MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
−Removed: During 2022, our recovery from the impact of the COVID-19 pandemic continued and is continuing into 2023.
−Removed: Given the drastic and unprecedented impact of the pandemic on our operating results in 2020 and 2021, we believe that a comparison of our results in 2022 to both 2021 and 2019 in this overview section allows for a better understanding of the full impact of the COVID-19 pandemic and the progress of our recovery.
−Removed: This section of Form 10-K, however, does not address certain items regarding the year ended December 31, 2020.
+Added: This section of Form 10-K does not address certain items regarding the year ended December 31, 2021.
Discussion and analysis of 2021 and year-to-year comparisons between 2022 and 2021 not included in this Form 10-K can be found in "Item 7.
1 unchanged sentence
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our audited Consolidated Financial Statements and the related notes and other financial information as well as the material risk factors included elsewhere in this Annual Report on Form 10-K.
−Removed: The table below shows certain key financial measures for the years ended December 31, 2022, 2021 and 2019:
−Removed: Year Ended December 31, 2022 vs 2021 % Increase (Decrease) 2022 vs 2019 % Increase (Decrease)
−Removed: (in millions) 2022 2021 2019
−Removed: Total operating revenue $ 50,582 $ 29,899 $ 47,007 69 % 8 %
−Removed: Total operating expense 46,921 28,013 40,389 67 % 16 %
−Removed: Operating income 3,661 1,886 6,618 94 % (45) %
−Removed: Available seat miles ("ASM" or "capacity") 233,226 194,474 275,379 20 % (15) %
2023 Financial Overview
−Removed: Our 2022 operating income was $3.7 billion, an improvement of $1.8 billion compared to 2021, while operating income, adjusted (a non-GAAP financial measure) which excludes restructuring charges and other items was $3.6 billion, an increase of $6.1 billion compared to 2021.
−Removed: The increases in operating income and operating income, adjusted were primarily due to the continued recovery in the demand for air travel during 2022, which resulted in a 69% increase in operating revenue on a 20% increase in system capacity.
−Removed: Operating income in 2021 included a benefit of $4.5 billion from the recognition of payroll support program ("PSP") grants, driving the smaller year-over-year increase than operating income, adjusted, which excluded the grants benefit in 2021.
−Removed: Our 2022 operating income decreased $3.0 billion compared to 2019 primarily due to an increase in operating costs, including a 35% increase in fuel cost, and lower passenger revenue due to system capacity that was 15% lower as we continued to restore our operations from the effects of the COVID-19 pandemic.
−Removed: Operating income, adjusted (a non-GAAP financial measure) decreased $3.1 billion compared to 2019.
−Removed: Compared to 2021, our 2022 operating revenue increased $20.7 billion, or 69%, primarily due to continued recovery in travel demand from the COVID-19 pandemic and higher refinery sales to third parties.
−Removed: Improvement in premium products revenue resulted from both a shift in the mix of seats on our aircraft following the retirement of certain fleets in 2020 and delivery of new aircraft since that time, as well as incremental increase in demand, particularly from leisure customers.
−Removed: Compared to 2019, our operating revenue increased $3.6 billion, or 8%, due primarily to higher refinery sales to third parties, partially offset by the revenue impact from 15% lower capacity.
−Removed: We are planning for our 2023 system capacity to fully recover to or exceed 2019 capacity levels.
+Added: Our 2023 operating income was $5.5 billion, an improvement of $1.9 billion compared to 2022, while operating income, adjusted (a non-GAAP financial measure) which excludes one-time pilot agreement expenses and other items was $6.3 billion, an increase of $2.8 billion compared to 2022.
+Added: Operating income and operating income, adjusted increased primarily from increases in revenue as described below.
+Added: Compared to 2022, our 2023 operating revenue increased $7.5 billion, or 15%, primarily due to a 17% increase in capacity driven by an increase in demand for international travel and continuing strength in demand for domestic travel and premium products.
+Added: Total revenue, adjusted (a non-GAAP financial measure) increased in 2023 by $9.1 billion, or 20%, compared to 2022.
+Added: Adjustments were primarily to exclude revenue related to refinery sales to third parties.
Operating Expense.
−Removed: Total operating expense increased $18.9 billion, or 67%, compared to 2021, primarily resulting from higher fuel costs, due to both an increase in fuel price and increased consumption as capacity was restored, as well as higher salaries and related costs, higher volume-related expenses associated with the increase in capacity and demand and an increase in expenses related to refinery sales to third parties, reflected in ancillary business and refinery expense.
−Removed: The increase also resulted from $4.5 billion of PSP grants recognized during 2021, which reduced expenses in that year.
−Removed: Total operating expense, adjusted (a non-GAAP financial measure) which excludes expenses related to refinery sales to third parties, contra-expense from the recognition of PSP grants in 2021 and other items, increased $12.8 billion, or 44%, compared to 2021.
−Removed: Delta Air Lines, Inc.
−Removed: | 2022 10-K 33
−Removed: MD&A - Financial Highlights
−Removed: Our total operating cost per available seat mile ("CASM") increased 40% to 20.12 cents compared to 2021, primarily due to the higher costs discussed above.
−Removed: Non-fuel unit costs ("CASM-Ex", a non-GAAP financial measure), which excludes fuel, expenses related to refinery sales to third parties, contra-expense from the recognition of PSP grants in 2021 and other items, increased 6% to 12.87 cents.
−Removed: Total operating expense increased $6.5 billion, or 16%, compared to 2019, primarily resulting from higher fuel costs and an increase in expenses related to refinery sales to third parties.
+Added: Total operating expense increased $5.6 billion, or 12%, compared to 2022, primarily resulting from higher employee related costs from increased wages and profit sharing, pilot agreement and related expenses and higher volume-related expenses associated with the 17% increase in capacity, partially offset by lower expenses related to refinery sales to third parties, reflected in ancillary business and refinery expense.
Total operating expense, adjusted (a non-GAAP financial measure) increased $6.3 billion, or 15%, compared to 2022.
−Removed: Our CASM increased 37% compared to 2019, primarily due to the higher costs discussed above and a 15% decrease in capacity.
−Removed: CASM-Ex (a non-GAAP financial measure) increased 18% compared to 2019.
−Removed: During 2023, we expect non-fuel unit costs to decrease compared to 2022 as we restore our network to pre-pandemic levels, better utilizing our assets.
−Removed: We expect to reduce our investments in rebuilding the network as we progress through the year while improving our operational efficiency and managing inflationary pressures including labor cost increases.
+Added: Adjustments were primarily to exclude expenses related to refinery sales to third parties and the pilot agreement and related expenses.
+Added: Our total operating cost per available seat mile ("CASM") decreased 4% compared to 2022 to 19.31 cents, primarily due to a 17% increase in capacity, as well as lower fuel expense and lower expenses related to refinery sales to third parties.
+Added: Non-fuel unit costs ("CASM-Ex", a non-GAAP financial measure), which excludes fuel, expenses related to refinery sales to third parties, and other items, increased 2.3% to 13.17 cents.
Non-Operating Results.
−Removed: Total non-operating expense was $1.7 billion in 2022, $259 million higher than 2021 primarily due to higher mark-to-market losses on certain of our equity investments, partially offset by reduced losses on our equity method investments, lower interest expense as a result of our debt reduction initiatives and lower losses on extinguishment of debt.
−Removed: Total non-operating expense was $1.3 billion higher than 2019, primarily due to higher mark-to-market losses on certain of our equity investments and higher interest expense as a result of our increased debt balances due to the financing arrangements entered into during 2020.
−Removed: During 2022, operating activities provided cash flows of $6.4 billion, primarily on improving ticket sales, and incurred approximately $6.9 billion of net investing cash outflows, primarily for $6.4 billion of capital expenditures.
−Removed: After adjusting for strategic investments and certain other activities, these results generated $244 million of free cash flow (a non-GAAP financial measure) in 2022.
+Added: Total non-operating income was $87 million in 2023 compared to total non-operating expense of $1.7 billion in 2022 primarily due to mark-to-market gains on certain of our equity investments and lower interest expense as a result of our debt reduction initiatives, partially offset by increased pension related expenses.
+Added: During 2023, operating activities provided cash flows of $6.5 billion, primarily from ticket sales.
+Added: Investing activities resulted in net cash outflows of approximately $3.1 billion, primarily for $5.3 billion of capital expenditures, partially offset by $2.2 billion of net redemptions of short-term investments.
+Added: After adjusting for the pilot agreement payment and certain other activities, these results generated $2.0 billion of free cash flow (a non-GAAP financial measure) in 2023.
Also, during 2023 we had cash outflows of approximately $4.1 billion related to repayments of our debt and finance leases, including approximately $2.0 billion for early repayments and the remainder from scheduled maturities.
Our cash, cash equivalents, short-term investments and aggregate principal amount committed and available to be drawn under our revolving credit facilities ("liquidity") at December 31, 2023 was $6.8 billion.
−Removed: The non-GAAP financial measures operating income, adjusted, operating expense, adjusted, CASM-Ex and free cash flow used above are defined and reconciled in "Supplemental Information" below.
+Added: The non-GAAP financial measures of operating income, adjusted, total revenue, adjusted, total operating expense, adjusted, CASM-Ex and free cash flow used above are defined and reconciled in "Supplemental Information" below.
Delta Air Lines, Inc.
−Removed: | 2022 10-K 34
+Added: | 2023 Form 10-K 34
MD&A - Results of Operations
18 unchanged sentences
Operating Revenue
−Removed: Our operating revenue increased $20.7 billion, or 69%, compared to the year ended December 31, 2021 due primarily to increased demand in 2022 as a result of the continued recovery from the COVID-19 pandemic and higher third-party refinery sales.
−Removed: The increase in operating revenue, on a 20% increase in system capacity, generated a 41% increase in total revenue per available seat mile ("TRASM") and a 43% increase in TRASM, adjusted (a non-GAAP financial measure) compared to 2021.
+Added: Our operating revenue increased $7.5 billion, or 15%, compared to 2022 due primarily to a 17% increase in capacity driven by an increase in demand for international travel and continuing strength in demand for domestic travel, with growth in revenue from premium products outpacing main cabin.
+Added: This increase was partially offset by lower third-party refinery sales recorded in other revenue.
+Added: Total revenue per available seat mile ("TRASM") decreased 2% in large part as a result of the decline in third-party refinery sales.
See "Refinery Segment" below for additional details on the refinery's operations, including third-party refinery sales recorded in other revenue, during each period.
4 unchanged sentences
ASMs (Capacity) Passenger Mile Yield PRASM Load Factor
−Removed: Domestic $ 30,197 64 % 27 % 10 % 29 % 48 % 11 pts
+Added: Domestic $ 33,968 12 % 10 % 10 % 2 % 2 % 1 pt
Atlantic 9,057 49 % 34 % 30 % 11 % 15 % 3 pts
2 unchanged sentences
Total passenger revenue $ 48,909 22 % 19 % 17 % 2 % 4 % 3 pts
−Removed: Domestic passenger unit revenue ("PRASM") for the year ended December 31, 2022 increased 48% compared to the year ended December 31, 2021 as a result of stronger demand and higher levels of traffic due to the ongoing recovery from the COVID-19 pandemic throughout 2022.
−Removed: Domestic revenue in 2022 was above 2021 levels and near pre-pandemic levels, even though capacity was not fully restored, as consumers continue to return to travel.
+Added: Domestic passenger unit revenue ("PRASM") for 2023 increased 2% compared to 2022 due to a 12% increase in revenue on a 10% increase in capacity and a slight increase in load factor.
+Added: Domestic revenue in 2023 was above 2022 levels as we experienced strong revenue results across the domestic network, with coastal hub markets such as New York and Boston improving significantly compared to the prior year, domestic business travel revenue improving and a 10% increase in domestic capacity compared to 2022.
We believe spending patterns for services are returning to historical levels compared to spending on goods.
−Removed: We also experienced higher growth in premium product revenue (including Delta One, First Class, Delta Premium Select and Delta Comfort+) compared to main cabin with the delivery of new aircraft that include more premium seat capacity and an increase in premium product yield compared to main cabin, as we see more consumers choosing these premium offerings.
−Removed: In 2023, we expect domestic capacity to be restored to pre-pandemic levels through growth in our core hubs in Atlanta, Minneapolis-St.
−Removed: Paul, Detroit and Salt Lake City.
+Added: We also experienced higher growth in premium product revenue (including Delta One, First Class, Delta Premium Select and Delta Comfort+) compared to main cabin with the delivery of new aircraft that include more premium seat capacity and an increase in yield in premium products compared to main cabin, as we see more consumers choosing these premium offerings.
+Added: In 2024, we expect moderate capacity growth of single digits.
Delta Air Lines, Inc.
−Removed: | 2022 10-K 35
+Added: | 2023 Form 10-K 35
MD&A - Results of Operations
International
−Removed: International passenger revenue for the year ended December 31, 2022 increased 147% with capacity up 47% compared to the year ended December 31, 2021, with the Atlantic region experiencing the most significant improvement, as travel to many European destinations resumed or increased.
−Removed: In November 2021, travel restrictions on most fully vaccinated foreign visitors to the United States were lifted.
−Removed: This action made travel to the U.S.
−Removed: by many foreign nationals possible for the first time in 18 months.
−Removed: Further, in June 2022, the United States lifted its testing requirement for international travel.
−Removed: Both of these changes have had a positive impact on international demand.
−Removed: Most countries in our network have removed or eased travel restrictions, resulting in revenue improvement across all international regions.
−Removed: The Atlantic region showed strong demand improvement during 2022 as western European countries removed or eased travel restrictions in the first half of 2022.
−Removed: Revenue in this region was near pre-pandemic levels as travelers continue to show increased desire for transatlantic travel.
−Removed: This has been led by demand for leisure destinations such as Italy, Spain and Greece and improving business demand.
−Removed: Latin America region revenue was also near pre-pandemic levels during 2022, due to continued strong demand for leisure destinations in Mexico, the Caribbean and Central America.
−Removed: Also, in 2022, final regulatory approval was granted for our trans-American joint venture agreement with LATAM.
−Removed: 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.
−Removed: Beginning in the December 2022 quarter, we and LATAM began adding capacity on certain Latin America routes and introduced one new route between Los Angeles and São Paulo, Brazil.
−Removed: The Pacific region continues to be the most impacted by travel restrictions, although we experienced demand improvement during 2022 following South Korea and Australia reopening to international travelers and the recent easing of travel restrictions to Japan.
−Removed: Throughout 2022, China still maintained international testing requirements and travel restrictions, which continued to restrain demand in the Pacific region.
−Removed: We expect the increasing revenue trends in all international regions to continue into 2023 as demand for international locations continues to be strong and countries continue to reopen and remove or ease remaining travel restrictions.
−Removed: For example, in January 2023 China ended most of its pandemic-related travel restrictions and we expect to increase capacity based on demand during 2023.
−Removed: Ticket Validity Flexibility
−Removed: 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.
−Removed: Delta has eliminated change fees for tickets originating in the United States, Canada, Europe and Africa (excluding Basic Economy tickets).
−Removed: A change fee waiver continues to apply for travel originating in Asia and the Pacific.
−Removed: Starting in 2022, Basic Economy tickets may be cancelled for a charge to receive a partial ticket credit.
−Removed: We estimate the value of ticket breakage and recognize revenue at the scheduled flight date.
−Removed: Our ticket breakage estimates are primarily based on historical experience, ticket contract terms and customers’ travel behavior.
−Removed: Given the impact of the COVID-19 pandemic on customer behavior and changes made in ticket validity terms, as well as the elimination of change fees for most tickets, our estimates of revenue that will be recognized from the air traffic liability for unused tickets may vary in future periods.
−Removed: See Note 2 of the Notes to the Consolidated Financial Statements for additional information about passenger ticket sales.
−Removed: Delta Air Lines, Inc.
−Removed: | 2022 10-K 36
−Removed: MD&A - Results of Operations
+Added: International passenger revenue for 2023 increased 49% with capacity up 31% compared to 2022.
+Added: Passenger revenue increased in each geographic region with the Atlantic region experiencing the largest absolute improvement, as travel to many European destinations increased.
+Added: Consumers showed a strong desire for transatlantic travel, driving higher revenue and passenger unit revenue during 2023 on 30% capacity growth compared to 2022.
+Added: This has been led by demand for travel to leisure destinations in Europe and premium products.
+Added: Latin America region revenue increased during 2023 compared to 2022, due to strong demand for leisure destinations in South America and the Caribbean on a 16% increase in capacity.
+Added: In addition, during the first year of our joint venture with LATAM, we have streamlined travel between North and South America while expanding connections in each of our key hub airports.
+Added: The Pacific region benefited from improved demand for travel to the region, particularly to Japan, on 75% increased capacity following the lifting of pandemic-related travel restrictions and the performance of our joint venture with Korean Air.
Other Revenue
7 unchanged sentences
This represents refinery sales to third parties.
−Removed: These sales increased $1.7 billion compared to 2021.
−Removed: The increase in third-party refinery sales resulted from higher pricing and production during 2022 compared to 2021.
+Added: These sales decreased $1.6 billion compared to 2022.
+Added: The decrease in third-party refinery sales resulted from lower pricing and a turnaround which was completed between September and November 2023.
See "Refinery Segment" below for additional details on the refinery's operations, including third-party refinery sales recorded in other revenue, during each period.
Loyalty Program.
−Removed: This relates to brand usage by third parties and other performance obligations embedded in miles sold, including redemption of miles for non-travel awards.
+Added: This relates to revenues from brand usage by third parties and other performance obligations embedded in miles sold, as well as redemption of miles for non-travel awards.
These revenues are mainly driven by customer spend on American Express cards and new cardholder acquisitions.
−Removed: On continued strength in co-brand card spend and card acquisitions, revenues from our relationship with American Express increased in 2022 compared to 2021.
+Added: Revenues from our relationship with American Express increased compared to 2022 driven by co-brand card spend growth.
Ancillary Businesses.
2 unchanged sentences
This is primarily composed of lounge access, including access provided to certain American Express cardholders, and codeshare revenues.
−Removed: Compared to 2021, these transactions have increased due to the ongoing recovery of our business that continued to materialize in 2022.
−Removed: Our network of Delta Sky Club lounges was fully reopened by the end of July 2021 after some lounges temporarily closed at the onset of the pandemic in 2020.
+Added: The increase in miscellaneous is primarily due to increased revenue from Delta Sky Club access.
Delta Air Lines, Inc.
−Removed: | 2022 10-K 37
+Added: | 2023 Form 10-K 36
MD&A - Results of Operations
Operating Expense
−Removed: Year Ended December 31, Increase (Decrease) % Increase
+Added: Year Ended December 31, Increase (Decrease) % Increase (Decrease) (1)
(in millions) 2023 2022
4 unchanged sentences
Landing fees and other rents 2,563 2,181 382 18 %
−Removed: Depreciation and amortization 2,107 1,998 109 5 %
−Removed: Regional carrier expense 2,051 1,736 315 18 %
Aircraft maintenance materials and outside repairs 2,432 1,982 450 23 %
+Added: Depreciation and amortization 2,341 2,107 234 11 %
Passenger commissions and other selling expenses 2,334 1,891 443 23 %
+Added: Regional carrier expense 2,200 2,051 149 7 %
Passenger service 1,750 1,453 297 20 %
Profit sharing 1,383 563 820 146 %
+Added: Pilot agreement and related expenses 864 — 864 NM
Aircraft rent 532 508 24 5 %
−Removed: Restructuring charges (124) (19) (105) 553 %
−Removed: Government grant recognition — (4,512) 4,512 (100) %
Other 2,239 1,700 539 32 %
Total operating expense $ 52,527 $ 46,921 $ 5,606 12 %
−Removed: During 2021, travel demand began to recover from the low levels experienced during the height of the COVID-19 pandemic.
−Removed: This recovery in demand continued to accelerate during 2022.
−Removed: As a result, operating expenses increased in conjunction with the increases in demand and capacity discussed above.
−Removed: The continued restoration of our operations was the primary driver for the increases in most operating expense line items, particularly contracted services, aircraft maintenance materials and outside repairs, passenger commissions and other selling expenses and passenger service.
−Removed: Other year-over-year fluctuations are discussed below.
+Added: (1) Certain variances are labeled as not meaningful ("NM") throughout management's discussion and analysis.
Salaries and Related Costs.
−Removed: We hired approximately 25,000 employees during 2022 principally in flight operations, in-flight service, reservations and customer care, TechOps and airport customer service, in order to support our operations as demand and capacity returned.
−Removed: These hiring actions and a 4% base pay increase effective May 1, 2022 for eligible employees resulted in the increase in salaries and related costs in 2022 compared to 2021.
−Removed: The increase also results from the ending of the voluntary unpaid leave of absence program we offered in response to the COVID-19 pandemic during 2021.
−Removed: During 2022, we no longer offered these leaves of absence as the program terminated in September 2021.
−Removed: In early 2023, we announced a 5% base pay increase for eligible employees effective April 1, 2023.
−Removed: Delta and ALPA reached an Agreement in Principle on a new collective bargaining agreement in December 2022.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: Delta Air Lines, Inc.
−Removed: | 2022 10-K 38
−Removed: MD&A - Results of Operations
+Added: Delta pilots ratified a new four-year Pilot Working Agreement effective January 1, 2023.
+Added: The agreement includes numerous work rule changes and pay rate increases during the four-year term, including an initial pay rate increase of 18%.
+Added: Additional effects of this agreement are described below under pilot agreement and related expenses.
+Added: We also implemented base pay increases for eligible non-pilot employees of 5% effective April 1, 2023.
+Added: Further, we have approximately 8,000 more employees as of December 31, 2023 than at December 31, 2022 principally in in-flight service, flight operations and aircraft maintenance, in order to support the growth in our operations.
+Added: Each of these actions contributed to the increase in salaries and related costs.
Aircraft Fuel and Related Taxes.
−Removed: Fuel expense increased $5.8 billion compared to 2021 primarily due to a 78% increase in the market price of jet fuel and a 23% increase in consumption as capacity was restored.
−Removed: Additionally, 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.
−Removed: 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.
−Removed: In the table below, these costs are shown in the carbon offset costs line item.
−Removed: As we continue to work on accelerating our long-term, net-zero greenhouse gas emissions goal, our vision of the path forward will require multiple initiatives, centered on a long-term strategy of decarbonization;
−Removed: we therefore expect substantially all of our investment going forward will be focused on solutions other than carbon offsets.
+Added: Fuel expense decreased $413 million compared to 2022 primarily due to an 18% decrease in the market price of jet fuel partially offset by a 15% increase in consumption on a 17% increase in capacity.
Fuel expense and average price per gallon
5 unchanged sentences
$ 11,506 $ 12,230 $ (724) $ 2.93 $ 3.58 $ (0.65)
−Removed: Carbon offset costs 116 95 21 0.03 0.03 —
Fuel hedge impact (52) 29 (81) (0.01) 0.01 (0.02)
4 unchanged sentences
Ancillary businesses and refinery includes expenses associated with refinery sales to third parties, aircraft maintenance services we provide to third parties and our vacation wholesale operations.
−Removed: Increased expenses were primarily related to refinery sales to third parties, which increased $1.7 billion compared to 2021.
−Removed: The increase compared to 2021 was driven by higher pricing and production during 2022.
−Removed: The cost of aircraft maintenance services we provide to third parties increased compared to 2021 due to the increase in flights and aircraft operated during 2022.
−Removed: Regional Carrier Expense.
−Removed: Regional carrier expense increased compared to 2021 due to an increase in contract carrier rates and wages, while capacity was constrained due to a shortage of regional jet pilots.
−Removed: Restructuring Charges.
−Removed: During 2020, we recorded restructuring charges of $8.2 billion for items such as fleet impairments and voluntary early retirement and separation programs following strategic business decisions in response to the COVID-19 pandemic.
−Removed: In the years ended December 31, 2022 and 2021, we recognized $124 million and $19 million, respectively, of adjustments to certain of those restructuring charges, representing changes in our estimates or the outcome of contract negotiations.
−Removed: See Note 15 of the Notes to the Consolidated Financial Statements for additional information about the restructuring charges recorded in 2020.
+Added: The decline in these expenses was primarily related to lower refinery sales to third parties, which decreased $1.6 billion compared to 2022.
+Added: The decrease in third-party refinery sales resulted from lower pricing and the turnaround, which was completed between September and November 2023.
+Added: Contracted Services.
+Added: Contracted services expenses increased compared to 2022 due to higher-volume related expenses associated with increased capacity, in addition to inflationary pressures.
+Added: Delta Air Lines, Inc.
+Added: | 2023 Form 10-K 37
+Added: MD&A - Results of Operations
+Added: Landing Fees and Other Rents.
+Added: The increase in landing fees and other rents resulted from higher rates charged by airports following extensive redevelopment projects at numerous facilities and more flights compared to 2022 that contributed to our increased capacity.
+Added: Aircraft Maintenance Materials and Outside Repairs.
+Added: Aircraft maintenance materials and outside repairs increased as we continued to invest in the operational reliability of our fleet, in particular related to engine overhauls on our B-757 aircraft, in addition to higher material costs.
+Added: Passenger Commissions and Other Selling Expenses.
+Added: The increase in passenger revenue in 2023, compared to 2022, directly led to increased passenger commissions and selling expenses.
+Added: Passenger Service.
+Added: Passenger service expenses increased compared to 2022 due to higher volume-related expenses associated with increased traffic.
Profit Sharing.
1 unchanged sentence
Our profit sharing program pays 10% to all eligible employees for the first $2.5 billion of annual profit, as defined by the terms of the program, and 20% of annual profit above $2.5 billion.
−Removed: 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.
−Removed: Government Grant Recognition.
−Removed: During the year ended December 31, 2021, we received a total of $6.4 billion under PSP agreements with the U.S.
−Removed: Department of the Treasury, which we were required to use exclusively for the payment of employee wages, salaries and benefits.
−Removed: The support payments included grants totaling $4.5 billion that were recognized as contra-expense in 2021 over the period that the funds were used.
−Removed: Delta Air Lines, Inc.
−Removed: | 2022 10-K 39
−Removed: MD&A - Non-Operating Results
+Added: Pilot agreement and related expenses.
+Added: In addition to the actions in salaries and related costs described above, the ratified pilot agreement also includes a provision for a one-time payment made upon ratification during 2023 of $735 million.
+Added: Additionally, we recorded adjustments to other benefit-related items of approximately $130 million.
+Added: The increase in other is primarily due to higher volume-related expenses associated with increased capacity, such as flight crew and other employee travel and incidental costs, and inflationary pressures.
Non-Operating Results
2 unchanged sentences
Interest expense, net $ (834) $ (1,029) $ 195
−Removed: Impairments and equity method results (20) (337) 317
Gain/(loss) on investments, net 1,263 (783) 2,046
Loss on extinguishment of debt (63) (100) 37
−Removed: Pension and related benefit 292 451 (159)
+Added: Pension and related (expense)/benefit (244) 292 (536)
Miscellaneous, net (35) (127) 92
−Removed: Total non-operating expense, net $ (1,747) $ (1,488) $ (259)
+Added: Total non-operating income/(expense), net $ 87 $ (1,747) $ 1,834
Interest expense, net.
Interest expense, net includes interest expense and interest income.
−Removed: This decreased as compared to 2021 as a result of our debt reduction initiatives during 2021 and 2022.
−Removed: See Note 6 of the Notes to the Consolidated Financial Statements for additional information on our debt reduction initiatives.
+Added: This decreased as compared to 2022 as a result of our reduced interest expense resulting from our debt reduction initiatives and increased interest income.
We are reducing the total amount of interest expense by pre-paying our debt in addition to periodic amortization payments and scheduled maturities.
−Removed: During 2021, we made payments of approximately $5.8 billion related to our debt and finance leases, which included approximately $3.8 billion for early repayments.
−Removed: We have continued to pay down our debt during 2022 with $4.5 billion of payments on debt and finance lease obligations, including early repayment activities of $1.5 billion of certain notes through a cash tender offer in the September 2022 quarter and $778 million in principal for the early repurchase of various secured and unsecured notes through repurchases on the open market.
+Added: During 2023, we made $4.1 billion of payments on debt and finance lease obligations, including early repayment activities of $1.4 billion in principal for the early repurchase of various secured and unsecured notes and the SkyMiles Term Loan on the open market and $585 million in early principal repayments on various notes secured by aircraft.
We will continue to seek opportunities to pre-pay our debt, in addition to periodic amortization payments and scheduled maturities, during 2024 and beyond.
−Removed: Impairments and equity method results.
−Removed: Equity method results in 2022 consist of our share of Aeroméxico's net results and in 2021 reflected our share of Virgin Atlantic's net results.
−Removed: See Note 4 of the Notes to the Consolidated Financial Statements for additional information on our equity investments.
+Added: Interest income increased as a result of higher interest rates and higher short-term investment balances throughout most of 2023.
Gain/(loss) on investments, net.
See Note 4 of the Notes to the Consolidated Financial Statements for additional information on our equity investments measured at fair value on a recurring basis.
+Added: The increase compared to 2022 is due to net unrealized gains on our equity investments during 2023, primarily Wheels Up, Hanjin-KAL and LATAM.
+Added: During 2023, we recorded a $786 million mark-to-market gain on our investment in Wheels Up based on the closing price of its shares as traded on the New York Stock Exchange.
+Added: As of December 31, 2023, Wheels Up's public float was under 5% of the total outstanding shares which contributed to significant volatility in the value of our Wheels Up equity investment since the announcement of Wheels Up's credit facility in September 2023.
+Added: Net unrealized losses on our equity investments during 2022 were primarily related to LATAM, Hanjin-KAL and Wheels Up.
+Added: Delta Air Lines, Inc.
+Added: | 2023 Form 10-K 38
+Added: MD&A - Non-Operating Results
Loss on extinguishment of debt.
Loss on extinguishment of debt reflects the losses incurred in the early repayment of debt referenced above.
−Removed: See Note 6 of the Notes to the Consolidated Financial Statements for additional information on the early repayment of debt.
−Removed: Pension and related benefit.
−Removed: Pension and related benefit reflects the net periodic benefit/(cost) of our pension and other postretirement and postemployment benefit plans.
−Removed: Based on our funded status as of December 31, 2021, we modified the strategic asset allocation mix in 2022 to reduce the investment risk of the portfolio.
−Removed: Based on the portfolio's risk profile, we lowered the weighted average expected long-term rate of return on our defined benefit pension plan assets for 2022 net periodic benefit cost to 7.00%.
+Added: Pension and related (expense)/benefit.
+Added: Pension and related (expense)/benefit reflects the net periodic (cost)/benefit of our pension and other postretirement and postemployment benefit plans.
See Note 9 of the Notes to the Consolidated Financial Statements for additional information on our employee benefit plans.
Miscellaneous, net.
−Removed: Miscellaneous, net primarily includes charitable contributions and foreign exchange gains/(losses).
−Removed: Delta Air Lines, Inc.
−Removed: | 2022 10-K 40
−Removed: MD&A - Income Taxes
+Added: Miscellaneous, net primarily includes our share of net results from our equity method investments, charitable contributions and foreign exchange gains/(losses).
+Added: See Note 4 of the Notes to the Consolidated Financial Statements for additional information on our equity investments.
Our effective tax rate for 2023 was 18%.
−Removed: We expect our annual effective tax rate to be between 23% and 26% for 2023.
Our effective tax rate in 2023 was impacted by mark-to-market adjustments on our equity investments which are considered capital assets for tax purposes.
−Removed: As of December 31, 2022 , w e had approximately $5.4 billion of U.S.
−Removed: 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.
−Removed: Under current tax law, the remaining net operating loss carryforwards do not expire.
−Removed: The Inflation Reduction Act ("IRA") was enacted into law on August 16, 2022.
−Removed: Included in the IRA was a provision to implement a 15% corporate alternative minimum tax on corporations whose average annual adjusted financial statement income during the most recently-completed three-year period exceeds $1.0 billion.
−Removed: This provision is effective for tax years beginning after December 31, 2022.
−Removed: We are in the process of evaluating the provisions of the IRA, but we do not currently believe the IRA will have a material impact on our reported results, cash flows or financial position.
+Added: As of December 31, 2023, we had approximately $4.5 billion of U.S.
+Added: federal pre-tax net operating loss carryforwards which we are expecting to utilize by the end of 2025.
+Added: Approximately $800 million of these net operating loss carryforwards were generated prior to 2018 and will not begin to expire until 2029, while the remaining net operating loss carryforwards do not expire.
+Added: We expect our annual effective tax rate to be between 23% and 25% for 2024.
+Added: In certain interim periods, we may have adjustments to our net deferred tax assets as a result of changes in prior year estimates, mark-to-market adjustments on our equity investments and tax laws enacted during the period, which will impact the effective tax rate for that period.
For more information about our income taxes, see Note 11 of the Notes to the Consolidated Financial Statements.
2 unchanged sentences
Monroe has agreements in place to exchange the non-jet fuel products the refinery produces with third parties for jet fuel consumed in our airline operations.
−Removed: The jet fuel produced and procured through exchanging gasoline and diesel fuel produced by the refinery provided approximately 200,000 barrels per day, or approximately 75% of our pre-COVID-19 pandemic consumption, for use in our airline operations.
+Added: The jet fuel produced and procured through exchanging gasoline and diesel fuel produced by the refinery typically provides approximately 200,000 barrels per day, or approximately 75% of our consumption, for use in our airline operations.
+Added: Between mid-September 2023 and mid-November 2023, the refinery completed a turnaround and did not produce any refined products during this time.
+Added: The turnaround was in accordance with the long-term maintenance plan for the facility to allow for the safe completion of major repairs and upgrades.
Refinery segment financial information
−Removed: Year Ended December 31,
−Removed: (in millions, except per gallon data) 2022 2021 % Increase (Decrease) (1)
+Added: Year Ended December 31, % Increase (Decrease)
+Added: (in millions, except per gallon data) 2023 2022
Exchange products $ 2,354 $ 3,475 (32) %
3 unchanged sentences
Operating revenue $ 7,572 $ 10,706 (29) %
−Removed: Operating income (loss) $ 777 $ (2) NM
−Removed: Refinery segment impact on average price per fuel gallon $ (0.23) $ — NM
−Removed: (1) Certain variances are labeled as not meaningful ("NM").
−Removed: Refinery revenues increased from $6.1 billion in 2021 to $10.7 billion in 2022, primarily driven by the increase in third-party refinery sales and sales to the airline segment.
−Removed: The increase in third-party refinery sales resulted from higher pricing and production during 2022 compared to 2021.
−Removed: The refinery recorded an operating loss of $2 million in 2021 compared to operating income of $777 million in 2022 mainly due to the increased production and pricing, partially offset by higher Renewable Identification Numbers ("RINs") compliance costs discussed below.
−Removed: 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.
−Removed: Alternatively, a refinery may purchase RINs from third parties in the secondary market.
−Removed: The Monroe refinery purchases the majority of its RINs in the secondary market.
+Added: Operating income $ 385 $ 777 (50) %
+Added: Refinery segment impact on average price per fuel gallon $ (0.10) $ (0.23) (57) %
+Added: Refinery revenues decreased in 2023, primarily driven by the decrease in exchange products and third-party refinery sales.
+Added: These decreases resulted from lower pricing and the turnaround, which was completed between September and November 2023.
+Added: The refinery operating income decreased in 2023 mainly due to lower pricing and the turnaround.
+Added: Delta Air Lines, Inc.
+Added: | 2023 Form 10-K 39
+Added: MD&A - Refinery Segment
+Added: A refinery is subject to annual EPA requirements to blend renewable fuels into the gasoline and on-road diesel fuel it produces.
+Added: A refinery may meet its obligation by blending the necessary volumes of renewable fuels, by purchasing RINs in the open market or through a combination of blending and purchasing RINs.
+Added: Because Monroe is able to blend only a small amount of renewable fuels, it must purchase the majority of its RINs requirement in the secondary market.
Monroe incurred $323 million in RINs compliance costs during 2023, compared to $576 million incurred in 2022.
−Removed: Observable RINs prices increased through the first half of 2022 and remained at these higher rates through the second half of the year.
−Removed: At December 31, 2022, we had a net fair value obligation related to RINs of $226 million.
−Removed: Our obligation as of December 31, 2022 was calculated using the U.S.
−Removed: EPA Renewable Fuel Standard ("RFS") volume requirements, which were finalized in the June 2022 quarter.
−Removed: During the December 2022 quarter, we retired our 2020 RINs assets to settle our 2020 obligations prior to the compliance deadline.
−Removed: We expect to settle our 2021 and 2022 obligations in the first half of 2023.
+Added: Observable RINs prices declined during 2023 and we acquired RINs assets to satisfy substantially all of our 2023 RINs obligation.
+Added: During 2023, we retired approximately $700 million of our 2021 and 2022 RINs assets to settle our 2021 and 2022 obligations prior to the compliance deadlines.
For more information regarding the refinery's results, see Note 14 of the Notes to the Consolidated Financial Statements.
−Removed: Delta Air Lines, Inc.
−Removed: | 2022 10-K 41
−Removed: MD&A - Operating Statistics
Operating Statistics
1 unchanged sentence
Consolidated (1)
−Removed: 2022 2021 2019
Revenue passenger miles (in millions) 232,241 195,480
17 unchanged sentences
(2) Non-GAAP financial measures are defined and reconciled to TRASM, CASM and average fuel price per gallon, respectively, in "Supplemental Information" below.
−Removed: (3) Includes the impact of refinery segment results, carbon offset costs and fuel hedge activity.
+Added: (3) Includes the impact of refinery segment results and fuel hedge activity.
Delta Air Lines, Inc.
−Removed: | 2022 10-K 42
+Added: | 2023 Form 10-K 40
MD&A - Financial Condition and Liquidity
6 unchanged sentences
Operating activities in 2023 provided $6.5 billion of cash flow compared to $6.4 billion in 2022.
−Removed: Operating activities in 2021 included $4.5 billion in funds received from payroll support program grants.
−Removed: We expect to continue generating positive cash flows from operations during 2023.
+Added: We expect to continue generating cash flows from operations during 2024.
Our operating cash flow is impacted by the following factors:
3 unchanged sentences
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.
−Removed: 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.
−Removed: However, demand improved during 2022 as consumers regained confidence to travel and increased ticket purchases for travel further in advance.
−Removed: As a result, air traffic liability began returning to the usual seasonal trend in 2022.
Fuel expense represented approximately 21% of our total operating expense during 2023.
The market price for jet fuel is volatile, which can impact the comparability of our periodic cash flows from operations.
−Removed: The average fuel price per gallon increased substantially in 2022.
−Removed: While prices have recently moderated, we expect elevated jet fuel prices in comparison to historical levels to continue during the beginning of 2023 due to current market conditions, further exacerbated by geopolitical events.
−Removed: As capacity and demand increased throughout the year, fuel consumption was higher in 2022 than 2021 as well.
−Removed: We expect that fuel consumption will continue to increase throughout 2023 as we return to pre-pandemic levels of capacity, partially offset by increases in the fuel efficiency of our fleet.
+Added: The average fuel price per gallon decreased in 2023.
+Added: We expect elevated jet fuel prices in comparison to historical levels to continue during the beginning of 2024 due to current market conditions, further exacerbated by geopolitical events.
+Added: As capacity increased throughout the year, fuel consumption was higher in 2023 than 2022 as well.
+Added: We expect fuel consumption to increase in 2024 aligned with capacity, partially offset by improvements in the fuel efficiency of our fleet.
We expect our commitment to environmental sustainability to depend on increased use of SAF, which is not presently available at scale or at prices competitive to jet fuel.
2 unchanged sentences
We sponsor defined benefit pension plans for eligible employees and retirees.
−Removed: These plans are closed to new entrants and are frozen for future benefit accruals.
+Added: These plans are generally closed to new entrants and are frozen for future benefit accruals.
Our funding obligations for these plans are governed by the Employee Retirement Income Security Act ("ERISA") and any applicable legislation.
−Removed: We had no minimum funding requirements in 2021 or 2022, and have no such requirements in 2023.
−Removed: However, we voluntarily contributed $1.5 billion to these plans during 2021.
−Removed: At this level of funding, investment returns are expected to satisfy future benefit payments, which we believe would eliminate further material voluntary or required cash contributions to the plans under the terms of ERISA.
−Removed: Further, based on this level of funding, we have modified, and continue to evaluate, the asset allocation mix to reduce the investment risk of the portfolio.
+Added: We had no minimum funding requirements in 2023, and have no such requirements in 2024.
+Added: At the current level of funding, plan assets and investment returns are expected to satisfy a majority of future benefit payments.
Estimates of future funding requirements are based on various assumptions and could vary materially from actual funding requirements.
2 unchanged sentences
See Note 9 of the Notes to the Consolidated Financial Statements for more information on our employee benefit obligations.
−Removed: Delta Air Lines, Inc.
−Removed: | 2022 10-K 43
−Removed: MD&A - Financial Condition and Liquidity
−Removed: Voluntary Separation Programs.
−Removed: In 2020, we recorded a $3.4 billion charge associated with voluntary early retirement and separation programs and other employee benefit charges.
−Removed: 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.
−Removed: We anticipate that a total of approximately $300 million in cash payments will be made to participants in the voluntary separation programs in 2023 and the remaining payments in 2024 and beyond.
Profit Sharing.
2 unchanged sentences
We pay profit sharing annually in February.
−Removed: To recognize the extraordinary efforts of our employees through the pandemic, we made a special profit-sharing payment of $108 million to eligible employees in February 2022, based on the adjusted pre-tax profit earned during the second half of 2021.
−Removed: During the year ended December 31, 2022, we recorded $563 million in profit sharing expense based on 2022 pre-tax profit, which we will pay to employees in February 2023.
+Added: We paid $563 million in 2023 to our employees in recognition of their contributions toward meeting our financial goals.
+Added: During the year ended December 31, 2023, we recorded $1.4 billion in profit sharing expense based on 2023 pre-tax profit, which we will pay to employees in February 2024.
+Added: Delta Air Lines, Inc.
+Added: | 2023 Form 10-K 41
+Added: MD&A - Financial Condition and Liquidity
Contract Carrier Obligations.
1 unchanged sentence
These minimum amounts are based on the required minimum levels of flying by the regional carriers under the respective agreements and assumptions regarding the costs associated with such minimum levels of flying.
−Removed: As of December 31, 2022 the total of these minimum amounts was $10.6 billion and are approximately $1.6 billion on an annual basis over the next five years.
+Added: As of December 31, 2023 the total of these minimum amounts was $8.8 billion and range from approximately $1.3 billion to $1.6 billion on an annual basis over the next five years.
See Note 10 of the Notes to the Consolidated Financial Statements for more information on our contract carrier obligations.
5 unchanged sentences
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").
−Removed: We have a long-term agreement with IAT to sublease space in Terminal 4 through 2043 ("Sublease").
+Added: We have a long-term agreement with IAT to sublease space in Terminal 4 through 2043.
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.
−Removed: The project will add 10 new gates and other complementary facilities, including an additional Delta Sky Club and a new Delta One lounge.
+Added: The project is adding 10 new gates and other complementary facilities, including an additional Delta Sky Club and a new Delta premium 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.
−Removed: Construction started in late 2021 and Delta's portion of the project is estimated to be complete by early 2024.
−Removed: In 2022, we amended our Sublease to provide for the expansion project, including the adjustment of our subleased space and rentals.
−Removed: We have recognized a right-of-use ("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.
−Removed: As of December 31, 2022, our lease liability related to this Sublease was $2.3 billion.
−Removed: See Note 7 of the Notes to the Consolidated Financial Statements for more information on our ROU assets and lease liabilities.
+Added: Construction started in late 2021 and in 2023 we substantially completed a majority of Delta's portion of the project and consolidated all operations to Terminal 4.
Other Obligations.
We have certain purchase obligations under which we are required to make minimum payments for goods and services, including, but not limited to, aviation-related, maintenance, insurance, marketing, technology, sponsorships and other third-party services and products.
−Removed: As of December 31, 2022, we had approximately $8.6 billion of such obligations, which range from approximately $350 million to $900 million on an annual basis over the next five years.
−Removed: Delta Air Lines, Inc.
−Removed: | 2022 10-K 44
−Removed: MD&A - Financial Condition and Liquidity
+Added: As of December 31, 2023, we had approximately $9.2 billion of such obligations, which range from approximately $300 million to $1.1 billion on an annual basis over the next five years.
Investing Activities
Short-Term Investments.
−Removed: In 2022 we redeemed a net of $100 million in short-term investments.
+Added: In 2023, we redeemed a net of $2.2 billion in short-term investments.
See Note 1 and Note 3 of the Notes to the Consolidated Financial Statements for further information on these investments.
9 unchanged sentences
As part of the terminal redevelopment project at LaGuardia Airport, we are partnering with the Port Authority to replace Terminals C and D with a new state-of-the-art terminal facility consisting of 37 gates across four concourses connected to a central headhouse.
−Removed: The terminal will feature a new, larger Delta Sky Club, wider concourses, more gate seating and nearly double the amount of concessions space than the existing terminals.
−Removed: The facility will also offer direct access between the parking garage and terminal and improved roadways and drop-off/pick-up areas.
+Added: The completed terminal redevelopment features a new, larger Delta Sky Club, wider concourses, more gate seating and nearly double the amount of concessions space than the prior terminals.
+Added: The completed facility also offers direct access between the parking garage and terminal and improved roadways and drop-off/pick-up areas.
Construction is underway and is being phased to limit passenger inconvenience.
−Removed: Due to an acceleration effort that commenced in 2020, completion is expected by 2025.
−Removed: In 2019, we opened Concourse G, the first of four new concourses, housing seven of the 37 new gates.
−Removed: 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.
−Removed: Additionally, we opened four of 12 planned new gates on Concourse F.
+Added: We have opened Concourse E, Concourse G, the headhouse (including the Delta Sky Club), the terminal roadways and portions of Concourse D and Concourse F.
+Added: Due to an acceleration effort that commenced in 2020, substantial completion is expected by the end of 2024.
+Added: Delta Air Lines, Inc.
+Added: | 2023 Form 10-K 42
+Added: MD&A - Financial Condition and Liquidity
In connection with the redevelopment, during 2017, we entered into an amended and restated terminal lease with the Port Authority with a term through 2050.
−Removed: 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.
−Removed: The project is expected to cost $4.3 billion.
+Added: Pursuant to the lease agreement, as amended to date, we (1) are funding (through debt issuance and existing cash) and undertaking the design, management and construction of the terminal and certain off-premises supporting facilities, (2) are receiving a Port Authority contribution of approximately $500 million to facilitate construction of the terminal and other supporting infrastructure, (3) will be responsible for all operations and maintenance during the term of the lease and (4) will have preferential rights to all gates in the terminal subject to Port Authority requirements with respect to accommodation of designated carriers.
+Added: The project is expected to cost $4.3 billion and the total amount spent to date is approximately $3.7 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.
We entered into loan agreements to fund a portion of the construction, which are recorded on our Consolidated Balance Sheets ("balance sheets") as debt with the proceeds reflected as restricted cash.
−Removed: 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.
+Added: Using funding primarily provided by these arrangements, we spent approximately $500 million, $650 million and $950 million during 2023, 2022 and 2021, respectively.
We expect to spend approximately $500 million during 2024.
+Added: See Note 6 of the Notes to the Consolidated Financial Statements for additional information on the debt related to the redevelopment project, including the $878 million of NYTDC Special Facilities Revenue Bonds, Series 2023 issued during 2023.
Los Angeles International Airport ("LAX") Construction.
2 unchanged sentences
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.
−Removed: Delta Air Lines, Inc.
−Removed: | 2022 10-K 45
−Removed: MD&A - Financial Condition and Liquidity
The project is expected to cost approximately $2.4 billion.
1 unchanged sentence
The credit facility was executed in 2017 and we have guaranteed the obligations of the RAIC under the credit facility.
−Removed: The revolving credit facility agreement was most recently amended in January 2023, decreasing the revolver capacity from $800 million to $700 million.
+Added: During 2023, the revolving credit facility agreement was amended and the revolver capacity was reduced to $626 million.
Loans made under the credit facility are being repaid with the proceeds from the City’s purchase of completed project assets.
1 unchanged sentence
Costs incurred in excess of the $1.8 billion maximum will not be reimbursed by the City.
−Removed: 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.
−Removed: Given reduced passenger volumes resulting from the COVID-19 pandemic, we accelerated the construction schedule for this project in 2020.
−Removed: 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.
−Removed: 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.
−Removed: Construction is expected to be completed in 2023.
−Removed: Equity Investments.
−Removed: To support our international presence, during 2022 we invested an aggregate amount of $757 million in Grupo Aeroméxico and LATAM as each carrier emerged from restructuring processes.
−Removed: Upon completion of their respective processes, we received a 20% equity stake in Grupo Aeroméxico and a 10% equity stake in LATAM.
−Removed: See Note 4 of the Notes to the Consolidated Financial Statements for additional information on our equity investments
+Added: We currently expect our net project costs to be approximately $600 million, of which approximately $350 million has been reflected as investing activities and approximately $200 million as operating activities in our cash flows statement since the project started in 2017.
+Added: 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.
+Added: In 2023, we substantially completed all construction for this project.
+Added: We announced an expanded strategic partnership with Wheels Up, which included an agreement for a new credit facility to Wheels Up.
+Added: This new credit facility is comprised of a $390 million term loan, of which we contributed $150 million and several other lenders contributed the remaining $240 million, and a $100 million liquidity facility that we made available to Wheels Up in the event the company's liquidity falls below $100 million.
+Added: Our $150 million cash contribution was reflected as an investing outflow in our cash flows statement.
Financing Activities
Debt and Finance Leases.
−Removed: In 2022, we had cash outflows of approximately $4.5 billion related to repayments of our debt and finance leases, including approximately $2.3 billion for the early repayment of certain notes through a cash tender offer and other various secured and unsecured notes.
+Added: In 2023, we had cash outflows of approximately $4.1 billion related to repayments of our debt and finance leases, including early repayment activities of $1.4 billion in principal for the repurchase of various secured and unsecured notes and the SkyMiles Term Loan through repurchases on the open market and $585 million in early principal repayments on various notes secured by aircraft.
We will continue to seek opportunities to pre-pay our debt, in addition to periodic amortization payments and scheduled maturities, during 2024 and beyond.
−Removed: See Note 6 of the Notes to the Consolidated Financial Statements for additional information on recent repayment activity.
+Added: In the March 2023 quarter, both Fitch and S&P credit rating agencies upgraded our debt rating outlooks to stable and positive, respectively.
+Added: In the September 2023 quarter, S&P upgraded our credit rating to BB+.
The principal amount of our debt and finance leases was $20.1 billion at December 31, 2023.
+Added: Delta Air Lines, Inc.
+Added: | 2023 Form 10-K 43
+Added: MD&A - Financial Condition and Liquidity
Future Debt Obligations.
2 unchanged sentences
In addition, we are obligated to make periodic interest payments at fixed and variable rates, depending on the terms of the applicable debt agreements.
−Removed: Based on applicable interest rates and scheduled debt maturities as of December 31, 2022, these interest obligations total approximately $4.6 billion and range from approximately $350 million to $1.0 billion on an annual basis over the next five years.
−Removed: In addition to payment of scheduled debt maturities, we expect to continue paying down our debt in 2023, and therefore reduce our future interest obligations.
+Added: Based on applicable interest rates and scheduled debt maturities as of December 31, 2023, these interest obligations total approximately $4.0 billion and range from approximately $300 million to $800 million on an annual basis over the next five years.
+Added: We will continue to seek opportunities to pre-pay our debt, in addition to periodic amortization payments and scheduled maturities, during 2024 and beyond.
Finance Lease Obligations.
1 unchanged sentence
These minimum lease payments range from approximately $200 million to $400 million on an annual basis over the next five years.
+Added: Capital Returns to Shareholders.
+Added: During 2023, we re-instated our quarterly dividend program with $0.10 per share payments in both the September 2023 and December 2023 quarters, resulting in total dividend payments during the year ended December 31, 2023 of $128 million.
+Added: On February 8, 2024, the Board of Directors approved and we will pay a quarterly dividend of $0.10 per share on March 18, 2024 to shareholders of record as of February 26, 2024.
Undrawn Lines of Credit.
4 unchanged sentences
Delta Air Lines, Inc.
−Removed: | 2022 10-K 46
+Added: | 2023 Form 10-K 44
MD&A - Critical Accounting Estimates
6 unchanged sentences
Our SkyMiles loyalty program generates customer loyalty by rewarding customers with incentives to travel on Delta.
−Removed: This program allows customers to earn mileage credits ("miles") by flying on Delta, Delta Connection carriers and other airlines that participate in the loyalty program.
+Added: This program allows customers to earn miles by flying on Delta, Delta Connection carriers and other airlines that participate in the loyalty program.
When traveling, customers earn miles primarily based on the passenger's loyalty program status, fare class and ticket price.
−Removed: Customers can also earn miles through participating companies such as credit card companies, hotels, car rental agencies and ridesharing companies.
−Removed: Miles are redeemable by customers in future periods for air travel on Delta and other participating airlines, access to our Sky Club and other program awards.
−Removed: To facilitate transactions with participating companies, we sell miles to non-airline businesses, customers and other airlines.
+Added: Customers can also earn miles through participating companies.
+Added: Miles are redeemable by customers in future periods for air travel on Delta and other participating airlines, access to Delta Sky Club and other program awards.
+Added: To facilitate transactions with participating companies, we sell miles to non-airline businesses and other airlines.
The loyalty program includes two types of transactions that are considered revenue arrangements with multiple performance obligations (1) passenger ticket sales earning miles and (2) sale of miles to participating companies.
13 unchanged sentences
Sale of Miles to Participating Companies.
−Removed: Customers earn miles based on their spending with participating companies such as credit card companies, hotels, car rental agencies and ridesharing companies with which we have marketing agreements to sell miles.
+Added: Customers earn miles based on their spending with participating companies, such as credit card, retail, ridesharing, car rental and hotel companies, with which we have marketing agreements to sell miles.
Our contracts to sell miles under these marketing agreements have multiple performance obligations.
−Removed: Payments are typically due to us monthly based on the volume of miles sold during the period, and the initial terms of our marketing contracts are from three to eleven years.
+Added: Payments are typically due to us monthly based on the volume of miles sold during the period, and the initial terms of our marketing contracts are from one to thirteen years.
During the years ended December 31, 2023, 2022 and 2021, total cash sales from marketing agreements related to our loyalty program were $6.9 billion, $5.7 billion and $4.1 billion, respectively, which are allocated to travel and other performance obligations, as discussed below.
5 unchanged sentences
Delta Air Lines, Inc.
−Removed: | 2022 10-K 47
+Added: | 2023 Form 10-K 45
MD&A - Critical Accounting Estimates
4 unchanged sentences
Revenue allocated to services performed in conjunction with a passenger’s flight, such as baggage fee waivers, is recognized as travel-related services in passenger revenue when the related service is performed.
−Removed: Revenue allocated to access Delta Sky Club lounges is recognized as miscellaneous in other revenue as access is provided.
+Added: Revenue allocated to Delta Sky Club lounge access is recognized as miscellaneous in other revenue as access is provided.
Revenue allocated to the remaining performance obligations, primarily brand value, is recorded as loyalty program in other revenue as miles are delivered.
5 unchanged sentences
We defer sales of passenger tickets to be flown by us or that we sell on behalf of other airlines in our air traffic liability.
−Removed: Passenger revenue is recognized when we provide transportation or when the ticket expires unused ("ticket breakage").
+Added: Passenger revenue is recognized when we provide transportation.
For tickets that we sell on behalf of other airlines, we reduce the air traffic liability when consideration is remitted to those airlines.
−Removed: The air traffic liability primarily includes sales of passenger tickets with scheduled departure dates in the future and credits which can be applied as payment toward the cost of a ticket ("travel credits").
−Removed: Travel credits are typically issued as a result of ticket cancellations prior to their expiration dates.
+Added: The air traffic liability primarily includes sales of passenger tickets with scheduled departure dates in the future and travel credits, which can be applied as payment toward the cost of a ticket.
We periodically evaluate the estimated air traffic liability and may record adjustments in our Consolidated Statement of Operations ("income statement").
−Removed: 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.
−Removed: During the COVID-19 pandemic, we experienced significant ticket cancellations, particularly in the early months of 2020.
−Removed: Delta has eliminated change fees for tickets originating in the United States, Canada, Europe and Africa (excluding Basic Economy tickets).
−Removed: 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.
+Added: These adjustments relate primarily to tickets that expire unused ("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 estimate the value of ticket breakage and recognize revenue at the scheduled flight date.
Our ticket breakage estimates are primarily based on historical experience, ticket contract terms and customers’ travel behavior.
−Removed: Given the impact of the COVID-19 pandemic on customer behavior and changes made in ticket validity terms, as well as the elimination of change fees for most tickets, our estimates of revenue that will be recognized from the air traffic liability for unused tickets may vary in future periods.
At December 31, 2023, the aggregate air traffic liability balance was $7.0 billion.
−Removed: A hypothetical 10% change in the amount of travel credits estimated to expire unused would result in an impact of less than 1% of total operating revenue for the year ended December 31, 2022.
+Added: A hypothetical 10% change in the amount of tickets estimated to expire unused would result in an impact of less than 1% of total operating revenue for the year ended December 31, 2023.
For additional information on our significant accounting policies related to passenger ticket sales, see Note 2 of the Notes to the Consolidated Financial Statements.
−Removed: Delta Air Lines, Inc.
−Removed: | 2022 10-K 48
−Removed: MD&A - Critical Accounting Estimates
−Removed: Long-Lived Assets
−Removed: Our long-lived lived assets, including flight equipment, which consists of aircraft and associated engines and parts, operating ROU assets and other long-lived assets, which have a recorded value of approximately $40.1 billion at December 31, 2022, are recorded in property and equipment, net and operating lease right-of-use assets on our balance sheets.
−Removed: This value is based on various factors, including the assets' acquisition costs, estimated useful lives, salvage values, discounted lease payments and lease terms.
−Removed: We review flight equipment, ROU assets and other long-lived assets used in operations for impairment losses when events and circumstances indicate the assets may be impaired.
−Removed: Factors which could be indicators of impairment include, but are not limited to (1) a decision to permanently remove flight equipment or other long-lived assets from operations, (2) significant changes in the estimated useful life, (3) significant changes in projected cash flows, (4) permanent and significant declines in fleet fair values and (5) changes to the regulatory environment.
−Removed: 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.
−Removed: 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.
−Removed: If an asset group is impaired, the impairment loss recognized is the amount by which the asset group's carrying amount exceeds its estimated fair value.
−Removed: We estimate aircraft fair values using published sources, appraisals and bids received from third parties, as available.
−Removed: 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.
−Removed: We 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.
−Removed: This resulted in impairment and other related charges of $4.4 billion during 2020, recorded in restructuring charges in our income statement.
−Removed: 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.
−Removed: The effects of the COVID-19 pandemic created additional estimation uncertainty as there was a limited market for aircraft and limited data on how the COVID-19 pandemic affected the fair value of aircraft.
−Removed: 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.
−Removed: We recorded no further impairments during 2021 or 2022.
−Removed: Following the impairment charges, the aggregate net book value of these aircraft as of December 31, 2022 and December 31, 2021 was approximately $220 million and $340 million, respectively, with the reduction in 2022 primarily due to aircraft sales.
−Removed: See Note 15 of the Notes to the Consolidated Financial Statements for additional details regarding these impairments and related charges.
Goodwill and Indefinite-Lived Intangible Assets
5 unchanged sentences
Under a quantitative approach, we calculate the fair value of the asset incorporating the key assumptions listed below into our calculation.
−Removed: When we evaluate goodwill for impairment using a quantitative approach, we estimate the fair value of the reporting unit by considering both comparable public company multiples (a market approach) and projected discounted future cash flows (an income approach).
−Removed: When we perform a quantitative impairment assessment of our indefinite-lived intangible assets, fair value is estimated based on (1) recent market transactions, where available, (2) the royalty method for the Delta tradename (which assumes hypothetical royalties generated from using our tradename) or (3) projected discounted future cash flows (an income approach).
Delta Air Lines, Inc.
−Removed: | 2022 10-K 49
+Added: | 2023 Form 10-K 46
MD&A - Critical Accounting Estimates
+Added: When we evaluate goodwill for impairment using a quantitative approach, we estimate the fair value of the reporting unit by considering both comparable public company multiples (a market approach) and projected discounted future cash flows (an income approach).
+Added: When we perform a quantitative impairment assessment of our indefinite-lived intangible assets, fair value is estimated based on (1) recent market transactions, where available, (2) the royalty method for the Delta tradename (which assumes hypothetical royalties generated from using our tradename) or (3) projected discounted future cash flows (an income approach).
Key Assumptions.
−Removed: The key assumptions in our impairment tests include (1) forecasted revenues, expenses and cash flows, including the duration and extent of impact to our business and our alliance partners from the COVID-19 pandemic, (2) current discount rates, (3) observable market transactions and (4) anticipated changes to the regulatory environment (e.g., changes in slot access and/or availability, additional Open Skies agreements or changes to antitrust approvals).
+Added: The key assumptions in our impairment tests include (1) forecasted revenues, expenses and cash flows, (2) current discount rates, (3) observable market transactions and (4) anticipated changes to the regulatory environment (e.g., changes in slot access and/or availability, additional Open Skies agreements or changes to antitrust approvals).
These assumptions are consistent with those that hypothetical market participants would use.
3 unchanged sentences
Factors which could cause impairment include, but are not limited to (1) negative trends in our market capitalization, (2) reduced profitability resulting from lower passenger mile yields or higher input costs (primarily related to fuel and employees), (3) lower passenger demand as a result of weakened U.S.
−Removed: and global economies, global pandemics or other factors, (4) interruption to our operations due to a prolonged employee strike, terrorist attack or other reasons, (5) changes to the regulatory environment (e.g., changes in slot access and/or availability, additional Open Skies agreements or changes to antitrust approvals), (6) competitive changes by other airlines and (7) strategic changes to our operations leading to diminished utilization of the intangible assets.
+Added: and global economies or other factors, (4) interruption to our operations due to a prolonged employee strike, terrorist attack or other reasons, (5) changes to the regulatory environment (e.g., changes in slot access and/or availability, additional Open Skies agreements or changes to antitrust approvals), (6) competitive changes by other airlines and (7) strategic changes to our operations leading to diminished utilization of the intangible assets.
Our goodwill balance, which is related to the airline segment, was $9.8 billion at December 31, 2023.
3 unchanged sentences
Definite-lived assets consist primarily of marketing and maintenance service agreements.
−Removed: In the September 2022 quarter, final regulatory approval was granted for our trans-American joint venture agreement with LATAM.
−Removed: 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.
−Removed: Approval was granted for a 10-year period with a subsequent reassessment and extension process.
−Removed: This agreement supports our strategic partnership with LATAM and the value of our $1.2 billion alliance-related indefinite-lived intangible asset.
−Removed: We believe the LATAM joint venture agreement will generate growth opportunities, building upon Delta's and LATAM's global footprint.
−Removed: 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.
−Removed: and foreign carriers that have been cleared by competition authorities in relevant foreign jurisdictions and granted antitrust immunity from the U.S.
−Removed: Department of Transportation ("DOT").
−Removed: Antitrust immunity grants are generally subject to reporting requirements and periodic reassessment processes administered by the DOT.
−Removed: 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.
−Removed: In 2022, we performed qualitative assessments of our goodwill and indefinite-lived intangible assets, including applicable factors noted in "Key Assumptions" above, and determined that there was no indication that the assets were impaired.
−Removed: Our qualitative assessments include analyses and weighting of all relevant factors which impact the fair value of our indefinite-lived intangible assets.
+Added: In 2023, we performed quantitative assessments of our goodwill and indefinite-lived intangible assets, including applicable factors noted in "Key Assumptions" above, and determined that there was no indication that the assets were impaired as the fair value of each asset exceeded its carrying value by at least 20%.
+Added: Assumptions are sensitive to uncertainty about future events, the macroeconomic environment and other market-based risk factors.
+Added: A change in key assumptions such as the discount rate or projected future revenues, expenses and cash flows could materially affect the determination of fair values.
+Added: Management evaluated estimates and assumptions used in the valuations, considering market and industry-specific conditions.
For additional information on our goodwill and indefinite-lived intangible assets' significant accounting policies and the related fair values and book values, see Note 5 of the Notes to the Consolidated Financial Statements.
1 unchanged sentence
We sponsor defined benefit pension plans for eligible employees and retirees.
−Removed: These plans are closed to new entrants and frozen for future benefit accruals.
−Removed: As of December 31, 2022, the unfunded benefit obligation for these plans recorded on our balance sheets was $90 million.
−Removed: We had no minimum funding requirements in 2021 or 2022, and have no such requirements in 2023.
−Removed: However, we voluntarily contributed $1.5 billion to these plans during 2021.
−Removed: The most critical assumptions impacting our defined benefit pension plan obligations, plan assets and net periodic benefit cost are the discount rate, the expected long-term rate of return on plan assets and life expectancy of plan participants.
+Added: These plans are generally closed to new entrants and frozen for future benefit accruals.
+Added: As of December 31, 2023, the unfunded benefit obligation for these plans recorded on our balance sheets was $145 million, which is the net of our benefit obligation of $15.9 billion and plan assets of $15.8 billion.
+Added: We had no minimum funding requirements in 2023, and have no such requirements in 2024.
+Added: The most critical assumptions impacting our defined benefit pension plan obligations, plan assets and net periodic cost/(benefit) are the discount rate, the expected long-term rate of return on plan assets and life expectancy of plan participants.
+Added: Discount Rate.
+Added: We determine our discount rate on our measurement date primarily by reference to annualized rates earned on high-quality fixed income investments and yield-to-maturity analyses specific to our estimated future benefit payments for each plan.
+Added: We used a weighted average discount rate to value the obligations of 5.31% and 5.62% at December 31, 2023 and 2022, respectively.
Delta Air Lines, Inc.
−Removed: | 2022 10-K 50
+Added: | 2023 Form 10-K 47
MD&A - Critical Accounting Estimates
−Removed: Weighted Average Discount Rate.
−Removed: We determine our weighted average discount rate on our measurement date primarily by reference to annualized rates earned on high-quality fixed income investments and yield-to-maturity analyses specific to our estimated future benefit payments.
−Removed: We used a weighted average discount rate to value the obligations of 5.62% and 2.97% at December 31, 2022 and 2021, respectively.
Expected Long-Term Rate of Return.
4 unchanged sentences
The investment strategy for our defined benefit pension plan assets is to earn a long-term return that meets or exceeds our annualized return target while taking an acceptable level of risk and maintaining sufficient liquidity to pay current benefits and other cash obligations of the plan.
−Removed: Based on our funded status as of December 31, 2021, we modified the strategic asset allocation mix in 2022 to reduce the investment risk of the portfolio.
−Removed: Based on the portfolio's risk profile, we lowered the weighted average expected long-term rate of return on our defined benefit pension plan assets for 2022 net periodic benefit cost to 7.00%.
+Added: This is achieved by investing in a globally diversified mix of public and private equity, fixed income, real assets, hedge funds and other assets and instruments.
+Added: The expected long-term rate of return on our defined benefit pension plan assets is 7.00%.
The impact of a 0.50% change in weighted average discount rate and 1.00% change in expected long-term rate of return on assets are shown in the table below:
1 unchanged sentence
Change in Assumption Effect on 2024
−Removed: Pension Benefit Cost Effect on Accrued
+Added: Pension Cost/(Benefit) Effect on Accrued
Pension Liability at
5 unchanged sentences
Life Expectancy .
−Removed: Changes in life expectancy may significantly impact our benefit obligations and future net periodic benefit cost.
−Removed: We use the Society of Actuaries ("SOA") published mortality data and other publicly available information to develop our best estimate of life expectancy.
−Removed: The SOA publishes updated mortality tables for U.S.
−Removed: plans and updated improvement scales.
−Removed: Each year we consider updates by the SOA in setting our mortality assumptions for purposes of measuring pension and other postretirement and postemployment benefit obligations.
−Removed: Our funding obligations for qualified defined benefit plans are governed by the Employee Retirement Income Security Act and any applicable legislation.
+Added: Changes in life expectancy may significantly impact our benefit obligations and future net periodic cost/(benefit).
+Added: Each year we review information published by the Society of Actuaries and other publicly available information to develop our best estimate of life expectancy for purposes of measuring pension and other postretirement and postemployment benefit obligations.
+Added: Our funding obligations for qualified defined benefit plans are governed by ERISA and any applicable legislation.
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.
9 unchanged sentences
Delta Air Lines, Inc.
−Removed: | 2022 10-K 51
+Added: | 2023 Form 10-K 48
MD&A - Critical Accounting Estimates
−Removed: Income Tax Valuation Allowance
−Removed: We periodically assess whether it is more likely than not that we will generate sufficient taxable income to realize our deferred income tax assets.
−Removed: We establish valuation allowances if it is more likely than not that we will be unable to realize our deferred income tax assets.
−Removed: In making this determination, we consider available positive and negative evidence and make certain assumptions.
−Removed: 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.
−Removed: In evaluating the likelihood of utilizing our net deferred income tax assets, the significant factors that we consider include (1) our recent history of significant profitability, (2) growth in the U.S.
−Removed: and global economies, (3) forecast of airline revenue trends, (4) estimate of future fuel prices and (5) future impact of taxable temporary differences.
−Removed: 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.
−Removed: 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.
−Removed: During 2022, we returned to profitability, as our business continued to recover from the impact of the pandemic.
−Removed: We are expecting to generate sufficient taxable income to utilize our federal net operating loss carryforwards before any expire.
−Removed: 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.
−Removed: 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.
−Removed: Our federal net operating loss carryforwards generated before 2018 do not begin to expire until 2029.
−Removed: Under current tax law, federal net operating losses generated after 2017 do not expire.
−Removed: 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.
−Removed: For additional information on our significant accounting policies related to income taxes, see Note 11 of the Notes to the Consolidated Financial Statements.
Recent Accounting Standards
5 unchanged sentences
The standard also requires certain disclosures for equity securities that are subject to contractual restrictions.
−Removed: The ASU becomes effective January 1, 2024.
−Removed: Upon adoption, we do not believe it will have a material impact on the valuation of our equity investments;
−Removed: however, we may be required to include additional disclosures to the extent we have material equity investments subject to contractual sale restrictions.
−Removed: Supplier Finance Program Obligations.
−Removed: In September 2022, the FASB issued ASU No.
−Removed: 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.
−Removed: The new standard does not affect the recognition, measurement or financial statement presentation of supplier finance program obligations.
−Removed: The ASU becomes effective January 1, 2023, except for the rollforward requirement, which becomes effective January 1, 2024.
−Removed: Upon adoption, we may be required to include additional disclosures to the extent we have material supplier finance program obligations.
+Added: The ASU becomes effective January 1, 2024, however we early adopted this standard as of December 31, 2023.
+Added: The new standard does not impact the valuation of our equity investments, but we have included the newly required disclosures related to the contractual sale restrictions associated with our investment in Wheels Up.
+Added: See Note 4 of the Notes to the Consolidated Financial Statements for additional details.
+Added: Segment Reporting.
+Added: In November 2023, the FASB issued ASU No.
+Added: 2023-07, "Segment Reporting (Topic 280):
+Added: Improvements to Reportable Segment Disclosures." This standard requires disclosure of significant segment expenses and other segment items by reportable segment.
+Added: This ASU becomes effective for annual periods beginning in 2024 and interim periods in 2025.
+Added: We are assessing the impact of this ASU and upon adoption expect that any impact would be limited to additional segment expense disclosures in the footnotes to our Consolidated Financial Statements.
+Added: Income Taxes.
+Added: In December 2023, the FASB issued ASU No.
+Added: 2023-09, "Income Taxes (Topic 740):
+Added: Improvements to Income Tax Disclosures." This standard enhances disclosures related to income taxes, including the rate reconciliation and information on income taxes paid.
+Added: This ASU becomes effective January 1, 2025.
+Added: We are assessing the impact of this ASU and upon adoption may be required to include certain additional disclosures in the footnotes to our Consolidated Financial Statements.
Delta Air Lines, Inc.
−Removed: | 2022 10-K 52
+Added: | 2023 Form 10-K 49
MD&A - Supplemental Information
4 unchanged sentences
Included below are reconciliations of non-GAAP measures used within this Form 10-K to the most directly comparable GAAP financial measures.
−Removed: These reconciliations include certain adjustments to GAAP measures, which are directly related to the impact of COVID-19 and our response.
Reconciliations below may not calculate exactly due to rounding.
−Removed: These adjustments are made to provide comparability between the reported periods, if applicable, as indicated below:
−Removed: • Restructuring charges.
−Removed: During 2020, we recorded restructuring charges of $8.2 billion for items such as fleet impairments and voluntary early retirement and separation programs following strategic business decisions in response to the COVID-19 pandemic.
−Removed: In the years ended December 31, 2022 and 2021, we recognized $124 million and $19 million, respectively, of adjustments to certain of those restructuring charges, representing changes in our estimates or the outcome of contract negotiations.
−Removed: • Government grant recognition.
−Removed: We recognized $4.5 billion of the grant proceeds from the payroll support program extensions as a contra-expense during 2021.
−Removed: We recognized the grant proceeds as contra-expense based on the periods that the funds were intended to compensate and fully used all proceeds from the payroll support program extensions during that year.
−Removed: • Special profit-sharing payment.
−Removed: This adjustment is exclusive to 2021.
−Removed: To recognize the extraordinary efforts of our employees through the pandemic, we made 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.
−Removed: This adjustment allows investors to better understand and analyze our recurring cost performance and provides a more meaningful comparison of our core operating costs to the airline industry.
−Removed: We also regularly adjust certain GAAP measures for the following items, if applicable, for the reasons indicated below:
+Added: These reconciliations include certain adjustments to GAAP measures to provide comparability between the reported periods, if applicable, as indicated below:
• MTM adjustments and settlements on hedges.
2 unchanged sentences
Settlements represent cash received or paid on hedge contracts settled during the applicable period.
−Removed: • Delta Private Jets adjustment .
−Removed: Because we combined Delta Private Jets with Wheels Up in January 2020, we have excluded the impact of Delta Private Jets from 2019 results for comparability.
+Added: • One-time pilot agreement expenses.
+Added: During 2023, Delta pilots ratified a new four-year Pilot Working Agreement effective January 1, 2023.
+Added: The agreement includes a provision for a one-time payment made upon ratification in the March 2023 quarter of $735 million.
+Added: Additionally, we recorded adjustments to other benefit-related items of approximately $130 million.
+Added: Adjusting for these expenses allows investors to better understand and analyze our core cost performance.
+Added: • Restructuring charges.
+Added: During 2020, we recorded restructuring charges for items such as fleet impairments and voluntary early retirement and separation programs following strategic business decisions in response to the COVID-19 pandemic.
+Added: During 2022, we recognized adjustments to certain of those restructuring charges, representing changes in our estimates.
• Third-party refinery sales.
6 unchanged sentences
We adjust for profit sharing because this adjustment allows investors to better understand and analyze our recurring cost performance and provides a more meaningful comparison of our core operating costs to the airline industry.
−Removed: Delta Air Lines, Inc.
−Removed: | 2022 10-K 53
−Removed: MD&A - Supplemental Information
Operating income, adjusted reconciliation
4 unchanged sentences
Adjusted for:
−Removed: Restructuring charges (124) (19) —
−Removed: Government grant recognition
MTM adjustments and settlements on hedges (52) 29
−Removed: Special profit sharing payment
−Removed: Delta Private Jets adjustment — — 3
−Removed: Operating income/(loss), adjusted
+Added: One-time pilot agreement expenses
+Added: Restructuring charges — (124)
+Added: Operating income, adjusted
$ 6,334 $ 3,566
+Added: Delta Air Lines, Inc.
+Added: | 2023 Form 10-K 50
+Added: MD&A - Supplemental Information
+Added: Total revenue, adjusted reconciliation
+Added: Year Ended December 31,
+Added: (in millions) 2023 2022
+Added: Total revenue $ 58,048 $ 50,582
+Added: Adjusted for:
+Added: Third-party refinery sales (3,379) (4,977)
+Added: Total revenue, adjusted $ 54,669 $ 45,605
Operating expense, adjusted reconciliation
3 unchanged sentences
Adjusted for:
−Removed: Restructuring charges 124 19 —
−Removed: Government grant recognition — 4,512 —
−Removed: MTM adjustments and settlements on hedges (29) (9) (14)
−Removed: Special profit sharing payment — (108) —
Third-party refinery sales (3,379) (4,977)
−Removed: Delta Private Jets adjustment — — (196)
+Added: MTM adjustments and settlements on hedges 52 (29)
+Added: One-time pilot agreement charges (864) —
+Added: Restructuring charges — 124
Operating expense, adjusted $ 48,335 $ 42,039
6 unchanged sentences
MTM adjustments and settlements on hedges 52 (29) 0.01 (0.01)
−Removed: Delta Private Jets adjustment — — (28) — — (0.01)
Total fuel expense, adjusted $ 11,121 $ 11,453 $ 2.83 $ 3.36
5 unchanged sentences
Third-party refinery sales (1.24) (2.13)
−Removed: Delta Private Jets adjustment — — (0.07)
TRASM, adjusted 20.10 ¢ 19.55 ¢
−Removed: Delta Air Lines, Inc.
−Removed: | 2022 10-K 54
−Removed: MD&A - Supplemental Information
CASM-Ex reconciliation
3 unchanged sentences
Adjusted for:
−Removed: Restructuring charges 0.05 0.01 —
−Removed: Government grant recognition — 2.32 —
−Removed: Aircraft fuel and related taxes (4.92) (2.90) (3.10)
Third-party refinery sales (1.24) (2.13)
−Removed: Special profit sharing payment — (0.06) —
+Added: Aircraft fuel and related taxes (4.07) (4.92)
Profit sharing (0.51) (0.24)
−Removed: Delta Private Jets adjustment — — (0.06)
+Added: One-time pilot agreement expenses (0.32) —
+Added: Restructuring charges — 0.05
CASM-Ex 13.17 ¢ 12.87 ¢
+Added: Delta Air Lines, Inc.
+Added: | 2023 Form 10-K 51
+Added: MD&A - Supplemental Information
Free Cash Flow
14 unchanged sentences
The adjustment is based on their original contractual purchase price or an estimate of the aircraft's fair value and provides a more meaningful view of our investing activities.
+Added: • Pilot agreement payment .
+Added: In the March 2023 quarter, Delta pilots ratified a new four-year Pilot Working Agreement effective January 1, 2023.
+Added: The agreement includes a provision for a one-time payment made upon ratification in the March 2023 quarter of $735 million.
+Added: Adjusting for this item provides investors a better understanding of our recurring free cash flow generated by our operations.
Free cash flow reconciliation
8 unchanged sentences
Financed aircraft acquisitions (461)
+Added: Pilot agreement payment 735
Free cash flow $ 2,003
Delta Air Lines, Inc.
−Removed: | 2022 10-K 55
+Added: | 2023 Form 10-K 52
MD&A - Glossary of Defined Terms
8 unchanged sentences
Free Cash Flow - A measure of net cash from operating and investing activities, adjusted for items shown above in "Supplemental Information." Represents the cash available for use for debt service or general corporate initiatives.
−Removed: Liquidity - Includes our cash and cash-like assets, including cash equivalents, short-term investments and aggregate principal amount committed and available to be drawn under our revolving credit facilities.
+Added: Liquidity - Includes our cash and cash-like assets, including cash equivalents and short-term investments, as well as aggregate principal amount committed and available to be drawn under our revolving credit facilities.
Load Factor - A measure of utilized available seating capacity calculated by dividing RPMs by ASMs for a reporting period.
11 unchanged sentences
Delta Air Lines, Inc.
−Removed: | 2022 10-K 56
+Added: | 2023 Form 10-K 53
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.