases 91 1,049 381

Other financings — 280 —

Equity investments and other financings 330 — 280

Operating leases converted to finance leases 342 42 —

1 unchanged sentence

Delta Air Lines, Inc.

2021 Form 10-K 70

| 2022 10-K 65

Financial Statements

4 unchanged sentences

Earnings / (Accumulated Deficit) Accumulated

Comprehensive Loss Treasury Stock

Other Comprehensive Loss Treasury Stock

(in millions, except per share data) Shares Amount Shares Amount Total

Balance at January 1, 2020 652 $ — $ 11,129 $ 12,454 $ ( 7,989 ) 9 $ ( 236 ) $ 15,358

Net income — — — 4,767 — — — 4,767

Net loss — — — ( 12,385 ) — — — ( 12,385 )

Dividends declared — — — ( 257 ) — — — ( 257 )

Other comprehensive loss — — — — ( 1,049 ) — — ( 1,049 )

Common stock issued for employee equity awards (1)

Common stock issued for employee equity awards and other (1)

1 — 120 — — — ( 23 ) 97

Stock purchased and retired ( 6 ) — ( 104 ) ( 240 ) — — — ( 344 )

Government grant warrant issuance — — 114 — — — — 114

Balance at December 31, 2020 647 — 11,259 ( 428 ) ( 9,038 ) 9 ( 259 ) 1,534

— — — 280 — — — 280

Dividends declared

— — — ( 257 ) — — — ( 257 )

Other comprehensive loss

Other comprehensive income

— — — — 1,908 — — 1,908

Common stock issued for employee equity awards and other (1)

Common stock issued for employee equity awards (1)

3 — 102 — — 1 ( 23 ) 79

Stock purchased and retired ( 6 ) — ( 104 ) ( 240 ) — — — ( 344 )

Government grant warrant issuance — — 86 — — — — 86

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2 — 79 — — 1 ( 31 ) 48

Government grant warrant issuance — — 86 — — — — 86

Balance at December 31, 2022 652 $ — $ 11,526 $ 1,170 $ ( 5,801 ) 11 $ ( 313 ) $ 6,582

2 unchanged sentences

Delta Air Lines, Inc.

2021 Form 10-K 71

| 2022 10-K 66

Notes to the Consolidated Financial Statements

4 unchanged sentences

Our Consolidated Financial Statements include the accounts of Delta Air Lines, Inc.

and our consolidated subsidiaries and have been prepared in accordance with accounting principles generally accepted in the U.S.

and our consolidated subsidiaries and have been prepared in accordance with generally accepted accounting principles in the U.S.

We are the primary beneficiary of, and have a controlling financial interest in, certain immaterial entities in which we have voting rights of 50% or less, which we consolidate in our financial results.

6 unchanged sentences

Unless otherwise noted, all amounts disclosed are stated before consideration of income taxes.

Regional Carrier Expense

Until 2021, we allocated certain costs (such as landing fees and other rents, salaries and related costs and contracted services) to regional carrier expense in our income statement based on relevant statistics (such as passenger counts).

Beginning in 2021 we ceased performing this allocation and have reclassified the costs presented in prior periods to align with this presentation.

This reclassification better reflects the nature of, and how management views, these regional carrier related expenses.

This allocation was approximately $ 900 million in 2020 and $ 1.4 billion in 2019.

The amounts in regional carrier expense under the current presentation represent the accrual of payments to our regional carriers under capacity purchase agreements, maintenance costs related to our regional fleet and the expenses of our wholly owned regional subsidiary, Endeavor Air, Inc.

Use of Estimates

3 unchanged sentences

Recent Accounting Standards

Government Assistance .

In 2021, the Financial Accounting Standards Board issued Accounting Standards Update ("ASU") No.

2021-10, "Government Assistance (Topic 832):

Disclosures by Business Entities about Government Assistance." This ASU will require certain disclosures about the significant terms and conditions of material government assistance agreements in order to provide more consistent information to users of the financial statements.

This standard is effective for annual reporting periods beginning after December 15, 2021, and early adoption is permitted.

We determined that our material government assistance agreements are the payroll support program agreements under the Coronavirus Aid, Relief and Economic Security Act ("CARES Act") and the program extensions, and we adopted the new standard in 2021.

See Note 6, "Debt," where we reflect the requirements of this new standard as it relates to our payroll support program disclosures.

Standards Effective in Future Years

Fair Value of Equity Investments.

In June 2022, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No.

2022-03, "Fair Value Measurement (Topic 820):

Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions." Under this standard, a contractual restriction on the sale of an equity security is not considered in measuring the security's fair value.

The standard also requires certain disclosures for equity securities that are subject to contractual restrictions.

The ASU becomes effective January 1, 2024.

Upon adoption, we do not believe it will have a material impact on the valuation of our equity investments;

however, we may be required to include additional disclosures to the extent we have material equity investments subject to contractual sale restrictions.

Supplier Finance Program Obligations.

In September 2022, the FASB issued ASU No.

2022-04, "Liabilities—Supplier Finance Programs (Subtopic 405-50)." This standard requires disclosure of the key terms of outstanding supplier finance programs and a rollforward of the related obligations.

The new standard does not affect the recognition, measurement or financial statement presentation of supplier finance program obligations.

The ASU becomes effective January 1, 2023, except for the rollforward requirement, which becomes effective January 1, 2024.

Upon adoption, we may be required to include additional disclosures to the extent we have material supplier finance program obligations.

Delta Air Lines, Inc.

2021 Form 10-K 72

| 2022 10-K 67

Notes to the Consolidated Financial Statements

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Short-term, highly liquid investments with maturities of three months or less when purchased are classified as cash and cash equivalents.

Investments with maturities of greater than three months, but not in excess of one year, when purchased are classified as short-term investments.

Investments with maturities of greater than three months, but not in excess of one year, when purchased are classified as short-term investments and are stated at fair value.

Investments with maturities beyond one year when purchased may be classified as short-term investments if they are expected to be available to support our short-term liquidity needs.

Our short-term investments are classified as fair value investments and gains and losses are recorded in non-operating expense .

Our short-term investments in debt securities purchased prior to October 1, 2022 are classified as fair value investments under the fair value option and unrealized gains and losses are recorded in non-operating expense.

As we return to our pre-pandemic investment strategy for these assets, our short-term investments in debt securities purchased after October 1, 2022 are classified as available-for-sale investments and are stated at fair value with unrealized gains and losses recorded in accumulated other comprehensive income/(loss) ("AOCI").

Realized gains and losses on these investments are recorded in non-operating expense.

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the Consolidated Balance Sheets ("balance sheets") that sum to the total of the same such amounts shown within the Consolidated Statements of Cash Flows ("cash flows statement").

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Noncurrent assets:

Cash restricted for airport construction 473 1,556 636

Restricted cash included in other noncurrent assets 69 473 1,556

Total cash, cash equivalents and restricted cash $ 3,473 $ 8,569 $ 10,055

4 unchanged sentences

Costs include the raw material consumed plus direct manufacturing costs (such as labor, utilities and supplies) as incurred and an applicable portion of manufacturing overhead.

We expense the cost of carbon offsets upon retirement within aircraft fuel and related taxes on our income statement as these costs are related to our carbon emissions generated by our airline segment.

The purchase of carbon offsets is included in operating activities on our cash flows statement.

During 2022, we purchased and retired $ 116 million of carbon offsets which relate to a portion of our airline segment's 2021 and March 2022 quarter carbon emissions.

During 2021, we purchased and retired $ 95 million of carbon offsets, which related to a portion of our airline segment's 2020 and 2021 carbon emissions.

Expendables Parts and Supplies.

6 unchanged sentences

We have recorded these nonmonetary exchanges at the carrying amount of the non-jet fuel products transferred within aircraft fuel and related taxes on the income statement.

Changes in fuel prices, interest rates and foreign currency exchange rates impact our results of operations.

In an effort to manage our exposure to these risks, we may enter into derivative contracts and adjust our derivative portfolio as market conditions change.

Our derivative contracts are recognized at fair value on our balance sheets and have net balances of $ 17 million and $ 1 million at December 31, 2021 and 2020, respectively.

Delta Air Lines, Inc.

2021 Form 10-K 73

| 2022 10-K 68

Notes to the Consolidated Financial Statements

Changes in fuel prices, interest rates and foreign currency exchange rates impact our results of operations.

In an effort to manage our exposure to these risks, we may enter into derivative contracts and adjust our derivative portfolio as market conditions change.

Our derivative contracts are recognized at fair value on our balance sheets and had net balances of $ 47 million and $ 17 million at December 31, 2022 and 2021, respectively.

Long-Lived Assets

18 unchanged sentences

Residual values for owned aircraft, engines, spare parts and simulators are generally 5 % to 10 % of cost.

We capitalize certain internal and external costs incurred to develop and implement software and amortize those costs over an estimated useful life of three to ten years .

We capitalize certain internal and external costs incurred to develop and implement software and amortize those costs over an estimated useful life of three to fifteen years .

Included in the depreciation and amortization expense discussed above, we recorded $ 307 million, $ 301 million and $ 304 million for amortization of capitalized software for the years ended December 31, 2022, 2021 and 2020, respectively.

The net book value of these assets, which are included in information technology-related assets above, totaled $ 876 million and $ 1.0 billion at December 31, 2021 and 2020, respectively.

The net book value of these assets, which are included in information technology-related assets above, totaled $ 891 million and $ 876 million at December 31, 2022 and 2021, respectively.

Our tangible assets consist primarily of flight equipment, which is mobile across geographic markets.

3 unchanged sentences

For long-lived assets held for sale, we discontinue depreciation and record impairment losses when the carrying amount of these assets is greater than the fair value less the cost to sell.

Delta Air Lines, Inc.

| 2022 10-K 69

Notes to the Consolidated Financial Statements

To determine whether impairments exist for aircraft used in operations, we group assets at the fleet type level or at the contract level for aircraft operated by third-party regional carriers (i.e., the lowest level for which there are identifiable cash flows) and then estimate future cash flows based on projections of capacity, passenger mile yield, fuel and labor costs and other relevant factors.

1 unchanged sentence

We estimate aircraft fair values using published sources, appraisals and bids received from third parties, as available.

Due to the impacts of the COVID-19 pandemic, we evaluated our fleet during 2020 and determined that only the fleet types discussed in Note 15, "Restructuring," were impaired, as the future cash flows from the operation of other fleet types through the respective retirement dates exceeded the carrying value.

Due to the recovery in demand that we have experienced throughout 2021, we decided not to retire any additional aircraft and returned to service a majority of the aircraft that were temporarily parked in 2020.

We recorded no further impairments during 2021.

As we gained updated information during the year, we updated estimates to the 2020 fleet-related impairment charges and recorded adjustments of $ 19 million to certain of the restructuring charges during 2021.

Delta Air Lines, Inc.

2021 Form 10-K 74

Notes to the Consolidated Financial Statements

Due to the impacts of the COVID-19 pandemic, during 2020 we removed a significant portion of our mainline and regional aircraft from active service and evaluated our fleet for impairment, determining that only certain fleet types were impaired, as the future cash flows from the operation of these fleet types through the respective retirement dates were lower than the carrying value.

Due to the recovery in demand that we experienced throughout 2021 and 2022, we decided not to retire any additional aircraft and returned to service a majority of the aircraft that were temporarily parked in 2020.

We recorded no further impairments during 2021 or 2022.

See Note 15, "Government Grants and Restructuring," for additional details regarding these impairments and related charges.

We account for deferred income taxes under the liability method.

21 unchanged sentences

Maintenance costs are expensed as incurred, except for costs incurred under power-by-the-hour contracts, which are expensed based on actual hours flown.

Power-by-the-hour contracts transfer certain risk to third-party service providers and fix the amount we pay per flight hour to the service provider in exchange for maintenance and repairs under a predefined maintenance program.

Power-by-the-hour contracts transfer certain risk to third-party service providers and fix the amount we pay per flight hour or per flight cycle to the service provider in exchange for maintenance and repairs under a predefined maintenance program.

Modifications that enhance the operating performance or extend the useful lives of airframes or engines are capitalized and amortized over the remaining estimated useful life of the asset or the remaining lease term, whichever is shorter.

Delta Air Lines, Inc.

| 2022 10-K 70

Notes to the Consolidated Financial Statements

Advertising Costs

3 unchanged sentences

Passenger sales commissions and merchant fees are recognized in passenger commissions and other selling expenses when the related revenue is recognized.

Delta Air Lines, Inc.

2021 Form 10-K 75

Notes to the Consolidated Financial Statements

Carbon Offset Costs

We may purchase and retire carbon offsets and we expense the cost of carbon offsets upon retirement of the credits within aircraft fuel and related taxes on our income statement as these costs are related to our carbon emissions generated by our airline segment.

The purchase of carbon offsets is included in operating activities on our cash flows statement.

During 2021, we purchased and retired $ 95 million of carbon offsets, of which $ 30 million relates to 13 million metric tons of carbon emissions generated by our airline segment from March 1 to December 31, 2020 as well as $ 65 million which relates to a portion of 2021 carbon emissions generated by our airline segment.

REVENUE RECOGNITION

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We periodically evaluate the estimated air traffic liability and may record adjustments in our income statement.

These adjustments relate primarily to refunds, exchanges, ticket breakage, transactions with other airlines and other items for which final settlement occurs in periods subsequent to the sale of the related tickets at amounts other than the original sales price.

These adjustments relate primarily to ticket breakage, refunds, exchanges, transactions with other airlines and other items for which final settlement occurs in periods subsequent to the sale of the related tickets at amounts other than the original sales price.

We recognized approximately $ 4.2 billion, $ 2.2 billion and $ 3.1 billion in passenger revenue during the years ended December 31, 2022, 2021 and 2020, respectively, that had been recorded in our air traffic liability balance at the beginning of those periods.

The air traffic liability typically increases during the winter and spring months as advanced ticket sales grow prior to the summer peak travel season and decreases during the summer and fall months.

However, the ongoing reduction in demand for air travel due to the COVID-19 pandemic has resulted in a lower level of advance bookings and the associated cash received, as well as significant ticket cancellations which led to issuance of cash refunds or travel credits to customers.

The total value of cash refunds, excluding taxes and related fees, issued to customers during the years ended December 31, 2021 and 2020 was approximately $ 1.1 billion and $ 3.1 billion, respectively.

Travel credits represented approximately 45 % and 65 % of the air traffic liability as of December 31, 2021 and 2020, respectively.

In the March 2021 quarter, we announced the extension of the validity of all passenger tickets and travel credits purchased or expiring in 2021 to December 31, 2022, which allowed for tickets to be rebooked through December 31, 2022 for travel through 2023.

The air traffic liability classified as noncurrent as of December 31, 2021 represents our current estimate of tickets and travel credits to be used or refunded beyond one year, while the balance classified as current represents our current estimate of tickets and travel credits to be used or refunded within one year.

We will continue to monitor our customers' travel behavior and may adjust our estimates in the future.

In January 2022, we announced changes to expiration dates, as discussed below.

Delta Air Lines, Inc.

2021 Form 10-K 76

Notes to the Consolidated Financial Statements

Beginning with the COVID-19 pandemic in the March 2020 quarter through 2021, reduced demand for air travel resulted in a lower level of advance bookings and the associated cash received than we had historically experienced, which had been impacting the typical seasonal trend of air traffic liability.

However, demand improved during 2022 as consumers regained confidence to travel and increased ticket purchases for travel further in advance.

Ticket Breakage.

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Given the impact of the COVID-19 pandemic on customer behavior and changes made in ticket validity terms, as well as the elimination of change fees for most tickets as discussed below, our estimates of revenue that will be recognized from the air traffic liability for unused tickets may vary in future periods.

Further Extension to Ticket Validity.

In January 2022, we announced that all existing travel credit holders will have until December 31, 2023 to rebook their ticket for travel throughout 2024.

Additionally, all Delta customers with upcoming 2022 travel or who purchase a ticket in 2022 will also have the flexibility to rebook their ticket through December 31, 2023, and travel throughout 2024.

This change is expected to shift a portion of our air traffic liability to noncurrent.

We will also consider this change in estimating the future ticket breakage rate.

Delta Air Lines, Inc.

| 2022 10-K 71

Notes to the Consolidated Financial Statements

Extension to Ticket Validity.

In order to provide our customers more flexibility and time to plan their travel, travel credit holders as of January 2022 and customers who purchased a ticket in 2022 are able to rebook their ticket through December 31, 2023 for travel throughout 2024.

Regional Carriers.

9 unchanged sentences

We recognize revenue for these services when the related transportation service is provided.

During 2020, with the exception of Basic Economy, we eliminated change fees for all tickets originating in North America and waived change fees for tickets originating outside of North America.

We also implemented a temporary waiver that allowed Basic Economy tickets with travel for 2021, which are normally non-changeable, to be changed without paying a fee regardless of origin or destination.

Starting January 1, 2022, Basic Economy tickets may be cancelled for a fee to receive a partial ticket credit.

Delta has eliminated change fees for tickets originating in the United States, Canada, Europe and Africa (excluding Basic Economy tickets).

A change fee waiver continues to apply for travel originating in Asia and the Pacific.

Starting in 2022, Basic Economy tickets may be cancelled for a charge to receive a partial ticket credit.

Loyalty Program

12 unchanged sentences

We use statistical models to estimate mileage breakage based on historical redemption patterns.

A change in assumptions to the redemption activity for miles or the estimated fair value of miles expected to be redeemed could have a material impact on our revenue in the year in which the change occurs and in future years.

A change in assumptions regarding the redemption activity for miles or the estimated fair value of miles expected to be redeemed could have a material impact on our revenue in the year in which the change occurs and in future years.

We recognize mileage breakage proportionally during the period in which the remaining miles are actually redeemed.

Delta Air Lines, Inc.

2021 Form 10-K 77

Notes to the Consolidated Financial Statements

We defer revenue for the miles when earned and recognize loyalty travel awards in passenger revenue as the miles are redeemed and transportation is provided.

5 unchanged sentences

During the years ended December 31, 2022, 2021 and 2020, total cash sales from marketing agreements related to our loyalty program were $ 5.7 billion, $ 4.1 billion and $ 2.9 billion, respectively, which are allocated to travel and other performance obligations, as discussed below.

Delta Air Lines, Inc.

| 2022 10-K 72

Notes to the Consolidated Financial Statements

Our most significant contract to sell miles relates to our co-brand credit card relationship with American Express.

21 unchanged sentences

Balance at December 31 $ 7,882 $ 7,559 $ 7,182

Delta Air Lines, Inc.

2021 Form 10-K 78

Notes to the Consolidated Financial Statements

The timing of mile redemptions can vary widely;

however, the majority of new miles have historically been redeemed within two years of being earned.

The loyalty program deferred revenue classified as a current liability represents our current estimate of revenue expected to be recognized in the next twelve months based on projected redemptions, while the balance classified as a noncurrent liability represents our current estimate of revenue expected to be recognized beyond twelve months.

Compared to pre-pandemic levels, a larger portion of mile redemptions is projected to occur beyond twelve months and is therefore reflected as a noncurrent liability as of December 31, 2021.

We will continue to monitor redemptions as the situation evolves.

The loyalty program deferred revenue classified as a current liability represents our estimate of revenue expected to be recognized in the next twelve months based on projected redemptions, while the balance classified as a noncurrent liability represents our estimate of revenue expected to be recognized beyond twelve months.

Cargo Revenue

Cargo revenue is recognized when we provide the transportation.

Delta Air Lines, Inc.

| 2022 10-K 73

Notes to the Consolidated Financial Statements

Other Revenue

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Total other revenue $ 9,314 $ 6,348 $ 3,604

This represents refinery sales to third parties, which are at or near cost;

accordingly, the margin on these sales is de minimis .

This represents refinery sales to third parties.

See Note 14, "Segments," for more information on revenue recognition within our refinery segment.

Loyalty Program.

Loyalty program revenues relate to brand usage by third parties and other performance obligations embedded in miles sold, including redemption of miles for non-travel awards.

This relates to brand usage by third parties and other performance obligations embedded in miles sold, including redemption of miles for non-travel awards.

These revenues are included within the total cash sales from marketing agreements, discussed above.

Ancillary Businesses.

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

In January 2020, we combined Delta Private Jets, our former wholly owned subsidiary which provided private jet operations, with Wheels Up.

Upon closing, we received an equity stake in Wheels Up, and Delta Private Jets is no longer reflected in ancillary businesses.

This includes aircraft maintenance services we provide to third parties and our vacation wholesale operations.

Miscellaneous.

Miscellaneous revenue is primarily composed of lounge access, including access provided to certain American Express cardholders, and codeshare revenues.

This is primarily composed of lounge access, including access provided to certain American Express cardholders, and codeshare revenues.

Revenue by Geographic Region

Operating revenue for the airline segment is recognized in a specific geographic region based on the origin, flight path and destination of each flight segment.

A significant portion of the refinery's revenues typically consists of fuel sales to support the airline, which is eliminated in the Consolidated Financial Statements.

A significant portion of the refinery segment's revenues typically consists of fuel sales to support the airline, which is eliminated in the Consolidated Financial Statements.

The remaining operating revenue for the refinery segment is included in the domestic region.

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Total $ 40,218 $ 22,519 $ 12,883 $ 50,582 $ 29,899 $ 17,095

Delta Air Lines, Inc.

2021 Form 10-K 79

Notes to the Consolidated Financial Statements

Accounts Receivable

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We provide an allowance for uncollectible accounts using an expected credit loss model which represents our estimate of expected credit losses over the lifetime of the asset.

In 2020, due to the COVID-19 pandemic, we recorded reserves on certain receivables, which are discussed further in Note 15, "Restructuring".

In 2020, due to the COVID-19 pandemic, we recorded reserves on certain receivables, which are discussed further in Note 15, "Government Grants and Restructuring".

Passenger Taxes and Fees

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We record a liability when the amounts are collected and reduce the liability when payments are made to the applicable government agency or operating carrier (i.e., for codeshare-related fees).

Delta Air Lines, Inc.

| 2022 10-K 74

Notes to the Consolidated Financial Statements

FAIR VALUE MEASUREMENTS

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Government securities 1,587 122 1,465 — (a)

Corporate obligations 1,614 — 1,614 — (a)

Other fixed income securities 67 — 67 — (a)

Long-term investments 1,450 1,305 38 107 (a)(b)

1 unchanged sentence

Fuel hedge contracts ( 47 ) — ( 47 ) — (a)(b)

Foreign currency exchange contracts 1 — 1 — (a)

Delta Air Lines, Inc.

2021 Form 10-K 80

Notes to the Consolidated Financial Statements

December 31, 2021 Valuation

7 unchanged sentences

Fuel hedge contracts ( 18 ) — ( 18 ) — (a)(b)

Interest rate contracts 23 — 23 — (a)

Foreign currency exchange contracts ( 13 ) — ( 13 ) — (a)

(1) See Note 9, "Employee Benefit Plans," for fair value of benefit plan assets.

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Cash equivalents generally consist of money market funds.

Restricted cash equivalents are recorded in prepaid expenses and other and cash restricted for airport construction on our balance sheets and generally consist of money market funds, time deposits, commercial paper and negotiable certificates of deposit, which primarily relate to proceeds from debt issued to finance, among other things, a portion of the construction costs for our new terminal facilities at New York's LaGuardia Airport.

Restricted cash equivalents are recorded in prepaid expenses and other and other noncurrent assets on our balance sheets and generally consist of money market funds, time deposits, commercial paper and negotiable certificates of deposit, which primarily relate to certain self-insurance obligations and airport commitments as well as proceeds from debt issued to finance, among other things, a portion of the construction costs for our new terminal facilities at New York's LaGuardia Airport.

The fair value of these cash equivalents is based on a market approach using prices generated by market transactions involving identical or comparable assets.

Delta Air Lines, Inc.

| 2022 10-K 75

Notes to the Consolidated Financial Statements

Short-Term Investments.

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As of December 31, 2022, the estimated fair value of our short-term investments was $ 3.3 billion.

Of these investments, $ 2.8 billion are expected to mature in one year or less, with the remainder maturing by the second half of 2023.

Of these investments, $ 2.8 billion are expected to mature in one year or less, with the remainder maturing by the first half of 2024.

Long-Term Investments.

Our long-term investments measured at fair value primarily consist of equity investments, which are valued based on market prices or other observable transactions and inputs, and are recorded in equity investments on our balance sheet.

During 2021, both Wheels Up Experience Inc.

("Wheels Up") and Clear Secure, Inc.

("CLEAR") became publicly traded and as of December 31, 2021, our investment in both of these are classified as Level 1 .

In addition, our equity investments in private companies are classified as Level 3 in the fair value hierarchy as their equity is not traded on a public exchange and our valuations incorporate certain unobservable inputs, including non-public equity issuances and forecasts provided by our investees.

Our equity investments in private companies are classified as Level 3 in the fair value hierarchy as their equity is not traded on a public exchange and our valuations incorporate certain unobservable inputs, including non-public equity issuances.

Fair value measurement using unobservable inputs is inherently uncertain, and a change in significant inputs could result in different fair values.

During the year ended December 31, 2021 there were no material gains or losses as a result of fair value adjustments.

During the year ended December 31, 2022 there were no material gains or losses related to investments classified as Level 3 as a result of fair value adjustments.

See Note 4, "Investments," for further information on our long-term investments.

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Such contracts would be classified as Level 2 within the fair value hierarchy.

The remainder of our hedge contracts are comprised of futures contracts, which are traded on a public exchange.

These contracts are classified within Level 1 of the fair value hierarchy.

The remainder of our hedge contracts may be comprised of futures contracts, which are traded on a public exchange.

These contracts would be classified within Level 1 of the fair value hierarchy.

• Fuel Hedge Contracts.

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Futures contracts and options on futures contracts are traded on a public exchange and valued based on quoted market prices.

We recognized losses of $ 146 million, gains of $ 85 million and losses of $ 41 million on our fuel hedge contracts for the years ended December 31, 2021, 2020 and 2019, respectively.

• Interest Rate Contracts.

Our interest rate derivatives were swap contracts, which were valued based on data readily observable in public markets.

We unwound our final interest rate contract in January 2021 and have no contracts open as of December 31, 2021.

Delta Air Lines, Inc.

2021 Form 10-K 81

Notes to the Consolidated Financial Statements

• Foreign Currency Exchange Contracts.

Our foreign currency derivatives consist of forward contracts and are valued based on data readily observable in public markets.

We recognized losses of $ 394 million, $ 146 million and gains of $ 85 million on our fuel hedge contracts in aircraft fuel and related taxes on our income statement for the years ended December 31, 2022, 2021 and 2020, respectively.

The losses recognized during 2022 were composed of $ 365 million of settlements on contracts and $ 29 million of mark-to-market adjustments.

Expense from the settlement of closed contracts is offset by higher operating profits at Monroe from higher pricing.

See Note 14, "Segments," for further information on our Monroe refinery segment.

We have developed strategic relationships with a number of airlines and airline services companies through joint ventures and other forms of cooperation and support, including equity investments.

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

Our share of Unifi Aviation's financial results is recorded in contracted services in our income statement as this entity is integral to the operations of our business by providing services at our airport locations, while our share of other equity method investees' financial results is recorded in impairments and equity method losses in our income statement under non-operating expense.

If an investment accounted for under the equity method experiences a loss in value that is determined to be other than temporary, we will reduce our carrying value of the investment to fair value and record the loss in impairments and equity method losses in our income statement.

Delta Air Lines, Inc.

| 2022 10-K 76

Notes to the Consolidated Financial Statements

Our share of our equity method investees' financial results is recorded in impairments and equity method results in our income statement under non-operating expense, except as noted below for Unifi Aviation.

Equity investments ownership interest and carrying value

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(in millions) December 31, 2022 December 31, 2021 December 31, 2022 December 31, 2021

Wheels Up Fair Value 21 % 24 % $ 241 $ 210

Hanjin-KAL Fair Value 13 % 13 % 455 512

Air France-KLM Fair Value 3 % 6 % $ 97 $ 165

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CLEAR Fair Value 5 % 6 % 227 260

Grupo Aeroméxico Equity Method 20 % 51 % 412 —

Hanjin-KAL Fair Value (1)

15 % 13 % 296 455

LATAM Fair Value 10 % 20 % 403 —

Unifi Aviation Equity Method (2)

49 % 49 % 165 159

Wheels Up Fair Value (3)

21 % 21 % 54 241

Other investments Various 285 255

Equity investments $ 2,128 $ 1,712

In the September 2021 quarter, Wheels Up became a publicly-traded company through a merger with Aspirational Consumer Lifestyle Corp ("Aspirational").

Aspirational subsequently changed its name to Wheels Up Experience Inc.

and its common stock trades on the New York Stock Exchange under the symbol UP.

We account for our investment under the fair value option and use the stock price to recognize fair value adjustments.

In the June 2021 quarter, Clear Secure, Inc.

completed an initial public offering of Class A common stock, which trades on the New York Stock Exchange under the symbol YOU.

We own shares of Alclear Holdings, LLC, which are convertible on a one-to-one basis for the Class A common stock of Clear.

Our 6 % ownership interest in Clear is determined on a fully exchanged and converted basis.

We account for our investment under the fair value method and use the stock price to recognize fair value adjustments.

(1) At December 31, 2022, we held 14.8 % of the outstanding shares (including common and preferred), and 14.9 % of the common shares, of Hanjin KAL.

(2) Results are included in contracted services in our income statement as this entity is integral to the operations of our business by providing services at many of our airport locations.

(3) We elected to account for our investment under the fair value option.

Grupo Aeroméxico.

In the March 2022 quarter, Grupo Aeroméxico ("Aeroméxico") emerged from its voluntary proceedings to reorganize under Chapter 11 of the United States bankruptcy code ("bankruptcy process").

At the conclusion of the bankruptcy process, Aeroméxico's previously outstanding capital stock was consolidated and exchanged for less than 0.01 % of new capital stock, which effectively eliminated our historical 51 % ownership stake.

Upon emergence, Delta received a 20 % equity stake in the newly restructured Aeroméxico in exchange for (1) our receivables under Aeroméxico's debtor-in-possession financing, (2) $ 100 million (recorded as an investing outflow on our cash flows statement), and (3) our agreement to provide expanded commercial services to Aeroméxico in future periods.

In the December 2022 quarter, LATAM Airlines Group S.A.

("LATAM") emerged from its voluntary proceedings to reorganize under the bankruptcy process.

Upon emergence, Delta received full repayment of our outstanding debtor-in-possession financing.

We purchased LATAM's New Convertible Notes for $ 657 million and subsequently converted the Notes to common stock, representing a 10 % equity stake in the newly restructured LATAM.

Other Investments

This category includes various investments that are accounted for at fair value or under the equity method, depending on our ownership interest and the level of influence conveyed by our investment.

Included therein are our investments in Grupo Aeroméxico, LATAM Airlines Group S.A.

("LATAM") and Virgin Atlantic, all of which are undergoing in-court or out-of-court restructurings, and the carrying values of these investments have been reduced to and remain zero as of December 31, 2021.

In order to support our relationships with these carriers, we have provided them with strategic and operational assistance through their restructurings.

Delta Air Lines, Inc.

2021 Form 10-K 82

Notes to the Consolidated Financial Statements

In the December 2021 quarter, we purchased approximately $ 525 million in obligations from certain lenders under LATAM, Grupo Aeroméxico and Virgin Atlantic’s restructuring processes, which reduced current maturities of debt and finance leases on the balance sheet.

These purchases are reflected as financing outflows on the cash flows statement.

As a result of these purchases, we have assumed a pro-rata portion of each lender’s rights under the financing arrangements with each respective partner, which are recorded within other noncurrent assets as of December 31, 2021.

The receivables from Grupo Aeroméxico and LATAM are subject to certain reserves based on our assessment of collectability, the amounts of which are not material.

In addition to the loans we purchased from a third party lender in Virgin Atlantic’s restructuring process, in the December 2021 quarter, we also loaned $ 275 million to Virgin Atlantic which is reflected as an investing outflow on the cash flows statement.

After the carrying amount of our investment in Virgin Atlantic was reduced to zero during 2020, we have continued to track our 49 % share of their losses under the equity method of accounting.

Included in this category is our investment in Virgin Atlantic.

Virgin Atlantic.

The carrying value of our investment in Virgin Atlantic remains zero as of December 31, 2022.

We maintain our 49 % equity interest and continue to track our share of Virgin Atlantic's losses under the equity method of accounting.

These previously unrecognized losses are only recorded to the extent we make additional investments in Virgin Atlantic (i.e., additional shareholder support).

The loans we have extended to Virgin Atlantic are treated as additional shareholder support and during 2021 resulted in our recognition of $ 340 million of previously unrecognized losses in impairments and equity method losses within non-operating expense in our income statement.

As of December 31, 2021, we have an additional $ 130 million of unrecognized equity method losses related to our 49 % interest in Virgin Atlantic.

Upon completion of their respective processes, we expect to receive an approximately 20 % equity stake in Grupo Aeroméxico and an approximately 10 % equity stake in LATAM, while maintaining our 49 % equity stake in Virgin Atlantic.

Our total investments to be made in these carriers, inclusive of the transactions described above, will be approximately $ 1.2 billion.

As of December 31, 2022, we have approximately $ 300 million of unrecognized equity method losses related to our 49 % interest in Virgin Atlantic.

We also have an investment in JFK IAT Member LLC which is accounted for under the equity method and is discussed further in Note 8, "Airport Redevelopment."

During 2020, we loaned GOL Linhas Aéreas Inteligentes, the parent company of GOL Linhas Aéreas (operating as GOL), $ 250 million to be used exclusively to repay the term loan we had previously guaranteed.

As of December 31, 2020, GOL had repaid approximately $ 160 million of this loan and during 2021 GOL repaid the remaining balance.

Delta Air Lines, Inc.

| 2022 10-K 77

Notes to the Consolidated Financial Statements

GOODWILL AND INTANGIBLE ASSETS

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We recognize an impairment charge if the asset's carrying value exceeds its estimated fair value.

Delta Air Lines, Inc.

2021 Form 10-K 83

Notes to the Consolidated Financial Statements

Changes in certain events and circumstances could result in impairment or a change from indefinite-lived to definite-lived.

18 unchanged sentences

Total $ 15,671 $ 15,671

Delta Air Lines, Inc.

| 2022 10-K 78

Notes to the Consolidated Financial Statements

International Routes and Slots.

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This primarily relates to our commercial agreements with LATAM and our SkyTeam partners.

In the September 2022 quarter, final regulatory approval was granted for our trans-American joint venture agreement with LATAM.

This agreement combines our highly complementary route networks between North and South America, with the goal of providing customers with a seamless travel experience and industry-leading connectivity.

Approval was granted for a 10 -year period with a subsequent reassessment and extension process.

This agreement supports our strategic partnership with LATAM and the value of our $ 1.2 billion alliance-related indefinite-lived intangible asset.

We believe the LATAM joint venture agreement will generate growth opportunities, building upon Delta's and LATAM's global footprint.

We have classified our LATAM alliance intangible asset as indefinite-lived as we expect to indefinitely receive the economic benefits from the relationship, similar to other joint venture arrangements between U.S.

and foreign carriers that have been cleared by competition authorities in relevant foreign jurisdictions and granted antitrust immunity from the U.S.

Department of Transportation ("DOT").

Antitrust immunity grants are generally subject to reporting requirements and periodic reassessment processes administered by the DOT.

We have determined that there are currently no material legal, regulatory, contractual, competitive, economic or other factors that limit the useful life of our LATAM alliance-related intangible asset.

Domestic Slots.

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(in millions) Gross Carrying Value

Amortization Gross Carrying Value

Accumulated Amortization Gross Carrying Value Accumulated Amortization

Marketing agreements $ 730 $ ( 704 ) $ 730 $ ( 700 )

5 unchanged sentences

Delta Air Lines, Inc.

2021 Form 10-K 84

| 2022 10-K 79

Notes to the Consolidated Financial Statements

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(in millions) Dates December 31, 2022 2022 2021

Unsecured notes 2022 to 2029 2.90 % to 7.38 % $ 4,354 $ 5,350

Unsecured Payroll Support Program Loans 2030 to 2031 1.00 % $ 3,496 $ 3,496

Unsecured notes 2023 to 2029 2.90 % to 7.38 % 2,997 4,354

Financing arrangements secured by SkyMiles assets:

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2023 to 2027 7.99 % 2,820 2,820

Financing arrangements secured by slots, gates and/or routes:

2020 Senior Secured Notes 2025 7.00 % 2,589 3,500

2020 Term Loan n/a n/a — 1,493

2018 Revolving Credit Facility (2)

2023 to 2024 Undrawn — —

Financing arrangements secured by aircraft:

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2023 to 2033 2.08 % to 6.85 % 813 1,139

NYTDC Special Facilities Revenue Bonds, Series 2020 (1)

2026 to 2045 4.00 % to 5.00 % 1,511 1,511

NYTDC Special Facilities Revenue Bonds, Series 2018 (1)

NYTDC Special Facilities Revenue Bonds (1)

2023 to 2045 4.00 % to 5.00 % 2,838 2,894

Financing arrangements secured by slots, gates and/or routes:

2020 Senior Secured Notes 2025 7.00 % 1,542 2,589

2018 Revolving Credit Facility (2)

2024 to 2025 Undrawn — —

Other financings (1)(2)

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All variable rates are equal to LIBOR (generally subject to a floor) or another index rate plus a specified margin.

Unsecured Payroll Support Program Extension Loans

A summary of the amounts received and warrants issued under the initial payroll support program under the CARES Act and the payroll support program extensions is set forth in the following table:

Summary of payroll support program activity

(in millions) Total Grant Loan Number of Warrants Percentage of Outstanding Shares at December 31, 2021

Payroll Support Program (PSP1) $ 5,594 $ 3,946 $ 1,648 6.8 1.1 %

Payroll Support Program Extension (PSP2) 3,290 2,333 957 2.4 0.4 %

Payroll Support Program 3 (PSP3) 3,069 2,178 891 1.9 0.3 %

Total $ 11,953 $ 8,457 $ 3,496 11.1 1.8 %

Grants received were recognized in government grant recognition in our income statement over the periods that the funds were intended to compensate.

The PSP1 grant was recognized during 2020 and grants received from PSP2 and PSP3 were fully recognized during 2021.

Delta Air Lines, Inc.

2021 Form 10-K 85

Notes to the Consolidated Financial Statements

Payroll Support Program Extension (PSP2).

The Consolidated Appropriations Act, 2021 was enacted on December 27, 2020, and included an extension of the payroll support program created under the CARES Act providing an additional $15 billion in grants and loans to the airline industry.

In January 2021, we entered into a payroll support program extension agreement with the U.S.

Department of the Treasury.

During the six months ended June 30, 2021, we received a total of $ 3.3 billion in payroll support payments under this extension agreement, which we were required to use exclusively for the payment of employee wages, salaries and benefits and were conditioned on our agreement to refrain from conducting involuntary employee layoffs or furloughs from the date of the extension agreement through March 2021.

Other conditions include prohibitions on share repurchases and dividends through March 2022 and certain limitations on executive compensation until October 2022.

The Department of Transportation also has the authority until March 1, 2022 to require airlines that received payroll support program funds to maintain scheduled air service deemed necessary to any point served by the airline before March 1, 2020.

These support payments consisted of $ 2.3 billion in a grant and $ 957 million in an unsecured 10 -year low interest loan.

In return, we entered into a promissory note for the loan and issued warrants to the U.S.

Department of the Treasury to acquire approximately 2.4 million shares of Delta common stock.

The loan bears interest at an annual rate of 1.00 % for the first five years and the applicable Secured Overnight Financing Rate ("SOFR") plus 2.00 % in the final five years.

The warrants have an initial exercise price of $ 39.73 per share, subject to adjustment in certain cases, and a five-year term.

We have recorded the value of the promissory note and warrants on a relative fair value basis as $ 905 million of noncurrent debt, net of discount, and $ 52 million in additional paid in capital, respectively.

Payroll Support Program 3 (PSP3).

The American Rescue Plan Act of 2021 was enacted on March 11, 2021, and included a further extension of the payroll support program providing an additional $14 billion in grants and loans to the airline industry.

In April 2021, we entered into a Payroll Support Program 3 Agreement with the U.S.

Department of the Treasury.

During the June 2021 quarter, we received a total of $ 3.1 billion in payroll support payments under this agreement, which we were required to use exclusively for the payment of employee wages, salaries and benefits and was conditioned on our agreement to refrain from conducting involuntary employee layoffs or furloughs from the date of the agreement through September 30, 2021 or the date on which we have expended all of the payroll support, whichever is later.

We expended all of the payroll support during 2021.

Other conditions include prohibitions on share repurchases and dividends through September 30, 2022 and certain limitations on executive compensation until April 1, 2023.

These support payments consisted of $ 2.2 billion in a grant and $ 891 million in an unsecured 10 -year low interest loan.

In return, we entered into a promissory note for the loan and issued warrants to the U.S.

Department of the Treasury to acquire approximately 1.9 million shares of Delta common stock.

The loan bears interest at an annual rate of 1.00 % for the first five years and the applicable SOFR plus 2.00 % in the final five years.

The warrants have an initial exercise price of $ 47.80 per share, subject to adjustment in certain cases, and a five-year term.

We have recorded the value of the promissory note and warrants on a relative fair value basis as $ 857 million of noncurrent debt, net of discount, and $ 34 million in additional paid in capital, respectively.

2020 Term Loan

In 2020 we entered into a $ 1.5 billion term loan secured by certain slots, gates and routes.

In the March 2021 quarter, we repaid in full the term loan, which was scheduled to mature in April 2023, and incurred a $ 56 million loss on extinguishment of debt, which is recorded in loss on extinguishment of debt in non-operating expense in our income statement.

Enhanced Equipment Trust Certificates ("EETCs") Prepayments

In the June 2021 quarter, we repaid in full approximately $ 450 million of various EETCs which were scheduled to mature between 2022 and 2023, and incurred a $ 26 million loss on extinguishment of debt, which is recorded in loss on extinguishment of debt in non-operating expense in our income statement.

Early Settlement of Outstanding Notes

In 2022, we completed a cash tender offer for an aggregate purchase price of $ 1.5 billion, excluding accrued and unpaid interest, of certain of our outstanding debt securities.

As a result of the tender offer, we repurchased the following notes:

Notes Repurchased in Tender Offer

(in millions) Location in debt table Principal Repurchased Amount Paid

4.500 % Senior Secured Notes due 2025

SkyMiles Notes $ 856 $ 850

7.000 % Senior Secured Notes due 2025

2020 Senior Secured Notes 478 498

7.375 % Notes due 2026

Unsecured Notes 84 87

3.800 % Notes due 2023

Unsecured Notes 65 65

Total Notes Repurchased $ 1,483 $ 1,500

During 2022, in addition to the cash tender offer, we also repurchased $ 778 million of various secured and unsecured notes on the open market.

Collectively, these payments resulted in a $ 100 million loss on extinguishment of debt, which is recorded in non-operating expense in our income statement.

Delta Air Lines, Inc.

2021 Form 10-K 86

| 2022 10-K 80

Notes to the Consolidated Financial Statements

Early Settlement of Outstanding Notes

In July 2021, we completed a cash tender offer for an aggregate purchase price of $ 1.0 billion, excluding accrued and unpaid interest, of our outstanding 7.0 % Senior Secured Notes due 2025 (the "2025 Notes"), 7.375 % Notes due 2026 (the "2026 Notes") and 4.5 % Senior Secured Notes due 2025 (the "2025 SkyMiles Notes").

As a result of the tender offer, we purchased 2025 Notes, included as 2020 Senior Secured Notes in the table above, with principal amount of $ 677 million for approximately $ 800 million and 2026 Notes, included in Unsecured Notes in the table above, with principal amount of $ 169 million for approximately $ 200 million.

We did not purchase any of the 2025 SkyMiles Notes under the tender offer.

In addition to the early settlement of the principal amount of the purchased notes, we recorded a loss of $ 166 million on extinguishment of debt in non-operating expense in our income statement.

During the second half of 2021, we also repurchased $ 647 million of various secured certificates, unsecured notes and a portion of the SkyMiles Term Loan on the open market.

These payments resulted in a $ 71 million loss on extinguishment of debt.

In January 2022, we irrevocably committed to the early redemption of $ 1.0 billion of our 3.625 % unsecured notes that had an original maturity during March 2022.

We will repay these notes plus accrued interest during February 2022.

Availability Under Revolving Facilities

As of December 31, 2022, we had approximately $ 2.9 billion undrawn and available under our revolving credit facilities.

In addition, we had $ 300 million outstanding letters of credit as of December 31, 2021 that did not affect the availability under our revolvers.

In addition, we had $ 400 million of outstanding letters of credit as of December 31, 2022 that did not affect the availability under our revolvers.

Fair Value of Debt

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The minimum liquidity covenant requires us to maintain at least $ 2.0 billion of liquidity (defined as cash, cash equivalents, short-term investments and aggregate principal amount committed and available to be drawn under our revolving credit facilities).

Certain of our debt agreements also include collateral coverage ratios and limit our ability to (1) incur liens under certain circumstances, (2) dispose of collateral, (3) engage in mergers and consolidations or transfer all or substantially all of our assets and (4) pay dividends or repurchase our common stock through September 2022.

Our SkyMiles financing agreements include a debt service coverage ratio and also restrict our ability to, among other things, (1) modify the terms of the SkyMiles program, or otherwise change the policies and procedures of the SkyMiles program, in a manner that would reasonably be expected to materially impair repayment of the SkyMiles Debt, (2) sell pre-paid miles in excess of $ 550 million in the aggregate and (3) terminate or materially modify the intercompany arrangements governing the relationship between Delta and SMIP with respect to the SkyMiles program.

Certain of our debt agreements also include collateral coverage ratios and limit our ability to (1) incur liens under certain circumstances, (2) dispose of collateral and (3) engage in mergers and consolidations or transfer all or substantially all of our assets.

with respect to the SkyMiles program.

Each of these restrictions, however, is subject to certain exceptions and qualifications that are set forth in these debt agreements.

We were in compliance with the covenants in our debt agreements at December 31, 2022.

Delta Air Lines, Inc.

2021 Form 10-K 87

Notes to the Consolidated Financial Statements

Future Maturities

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Total $ 21,519 $ ( 138 ) $ 21,381

Delta Air Lines, Inc.

| 2022 10-K 81

Notes to the Consolidated Financial Statements

We lease property and equipment under finance and operating leases.

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We do not separate lease and nonlease components of contracts, except for regional aircraft and information technology ("IT") assets as discussed below.

When available, we use the rate implicit in the lease to discount lease payments to present value;

however, we have an insignificant number of leases representing an immaterial portion of our lease liability that provide readily determinable implicit rates.

When the rate implicit in the lease is not available, we use our incremental borrowing rate, which is based on the estimated interest rate for collateralized borrowing over a similar term of the lease at commencement date.

We use the rate implicit in the lease to discount lease payments to present value, when readily determinable.

As the rate implicit in the lease is rarely readily determinable, we use our incremental borrowing rate, which is based on the estimated interest rate for collateralized borrowing over a similar term of the lease at commencement date.

Some of our aircraft lease agreements include provisions for residual value guarantees.

These provisions primarily relate to our regional aircraft and the amounts are not significant.

We do not have other forms of variable interests with the lessors of our leased assets, other than at New York-JFK, in which we are not the primary beneficiary as discussed in Note 8, "Airport Redevelopment," and with respect to one lessor, in which we have a variable interest in certain immaterial aircraft leases, that we have consolidated.

These guarantees represent an immaterial portion of our lease liability.

As of December 31, 2022, including aircraft operated by our regional carriers, we leased 221 aircraft, of which 105 were under finance leases and 116 were operating leases.

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See Note 10, "Commitments and Contingencies," for additional information about our capacity purchase agreements.

Delta Air Lines, Inc.

2021 Form 10-K 88

Notes to the Consolidated Financial Statements

Airport Facilities

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We lease certain IT assets (including servers, mainframes, etc.), ground support equipment (including tugs, tractors, fuel trucks and de-icers), and various other equipment.

The remaining lease terms range from one month to eight years .

The remaining lease terms range from one month to seven years .

Certain leased assets are embedded within various ground and IT service agreements.

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Sale-Leaseback Transactions

In 2020, we entered into $ 2.8 billion of sale-leaseback transactions for 85 aircraft including 25 A321-200s, 25 A220-100s, 23 CRJ-900s, 10 737-900ERs and two A330-900s.

In 2020, we entered into $ 2.8 billion of sale-leaseback transactions for 85 aircraft.

Of these transactions, 74 did not qualify as a sale as they are finance leases or have an option to repurchase at a stated price.

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The cash proceeds were treated as financing inflows on the cash flows statement.

Delta Air Lines, Inc.

| 2022 10-K 82

Notes to the Consolidated Financial Statements

The other 11 transactions qualified as sales, generating an immaterial loss, and the associated assets were removed from our balance sheet within property and equipment, net and recorded within ROU assets.

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The cash proceeds were treated as investing cash inflows on the cash flows statement.

Delta Air Lines, Inc.

2021 Form 10-K 89

Notes to the Consolidated Financial Statements

Lease Position

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Total lease cost $ 3,254 $ 2,893 $ 2,852

(1) Expenses are classified within aircraft rent, landing fees and other rents and regional carrier expense on the income statement.

For the years ended December 31, 2021, 2020 and 2019, operating lease costs of $ 111 million, $ 187 million and $ 174 million, respectively, are attributed to our regional carriers.

For the years ended December 31, 2021, 2020 and 2019, variable lease costs of $ 29 million, $ 50 million and $ 64 million, respectively, are attributable to our regional carriers.

(1) Expenses are primarily classified within aircraft rent, landing fees and other rents and regional carrier expense on our income statement.

Delta Air Lines, Inc.

2021 Form 10-K 90

| 2022 10-K 83

Notes to the Consolidated Financial Statements

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New York-JFK Airport

In 2015, we completed two phases of redevelopment at New York-JFK's Terminal 4 to facilitate convenient connections for our passengers and improve coordination with our SkyTeam alliance partners.

We are enhancing and expanding our facilities at Terminal 4 of JFK to strengthen our competitive position and offer a premium travel experience for customers in New York City.

Terminal 4 is operated by JFK International Air Terminal LLC ("IAT"), a private party, under its lease with the Port Authority of New York and New Jersey ("Port Authority").

In December 2010, we entered into a 33 -year agreement with IAT ("Sublease") to sublease space in Terminal 4.

Also, in 2010, the Port Authority issued approximately $ 800 million principal amount of special project bonds (the "Series 8 Bonds") to fund the majority of the project.

In December 2020, the NYTDC issued approximately $ 611 million principal amount of special project bonds to refinance the outstanding balance of the Series 8 Bonds.

We have recognized a ROU asset and lease liability representing the fixed component of the lease payments for this facility.

During 2021, we signed an amendment to the Sublease for additional gates at JFK, increasing our lease obligation by $ 1.2 billion.

We have an equity method investment in JFK IAT Member LLC, which owns IAT, our sublessor at Terminal 4.

We have a long-term agreement with IAT to sublease space in Terminal 4 through 2043 ("Sublease").

In 2021, the Port Authority approved plans to renovate and expand Terminal 4 in order to facilitate Delta's relocation from Terminal 2 and consolidation of its operations into Terminal 4.

The project will add 10 new gates and other complementary facilities, including an additional Delta Sky Club and a new Delta One lounge.

The project is estimated to cost approximately $ 1.6 billion and will be funded primarily with bonds issued in 2022 by the New York Transportation Development Corporation ("NYTDC") for which our landlord, IAT, is the obligor.

The majority of project costs are being used to expand or modify Delta's leased premises.

Construction started in late 2021 and Delta's portion of the project is estimated to be complete by early 2024.

Based on our assessment of the project, we concluded that we do not control the underlying assets being constructed, and therefore, we do not have the project asset or related obligation recorded on our balance sheet.

Delta Air Lines, Inc.

| 2022 10-K 84

Notes to the Consolidated Financial Statements

In 2022, we amended our Sublease to provide for the expansion project, including the adjustment of our subleased space and rentals.

We have recognized a ROU asset and lease liability representing the fixed component of the lease payments for this facility and as the majority of the project either expands or modifies Delta’s leased premises, our lease liability will increase upon completion.

As of December 31, 2022, our lease liability related to this Sublease was $ 2.3 billion.

See Note 7, " Leases " for more information on our ROU assets and lease liabilities.

Equity Investment.

We have an equity method investment in JFK IAT Member LLC, which owns IAT.

The Sublease requires us to pay certain fixed management fees.

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Accordingly, we do not consolidate this entity in our Consolidated Financial Statements.

Delta Air Lines, Inc.

2021 Form 10-K 91

Notes to the Consolidated Financial Statements

We continue to plan for further expansion of Terminal 4 and during 2021, the Port Authority approved modified project plans to renovate Terminal 4 and add 10 new gates enabling us to move out of Terminal 2 and consolidate our operations at Terminal 4.

The project is estimated to cost approximately $ 1.5 billion and we expect to amend the Sublease in the March 2022 quarter.

Construction started in late 2021 with the project estimated to be complete by the end of 2023.

We have not completed our assessment of the project accounting, but we expect that we will not control the underlying assets being constructed, and therefore, do not expect to have the project asset or related obligation recorded on our balance sheet.

See Note 4, " Investments " for additional information on our equity investments.

Los Angeles International Airport ("LAX")

We executed a modified lease agreement during 2016 with the City of Los Angeles (the "City"), which owns and operates LAX, and announced plans to modernize, upgrade and provide post-security connection to Terminals 2 and 3.

Construction is underway, which includes a new centralized ticketing and arrival hall, a new security checkpoint, core infrastructure to support the City's planned airport people mover, ramp improvements and a post-security connector to the north side of the Tom Bradley International Terminal.

Given reduced passenger volumes resulting from the COVID-19 pandemic, we accelerated the construction schedule for this project in 2020.

Additionally, in 2020, we enhanced the project’s scope to include a more customer-friendly design of Terminal 3, an expanded Delta Sky Club and baggage system upgrades designed to increase the terminals’ operational efficiency going forward.

Construction is expected to be completed in 2023.

As part of the terminal redevelopment project at LAX, we are modernizing, upgrading, and providing post-security connection to Terminals 2 and 3.

We announced this project and executed a modified lease agreement during 2016 with the City of Los Angeles (the "City"), which owns and operates LAX.

This project includes a new centralized ticketing and arrival hall, a new security checkpoint, core infrastructure to support the City's planned airport people mover, ramp improvements and a post-security connector to the north side of the Tom Bradley International Terminal.

The project is expected to cost approximately $ 2.4 billion.

A substantial majority of the project costs are being funded through the Regional Airports Improvement Corporation ("RAIC"), a California public benefit corporation, using a revolving credit facility provided by a group of lenders.

The credit facility was executed in 2017 and amended in 2020, and we have guaranteed the obligations of the RAIC under the credit facility.

The revolving credit facility agreement was amended again in January 2022, increasing the revolver capacity from $ 800 million to $ 1.1 billion.

The credit facility was executed in 2017 and we have guaranteed the obligations of the RAIC under the credit facility.

The revolving credit facility agreement was most recently amended in January 2023, decreasing the revolver capacity from $ 800 million to $ 700 million.

Loans made under the credit facility are being repaid with the proceeds from the City’s purchase of completed project assets.

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We currently expect our net project costs to be approximately $ 600 million, of which approximately $ 350 million has been reflected as investing activities in our cash flows statement since the project started in 2017.

In 2021, $ 487 million was spent on this project, with $ 450 million paid by the credit facility and $ 37 million paid directly by Delta.

Given reduced passenger volumes resulting from the COVID-19 pandemic, we accelerated the construction schedule for this project in 2020.

Additionally, we enhanced the project’s scope to include a more customer-friendly design of Terminal 3, an expanded Delta Sky Club and baggage system upgrades designed to increase the terminals’ operational efficiency going forward.

In 2022, we opened a new consolidated headhouse for both terminals, which includes ticketing, security, baggage claim and a new Delta Sky Club lounge and have a total of 11 of 14 planned new gates now open in Terminal 3.

Construction is expected to be completed in 2023.

Due to the variable nature of lease payments in our agreement with the City, we have not recognized a ROU asset and lease liability on our balance sheet.

See Note 7, " Leases " for more information on our ROU assets and lease liabilities.

New York-LaGuardia Airport

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The facility will also offer direct access between the parking garage and terminal and improved roadways and drop-off/pick-up areas.

The design of the new terminal will integrate sustainable technologies and improvements in energy efficiency.

Construction is underway and is being phased to limit passenger inconvenience.

Due to an acceleration effort that commenced in 2020, completion is expected by 2025.

In 2019, we opened Concourse G, the first of four new concourses, housing seven of the 37 new gates.

In 2022, we achieved a significant milestone by opening the headhouse (including the Delta Sky Club), the terminal roadways and Concourse E - the second of four new concourses to be built.

Additionally, we opened four of 12 planned new gates on Concourse F.

Delta Air Lines, Inc.

2021 Form 10-K 92

| 2022 10-K 85

Notes to the Consolidated Financial Statements

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Pursuant to the lease agreement, as amended to date, we will (1) fund (through debt issuance and existing cash) and undertake the design, management and construction of the terminal and certain off-premises supporting facilities, (2) receive a Port Authority contribution of approximately $ 500 million to facilitate construction of the terminal and other supporting infrastructure, (3) be responsible for all operations and maintenance during the term of the lease and (4) have preferential rights to all gates in the terminal subject to Port Authority requirements with respect to accommodation of designated carriers.

The project is expected to cost $ 4.3 billion.

We currently expect our net project cost to be approximately $ 3.8 billion and we bear the risks of project construction, including any potential cost over-runs.

Using funding primarily provided by existing financing arrangements, we spent approximately $ 950 million, which is primarily reflected in investing activities in our cash flows statement, during 2021, bringing the total amount spent on the project to date to approximately $ 2.5 billion.

See Note 6, "Debt," for additional information on the debt related to this redevelopment project, NYTDC Special Facilities Revenue Bonds, Series 2018 and NYTDC Special Facilities Revenue Bonds, Series 2020.

In 2019, we opened Concourse G, the first of four new concourses, housing seven of the 37 new gates.

Not only did the new Concourse G provide the first direct impact to the Delta passenger experience, it also represented the first major phasing milestone.

The next major milestone will be the opening of the headhouse and Concourse E, which is scheduled for the second quarter of 2022.

Based on our assessment of the project, we concluded that we do not control the underlying assets being constructed.

Costs incurred by Delta are accounted for as leasehold improvements.

We entered into loan agreements to fund a portion of the construction, which are recorded on our balance sheet as debt with the proceeds reflected as restricted cash.

Using funding primarily provided by these arrangements, we spent approximately $ 650 million, $ 950 million and $ 600 million during 2022, 2021, and 2020 respectively, bringing the total amount spent on the project to date to approximately $ 3.2 billion.

Based on our assessment of the project, we concluded that we do not control the underlying assets being constructed.

Costs incurred by Delta are accounted for as leasehold improvements recorded in property and equipment, net on our balance sheets.

See Note 6, "Debt," for additional information on the debt (NYTDC Special Facilities Revenue Bonds) related to this redevelopment project.

EMPLOYEE BENEFIT PLANS

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Under the Pension Protection Act of 2006, we elected alternative funding rules so that the unfunded liability for a frozen defined benefit plan may be amortized over a fixed 17-year period and is calculated using an 8.85 % discount rate until the 17-year period expires for all frozen defined benefit plans by the end of 2024.

Upon expiration, under recent legislation passed in 2021, any required funding would be amortized over a rolling 15-year period and calculated using a discount rate of no less than 4.75% through 2030.

Upon expiration, under legislation passed in 2021, any required funding would be amortized over a rolling 15-year period and calculated using a discount rate of no less than 4.75% through 2030.

We have no minimum funding requirements for these plans in 2023 and do no t plan to make voluntary contributions during 2023.

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These plans generally cover different employee groups and employer contributions vary by plan.

The costs associated with our defined contribution pension plans were approximately $ 875 million, $ 805 million and $ 1.0 billion for the years ended December 31, 2021, 2020 and 2019, respectively.

The costs associated with our defined contribution pension plans were approximately $ 1.0 billion, $ 875 million and $ 805 million for the years ended December 31, 2022, 2021 and 2020, respectively.

Postretirement Healthcare Plans.

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As a result, we recorded a $ 1.3 billion special termination benefit charge and increased our postretirement healthcare obligation by $ 1.3 billion.

See Note 15, "Government Grants and Restructuring," for more information on these voluntary programs

Postemployment Plans.

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Delta Air Lines, Inc.

2021 Form 10-K 93

| 2022 10-K 86

Notes to the Consolidated Financial Statements

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Participant contributions — — 18 18

Special termination benefits — — — 1,260

Settlements ( 5 ) ( 91 ) — —

Benefit obligation at end of period (1)

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Fair value of plan assets at beginning of period $ 19,502 $ 16,541 $ 357 $ 496

Actual gain on plan assets 2,732 1,973 57 76

Actual gain/(loss) on plan assets ( 2,517 ) 2,732 ( 73 ) 57

Employer contributions 10 1,513 216 192

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Benefits paid, including lump sums and annuities ( 1,274 ) ( 1,284 ) ( 447 ) ( 406 )

Settlements ( 5 ) ( 91 ) — —

Fair value of plan assets at end of period $ 15,721 $ 19,502 $ 71 $ 357

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(1) At the end of each year presented, our accumulated benefit obligations for our pension plans are equal to the benefit obligations shown above.

During 2021, actuarial gains decreased our benefit obligation due to the increase in discount rate, while in 2020 our obligation increased due to the actuarial losses from a decrease in discount rates.

During 2022, net actuarial gains decreased our benefit obligation primarily due to the increase in discount rates.

These gains and losses are recorded in AOCI and reflected in the table below.

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(in millions) 2022 2021 2022 2021

Prepaid pension assets $ 27 $ — $ — $ —

Current liabilities ( 9 ) ( 9 ) ( 369 ) ( 203 )

Noncurrent liabilities ( 108 ) ( 1,562 ) ( 3,224 ) ( 4,045 )

Total liabilities $ ( 1,571 ) $ ( 6,085 ) $ ( 4,248 ) $ ( 4,270 )

Funded status at end of period $ ( 90 ) $ ( 1,571 ) $ ( 3,593 ) $ ( 4,248 )

Net actuarial loss $ ( 6,444 ) $ ( 7,462 ) $ ( 155 ) $ ( 831 )

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Total accumulated other comprehensive loss, pre-tax $ ( 6,444 ) $ ( 7,462 ) $ ( 137 ) $ ( 808 )

Certain pension plans have benefit obligations in excess of plan assets.

These plans have aggregate projected benefit obligations of $ 4.0 billion and aggregate fair value of plan assets of $ 3.9 billion at December 31, 2022.

Delta Air Lines, Inc.

2021 Form 10-K 94

| 2022 10-K 87

Notes to the Consolidated Financial Statements

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Service cost is recorded in salaries and related costs in the income statement.

Special termination benefits are recorded in restructuring charges, while all other components are recorded within pension and related benefit/(expense) under non-operating expense.

Special termination benefits are recorded in restructuring charges, while all other components are recorded within pension and related benefit under non-operating expense.

We used the following actuarial assumptions to determine our benefit obligations and our net periodic benefit cost for the periods presented:

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2022 2021 2020

Weighted average discount rate - pension benefit 2.65 % 3.40 % 4.33 %

Weighted average discount rate - other postretirement benefit 2.43 % 3.47 % 4.32 %

Weighted average discount rate - other postemployment benefit 2.55 % 3.34 % 4.32 %

Weighted average discount rate 2.96 % 2.61 % 3.39 %

Weighted average expected long-term rate of return on plan assets 7.00 % 8.98 % 8.97 %

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Delta Air Lines, Inc.

2021 Form 10-K 95

| 2022 10-K 88

Notes to the Consolidated Financial Statements

2 unchanged sentences

Actual benefit payments may vary significantly from these estimates.

Benefits earned under our pension plans and certain postemployment benefit plans are expected to be paid from funded benefit plan trusts, while our other postretirement benefits are funded from current assets.

Benefits earned under our pension plans are expected to be paid from funded benefit plan trusts, while our other postretirement and postemployment benefits are funded from current assets.

The following table summarizes the benefit payments that are expected to be paid in the years ending December 31:

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Benefit Plan Assets Measured at Fair Value on a Recurring Basis

Benefit Plan Assets.

Benefit plan assets relate to our defined benefit pension plans and certain of our postemployment benefit plans.

These investments are presented net of the related benefit obligation in pension, postretirement and related benefits on the balance sheets.

These investments are presented net of the related benefit obligation in either other noncurrent assets or pension, postretirement and related benefits on the balance sheets depending on the funded status of each plan.

See Note 3, "Fair Value Measurements," for a description of the levels within the fair value hierarchy and associated valuation techniques used to measure fair value.

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(in millions) Level 1 Level 2 Total Level 1 Level 2 Total

Fixed income and fixed income-related instruments $ 77 $ 1,366 $ 1,443 $ 69 $ 979 $ 1,048 (a)(b)

Cash equivalents 629 265 894 2,390 2,097 4,487 (a)

Equities and equity-related instruments 420 25 445 1,034 161 1,195 (a)

Fixed income and fixed income-related instruments 69 979 1,048 — 882 882 (a)(b)

Delta common stock 343 — 343 407 — 407 (a)

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Delta Air Lines, Inc.

2021 Form 10-K 96

| 2022 10-K 89

Notes to the Consolidated Financial Statements

Fixed Income and Fixed Income-Related Instruments.

These investments include corporate bonds, government bonds, collateralized mortgage obligations and other asset-backed securities, and are generally valued at the bid price or the average of the bid and ask price.

Prices are based on pricing models, quoted prices of securities with similar characteristics or broker quotes.

Fixed income-related instruments include investments in securities traded on exchanges, including listed futures and options, which are valued at the last reported sale prices on the last business day of the year, or if not available, the last reported bid prices.

Over-the-counter securities are valued at the bid prices or the average of the bid and ask prices on the last business day of the year from published sources or, if not available, from other sources considered reliable, generally broker quotes.

Cash Equivalents.

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Fixed Income and Fixed Income-Related Instruments.

Prices are based on pricing models, quoted prices of securities with similar characteristics or broker quotes.

Delta Common Stock.

The Delta common stock investment is managed by an independent fiduciary.

These investments include precious metals and precious metals-related instruments, some of which are valued at the closing price reported on the active market on which the individual instruments are traded, while others are priced based on pricing models, quoted prices of securities with similar characteristics or broker quotes.

These investments include commodities such as precious metals and precious metals-related instruments, some of which are valued at the closing price reported on the active market on which the individual instruments are traded, while others are priced based on pricing models, quoted prices of securities with similar characteristics or broker quotes.

The following table summarizes investments measured at fair value based on NAV per share as a practical expedient:

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(in millions) Fair Value Redemption Frequency Redemption Notice Period Fair Value Redemption Frequency Redemption Notice Period

Hedge funds and hedge fund-related strategies (4)

$ 7,563 (3) 2 - 180 Days

Hedge funds and hedge fund-related strategies $ 6,730 (1) 2 - 180 Days

$ 7,563 (1) 2 - 180 Days

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Total investments measured at NAV $ 12,329 $ 12,653

(1) Weekly, semi-monthly, monthly

(2) Semi-annually and annually

Includes funds with weekly, semi-monthly, monthly, quarterly and custom redemption frequencies as well as funds with a redemption window following the anniversary of the initial investment.

Includes funds with monthly or more frequent, quarterly and/or custom redemption frequencies as well as funds with a redemption window following the anniversary of the initial investment.

(2) Includes private funds that are closed-ended structures in which the plans' investments are generally not eligible for redemption.

(3) Includes funds with monthly or more frequent redemptions

(4) Unfunded commitments were $ 1.2 billion for commingled funds, private equity and private equity-related instruments, $ 364 million for fixed income and fixed income-related instruments and $ 507 million for real assets at December 31, 2022.

On an annual basis we assess the potential for adjustments to the fair value of all investments.

This primarily applies to private equity, private equity-related strategies and real assets.

Due to a lag in the availability of data for certain of these investments, we solicit valuation updates from the investment fund managers and use their information and corroborating data from public markets to determine any needed fair value adjustments.

Hedge Funds and Hedge Fund-Related Strategies.

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Commingled funds are valued based on quoted market prices of the underlying assets owned by the fund.

Private equity and private equity-related strategies are typically valued quarterly by the fund managers using valuation models where one or more of the significant inputs into the model cannot be observed and which require the development of assumptions.

Private equity and private equity-related instruments are typically valued quarterly by the fund managers using valuation models where one or more of the significant inputs into the model cannot be observed and which require the development of assumptions.

Delta Air Lines, Inc.

2021 Form 10-K 97

| 2022 10-K 90

Notes to the Consolidated Financial Statements

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Commingled funds are valued based on quoted market prices of the underlying assets owned by the fund.

Private fixed income strategies are typically valued monthly or quarterly by the fund managers or third-party valuation agents using valuation models where one or more of significant inputs into the model cannot be observed and which require the development of assumptions.

These investments include real estate, energy, timberland, agriculture and infrastructure.

Private fixed income instruments are typically valued monthly or quarterly by the fund managers or third-party valuation agents using valuation models where one or more of significant inputs into the model cannot be observed and which require the development of assumptions.

These investments include real estate, energy transition, timberland, agriculture and infrastructure.

The valuation of real assets requires significant judgment due to the absence of quoted market prices as well as the inherent lack of liquidity and the long-term nature of these assets.

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Primarily includes globally-diversified, risk-managed commingled funds consisting mainly of equity, fixed income and commodity exposures.

On an annual basis we assess the potential for adjustments to the fair value of all investments.

These investments valued using NAV as a practical expedient are typically valued on a monthly or quarterly basis by third-party administrators, valuation agents or fund managers with an annual audit performed by an independent third party, but certain of these investments have a lag in the availability of data.

This primarily applies to private equity, private equity-related strategies and real assets.

We solicit valuation updates from the investment fund managers and use their information and corroborating data from public markets to determine any needed fair value adjustments.

We also sponsor defined benefit pension plans for eligible employees in certain foreign countries.

These plans did not have a material impact on our Consolidated Financial Statements in any period presented.

Voluntary Programs

During 2020, in response to the COVID-19 pandemic, we announced the voluntary programs, which primarily applied to eligible U.S.

merit, ground and flight attendant and pilot employees.

Those employees who elected to participate in the voluntary programs were eligible for separation payments, continued healthcare benefits and certain participants received retiree medical accounts.

The election and revocation windows for these programs closed during 2020 with approximately 18,000 employees electing to participate.

We recorded $ 3.4 billion in restructuring charges in our income statement associated with these programs and other employee benefit charges during 2020, including $ 1.3 billion of special termination benefits (discussed above).

The remainder of the restructuring charge primarily relates to separation payments and healthcare benefits.

Approximately $ 720 million was disbursed in cash payments to participants in the voluntary programs during 2020 and approximately $ 575 million in 2021.

An additional approximately $ 250 million of cash payments were disbursed during 2020 related to unused vacation and other benefits, which were accrued prior to the voluntary programs charge.

Accruals related to the voluntary programs are primarily recorded in pension, postretirement and related benefits, other noncurrent liabilities, other accrued liabilities and accrued salaries and related benefits on our balance sheet.

Profit Sharing Program

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In determining the amount of profit sharing, the program defines profit as pre-tax profit adjusted for profit sharing and certain other items.

To recognize the extraordinary efforts of our employees through the pandemic, we will make a special profit-sharing payment to eligible employees in February 2022, based on the adjusted pre-tax profit earned during the second half of 2021.

For the years ended December 31, 2021 and 2019 we recorded profit sharing expense of $ 108 million and $ 1.6 billion, respectively.

For the year ended December 31, 2020 we recorded no profit sharing expense.

Delta Air Lines, Inc.

2021 Form 10-K 98

Notes to the Consolidated Financial Statements

For the year ended December 31, 2022, we recorded profit sharing expense of $ 563 million.

For the year ended December 31, 2021, we recorded a special profit sharing expense of $ 108 million, based on the adjusted pre-tax profit earned during the second half of the year, to recognize the extraordinary efforts of our employees through the pandemic.

We recorded no profit sharing expense for the year ended December 31, 2020.

COMMITMENTS AND CONTINGENCIES

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Total $ 18,960

(1) The timing of these commitments is based on our contractual agreements with the aircraft manufacturers and may be subject to change based on modifications to those agreements or changes in delivery schedules.

Delta Air Lines, Inc.

| 2022 10-K 91

Notes to the Consolidated Financial Statements

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

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A330-900neo 18

B-737-900ER 19

Aircraft Orders

During 2021, we agreed with Airbus to add incremental aircraft to our order book by converting options for 55 A321neo aircraft into firm orders and replenishing 25 of our options.

We expect to take delivery of our first A321neo in the first half of 2022, with deliveries of these aircraft continuing through 2027.

Additionally, we agreed to move up two A350-900 deliveries and one A330-900neo delivery to occur in the second half of 2022.

During 2021, we agreed to acquire 29 B-737-900 aircraft and enter into leases for nine A350-900 aircraft.

We began taking delivery of these preowned aircraft in 2021 and deliveries are expected to continue through the first quarter of 2022.

Phased entry into service is expected through the summer of 2023.

During 2022, we entered into a purchase agreement with Boeing for 100 Boeing 737-10s, the largest model in the 737 MAX family, to start delivery in 2025 with the option to purchase an additional thirty 737-10s.

Additionally during 2022, we agreed to acquire four B-737-900ERs, one A330-900 and exercised purchase rights for 24 A220-300s.

Deliveries of the pre-owned B-737-900ERs occurred during 2022, delivery of the new A330-900 is expected to occur in 2024, and deliveries of the new A220-300s are expected to start in 2026.

Contract Carrier Agreements

We have contract carrier agreements with regional carriers expiring from 2022 to 2031.

We have contract carrier agreements with regional carriers expiring through 2034.

These agreements are structured as either capacity purchase or revenue proration agreements.

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We pay those airlines an amount, as defined in the applicable agreement, which is based on a determination of their cost of operating those flights and other factors intended to approximate market rates for those services.

Delta Air Lines, Inc.

2021 Form 10-K 99

Notes to the Consolidated Financial Statements

The following table shows our minimum obligations under our existing capacity purchase agreements with third-party regional carriers.

The obligations set forth in the table contemplate minimum levels of flying by the regional carriers under the respective agreements and also reflect assumptions regarding certain costs associated with the minimum levels of flying such as the cost of fuel, labor, maintenance, insurance, catering, property tax and landing fees.

The following table shows our minimum obligations under our existing capacity purchase agreements with third-party regional carriers, excluding contract carrier payments accounted for as leases of aircraft, which are described in Note 7, "Leases." The obligations set forth in the table contemplate minimum levels of flying by the regional carriers under the respective agreements and also reflect assumptions regarding certain costs associated with the minimum levels of flying such as the cost of fuel, labor, maintenance, insurance, catering, property tax and landing fees.

Accordingly, our actual payments under these agreements could differ materially from the minimum fixed obligations set forth in the table below.

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Total $ 10,600

(1) These amounts exclude contract carrier payments accounted for as leases of aircraft, which are described in Note 7, "Leases."

Revenue Proration Agreement .

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This revenue proration agreement establishes a fixed dollar or percentage division of revenues for tickets sold to passengers traveling on connecting flight itineraries.

Delta Air Lines, Inc.

| 2022 10-K 92

Notes to the Consolidated Financial Statements

Legal Contingencies

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

Delta Air Lines, Inc.

2021 Form 10-K 100

Notes to the Consolidated Financial Statements

We believe that our insurance would cover most of our exposure to liabilities and related indemnities associated with the commercial real estate leases and aircraft and other equipment lease and financing agreements described above.

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

Delta Air Lines, Inc.

| 2022 10-K 93

Notes to the Consolidated Financial Statements

Employees Under Collective Bargaining Agreements

As of December 31, 2021, we had approximately 83,000 full-time equivalent employees, 20 % of whom were represented by unions.

As of December 31, 2022, we had approximately 95,000 full-time equivalent employees, approximately 20 % of whom were represented by unions.

Domestic airline employees represented by collective bargaining agreements by group

Employee Group Approximate Number of Employees Represented Union Date on which Collective Bargaining Agreement Becomes Amendable

Employee Group Approximate Number of

Employees Represented Union Date on which Collective

Bargaining Agreement

Becomes Amendable

Delta Pilots 15,040 ALPA December 31, 2019

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450 PAFCA November 1, 2024

Endeavor Air Pilots 1,900 ALPA January 1, 2029

Endeavor Air Flight Attendants

Endeavor Pilots 1,750 ALPA January 1, 2029

Endeavor Flight Attendants

1,800 AFA March 31, 2027

Delta and ALPA reached an Agreement in Principle on a new collective bargaining agreement in December 2022.

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.

In addition to various work rule changes and an 18 % pay rate increase in 2023, the tentative agreement includes a provision for a one-time payment of approximately $ 700 million upon pilot ratification.

As voting on the tentative agreement has not closed and there is significant uncertainty about the outcome of this process, we have not accrued for this one-time payment as of December 31, 2022.

In addition to the domestic airline employee groups discussed above, approximately 200 refinery employees of our wholly owned subsidiary Monroe are represented by the United Steel Workers under an agreement that expires on February 28, 2026.

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Because these obligations are contingent on our termination of the contract without cause prior to its expiration date, no obligation would exist unless such a termination occurs.

Delta Air Lines, Inc.

2021 Form 10-K 101

Notes to the Consolidated Financial Statements

Income Tax Provision

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Income tax (provision) benefit $ ( 596 ) $ ( 118 ) $ 3,202

Delta Air Lines, Inc.

| 2022 10-K 94

Notes to the Consolidated Financial Statements

The following table presents the principal reasons for the difference between the effective tax rate and the U.S.

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Effective income tax rate 31.2 % 29.8 % 20.5 %

Delta Air Lines, Inc.

2021 Form 10-K 102

Notes to the Consolidated Financial Statements

Deferred Taxes

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$ 301 $ 1,294

As of December 31, 2021, w e had approximately $ 4.8 billion of U.S.

federal pre-tax net operating loss carryforwards, of which $ 1.1 billion was generated prior to 2018 and will not begin to expire until 2029.

Under current tax law, the remaining amount has no expiration.

(1) At December 31, 2022, the net deferred tax assets of $ 301 million included $ 325 million of net state deferred tax assets, which are recorded in deferred income taxes, net, and $ 24 million of net federal deferred tax liabilities, which are recorded in other noncurrent liabilities.

At December 31, 2021, the net deferred tax assets of $ 1.3 billion were recorded in deferred income taxes, net.

Valuation Allowance

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We consider, among other things, projected future taxable income, scheduled reversals of deferred tax liabilities, the overall business environment, our historical financial results and tax planning strategies.

At December 31, 2021 our net deferred tax asset balance was $ 1.3 billion, including an $ 833 million valuation allowance primarily related to capital loss carryforwards and certain state net operating losses.

Although we have recent cumulative losses, we have a history of significant earnings prior to the onset of the COVID-19 pandemic.

While we expect to return to sustained profitability as the effects of the pandemic subside and to generate sufficient taxable income to utilize our federal net operating loss carryforwards before any expire, the generation of future taxable income is dependent on many factors, including those which are out of our control, such as the demand for air travel and overall health of the economy.

As such, there are no guarantees that a valuation allowance will not be required against some or all of our deferred tax assets in future periods.

Our federal net operating loss carryforwards generated before 2018 do not begin to expire until 2029.

Under current tax law, federal net operating losses generated after 2017 do not expire.

Therefore, we have not recorded a valuation allowance on our deferred tax assets other than the capital loss carryforwards and certain state net operating losses that have short expiration periods.

Delta Air Lines, Inc.

2021 Form 10-K 103

| 2022 10-K 95

Notes to the Consolidated Financial Statements

At December 31, 2022 our net deferred tax asset balance was $ 301 million, including a $ 1.2 billion valuation allowance primarily related to certain net realized and unrealized capital losses and certain state net operating losses.

Although we have cumulative losses since the onset of the pandemic, we have a history of significant earnings prior to the onset of the COVID-19 pandemic.

During 2022, we returned to profitability, as our business continued to recover from the impact of the pandemic.

We are expecting to generate sufficient taxable income to utilize our federal net operating loss carryforwards before any expire.

However, the generation of future taxable income is dependent on many factors, including those which are out of our control, such as the demand for air travel and overall health of the economy.

As such, there are no guarantees that a valuation allowance will not be required against some or all of our deferred tax assets in future periods.

As of December 31, 2022, w e had approximately $ 5.4 billion of U.S.

federal pre-tax net operating loss carryforwards, of which $ 1.5 billion was generated prior to 2018 and will not begin to expire until 2029.

Under current tax law, the remaining net operating loss carryforwards do not expire.

Therefore, we have not recorded a valuation allowance on our deferred tax assets other than the certain net realized and unrealized capital losses and certain state net operating losses that have short expiration periods.

The following table presents the balance of our valuation allowance on our deferred income tax assets and the associated activity:

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The weighted average cost per share held in treasury was $ 29.73 and $ 28.87 as of December 31, 2022 and 2021, respectively.

See Note 6, "Debt," for further discussion of the warrants issued during 2020 and 2021 in connection with the CARES Act payroll support program and extensions to acquire more than 11.1 million shares of Delta common stock.

Delta Air Lines, Inc.

| 2022 10-K 96

Notes to the Consolidated Financial Statements

During 2020 and 2021, in connection with the Coronavirus Aid, Relief, and Economic Security Act of 2020 (the "CARES Act") payroll support program and extensions, we issued warrants to the U.S Department of the Treasury to acquire more than 11.1 million shares of Delta common stock.

The conditions and number of warrants outstanding have remained unchanged since December 31, 2021 and key terms under each program are as follows:

Summary of payroll support program warrants

(in millions) Number of Warrants Exercise Price Expiration Year

Payroll Support Program (PSP1) 6.8 $ 24.37 2025

Payroll Support Program Extension (PSP2) 2.4 39.73 2026

Payroll Support Program 3 (PSP3) 1.9 47.80 2026

Equity Compensation

Our broad-based equity and cash compensation plan provides for grants of restricted stock, stock options, performance awards, including cash incentive awards and other equity-based awards (the "Plan").

Our broad-based equity and cash compensation plan provides for grants of restricted stock, restricted stock units, stock options, performance awards, including cash incentive awards and other equity-based awards (the "Plan").

Shares of common stock issued under the Plan may be made available from authorized, but unissued, common stock or common stock we acquire.

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We expect substantially all unvested awards to vest and recognize forfeitures as they occur.

Delta Air Lines, Inc.

2021 Form 10-K 104

Notes to the Consolidated Financial Statements

Restricted Stock .

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2022 2021 2020

Restricted Stock Awards Weighted-Average Grant Price Restricted Stock Awards Weighted-Average Grant Price Restricted Stock Awards Weighted-Average Grant Price

(in millions, except wtd avg grant price)

Stock Awards Weighted-Average

Grant Price Restricted

Stock Awards Weighted-Average

Grant Price Restricted

Stock Awards Weighted-Average

(in millions, except weighted avg grant price)

Outstanding at January 1 2.9 $ 45.66 2.2 $ 54.06 2.6 $ 51.28

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Outstanding at December 31 3.1 $ 43.43 2.9 $ 45.66 2.2 $ 54.06

Delta Air Lines, Inc.

| 2022 10-K 97

Notes to the Consolidated Financial Statements

Stock Options.

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2022 2021 2020

Stock Options Weighted-Average Exercise Price Stock Options Weighted-Average Exercise Price Stock Options Weighted-Average Exercise Price

(in millions, except wtd avg grant price)

Stock Options Weighted-Average

Exercise Price Stock Options Weighted-Average

Exercise Price

(in millions, except weighted avg grant price)

Outstanding at January 1 6.2 $ 50.41 5.4 $ 52.37 3.9 $ 49.57

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Based on the closing stock price at each respective year end and contingent on achieving the specified performance conditions, the maximum shares that could be issued were 0.7 million, 1.5 million and 2.2 million for the years ended December 31, 2022, 2021 and 2020, respectively.

Delta Air Lines, Inc.

2021 Form 10-K 105

Notes to the Consolidated Financial Statements

Performance-Based Restricted Stock Units.

Performance-based restricted stock units are long-term incentive opportunities that were granted in 2022 and provide executive officers with the right to receive shares of Delta stock based on our achievement of certain performance conditions at the end of a three-year period.

Potential payouts range from 0 %- 300 % of a target level.

Based on the closing stock price at year end and contingent on achieving the specified performance conditions, the maximum shares that could be issued were 1.3 million for the year ended December 31, 2022.

ACCUMULATED OTHER COMPREHENSIVE LOSS

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(in millions) Pension and Other Benefits Liabilities (2)

Balance at January 1, 2019 (net of tax effect of $ 1,492 )

$ ( 7,925 ) $ 100 $ ( 7,825 )

Changes in value (net of tax effect of $ 133 )

( 422 ) 7 ( 415 )

Reclassifications into earnings (net of tax effect of $ 76 ) (1)

252 ( 1 ) 251

Balance at December 31, 2019 (net of tax effect of $ 1,549 )

Other Tax Effect Total

Balance at January 1, 2020 $ ( 9,563 ) $ 25 $ 1,549 $ ( 7,989 )

Changes in value ( 1,652 ) 16 384 ( 1,252 )

Reclassifications into earnings (1)

372 — ( 169 ) 203

Changes in value (net of tax effect of $ 384 )

Balance at December 31, 2020

( 10,843 ) 41 1,764 ( 9,038 )

Reclassifications into earnings (net of tax effect of $ 169 ) (1)

Changes in value 2,077 — ( 484 ) 1,593

Reclassifications into earnings (1)

411 — ( 96 ) 315

Balance at December 31, 2020 (net of tax effect $ 1,764 )

Balance at December 31, 2021

( 8,355 ) 41 1,184 ( 7,130 )

Changes in value (net of tax effect of $ 484 )

Changes in value 1,419 — ( 330 ) 1,089

Reclassifications into earnings (1)

312 — ( 72 ) 240

Reclassifications into earnings (net of tax effect of $ 96 ) (1)

Balance at December 31, 2021 (net of tax effect of $ 1,184 )

Balance at December 31, 2022

$ ( 6,624 ) $ 41 $ 782 $ ( 5,801 )

(1) Amounts reclassified from AOCI for pension and other benefits liabilities are recorded in pension and related benefit/(expense) in non-operating expense in the income statement.

(1) Amounts reclassified from AOCI for pension and other benefits liabilities are recorded in pension and related benefit in non-operating expense in the income statement.

(2) Includes approximately $ 755 million of deferred income tax expense as a result of tax law changes and prior valuation allowance releases through continuing operations, that will not be recognized in net income until pension and other benefit obligations are fully extinguished.

(3) In 2020, all remaining foreign currency hedges expired, and we recognized an $ 83 million tax benefit which was released from AOCI.

Delta Air Lines, Inc.

2021 Form 10-K 106

| 2022 10-K 98

Notes to the Consolidated Financial Statements

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The gross fair value of the products exchanged under these agreements during the years ended December 31, 2022, 2021 and 2020 was $ 3.5 billion, $ 2.3 billion and $ 1.5 billion, respectively.

The decline in exchange transactions compared to the year ended December 31, 2019 is primarily due to the decrease in demand for jet fuel from our airline operations as a result of the economic conditions caused by the COVID-19 pandemic.

Delta Air Lines, Inc.

| 2022 10-K 99

Notes to the Consolidated Financial Statements

Segment Reporting

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Our segments are not designed to measure operating income or loss directly related to the products and services included in each segment on a stand-alone basis.

Delta Air Lines, Inc.

2021 Form 10-K 107

Notes to the Consolidated Financial Statements

Financial information by segment

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Sales of refined products ( 278 )

Operating income (loss) (4)

Operating income (3)

2,884 777 3,661

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Net fair value obligations, end of period — ( 226 ) ( 226 )

— ( 497 ) ( 497 )

Capital expenditures 6,217 149 6,366

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Sales of refined products ( 40 )

Operating loss (4)

Operating income (loss) (3)

1,888 ( 2 ) 1,886

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Net fair value obligations, end of period — ( 497 ) ( 497 )

— ( 156 ) ( 156 )

Capital expenditures 3,188 59 3,247

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Sales of refined products ( 307 )

Operating income (4)

Operating loss (3)

( 12,253 ) ( 216 ) ( 12,469 )

Interest expense (income), net 327 ( 26 ) 301

Interest expense, net 929 1 ( 1 ) 929

Depreciation and amortization 2,312 99 ( 99 ) (3)

Restructuring charges 8,219 — 8,219

Total assets, end of period 70,548 1,448 — 71,996

Net fair value obligations, end of period — ( 156 ) ( 156 )

— ( 4 ) ( 4 )

Capital expenditures 1,879 20 1,899

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(2) Represents value of products delivered under our exchange agreements, as discussed above, determined on a market price basis.

(3) These sales were at or near cost;

accordingly, the margin on these sales is de minimis.

(3) Refinery segment operating results, including depreciation and amortization, are included within aircraft fuel and related taxes in our income statement.

(5) The fair values of these obligations, which are related to renewable fuel compliance costs, are based on quoted market prices and other observable information and are classified as Level 2 in the fair value hierarchy.

At December 31, 2021 we had a gross fair value obligation of $ 593 million recorded in current liabilities on the balance sheet and related assets of $ 96 million.

Our obligation as of December 31, 2021 was calculated using the EPA's proposed Renewable Fuel Standard ("RFS") volume requirements for 2020 and 2021, which were issued in December 2021.

The EPA has not finalized the compliance deadlines to retire our obligations for 2020 and 2021, but we expect those deadlines to be within one year of the effective date of the new RFS volume requirements.

At December 31, 2020 we had a gross fair value obligation of $ 172 million and related assets of $ 16 million.

At December 31, 2019 we had a gross fair value obligation of $ 58 million and related assets of $ 54 million.

We expect to use the assets in settling a portion of our obligations.

Delta Air Lines, Inc.

2021 Form 10-K 108

| 2022 10-K 100

Notes to the Consolidated Financial Statements

RESTRUCTURING

As a result of the unprecedented, widespread and persistent impact of the COVID-19 pandemic, demand for travel declined at a rapid pace in the March 2020 quarter and remained depressed throughout 2020, which had an unprecedented and materially adverse impact on our results of operations and financial position.

Although demand improved throughout 2021, system-wide demand remained below pre-pandemic levels.

Renewable Fuel Compliance Costs

A refinery is subject to annual Environmental Protection Agency ("EPA") requirements to blend renewable fuels into the gasoline and on-road diesel fuel it produces.

Alternatively, a refinery may purchase Renewable Identification Numbers ("RINs") from third parties in the secondary market.

The Monroe refinery purchases the majority of its RINs in the secondary market.

Renewable fuel compliance costs are accrued each period as the RINs obligation is generated.

Purchased RINs are carried at the lower of cost and net realizable value and are recorded in prepaid expenses and other.

The RINs obligation is recorded in accounts payable at cost for those purchased or under fixed price purchase agreements, with any remaining net obligation recorded at fair value.

The RINs asset and obligation are retired when used to satisfy EPA requirements.

The net fair value obligations presented in the financial information by segment table above are based on quoted market prices and other observable information and are therefore classified as Level 2 in the fair value hierarchy.

Our obligation as of December 31, 2022 was calculated using the U.S.

EPA Renewable Fuel Standard ("RFS") volume requirements, which were finalized in the June 2022 quarter.

During the December 2022 quarter, we retired our 2020 RINs assets to settle our 2020 obligations prior to the compliance deadline.

We expect to settle our 2021 and 2022 obligations in the first half of 2023.

GOVERNMENT GRANTS AND RESTRUCTURING

Government Grant Recognition.

Under the initial payroll support program under the CARES Act and the payroll support program ("PSP") extensions we received support payments which included $ 4.5 billion and $ 3.9 billion of grants during the years ended December 31, 2021 and 2020, respectively.

These grants were recognized in government grant recognition in our income statement over the periods that the funds were intended to compensate.

PSP1 grants were recognized during 2020 and grants received from PSP2 and PSP3 were recognized during 2021.

See Note 6, "Debt," and Note 12, "Equity and Equity Compensation," for additional information on other aspects of the payroll support program.

Restructuring Charges.

As a result of the unprecedented, widespread impact of the COVID-19 pandemic, demand for travel declined at a rapid pace in the March 2020 quarter and remained depressed throughout 2020, which had a materially adverse impact on our results of operations and financial position.

During 2020, we implemented enhanced measures focusing on the safety of our customers and employees, while at the same time seeking to mitigate the impact on our financial position and operations and to position our business for recovery through actions including fleet retirements, offering voluntary retirement and separation programs and other decisions.

These actions resulted in significant restructuring charges during 2020 which are summarized as follows:

These actions resulted in significant restructuring charges during the year ended December 31, 2020.

Subsequent to these charges, we recorded adjustments to certain of these restructuring charges during the years ended December 31, 2022 and 2021, representing changes in our estimates or the outcome of contract negotiations.

These charges and adjustments are summarized as follows:

Restructuring charges by category

(in millions) December 31, 2020

Year Ended December 31,

(in millions) 2022 2021 2020

Fleet retirements $ ( 48 ) $ 40 $ 4,409

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Total restructuring charges $ ( 124 ) $ ( 19 ) $ 8,219

During 2021, we recorded $ 19 million of net adjustments to decrease certain of these restructuring charges, representing changes in our estimates.

Fleet Retirements.

As a result of the COVID-19 pandemic and our response, we made decisions to remove certain aircraft from active service and to early retire certain fleets.

The table below summarizes the number of leased and owned aircraft being retired early, though we remain flexible and may decide to fly certain aircraft beyond their planned retirement date, to the extent supported by demand.

Fleet retirement by aircraft type

Fleet Type Number of Aircraft Planned Retirement During the Quarter Ended Impairment-Related Charge (in millions)

777 18 December 2020 $ 1,440

767-300ER 56 December 2025 1,084

717 91 December 2025 950

MD-90 26 June 2020 335

125 December 2023 320

737-700 10 September 2020 223

A320 10 June 2020 57

47 June 2020 —

Total 383 $ 4,409

(1) Certain of the CRJ-200 aircraft scheduled to be retired by the December 2023 quarter are operated for us by SkyWest Airlines under a revenue proration agreement.

(2) During the March 2020 quarter, we recorded a $ 22 million charge related to accelerating the planned retirement of the MD-88 fleet from December 2020 to June 2020.

However, this amount was recorded in depreciation and amortization, rather than in restructuring charges, as it would have been incurred during 2020 prior to the onset of the COVID-19 pandemic.

These impairment and other related charges were recorded in restructuring charges in our income statement.

As a result of the COVID-19 pandemic and our response, we made decisions to remove certain aircraft from active service and to early retire certain fleet types.

These actions resulted in $ 4.4 billion of impairment and other related charges that were recorded in restructuring charges in our income statement for the year ended December 31, 2020.

These charges were calculated using Level 3 fair value inputs based primarily upon recent market transactions and third-party bids, which were corroborated with published pricing guides and our assessment of existing market conditions based on industry knowledge.

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Delta Air Lines, Inc.

2021 Form 10-K 109

| 2022 10-K 101

Notes to the Consolidated Financial Statements

Voluntary Programs and Other Employee Benefit Charges.

During 2020, in response to the COVID-19 pandemic, we announced the voluntary programs, which primarily applied to eligible U.S.

In response to the COVID-19 pandemic, we announced the voluntary programs, which primarily applied to eligible U.S.

merit, ground and flight attendant and pilot employees.

See Note 9, "Employee Benefit Plans," for more information on these voluntary programs.

During 2020, 18,000 employees elected to participate and were eligible for separation payments, continued healthcare benefits and certain participants received retiree medical accounts.

The remainder of the restructuring charge primarily relates to separation payments and healthcare benefits.

Approximately $ 440 million, $ 575 million and $ 720 million was disbursed in cash payments to participants in the voluntary programs during 2022, 2021 and 2020, respectively.

An additional $ 250 million of cash payments were disbursed during 2020 related to unused vacation and other benefits, which were accrued prior to the voluntary programs charge.

Other than the special termination benefits that are recorded in pension, postretirement and related benefits, the remaining accruals as of December 31, 2022 related to separation payments under the voluntary programs are recorded in other accrued liabilities on our balance sheet.

Receivables and Other.

Based on our assessment of collectability, during the year ended December 31, 2020, we recorded approximately $ 100 million of reserves against outstanding receivables from LATAM, Grupo Aeroméxico, GOL, Virgin Atlantic and others.

Following LATAM's and Grupo Aeroméxico's emergence from their respective bankruptcy processes and general improvement overall in the airline industry, these reserves were $ 7 million as of December 31, 2022.

EARNINGS/(LOSS) PER SHARE

We calculate basic earnings/(loss) per share and diluted (loss) per share by dividing net income/(loss) by the weighted average number of common shares outstanding, excluding restricted shares.

We calculate diluted earnings per share by dividing net income by the weighted average number of common shares outstanding plus the dilutive effect of outstanding share-based awards, including stock options, restricted stock awards and warrants.

We calculate diluted earnings per share by dividing net income by the weighted average number of common shares outstanding plus the dilutive effect of outstanding share-based instruments, including stock options, restricted stock awards and warrants.

Antidilutive common stock equivalents excluded from the diluted earnings/(loss) per share calculation are not material.

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Basic weighted average shares outstanding 638 636 636

Dilutive effect of share-based awards 5 — 2

Dilutive effect of share-based instruments 3 5 —

Diluted weighted average shares outstanding 641 641 636

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Delta Air Lines, Inc.

2021 Form 10-K 110

| 2022 10-K 102

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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 8. Financial Statements and Supplementary Data