What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2024-02-12 compared with 2023-02-10 · 352 added, 449 removed, 1205 unchanged (40% of the section changed)

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Consolidated Statements of Operations for the years ended December 31, 20 2 3 , 20 2 2 and 20 21

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

Consolidated Statements of Comprehensive Income for the years ended December 31, 20 2 3 , 20 2 2 and 20 21

Consolidated Statements of Cash Flows for the years ended December 31, 20 2 3 , 20 2 2 and 20 21

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Note 1 4 - Segments

Note 15 - Government Grants and Restructuring

Note 1 6 - Earnings /(Loss) Per Share

Note 1 5 - Earnings Per Share

Delta Air Lines, Inc.

| 2022 10-K 58

| 2023 Form 10-K 55

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

Delta Air Lines, Inc.

To the Stockholders and Board of Directors of Delta Air Lines, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Delta Air Lines, Inc.

(the Company) as of December 31, 2022 and 2021, and the related consolidated statements of operations, comprehensive income/(loss), cash flows, and stockholders' equity for each of the three years in the period ended December 31, 2022, and the related notes (collectively referred to as the " consolidated financial statements " ).

(the Company) as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income, cash flows, and stockholders' equity for each of the three years in the period ended December 31, 2023, and the related notes (collectively referred to as the " consolidated financial statements " ).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with U.S.

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Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatements of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

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Critical Audit Matters

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

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

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

Delta Air Lines, Inc.

| 2022 10-K 59

Employee Benefit Plans - NAV Asset Valuation

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

Employee Benefit Plans - Net Asset Value Per Share (NAV) Asset Valuation

Description of the Matter At December 31, 2023, the fair value of the Company’s benefit plan assets measured at fair value on a recurring basis totaled $16.2 billion, of which $11.4 billion do not have a readily determinable fair value and are measured at NAV as a practical expedient.

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

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

Delta Air Lines, Inc.

| 2023 Form 10-K 56

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

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

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

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

Loyalty Program - Mileage Breakage

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

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

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

Under the Company’s loyalty program, mileage credits do not expire.

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

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

Delta Air Lines, Inc.

| 2022 10-K 60

Realizability of Deferred Tax Assets

Description of the Matter At December 31, 2022, the Company had gross deferred tax assets of $8.2 billion with a related valuation allowance of $1.2 billion, and gross deferred tax liabilities of $7.9 billion.

As discussed in Notes 1 and 11 to the consolidated financial statements, the Company records a valuation allowance based on the assessment of the realizability of the Company’s deferred tax assets.

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

Auditing management’s assessment of recoverability of deferred tax assets involved subjective estimation and complex auditor judgment in weighing the positive and negative evidence to determine whether a valuation allowance for deferred tax assets is needed.

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

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

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

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

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

In addition, we involved our tax specialists to evaluate the application of tax law in the performance of these procedures.

Additionally, we tested the completeness and accuracy of the underlying mileage data used to develop the mileage breakage estimate.

/s/ Ernst & Young LLP

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Delta Air Lines, Inc.

| 2022 10-K 61

| 2023 Form 10-K 57

Financial Statements

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Equity investments 3,457 2,128

Deferred income taxes, net 325 1,294

Other noncurrent assets 1,692 1,259

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Debt and finance leases 17,071 20,671

Noncurrent air traffic liability 100 130

Pension, postretirement and related benefits 3,601 3,707

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Noncurrent operating leases 6,468 6,866

Deferred income taxes, net 908 24

Other noncurrent liabilities 3,561 4,050

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Additional paid-in capital 11,641 11,526

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

Retained earnings 5,650 1,170

Accumulated other comprehensive loss ( 5,845 ) ( 5,801 )

Treasury stock, at cost, 10,535,033 and 9,752,872

Treasury stock, at cost, 11,224,246 and 10,535,033 shares

( 341 ) ( 313 )

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Delta Air Lines, Inc.

| 2022 10-K 62

| 2023 Form 10-K 58

Financial Statements

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Landing fees and other rents 2,563 2,181 2,019

Depreciation and amortization 2,107 1,998 2,312

Regional carrier expense 2,051 1,736 1,584

Aircraft maintenance materials and outside repairs 2,432 1,982 1,401

Depreciation and amortization 2,341 2,107 1,998

Passenger commissions and other selling expenses 2,334 1,891 953

Regional carrier expense 2,200 2,051 1,736

Passenger service 1,750 1,453 756

Profit sharing 1,383 563 108

Pilot agreement and related expenses 864 — —

Aircraft rent 532 508 430

Restructuring charges ( 124 ) ( 19 ) 8,219

Government grant recognition — — ( 4,512 )

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Total operating expense 52,527 46,921 28,013

Operating Income/(Loss) 3,661 1,886 ( 12,469 )

Non-Operating Expense:

Operating Income 5,521 3,661 1,886

Non-Operating Income/(Expense):

Interest expense, net ( 834 ) ( 1,029 ) ( 1,279 )

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

Gain/(loss) on investments, net 1,263 ( 783 ) 56

Loss on extinguishment of debt ( 63 ) ( 100 ) ( 319 )

Pension and related benefit 292 451 219

Pension and related (expense)/benefit ( 244 ) 292 451

Miscellaneous, net ( 35 ) ( 127 ) ( 397 )

Total non-operating expense, net ( 1,747 ) ( 1,488 ) ( 3,118 )

Income/(Loss) Before Income Taxes 1,914 398 ( 15,587 )

Income Tax (Provision)/Benefit ( 596 ) ( 118 ) 3,202

Net Income/(Loss) $ 1,318 $ 280 $ ( 12,385 )

Basic Earnings/(Loss) Per Share $ 2.07 $ 0.44 $ ( 19.49 )

Diluted Earnings/(Loss) Per Share $ 2.06 $ 0.44 $ ( 19.49 )

Cash Dividends Declared Per Share $ — $ — $ 0.40

Total non-operating income/(expense), net 87 ( 1,747 ) ( 1,488 )

Income Before Income Taxes 5,608 1,914 398

Income Tax Provision ( 999 ) ( 596 ) ( 118 )

Net Income $ 4,609 $ 1,318 $ 280

Basic Earnings Per Share $ 7.21 $ 2.07 $ 0.44

Diluted Earnings Per Share $ 7.17 $ 2.06 $ 0.44

The accompanying notes are an integral part of these Consolidated Financial Statements.

Delta Air Lines, Inc.

| 2022 10-K 63

| 2023 Form 10-K 59

Financial Statements

DELTA AIR LINES, INC.

Consolidated Statements of Comprehensive Income/(Loss)

Consolidated Statements of Comprehensive Income

Year Ended December 31,

(in millions) 2023 2022 2021

Net Income/(Loss) $ 1,318 $ 280 $ ( 12,385 )

Other comprehensive income/(loss):

Net Income $ 4,609 $ 1,318 $ 280

Other comprehensive income:

Net change in pension and other benefits ( 44 ) 1,329 1,908

Net change in other — — ( 66 )

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

Comprehensive Income/(Loss) $ 2,647 $ 2,188 $ ( 13,434 )

Total Other Comprehensive (Loss)/Income ( 44 ) 1,329 1,908

Comprehensive Income $ 4,565 $ 2,647 $ 2,188

The accompanying notes are an integral part of these Consolidated Financial Statements.

Delta Air Lines, Inc.

| 2022 10-K 64

| 2023 Form 10-K 60

Financial Statements

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Cash Flows From Operating Activities:

Net income/(loss) $ 1,318 $ 280 $ ( 12,385 )

Net income $ 4,609 $ 1,318 $ 280

Adjustments to reconcile net income to net cash provided by operating activities:

Restructuring charges ( 46 ) 5 4,111

Depreciation and amortization 2,341 2,107 1,998

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(Gain)/loss on fair value investments ( 1,283 ) 874 ( 38 )

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

Impairments and equity method results 20 337 2,432

Pension, postretirement and postemployment payments greater than expense ( 121 ) ( 453 ) ( 2,038 )

Changes in certain assets and liabilities:

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Other, net ( 33 ) 120 419

Net cash provided by/(used in) operating activities 6,363 3,264 ( 3,793 )

Net cash provided by operating activities 6,464 6,363 3,264

Cash Flows From Investing Activities:

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Ground property and equipment, including technology ( 1,678 ) ( 1,871 ) ( 1,651 )

Proceeds from sale-leaseback transactions — — 465

Purchase of equity investments ( 152 ) ( 870 ) —

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Cash Flows From Financing Activities:

Proceeds from short-term obligations — — 3,261

Proceeds from long-term obligations 878 — 1,902

Proceeds from sale-leaseback transactions — — 2,306

Payments on debt and finance lease obligations ( 4,071 ) ( 4,475 ) ( 5,834 )

Repurchase of common stock — — ( 344 )

Cash dividends ( 128 ) — —

Fuel card obligation — — 364

Other, net ( 73 ) ( 60 ) 80

Net cash (used in)/provided by financing activities ( 4,535 ) ( 3,852 ) 19,356

Net (Decrease)/Increase in Cash, Cash Equivalents and Restricted Cash ( 5,096 ) ( 1,486 ) 6,325

Net cash used in financing activities ( 3,394 ) ( 4,535 ) ( 3,852 )

Net Decrease in Cash, Cash Equivalents and Restricted Cash ( 78 ) ( 5,096 ) ( 1,486 )

Cash, cash equivalents and restricted cash at beginning of period 3,473 8,569 10,055

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Flight and ground equipment acquired under finance leases 31 91 1,049

Equity investments and other financings 330 — 280

Operating leases converted to finance leases 84 342 42

Equity investments and other financings — 330 —

The accompanying notes are an integral part of these Consolidated Financial Statements.

Delta Air Lines, Inc.

| 2022 10-K 65

| 2023 Form 10-K 61

Financial Statements

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Balance at January 1, 2021 647 $ — $ 11,259 $ ( 428 ) $ ( 9,038 ) 9 $ ( 259 ) $ 1,534

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

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

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

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

Net income — — — 280 — — — 280

Other comprehensive income — — — — 1,908 — — 1,908

Common stock issued for employee equity awards (1)

3 — 102 — — 1 ( 23 ) 79

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

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

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2 — 79 — — 1 ( 31 ) 48

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

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

— — — 4,609 — — — 4,609

Other comprehensive income

Dividends declared ($ 0.20 per share)

— — — ( 129 ) — — — ( 129 )

Other comprehensive loss

— — — — ( 44 ) — — ( 44 )

Common stock issued for employee equity awards (1)

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Delta Air Lines, Inc.

| 2022 10-K 66

| 2023 Form 10-K 62

Notes to the Consolidated Financial Statements

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

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

We are not the primary beneficiary of, nor do we have a controlling financial interest in, any variable interest entity.

Accordingly, we have not consolidated any variable interest entity.

We have marketing alliances with other airlines to enhance our access to domestic and international markets.

These arrangements may include codesharing, reciprocal loyalty program benefits, shared or reciprocal access to passenger lounges, joint promotions, common use of airport gates and ticket counters, ticket office co-location and other marketing agreements.

We have received antitrust immunity for certain marketing arrangements, which enables us to offer a more integrated route network and develop common sales, marketing and discount programs for customers.

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

The ASU becomes effective January 1, 2024.

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

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

Supplier Finance Program Obligations.

In September 2022, the FASB issued ASU No.

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

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

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

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

The ASU becomes effective January 1, 2024, however we early adopted this standard as of December 31, 2023.

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 Experience Inc.

("Wheels Up").

See Note 4, "Investments," for additional details.

Segment Reporting.

In November 2023, the FASB issued ASU No.

2023-07, "Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures." This standard requires disclosure of significant segment expenses and other segment items by reportable segment.

This ASU becomes effective for annual periods beginning in 2024 and interim periods in 2025.

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.

Income Taxes.

In December 2023, the FASB issued ASU No.

2023-09, "Income Taxes (Topic 740):

Improvements to Income Tax Disclosures." This standard enhances disclosures related to income taxes, including the rate reconciliation and information on income taxes paid.

This ASU becomes effective January 1, 2025.

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.

| 2022 10-K 67

| 2023 Form 10-K 63

Notes to the Consolidated Financial Statements

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

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

Our short-term investments in debt securities purchased on or after October 1, 2022 are classified as available-for-sale investments and are stated at fair value with unrealized gains and losses recorded in accumulated other comprehensive income/(loss) ("AOCI").

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

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Refined products (finished goods) and feedstock and blendstock inventories (work-in-process) are both carried at the lower of cost and net realizable value.

We use jet fuel in our airline operations that is produced by the refinery and procured through the exchange with third parties of gasoline, diesel and other refined products ("non-jet fuel products") the refinery produces.

We use jet fuel in our airline operations that is produced by the refinery and procured through the exchanges with third parties of gasoline, diesel and other refined products ("non-jet fuel products") the refinery produces.

Cost is determined using the first-in, first-out method.

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

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

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

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

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

Expendables Parts and Supplies.

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Delta Air Lines, Inc.

| 2022 10-K 68

| 2023 Form 10-K 64

Notes to the Consolidated Financial Statements

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Our derivative contracts are recognized at fair value on our balance sheets and had net balances of $ 5 million and $ 47 million at December 31, 2023 and 2022, respectively.

See Note 3, "Fair Value Measurements," for further information regarding our derivative contracts.

Long-Lived Assets

Our long-lived lived assets, including flight equipment, which consists of aircraft and associated engines and parts, operating lease right-of-use ("ROU") assets and other long-lived assets, are recorded in property and equipment, net and operating lease right-of-use assets on our balance sheets.

Our long-lived lived assets include property and equipment, net and operating lease right-of-use ("ROU") assets on our balance sheets.

See Note 7, "Leases," for further information regarding our leases.

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(in millions, except for estimated useful life) Estimated Useful Life 2023 2022

Flight equipment 25 - 34 years

Flight equipment (1)

25 - 34 years

$ 40,976 $ 38,091

Ground property and equipment 3 - 40 years

Ground property and equipment

Information technology-related assets 3 - 15 years

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Total property and equipment, net $ 35,486 $ 33,109

(1) Includes aircraft and associated engines and parts.

(2) Includes accumulated amortization for flight and ground equipment under finance leases in the amount of $ 525 million and $ 463 million at December 31, 2023 and 2022, respectively.

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

Delta Air Lines, Inc.

| 2022 10-K 69

Notes to the Consolidated Financial Statements

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

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

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

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

We recorded no further impairments during 2021 or 2022.

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

Delta Air Lines, Inc.

| 2023 Form 10-K 65

Notes to the Consolidated Financial Statements

We account for deferred income taxes under the liability method.

We recognize deferred tax assets and liabilities based on the tax effects of temporary differences between the financial statement and tax basis of assets and liabilities, as measured by current enacted tax rates.

Deferred tax assets and liabilities are net by jurisdiction and are recorded as noncurrent on the balance sheet.

We have elected to recognize earnings of foreign affiliates that are determined to be global intangible low tax income in the period it arises and do not recognize deferred taxes for basis differences that may reverse in future years.

Deferred tax assets and liabilities are net by jurisdiction and are recorded as noncurrent on the balance sheets.

We have elected to recognize global intangible low tax income in the period it arises and do not recognize deferred taxes for basis differences that may reverse in future years.

A valuation allowance is recorded to reduce deferred tax assets when necessary.

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At both December 31, 2023 and 2022, we had $ 1.1 billion outstanding on this purchasing card and the activity was classified as a financing activity in our cash flows statement.

Retirement of Repurchased Shares

We immediately retire shares repurchased pursuant to any share repurchase program.

We allocate the share purchase price in excess of par value between additional paid-in capital and retained earnings.

Manufacturers' Credits

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

Delta Air Lines, Inc.

| 2022 10-K 70

Notes to the Consolidated Financial Statements

Advertising Costs

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

Delta Air Lines, Inc.

| 2023 Form 10-K 66

Notes to the Consolidated Financial Statements

REVENUE RECOGNITION

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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.

Passenger revenue is recognized when we provide transportation or when the ticket expires unused ("ticket breakage").

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.

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").

Travel credits are typically issued as a result of ticket cancellations prior to their expiration dates.

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 income statement.

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.

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 recognized approximately $ 7.4 billion, $ 4.2 billion and $ 2.2 billion in passenger revenue during the years ended December 31, 2023, 2022 and 2021, respectively, that had been recorded in our air traffic liability balance at the beginning of those periods.

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

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

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

As of December 31, 2023, all of our air traffic liability was recorded as a current liability.

As of December 31, 2022, our air traffic liability was $ 8.3 billion, of which $ 100 million was included in other noncurrent liabilities on our balance sheet due to ticket validity extensions related to certain tickets and travel credits as of the end of 2022.

Ticket Breakage.

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Our ticket breakage estimates are primarily based on historical experience, ticket contract terms and customers’ travel behavior.

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

Delta Air Lines, Inc.

| 2022 10-K 71

Notes to the Consolidated Financial Statements

Extension to Ticket Validity.

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

Regional Carriers.

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We record revenue related to our capacity purchase agreements in passenger revenue and the related expenses in regional carrier expense.

See Note 10, "Commitments and Contingencies," for additional information regarding contract carrier agreements.

Loyalty Travel Awards

Loyalty travel awards revenue is related to the redemption of miles for travel.

Loyalty travel awards revenue is related to the redemption of mileage credits ("miles") for travel.

We recognize loyalty travel awards revenue in passenger revenue as miles are redeemed and transportation is provided.

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Travel-Related Services

Travel-related services are primarily composed of services performed in conjunction with a passenger’s flight, including baggage fees, on-board sales and administrative fees.

Travel-related services are primarily composed of services performed in conjunction with a passenger’s flight, including baggage fees, administrative fees, and on-board sales.

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

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

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

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

Delta Air Lines, Inc.

| 2023 Form 10-K 67

Notes to the Consolidated Financial Statements

Loyalty Program

Our SkyMiles loyalty program generates customer loyalty by rewarding customers with incentives to travel on Delta.

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.

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.

Customers can also earn miles through participating companies such as credit card companies, hotels, car rental agencies and ridesharing companies.

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.

To facilitate transactions with participating companies, we sell miles to non-airline businesses, customers and other airlines.

Customers can also earn miles through participating companies.

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.

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.

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Sale of Miles to Participating Companies.

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.

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.

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 .

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.

Delta Air Lines, Inc.

| 2022 10-K 72

Notes to the Consolidated Financial Statements

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

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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.

Revenue allocated to access Delta Sky Club lounges is recognized as miscellaneous in other revenue as access is provided.

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.

Delta Air Lines, Inc.

| 2023 Form 10-K 68

Notes to the Consolidated Financial Statements

Current Activity of the Loyalty Program.

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Cargo revenue is recognized when we provide the transportation.

Delta Air Lines, Inc.

| 2022 10-K 73

Notes to the Consolidated Financial Statements

Other Revenue

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Loyalty Program.

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

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

This relates to revenues from brand usage by third parties and other performance obligations embedded in miles sold, which are included within the total cash sales from marketing agreements, discussed above.

This also includes the redemption of miles for non-travel awards.

Ancillary Businesses.

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

Delta Air Lines, Inc.

| 2023 Form 10-K 69

Notes to the Consolidated Financial Statements

Revenue by Geographic Region

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

Our passenger and operating revenue by geographic region is summarized in the following table:

Our passenger and operating revenue by geographic region are summarized in the following table:

Revenue by geographic region

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

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

Passenger Taxes and Fees

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federal transportation taxes, federal security charges, airport passenger facility charges and foreign arrival and departure taxes.

These taxes and fees are assessments on the customer for which we act as a collection agent.

Because we are not entitled to retain these taxes and fees, we do not include such amounts in passenger revenue.

These taxes and fees are assessments on the customer for which we act as a collection agent and these amounts are not included in passenger revenue.

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

Delta Air Lines, Inc.

| 2022 10-K 74

Notes to the Consolidated Financial Statements

FAIR VALUE MEASUREMENTS

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Techniques to convert future amounts to a single present value amount based on market expectations (including present value techniques and option-pricing models).

Delta Air Lines, Inc.

| 2023 Form 10-K 70

Notes to the Consolidated Financial Statements

Assets (Liabilities) Measured at Fair Value on a Recurring Basis (1)

December 31, 2022 Valuation

December 31, 2023 Valuation Technique

(in millions) Total Level 1 Level 2 Level 3

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Other fixed income securities 50 — 50 — (a)

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

Long-term investments and related 2,867 2,614 134 119 (a)(b)

Hedge derivatives, net

Fuel hedge contracts 5 — 5 — (a)(b)

December 31, 2021 Valuation

December 31, 2022 Valuation Technique

(in millions) Total Level 1 Level 2 Level 3

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

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

Other fixed income securities 67 — 67 — (a)

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

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Cash equivalents generally consist of money market funds.

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

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

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

Delta Air Lines, Inc.

| 2022 10-K 75

Notes to the Consolidated Financial Statements

Short-Term Investments.

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As of December 31, 2023, the estimated fair value of our short-term investments was $ 1.1 billion.

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

Long-Term Investments.

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

These investments are expected to mature in one year or less.

Long-Term Investments and Related.

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

As of December 31, 2023 and December 31, 2022, our equity investment in Wheels Up was classified as Level 1 in the fair value hierarchy.

In the September 2023 quarter, our Wheels Up investment was classified as Level 3 after we determined the quoted price of its publicly-traded shares did not represent fair value due to the short time between closing of Wheels Up's credit facility and our quarterly reporting date.

Given the amount of time that elapsed by December 31, 2023, we returned to valuing our equity investment in Wheels Up using the closing price of its shares at year end as traded on the New York Stock Exchange.

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

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

Delta Air Lines, Inc.

| 2023 Form 10-K 71

Notes to the Consolidated Financial Statements

Hedge Derivatives.

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• Fuel Hedge Contracts.

Our derivative contracts to hedge the financial risk from changing fuel prices are primarily related to Monroe’s inventory.

Our derivative contracts to hedge the financial risk from changing fuel prices are related to Monroe’s inventory.

Our fuel hedge portfolio may consist of a combination of options, swaps or futures.

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

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

We recognized losses of $ 6 million, $ 394 million and $ 146 million on our fuel hedge contracts in aircraft fuel and related taxes on our income statement for the years ended December 31, 2023, 2022 and 2021, respectively.

The losses recognized during 2023 were composed of $ 58 million of settlements on contracts and $ 52 million of mark-to-market adjustments.

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

Our equity investments reinforce our commitment to these relationships and generally enhance our ability to offer input to the investee on strategic issues and direction, in some cases through representation on the board of directors.

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

Delta Air Lines, Inc.

| 2022 10-K 76

Notes to the Consolidated Financial Statements

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

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

Fair Value Investments.

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

Equity Method Investments.

We record our share of our equity method investees' financial results in our income statement as described in the table below.

Equity investments ownership interest and carrying value

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Grupo Aeroméxico Equity Method (1)

20 % 20 % 421 412

Hanjin-KAL Fair Value (2)

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Equity investments $ 3,457 $ 2,128

(1) Results are included in miscellaneous, net in our income statement under non-operating expense.

(2) At December 31, 2023, we held 14.8 % of the outstanding shares (including common and preferred), and 14.9 % of the common shares, of Hanjin KAL.

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

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

Grupo Aeroméxico.

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

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

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

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

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

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

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

(4) See below for additional information about our ownership interest and voting rights.

Delta Air Lines, Inc.

| 2023 Form 10-K 72

Notes to the Consolidated Financial Statements

During 2023, we announced an expanded strategic partnership with Wheels Up, which included an agreement for a new credit facility to Wheels Up.

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.

In connection with the credit facility, the term loan investors received newly issued shares of Wheels Up's common stock representing 95 % of Wheels Up's outstanding equity on a fully diluted basis as of the closing of the initial extension of credit.

Our $ 150 million cash contribution was reflected as an investing outflow in our cash flows statement and allocated on a relative fair value basis to a loan receivable within other noncurrent assets and an equity investment on our balance sheet.

Combined with our previous ownership stake, this new investment provides us with a 38 % equity interest in Wheels Up.

Delta's voting rights with respect to its Wheels Up equity interest are capped at 29.9 %.

As a result of the transaction, we concluded that Wheels Up is a variable interest entity ("VIE").

A VIE requires consolidation by the entity’s primary beneficiary.

We determined that we are not the primary beneficiary after assessing the decision-making process for the significant activities of Wheels Up, concluding that Wheels Up's Board of Directors continues to possess the decision-making authority over the significant activities, and we do not control Wheels Up's Board.

Based on this assessment, Wheels Up is not consolidated in our financial statements.

We continue to account for our Wheels Up equity interest under the fair value option, as originally elected as part of our initial acquisition of Wheels Up shares in 2020.

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.

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.

The Wheels Up shares issued to Delta and the other term loan lenders were unregistered as of December 31, 2023 and are subject to a contractual transfer restriction until the first anniversary of the credit facility (September 2024).

Following the expiration of this restriction, our equity investment in Wheels Up will be subject to certain, more limited transfer restrictions.

We also account for our loan receivable at fair value, as the fair value option is applied to all of an investor's financial interests in the same entity.

None of the $ 100 million liquidity facility has been drawn as of December 31, 2023.

Other Investments

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

Included in this category is our investment in Virgin Atlantic.

Among others, this category includes our equity method investments in Virgin Atlantic and JFK IAT Member LLC.

Virgin Atlantic.

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As of December 31, 2023, we have approximately $ 400 million of unrecognized equity method losses related to our 49 % interest in Virgin Atlantic.

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

Delta Air Lines, Inc.

| 2022 10-K 77

Notes to the Consolidated Financial Statements

JFK IAT Member LLC is discussed further in Note 8, "Airport Redevelopment."

GOODWILL AND INTANGIBLE ASSETS

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Under a quantitative approach, we calculate the fair value of the asset incorporating the key assumptions listed below into our calculation.

Delta Air Lines, Inc.

| 2023 Form 10-K 73

Notes to the Consolidated Financial Statements

We value goodwill and indefinite-lived intangible assets primarily using market and income approach valuation techniques.

These measurements include the following key assumptions (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).

These measurements include the following key assumptions (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.

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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.

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.

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.

Identifiable Intangible Assets.

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Costs incurred to renew or extend the term of an intangible asset are expensed as incurred.

As a result of the significant impact the COVID-19 pandemic had on our market capitalization, profitability and overall travel demand, we performed a quantitative valuation of our goodwill and indefinite-lived intangible assets during the December 2020 quarter.

These quantitative impairment tests of goodwill and intangibles concluded that there was no indication of impairment as the fair value exceeded our carrying value.

In the December 2022 quarter we performed qualitative assessments of goodwill and indefinite-lived intangible assets, including applicable factors noted above, and determined that there was no indication that the assets were impaired.

Our qualitative assessments include analyses and weighting of all relevant factors that impact the fair value of our goodwill and indefinite-lived intangible assets.

During the December 2023 quarter, we performed a quantitative valuation of our goodwill and indefinite-lived intangible assets as the most recent quantitative analysis was several years ago.

These quantitative impairment tests of goodwill and intangibles concluded that there was no indication of impairment as the fair values exceeded our carrying values.

Goodwill and indefinite-lived intangible assets by category

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Total $ 15,671 $ 15,671

Delta Air Lines, Inc.

| 2022 10-K 78

Notes to the Consolidated Financial Statements

International Routes and Slots.

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

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

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

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

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

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

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

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

Department of Transportation ("DOT").

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

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

Domestic Slots.

This primarily relates to our slots at New York-LaGuardia and Washington-Reagan National airports.

Delta Air Lines, Inc.

| 2023 Form 10-K 74

Notes to the Consolidated Financial Statements

Definite-Lived Intangible Assets

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Based on our definite-lived intangible assets at December 31, 2023, we estimate that we will incur approximately $ 8 million of amortization expense annually from 2024 through 2028.

Delta Air Lines, Inc.

| 2022 10-K 79

Notes to the Consolidated Financial Statements

The following table summarizes our debt as of the dates indicated below:

Summary of outstanding debt by category

Maturity Interest Rate(s) Per Annum at

(in millions) Dates December 31, 2022 2022 2021

Maturity Dates Interest Rate(s) Per Annum at December 31, 2023

(in millions) 2023 2022

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

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2024 to 2027 9.17 % 1,772 2,820

NYTDC Special Facilities Revenue Bonds (1)

2024 to 2045 4.00 % to 6.00 % 3,656 2,838

Financing arrangements secured by aircraft:

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2024 to 2033 6.72 % to 7.65 % 165 813

NYTDC Special Facilities Revenue Bonds (1)

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

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

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(2) Certain financings are comprised of variable rate debt.

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

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

Early Settlement of Outstanding Notes

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

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

Notes Repurchased in Tender Offer

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

4.500 % Senior Secured Notes due 2025

SkyMiles Notes $ 856 $ 850

7.000 % Senior Secured Notes due 2025

2020 Senior Secured Notes 478 498

7.375 % Notes due 2026

Unsecured Notes 84 87

3.800 % Notes due 2023

Unsecured Notes 65 65

Total Notes Repurchased $ 1,483 $ 1,500

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

During 2023, we repurchased a principal amount of $ 1.4 billion of various secured and unsecured notes and a portion of the SkyMiles Term Loan on the open market and made early principal repayments of $ 585 million on various notes secured by aircraft.

Collectively, these payments resulted in a $ 63 million loss on extinguishment of debt, which is recorded in non-operating expense in our income statement.

Delta Air Lines, Inc.

| 2022 10-K 80

| 2023 Form 10-K 75

Notes to the Consolidated Financial Statements

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In addition, we had $ 450 million of outstanding letters of credit as of December 31, 2023 that did not affect the availability under our revolvers.

New York Transportation Development Corporation ("NYTDC") Special Facilities Revenue Bonds, Series 2023

In the December 2023 quarter, the NYTDC issued Special Facilities Revenue Bonds ("Series 2023 Bonds") in the aggregate principal amount of $ 878 million.

We entered into loan agreements with the NYTDC to use the proceeds from the Series 2023 Bonds to finance a portion of the costs of the construction project that is currently in process at LaGuardia Airport.

The proceeds from the Series 2023 Bonds are recorded in other noncurrent assets on our balance sheets.

See Note 8, "Airport Redevelopment," for further information on our LaGuardia Airport project.

We are required to pay debt service on the Series 2023 Bonds through payments under loan agreements with NYTDC, and we have guaranteed the Series 2023 Bonds.

2018 Revolving Credit Facility

In the December 2023 quarter, we entered into an amended and restated credit agreement (the "A&R Credit Facility") which amends and restates the previous 2018 revolving credit facility.

The A&R Credit Facility was undrawn at the time we entered into it and at December 31, 2023.

The A&R Credit Facility contains a $ 1.325 billion three-year revolving facility, a $ 1.325 billion five-year revolving facility and a $ 360 million three-year standby letter of credit facility.

Up to $ 250 million of each of the three-year and the five-year facilities can also be used for the issuance of letters of credit.

The A&R Credit Facility contains an accordion feature under which the aggregate commitments can be increased up to $ 3.65 billion subject to certain conditions.

The A&R Credit Facility is secured by a first lien on collateral consistent with the existing credit agreement, which includes our Pacific route authorities and certain related assets.

We also have the option of pledging additional collateral.

The A&R Credit Facility provides for the release of the lien on the collateral if we receive and maintain an investment grade rating with stable outlook from at least two of the three rating agencies (such date on which the collateral release conditions are met, the "Collateral Release Date").

Fair Value of Debt

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Fair value $ 18,400 $ 20,700

Delta Air Lines, Inc.

| 2023 Form 10-K 76

Notes to the Consolidated Financial Statements

Our debt agreements contain various affirmative, negative and financial covenants.

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

On or after the Collateral Release Date, collateral and liquidity covenants in the A&R Credit Facility will be replaced to include, among other things, (1) restrictions on our ability to place liens on, or to sell or otherwise dispose of, a designated pool of assets and (2) minimum fixed charge coverage ratio and minimum asset coverage ratio covenants.

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

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2026 2,610 ( 6 )

2026 2,838 ( 8 )

2027 2,493 ( 1 )

Thereafter 7,245 4

Total $ 18,693 $ ( 83 ) $ 18,610

Delta Air Lines, Inc.

| 2022 10-K 81

Notes to the Consolidated Financial Statements

We lease property and equipment under finance and operating leases.

For leases with terms greater than 12 months, we record the related asset and obligation at the present value of lease payments over the term.

For leases with terms greater than 12 months, we record the related asset and obligation at the present value of the fixed minimum lease payments over the term.

Many of our leases include rental escalation clauses, renewal options and/or termination options that are factored into our determination of lease payments when appropriate.

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These guarantees represent an immaterial portion of our lease liability.

Delta Air Lines, Inc.

| 2023 Form 10-K 77

Notes to the Consolidated Financial Statements

As of December 31, 2023, including aircraft operated by our regional carriers, we leased 225 aircraft, of which 111 were under finance leases and 114 were operating leases.

Our aircraft leases had remaining lease terms of one month to 13 years.

Our aircraft leases had remaining lease terms of five months to 12 years.

In addition, we have regional aircraft leases that are embedded within our capacity purchase agreements and included in the ROU asset and lease liability.

We allocated the consideration in each capacity purchase agreement to the lease and nonlease components based on their relative standalone value.

We allocated the consideration in each capacity purchase agreement to the lease and nonlease components based on their relative standalone fair values.

Lease components of these agreements consist of 116 aircraft as of December 31, 2023 and nonlease components primarily consist of flight operations, in-flight and maintenance services.

We determined our best estimate of the standalone value of the individual components by considering observable information including rates paid by our wholly owned subsidiary, Endeavor Air, Inc., and rates published by independent valuation firms.

We determined our best estimate of the standalone fair value of the individual components by considering observable information including rates paid by our wholly owned subsidiary, Endeavor Air, Inc., and rates published by independent valuation firms.

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

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airports, the lease rates depend on airport operating costs or use of the facilities and are reset at least annually.

Because of the variable nature of the rates, these leases are not recorded on our balance sheet as a ROU asset and lease liability.

Because of the variable nature of the rates, these leases are not recorded on our balance sheets as a ROU asset and lease liability.

Some airport facilities have fixed payment schedules, the most significant of which are New York-LaGuardia and New York-JFK.

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

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

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

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

For ground service contracts, we have elected to include both the lease and nonlease components in the lease asset and lease liability balances on our balance sheet.

For IT service contracts, we have elected to separate the lease and nonlease components and only the lease components are included in the lease asset and lease liability balances on our balance sheet.

For ground service contracts, we have elected to include both the lease and nonlease components in the lease asset and lease liability balances on our balance sheets.

The amounts of these lease and nonlease components are not significant.

Sale-Leaseback Transactions

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

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

The assets associated with these transactions remain on our balance sheet within property and equipment, net and we recorded the related liabilities under the lease.

These liabilities are classified within other accrued or other noncurrent liabilities on our balance sheet.

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

Delta Air Lines, Inc.

| 2022 10-K 82

| 2023 Form 10-K 78

Notes to the Consolidated Financial Statements

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

The liabilities are recorded within current maturities of operating leases and noncurrent operating leases on our balance sheet.

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

Lease Position

The table below presents the lease-related assets and liabilities recorded on the balance sheet.

The table below presents the lease-related assets and liabilities recorded on the balance sheets.

Lease asset and liability balance sheet position by category

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Operating lease cost (1)

949 863 1,019

Short-term lease cost (1)

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Delta Air Lines, Inc.

| 2022 10-K 83

| 2023 Form 10-K 79

Notes to the Consolidated Financial Statements

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Undiscounted Cash Flows

The table below reconciles the undiscounted cash flows for each of the first five years and total of the remaining years to the finance lease liabilities and operating lease liabilities recorded on the balance sheet.

Future lease cash flows and reconciliation to the balance sheet

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As of December 31, 2023, we had additional leases that had not yet commenced of $ 151 million.

These leases will commence in 2023 to 2024 with lease terms of 7 to 10 years.

These leases will commence in 2024 with lease terms of 4 to 19 years.

AIRPORT REDEVELOPMENT

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

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

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

The 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 NYTDC for which our landlord, IAT, is the obligor.

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

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

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.

Delta Air Lines, Inc.

| 2022 10-K 84

| 2023 Form 10-K 80

Notes to the Consolidated Financial Statements

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

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

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

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

Equity Investment.

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

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

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.

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Costs incurred in excess of the $ 1.8 billion maximum will not be reimbursed by the City.

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.

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

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

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

Construction is expected to be completed in 2023.

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

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.

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.

In 2023, we substantially completed all construction for this project.

Based on our assessment of the project, we concluded that we do not control the underlying assets being constructed, and therefore, we do not have the project asset or related obligation recorded on our balance sheets, except for certain assets recorded as leasehold improvements within property and equipment, net on our balance sheets.

We have recorded approximately $ 200 million as a ROU asset on our balance sheets related to certain costs incurred in excess of RAIC funding, though we have not recognized a ROU asset and lease liability on our balance sheets for the variable lease payments in our agreement with the City.

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

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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.

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.

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

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.

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.

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

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

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

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

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.

Due to an acceleration effort that commenced in 2020, substantial completion is expected by the end of 2024.

Delta Air Lines, Inc.

| 2022 10-K 85

| 2023 Form 10-K 81

Notes to the Consolidated Financial Statements

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.

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

The project is expected to cost $ 4.3 billion.

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.

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 balance sheet as debt with the proceeds reflected as restricted cash.

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

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

Using funding primarily provided by these arrangements, we spent approximately $ 500 million, $ 650 million and $ 950 million during 2023, 2022 and 2021, respectively.

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

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We sponsor defined benefit pension plans for eligible employees and retirees.

These plans are closed to new entrants and frozen for future benefit accruals.

These plans are generally closed to new entrants and frozen for future benefit accruals.

Our funding obligations for qualified defined benefit plans are governed by the Employee Retirement Income Security Act and any applicable legislation.

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We have no minimum funding requirements for these plans in 2024 and do no t plan to make voluntary contributions during 2024.

During 2023, we established a market based cash balance defined benefit pension plan for eligible pilots that is funded by company contributions in excess of IRS limits in the 401(k) plan.

Prior to 2023, these contributions were reflected in our cost associated with the defined contribution pension plans shown below.

The company funds the plan with cash contributions as benefits are earned and invests those assets.

The participants’ benefit is the sum of the contributions made on their behalf plus any positive return on the invested contributions.

Defined Contribution Pension Plans.

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

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

The costs associated with our defined contribution pension plans were approximately $ 1.2 billion, $ 1.0 billion and $ 875 million for the years ended December 31, 2023, 2022 and 2021, respectively.

Postretirement Healthcare Plans.

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We have generally eliminated company-paid post age 65 healthcare coverage, except for (1) subsidies available to a limited group of retirees and their dependents, (2) a group of retirees who retired prior to 1987 and (3) retiree medical accounts which provide a fixed dollar amount to eligible employees who retired under the 2012 voluntary workforce reduction programs or under the 2020 voluntary early retirement and separation programs ("voluntary programs").

Benefits under these plans are funded from current assets and employee contributions.

During 2020, we remeasured our postretirement healthcare obligation to account for the retiree medical accounts provided to eligible participants in our voluntary programs.

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

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

Postemployment Plans.

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Substantially all employees are eligible for benefits under these plans in the event of death and/or disability.

Benefits under our postretirement and post employment plans are funded from current assets and employee contributions.

Delta Air Lines, Inc.

| 2022 10-K 86

| 2023 Form 10-K 82

Notes to the Consolidated Financial Statements

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Interest cost 855 611 200 128

Actuarial (gain)/loss ( 4,599 ) ( 851 ) ( 710 ) 23

Actuarial loss/(gain) 351 ( 4,599 ) 24 ( 710 )

Benefits paid, including lump sums and annuities ( 1,201 ) ( 1,274 ) ( 485 ) ( 447 )

Plan amendments — — 11 —

Participant contributions — — 18 18

9 unchanged sentences

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

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

During 2023, net actuarial losses increased our benefit obligation primarily due to the decrease in discount rates while net actuarial gains decreased our benefit obligation primarily due to the increase in discount rates during 2022.

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

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Funded status at end of period $ ( 145 ) $ ( 90 ) $ ( 3,470 ) $ ( 3,593 )

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

Net actuarial (loss)/gain $ ( 6,474 ) $ ( 6,444 ) $ ( 162 ) $ ( 155 )

Prior service credit — — 1 18

3 unchanged sentences

Delta Air Lines, Inc.

| 2022 10-K 87

| 2023 Form 10-K 83

Notes to the Consolidated Financial Statements

Net Periodic (Benefit) Cost

Net Periodic Cost/(Benefit)

Pension Benefits Other Postretirement and Postemployment Benefits

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Settlements — — 2 — — —

Special termination benefits — — — — — 1,260

Net periodic (benefit) cost

Net periodic cost/(benefit)

$ 130 $ ( 453 ) $ ( 584 ) $ 279 $ 232 $ 218

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

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

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

Service cost is recorded in salaries and related costs in the income statement, while all other components are recorded within pension and related (expense)/benefit under non-operating expense.

Service cost listed under Pension Benefits relates solely to the new market based cash balance defined benefit pension plan discussed above.

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

Benefit Obligations (1)

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Year Ended December 31,

Net Periodic (Benefit) Cost (1)

Net Periodic Cost/(Benefit) (1)

2023 2022 2021

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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.

Our weighted average expected long-term rate of return on assets for net periodic benefit cost for the year ended December 31, 2022 was 7.00 %.

Our weighted average expected long-term rate of return on assets for net periodic cost/(benefit) for the year ended December 31, 2023 was 7.00 %.

Life Expectancy.

Changes in life expectancy may significantly impact our benefit obligations and future net periodic benefit cost.

We use the Society of Actuaries ("SOA") published mortality data and other publicly available information to develop our best estimate of life expectancy.

The SOA publishes updated mortality tables for U.S.

plans and updated improvement scales.

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.

Changes in life expectancy may significantly impact our benefit obligations and future net periodic cost/(benefit).

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.

Delta Air Lines, Inc.

| 2022 10-K 88

| 2023 Form 10-K 84

Notes to the Consolidated Financial Statements

18 unchanged sentences

Our investment strategies target a mix of 20 - 40 % growth-seeking assets, 25 - 35 % income-generating assets and 35 - 45 % risk-diversifying assets.

Risk diversifying assets include hedged mandates implementing long-short, market neutral and relative value strategies that invest primarily in publicly-traded equity, fixed income, foreign currency and commodity securities and are used to improve the impact of active management on the plans.

Risk diversifying assets include hedge funds implementing long-short, market neutral and relative value strategies that invest primarily in publicly-traded equity, fixed income, foreign currency and commodity securities and are used to improve the impact of active management on the plans.

Benefit Plan Assets Measured at Fair Value on a Recurring Basis

17 unchanged sentences

Delta Air Lines, Inc.

| 2022 10-K 89

| 2023 Form 10-K 85

Notes to the Consolidated Financial Statements

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Delta Air Lines, Inc.

| 2022 10-K 90

| 2023 Form 10-K 86

Notes to the Consolidated Financial Statements

Fixed Income and Fixed Income-Related Instruments.

These investments include commingled funds invested in debt obligations.

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

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

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

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

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

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

For the years ended December 31, 2023 and 2022, we recorded profit sharing expense of $ 1.4 billion and $ 563 million under the program, respectively.

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

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

COMMITMENTS AND CONTINGENCIES

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Total $ 17,530

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

(1) The timing of these commitments is based on our contractual agreements with the aircraft manufacturers and remains uncertain due to supply chain, manufacturing and regulatory constraints.

Delta Air Lines, Inc.

| 2022 10-K 91

| 2023 Form 10-K 87

Notes to the Consolidated Financial Statements

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Aircraft Orders

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

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

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

During 2023, we agreed to acquire one A330-900 with delivery expected to occur in 2025 and exercised purchase rights for 26 A220-300 aircraft with delivery expected to start in 2027.

In January 2024, we entered into a purchase agreement with Airbus for 20 A350-1000 aircraft, with an option to purchase an additional 20 widebody aircraft.

Deliveries of these aircraft are scheduled to begin in 2026.

Contract Carrier Agreements

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Delta Air Lines, Inc.

| 2022 10-K 92

| 2023 Form 10-K 88

Notes to the Consolidated Financial Statements

Legal Contingencies

We are involved in various legal proceedings related to employment practices, environmental issues, antitrust matters and other matters concerning our business.

We are involved in various legal proceedings related to employment practices, environmental issues, commercial disputes, antitrust and other regulatory matters concerning our business.

We record liabilities for losses from legal proceedings when we determine that it is probable that the outcome in a legal proceeding will be unfavorable and the amount of loss can be reasonably estimated.

18 unchanged sentences

Delta Air Lines, Inc.

| 2022 10-K 93

| 2023 Form 10-K 89

Notes to the Consolidated Financial Statements

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1,600 AFA March 31, 2027

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

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

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

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

Delta pilots ratified a new four -year Pilot Working Agreement effective January 1, 2023.

The agreement includes numerous work rule changes and pay rate increases during the four -year term, including an initial pay rate increase of 18 %.

The agreement also includes a provision for a one-time payment made upon ratification in the March 2023 quarter of $ 735 million.

Additionally, we recorded adjustments to other benefit-related items of approximately $ 130 million.

These items are recorded within pilot agreement and related expenses in our income statement.

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

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Income Tax Provision

Components of income tax (provision) benefit

Components of income tax provision

Year Ended December 31,

(in millions) 2023 2022 2021

Current tax (provision) benefit:

Current tax provision:

Federal $ — $ — $ —

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State and local ( 84 ) ( 66 ) 16

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

Income tax provision $ ( 999 ) $ ( 596 ) $ ( 118 )

Delta Air Lines, Inc.

| 2022 10-K 94

| 2023 Form 10-K 90

Notes to the Consolidated Financial Statements

29 unchanged sentences

Total deferred tax liabilities $ 8,319 $ 7,933

Net deferred tax assets (1)

Balance Sheet Position:

Other noncurrent assets $ 243 $ 325

Deferred income taxes, net ( 908 ) ( 24 )

Net deferred tax (liabilities) assets

$ ( 665 ) $ 301

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

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

Valuation Allowance

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Delta Air Lines, Inc.

| 2022 10-K 95

| 2023 Form 10-K 91

Notes to the Consolidated Financial Statements

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

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

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

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

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

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

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

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

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

At December 31, 2023 our net deferred tax liability balance was $ 665 million, including an $ 877 million valuation allowance primarily related to certain net realized and unrealized capital losses and certain state net operating losses.

As of December 31, 2023, we had approximately $ 4.5 billion of U.S.

federal pre-tax net operating loss carryforwards which we are expecting to utilize by the end of 2025.

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.

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.

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The weighted average cost per share held in treasury was $ 30.37 and $ 29.73 as of December 31, 2023 and 2022, respectively.

Delta Air Lines, Inc.

| 2022 10-K 96

Notes to the Consolidated Financial Statements

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

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

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

The number of warrants outstanding slightly increased and the exercise price of the warrants slightly decreased since December 31, 2022 due to dividend payments during 2023.

Key terms under each program as of December 31, 2023 are as follows:

Summary of payroll support program warrants

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Payroll Support Program 3 (PSP3) 1.9 47.57 2026

Delta Air Lines, Inc.

| 2023 Form 10-K 92

Notes to the Consolidated Financial Statements

Government Grant Recognition.

Under the initial payroll support program under the CARES Act and PSP extensions we received support payments of grants, which included $ 4.5 billion of grants during the year ended December 31, 2021.

The grants received from PSP2 and PSP3 were recognized in government grant recognition in our income statement during 2021 over the period that the funds were intended to compensate.

Equity Compensation

29 unchanged sentences

Delta Air Lines, Inc.

| 2022 10-K 97

| 2023 Form 10-K 93

Notes to the Consolidated Financial Statements

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Exercised (1)

— 39.78 — — — —

Forfeited (1)

— 51.91 — 52.87 ( 0.2 ) 49.61

Outstanding at December 31 6.2 $ 50.42 6.2 $ 50.40 6.2 $ 50.41

(1) 2023 exercise and forfeiture and 2022 forfeiture activity in the table above rounds to zero.

Performance Awards.

Performance awards are dollar-denominated long-term incentive opportunities which, for grants prior to 2021, are payable in Delta stock to executive officers on the payment date and in cash to all other participants.

Performance awards are dollar-denominated long-term incentive opportunities which, for grants prior to 2021, were payable in Delta stock to executive officers on the payment date and in cash to all other participants.

Beginning with the 2021 grants, performance awards are payable in cash to all participants.

Potential performance award payments range from 0 %- 200 % of a target level and are contingent upon our achieving certain financial and operational goals over a three-year performance period.

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

As of December 31, 2023, there were no performance awards payable in Delta stock to executive officers.

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

Performance-Based Restricted Stock Units.

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

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

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

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

Based on the closing stock price at year end and contingent on achieving the specified performance conditions, the maximum shares that could be issued were 3.3 million and 1.3 million for the years ended December 31, 2023 and 2022, respectively.

There were no outstanding performance-based restricted stock units for the year ended December 31, 2021.

ACCUMULATED OTHER COMPREHENSIVE LOSS

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$ ( 6,681 ) $ 40 $ 796 $ ( 5,845 )

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

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

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

Delta Air Lines, Inc.

| 2022 10-K 98

| 2023 Form 10-K 94

Notes to the Consolidated Financial Statements

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Our airline segment is managed as a single business unit that provides scheduled air transportation for passengers and cargo throughout the U.S.

and around the world and includes our loyalty program, as well as other ancillary airline services.

and around the world and includes our loyalty program, as well as other ancillary businesses.

This allows us to benefit from an integrated revenue pricing and route network.

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The gross fair value of the products exchanged under these agreements during the years ended December 31, 2023, 2022 and 2021 was $ 2.4 billion, $ 3.5 billion and $ 2.3 billion, respectively.

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.

A refinery may meet its obligation by blending the necessary volumes of renewable fuels, by purchasing Renewable Identification Numbers ("RINs") in the open market or through a combination of blending and purchasing RINs.

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

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

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

During 2023, we acquired RINs assets to satisfy substantially all of our 2023 RINs obligation.

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

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.

Delta Air Lines, Inc.

| 2022 10-K 99

| 2023 Form 10-K 95

Notes to the Consolidated Financial Statements

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Operating revenue $ 54,669 $ 7,572 $ ( 4,193 ) (1)

$ 45,605 $ 10,706 $ 50,582

Sales to airline segment $ ( 1,976 ) (1)

Exchanged products ( 3,475 ) (2)

Sales of refined products ( 278 )

Depreciation and amortization 2,341 94 ( 94 ) (2)

Operating income (2)

1 unchanged sentence

Interest expense, net 834 17 ( 17 ) 834

Depreciation and amortization 2,107 93 ( 93 ) (3)

Restructuring charges ( 124 ) — ( 124 )

Total assets, end of period 71,529 2,174 ( 59 ) 73,644

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

Capital expenditures 5,088 235 5,323

1 unchanged sentence

Operating revenue $ 45,605 $ 10,706 $ ( 5,729 ) (1)

$ 26,670 $ 6,054 $ 29,899

Sales to airline segment $ ( 492 ) (1)

Exchanged products ( 2,293 ) (2)

Sales of refined products ( 40 )

Operating income (loss) (3)

Depreciation and amortization 2,107 93 ( 93 ) (2)

Operating income (2)

2,884 777 3,661

Interest expense, net 1,029 12 ( 12 ) 1,029

Depreciation and amortization 1,998 95 ( 95 ) (3)

Restructuring charges ( 19 ) — ( 19 )

Total assets, end of period 69,355 3,039 ( 106 ) 72,288

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

Capital expenditures 6,217 149 6,366

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Operating revenue $ 26,670 $ 6,054 $ ( 2,825 ) (1)

$ 15,945 $ 3,143 $ 17,095

Sales to airline segment $ ( 214 ) (1)

Exchanged products ( 1,472 ) (2)

Sales of refined products ( 307 )

Operating loss (3)

Depreciation and amortization 1,998 95 ( 95 ) (2)

Operating income/(loss) (2)

1,888 ( 2 ) 1,886

Interest expense, net 1,279 7 ( 7 ) 1,279

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

Restructuring charges 8,219 — 8,219

Total assets, end of period 70,417 2,099 ( 57 ) 72,459

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

Capital expenditures 3,188 59 3,247

(1) Represents transfers, valued on a market price basis, from the refinery to the airline segment for use in airline operations.

We determine market price by reference to the market index for the primary delivery location, which is New York Harbor, for jet fuel from the refinery.

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

(1) See table below for detail of the intersegment operating revenue amounts.

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

Delta Air Lines, Inc.

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Notes to the Consolidated Financial Statements

Renewable Fuel Compliance Costs

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

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

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

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

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

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

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

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

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

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

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

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

GOVERNMENT GRANTS AND RESTRUCTURING

Government Grant Recognition.

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

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

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

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

Restructuring Charges.

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

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

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

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

These charges and adjustments are summarized as follows:

Restructuring charges by category

Operating Revenue Intersegment Sales/Other

Year Ended December 31,

(in millions) 2023 2022 2021

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

Voluntary programs and other employee benefit charges ( 79 ) ( 17 ) 3,409

Receivables and other 3 ( 42 ) 401

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

Fleet Retirements.

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

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

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

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.

Sales to airline segment (1)

$ ( 1,535 ) $ ( 1,976 ) $ ( 492 )

Exchanged products (2)

( 2,354 ) ( 3,475 ) ( 2,293 )

Sales of refined products

( 304 ) ( 278 ) ( 40 )

Total Operating Revenue Intersegment Sales/Other $ ( 4,193 ) $ ( 5,729 ) $ ( 2,825 )

(1) Represents transfers, valued on a market price basis, from the refinery to the airline segment for use in airline operations.

We determine market price for jet fuel from the refinery by reference to the market index for the primary delivery location, which is New York Harbor.

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

Delta Air Lines, Inc.

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| 2023 Form 10-K 96

Notes to the Consolidated Financial Statements

Voluntary Programs and Other Employee Benefit Charges.

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

merit, ground and flight attendant and pilot employees.

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

We recorded $ 3.4 billion in restructuring charges in our income statement associated with these programs and other employee benefit charges during 2020, including $ 1.3 billion of special termination benefits (see Note 9, "Employee Benefit Plans").

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

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

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

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

Receivables and Other.

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

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

EARNINGS/(LOSS) PER SHARE

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

EARNINGS PER SHARE

We calculate basic earnings per share by dividing net income by the weighted average number of common shares outstanding, excluding restricted shares.

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

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

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

The following table shows our computation:

Basic and diluted earnings/(loss) per share

Basic and diluted earnings per share

Year Ended December 31,

(in millions, except per share data) 2023 2022 2021

Net income/(loss) $ 1,318 $ 280 $ ( 12,385 )

Net income $ 4,609 $ 1,318 $ 280

Basic weighted average shares outstanding 639 638 636

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Diluted weighted average shares outstanding 643 641 641

Basic earnings/(loss) per share $ 2.07 $ 0.44 $ ( 19.49 )

Diluted earnings/(loss) per share $ 2.06 $ 0.44 $ ( 19.49 )

Basic earnings per share $ 7.21 $ 2.07 $ 0.44

Diluted earnings per share $ 7.17 $ 2.06 $ 0.44

Delta Air Lines, Inc.

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| 2023 Form 10-K 97

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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

What changed 10-K

Item 8. Financial Statements and Supplementary Data