Item 7. Management’s Discussion and Analysis
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This section of Form 10-K does not address certain items regarding the year ended December 31, 2022. Discussion and analysis of 2022 and year-to-year comparisons between 2023 and 2022 not included in this Form 10-K can be found in "Item 7. Management's Discussion and Analysis" of our Annual Report on Form 10-K for the year ended December 31, 2023. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our audited Consolidated Financial Statements and the related notes and other financial information as well as the material risk factors included elsewhere in this Annual Report on Form 10-K.
2024 Financial Overview
Our 2024 operating income was $6.0 billion, an improvement of $474 million compared to 2023, and operating income, adjusted (a non-GAAP financial measure) was $6.0 billion, a decrease of $318 million compared to 2023. Operating income, adjusted in 2023 excluded one-time pilot agreement expenses and other items. The changes in operating income and operating income, adjusted are primarily resulting from increases in both revenue and operating expenses as described below. As a result of our strong performance in 2023 and 2024, we paid profit sharing of $1.4 billion in February 2024 to our employees and will pay another $1.4 billion in February 2025 in recognition of these achievements.
Revenue. Compared to 2023, our 2024 operating revenue increased $3.6 billion, or 6%, primarily due to a 6% increase in capacity driven by continued strength in demand for domestic and international travel and premium products, as well as an increase in revenue related to refinery sales to third parties. Total revenue, adjusted (a non-GAAP financial measure) increased in 2024 by $2.3 billion, or 4.3%, compared to 2023. Adjustments were to exclude revenue related to refinery sales to third parties. In July 2024, our operations were significantly disrupted by the CrowdStrike-caused outage. We estimate that this disruption led to a direct revenue impact of approximately $380 million related to approximately 7,000 flight cancellations over five days, which reduced our expected year-over-year capacity growth by approximately 0.4 percentage points during 2024.
Operating Expense. Total operating expense increased $3.1 billion, or 6%, compared to 2023, primarily resulting from higher employee-related costs from increased wages and related expenses, higher volume-related expenses associated with the 6% increase in capacity and an increase in expenses related to refinery sales to third parties. The CrowdStrike-caused outage and operational recovery resulted in approximately $170 million of additional operating expenses primarily due to customer expense reimbursements and crew-related costs. Fuel expense was approximately $50 million lower than it would have been as a result of the flight cancellations. Total operating expense, adjusted (a non-GAAP financial measure) increased $2.7 billion, or 5%, compared to 2023. Current year adjustments were primarily to exclude expenses related to refinery sales to third parties, while prior year adjustments also excluded the pilot agreement and related expenses.
Our total operating cost per available seat mile ("CASM") of 19.30 cents was comparable to 2023, primarily due to lower fuel expense and a 6% increase in capacity offset by higher expenses associated with the increase in capacity and related to refinery sales to third parties. Non-fuel unit costs ("CASM-Ex", a non-GAAP financial measure), which excludes fuel, expenses related to refinery sales to third parties and other items, increased 2.8% to 13.54 cents compared to 2023.
Non-Operating Results. Total non-operating expense was $1.3 billion in 2024, compared to total non-operating income of $87 million in 2023, primarily due to mark-to-market gains on certain of our equity investments in 2023 partially offset by lower expenses in 2024 associated with our debt reduction initiatives.
Cash Flow. During 2024, operating activities generated $8.0 billion, primarily from ticket sales and the sale of SkyMiles to our partners. Total cash sales of SkyMiles to American Express were $7.4 billion during 2024, an increase of approximately 8% compared to 2023. Investing activities resulted in net cash outflows of approximately $3.7 billion, primarily for $5.1 billion of capital expenditures, partially offset by $1.1 billion of net redemptions of short-term investments. After adjusting for certain activities, these results generated $3.4 billion of free cash flow (a non-GAAP financial measure) in 2024.
Also, during 2024 we had cash outflows of approximately $4.0 billion primarily related to repayment of our debt and finance leases, including approximately $1.1 billion for early repayments and the remainder from scheduled maturities. Our cash, cash equivalents, short-term investments and aggregate principal amount committed and available to be drawn under our revolving credit facilities ("liquidity") at December 31, 2024 was $6.1 billion.
The non-GAAP financial measures of operating income, adjusted, total revenue, adjusted, total operating expense, adjusted, CASM-Ex and free cash flow used above are defined and reconciled in "Supplemental Information" below.
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Item 7. MD&A - Results of Operations
Results of Operations
Operating Revenue
Year Ended December 31,
Increase (Decrease) % Increase (Decrease)
(in millions) (1)
2024 2023
Ticket - Main cabin $ 24,497 $ 24,477 $ 20 — %
Ticket - Premium products 20,599 19,119 1,480 8 %
Loyalty travel awards 3,841 3,462 379 11 %
Travel-related services 1,957 1,851 106 6 %
Total passenger revenue $ 50,894 $ 48,909 $ 1,985 4 %
Cargo 822 723 99 14 %
Other 9,927 8,416 1,511 18 %
Total operating revenue $ 61,643 $ 58,048 $ 3,595 6 %
TRASM (cents) 21.37 ¢ 21.34 ¢ 0.03 ¢ — %
Third-party refinery sales (2)
(1.61) (1.24) (0.37) 30 %
TRASM, adjusted (cents) 19.76 ¢ 20.10 ¢ (0.34) ¢ (1.6) %
(1) Total amounts in the table above may not calculate exactly due to rounding.
(2) For additional information on adjustments to TRASM, see "Supplemental Information" below.
Operating Revenue
Our operating revenue increased $3.6 billion, or 6%, compared to 2023 related to a 6% increase in capacity resulting from continued strength in demand for domestic and international travel, particularly for our premium products (including Delta One, First Class, Delta Premium Select and Delta Comfort+), as well as increased revenue related to refinery sales to third parties and loyalty travel awards. Total revenue per available seat mile ("TRASM") remained flat as revenues increased at the same rate as capacity.
See "Refinery Segment" below for additional details on the refinery's operations, including third party refinery sales recorded in other revenue, during each period.
Passenger Revenue by Geographic Region
Increase (Decrease) vs. Year Ended December 31, 2023
(in millions) Year Ended December 31, 2024 Passenger Revenue RPMs (Traffic)
ASMs (Capacity) Passenger Mile Yield PRASM Load Factor
Domestic $ 35,226 4 % 5 % 5 % (1) % (1) % — pts
Atlantic 9,133 1 % 1 % — % — % 1 % 1 pt
Latin America 3,995 5 % 14 % 15 % (8) % (8) % — pts
Pacific 2,540 22 % 30 % 32 % (6) % (7) % (1) pt
Total passenger revenue $ 50,894 4 % 6 % 6 % (2) % (2) % — pts
Domestic
Domestic passenger unit revenue ("PRASM") for 2024 decreased 1% compared to 2023 due to a 4% increase in revenue on a 5% increase in capacity.
Domestic revenue in 2024 was above 2023 levels as we experienced strong demand across the domestic network. We generated higher growth in premium products revenue compared to main cabin with the delivery of new aircraft that include more premium seat capacity and an increase in yield in premium products compared to main cabin, as we see more consumers choosing these premium offerings.
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Item 7. MD&A - Results of Operations
International
International passenger revenue for 2024 increased 5% with capacity up 8% compared to 2023. Revenue in each international region increased in 2024, with the Pacific growing at the greatest rate as we continue to restore capacity in the region.
Demand for transatlantic travel remained at high levels throughout 2024 with revenue increasing slightly on flat capacity compared to 2023. Revenue growth in the Atlantic was led by demand for travel to European leisure destinations and our premium product offerings.
Latin America region revenue increased during 2024 compared to 2023, due to strong demand for leisure destinations in South America and the Caribbean on a 15% increase in capacity. We continued to build on the strength of our joint venture with LATAM in South America through additional routes, greater network connectivity, and a more streamlined airport experience.
The Pacific region benefited from improved demand for travel to the region, particularly to South Korea and Japan, on 32% increased capacity. Our performance in South Korea benefited from the strength of our joint venture partnership with Korean Air, which enables passengers to more seamlessly connect to over 80 destinations in Asia. Revenue from flights to Japan increased due to higher demand for travel from the United States due in part to weakness in the Japanese Yen compared to the U.S. dollar.
Other Revenue
Year Ended December 31,
Increase (Decrease) % Increase (Decrease)
(in millions) 2024 2023
Refinery $ 4,642 $ 3,379 $ 1,263 37 %
Loyalty program 3,297 3,093 204 7 %
Ancillary businesses 772 840 (68) (8) %
Miscellaneous 1,216 1,104 112 10 %
Total other revenue $ 9,927 $ 8,416 $ 1,511 18 %
Refinery. This represents refinery sales of non-jet fuel products to third parties. These sales increased $1.3 billion compared to 2023. See "Refinery Segment" below for additional details on the refinery's operations, including third party refinery sales recorded in other revenue, during each period.
Loyalty Program. This relates to revenues from brand usage by third parties and other performance obligations embedded in miles sold, as well as redemption of miles for non-air travel and other awards. These revenues are mainly driven by customer spend on American Express cards and new cardholder acquisitions. Revenues from our relationship with American Express increased compared to 2023 driven by co-brand card spend growth and card account acquisitions.
Ancillary Businesses. This includes revenues from aircraft maintenance services we provide to third parties and our vacation package operations.
Miscellaneous. This is primarily composed of revenues related to lounge access, including access provided to certain American Express cardholders, codeshare agreements and certain other commercial relationships. The increase in revenues was primarily driven by codeshare agreements and other commercial relationships.
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Item 7. MD&A - Results of Operations
Operating Expense
Year Ended December 31,
Increase (Decrease) % Increase (Decrease) (1)
(in millions) 2024 2023
Salaries and related costs $ 16,161 $ 14,607 $ 1,554 11 %
Aircraft fuel and related taxes 10,566 11,069 (503) (5) %
Ancillary businesses and refinery 5,416 4,172 1,244 30 %
Contracted services 4,228 4,041 187 5 %
Landing fees and other rents 3,150 2,563 587 23 %
Aircraft maintenance materials and outside repairs 2,616 2,432 184 8 %
Depreciation and amortization 2,513 2,341 172 7 %
Passenger commissions and other selling expenses 2,485 2,334 151 6 %
Regional carrier expense 2,328 2,200 128 6 %
Passenger service 1,788 1,750 38 2 %
Profit sharing 1,389 1,383 6 — %
Aircraft rent 548 532 16 3 %
Pilot agreement and related expenses — 864 (864) NM
Other 2,460 2,239 221 10 %
Total operating expense $ 55,648 $ 52,527 $ 3,121 6 %
(1) Certain variances are labeled as not meaningful ("NM") throughout management's discussion and analysis.
Salaries and Related Costs. The increase in salaries and related costs primarily resulted from the implementation of base pay increases for eligible employees of 5% effective June 1, 2024 and for Delta pilots on January 1, 2024. In June 2024 we also increased our minimum starting wage for domestic mainline employees to $19 per hour. Salaries and related costs also increased due to additional crew-related costs resulting from the CrowdStrike-caused outage and costs to support increased traffic. Employee benefits increased on higher healthcare expenses and from travel passes awarded to employees in recognition of their hard work through the summer. See Note 9 of the Notes to the Consolidated Financial Statements for additional information on our employee benefit plans.
Aircraft Fuel and Related Taxes. Fuel expense decreased $503 million compared to 2023 primarily due to a 12% decrease in the market price of jet fuel partially offset by a 5% increase in consumption on a 6% increase in capacity, resulting in a 1% improvement in fuel efficiency. Fuel expense was also approximately $50 million lower than it would have been as a result of the 7,000 flight cancellations over the five-day period following the CrowdStrike-caused outage.
Fuel expense and average price per gallon
Average Price Per Gallon
Year Ended December 31,
Increase (Decrease) Year Ended December 31,
Increase (Decrease)
(in millions, except per gallon data) 2024 2023 2024 2023
Fuel purchase cost (1)
$ 10,583 $ 11,506 $ (923) $ 2.57 $ 2.93 $ (0.36)
Fuel hedge impact 21 (52) 73 0.01 (0.01) 0.02
Refinery segment impact (38) (385) 347 (0.01) (0.10) 0.09
Total fuel expense $ 10,566 $ 11,069 $ (503) $ 2.57 $ 2.82 $ (0.25)
(1) Market price for jet fuel at airport locations, including related taxes and transportation costs.
Ancillary Businesses and Refinery. Ancillary businesses and refinery includes expenses associated with refinery sales to third parties, aircraft maintenance services we provide to third parties and our vacation package operations. The increase in these expenses was primarily related to higher refinery sales to third parties, which increased $1.3 billion compared to 2023. See "Refinery Segment" below for additional details on the refinery's operations, including third party refinery sales.
Landing Fees and Other Rents. The increase in landing fees and other rents resulted from higher rates charged by airports following extensive redevelopment projects at numerous facilities and more flights compared to 2023.
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Item 7. MD&A - Results of Operations
Pilot agreement and related expenses. In the March 2023 quarter, 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.
Other. The increase in other is primarily due to higher volume-related expenses associated with increased capacity, such as flight crew and other employee travel and incidental costs and the impact of service recovery costs including customer expense reimbursements from the CrowdStrike-caused outage.
Non-Operating Results
Year Ended December 31,
Favorable (Unfavorable)
(in millions) 2024 2023
Interest expense, net $ (747) $ (834) $ 87
Gain/(loss) on investments, net (319) 1,263 (1,582)
Loss on extinguishment of debt (39) (63) 24
Miscellaneous, net (232) (279) 47
Total non-operating (expense)/income, net $ (1,337) $ 87 $ (1,424)
Interest expense, net. Interest expense, net includes interest expense and interest income. This decreased compared to 2023 primarily on reduced interest expense resulting from our debt reduction initiatives, which was partially offset by lower interest income. We are reducing the total amount of interest expense by pre-paying our debt in addition to periodic amortization payments and scheduled maturities. During 2024, we made $4.0 billion of payments on debt and finance lease obligations, including approximately $1.1 billion of early repayments. This included early extinguishment of $844 million in principal related to a portion of the SkyMiles Term Loan and various secured and unsecured notes, and approximately $280 million for finance leased aircraft that were purchased. We continue to seek opportunities to pre-pay our debt, in addition to periodic amortization payments and scheduled maturities, during 2025 and beyond. Interest rates on the Payroll Support Program loans are 1.00% for the first five years and the applicable SOFR plus 2.00% in the final five years. The applicable interest rates will begin to adjust for each loan in April 2025, January 2026 and April 2026.
Interest income decreased due to lower cash, cash equivalents and short-term investment balances throughout most of 2024.
Gain/(loss) on investments, net. See Note 4 of the Notes to the Consolidated Financial Statements for additional information on our equity investments measured at fair value on a recurring basis. Net unrealized gains on our equity method investments during 2023 were primarily related to Wheels Up, Hanjin-KAL and LATAM.
Loss on extinguishment of debt. This reflects the losses incurred in the early repayment of debt referenced above.
Miscellaneous, net. Miscellaneous, net primarily includes employee benefit plans net periodic cost, charitable contributions, our share of our equity method investments' results and foreign exchange gains/(losses). See Note 4 of the Notes to the Consolidated Financial Statements for additional information on our equity investments.
Income Taxes
Our effective tax rate was 26% and 18% for 2024 and 2023, respectively. Our effective tax rate is impacted by net pre-tax income or loss recognized on our equity investments, which are considered capital assets for tax purposes, because realized capital losses can only be deducted against realized capital gains. As of December 31, 2024, we had approximately $2.7 billion of U.S. federal pre-tax net operating loss carryforwards which we are expecting to utilize during 2025. These net operating loss carryforwards were primarily generated in 2020 and do not expire.
We expect our annual effective tax rate to be between 23% and 25% for 2025. In certain periods, we may have adjustments to our net deferred tax liabilities as a result of changes in prior year estimates, mark-to-market adjustments on our equity investments and tax laws enacted during the period, which will impact the effective tax rate for that period.
For more information about our income taxes, see Note 11 of the Notes to the Consolidated Financial Statements.
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Item 7. MD&A - Refinery Segment
Refinery Segment
The refinery operated by our wholly owned subsidiary Monroe primarily produces gasoline, diesel and jet fuel. Monroe has agreements in place to exchange the non-jet fuel products the refinery produces with third parties for jet fuel consumed in our airline operations. The jet fuel produced and procured through exchanging gasoline and diesel fuel produced by the refinery typically provides approximately 200,000 barrels per day, or approximately 75% of our consumption, for use in our airline operations. The refinery regularly optimizes its sales and exchange activities of non-jet fuel products based on market conditions and the availability of counterparties for exchanges. Refinery revenues increased in 2024, primarily driven by the increase in third party refinery sales on reduced exchanges of non-jet fuel products due to the availability of exchange counterparties, and reduced production in 2023 related to the planned maintenance turnaround. The refinery operating income decreased in 2024 compared to 2023 mainly due to lower industry refining margins.
Refinery segment financial information
Year Ended December 31,
% Increase (Decrease)
(in millions, except per gallon data) 2024 2023
Exchanged products $ 1,473 $ 2,354 (37) %
Sales of refined products 231 304 (24) %
Sales to airline segment 1,421 1,535 (7) %
Third-party refinery sales 4,642 3,379 37 %
Operating revenue $ 7,767 $ 7,572 3 %
Operating income $ 38 $ 385 (90) %
Refinery segment impact on average price per fuel gallon $ (0.01) $ (0.10) (90) %
A refinery is subject to annual 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. Monroe incurred $203 million in RINs compliance costs during 2024, compared to $323 million incurred in 2023.
For more information regarding the refinery's results, see Note 14 of the Notes to the Consolidated Financial Statements.
Operating Statistics
Year Ended December 31,
Consolidated (1)
2024 2023
Revenue passenger miles (in millions) 246,145 232,241
Available seat miles (in millions) 288,394 272,033
Passenger mile yield 20.68 ¢ 21.06 ¢
Passenger revenue per available seat mile ("PRASM") 17.65 ¢ 17.98 ¢
Total revenue per available seat mile ("TRASM") 21.37 ¢ 21.34 ¢
TRASM, adjusted (2)
19.76 ¢ 20.10 ¢
Cost per available seat mile ("CASM") 19.30 ¢ 19.31 ¢
CASM-Ex (2)
13.54 ¢ 13.17 ¢
Passenger load factor 85 % 85 %
Fuel gallons consumed (in millions) 4,114 3,926
Average price per fuel gallon (3)
$ 2.57 $ 2.82
Average price per fuel gallon, adjusted (2)(3)
$ 2.56 $ 2.83
Approximate full-time equivalent employees, end of period 103,000 103,000
(1) Includes the operations of our regional carriers under capacity purchase agreements. Full-time equivalent employees exclude employees of regional carriers that we do not own.
(2) Non-GAAP financial measures are defined and reconciled to TRASM, CASM and average fuel price per gallon, respectively, in "Supplemental Information" below.
(3) Includes the impact of refinery segment results and fuel hedge activity.
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Item 7. MD&A - Financial Condition and Liquidity
Financial Condition and Liquidity
As of December 31, 2024, we had $6.1 billion in cash, cash equivalents, short-term investments and aggregate principal amount committed and available to be drawn under our revolving credit facilities ("liquidity"). We expect to meet our liquidity needs for the next twelve months with cash and cash equivalents, restricted cash equivalents and cash flows from operations. We expect to meet our long-term liquidity needs with cash flows from operations and financing arrangements.
Sources and Uses of Liquidity
Operating Activities
Operating activities in 2024 provided $8.0 billion of cash flow compared to $6.5 billion in 2023. We expect to continue generating cash flows from operations during 2025.
Our operating cash flow is impacted by the following factors:
Seasonality of Advance Ticket Sales . We sell tickets for air travel in advance of the customer's travel date. When we receive a cash payment at the time of sale, we record the cash received on advance sales as deferred revenue in air traffic liability. 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.
Sale of Miles to Participating Companies. 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. Payments are typically due to us monthly based on the volume of miles sold during the period. Our most significant contract to sell miles relates to our co-brand credit card relationship with American Express. Total cash sales to American Express were $7.4 billion during 2024, an increase of 8% compared to the prior year. See Note 2 of the Notes to the Consolidated Financial Statements for further information regarding the cash sales from marketing agreements.
Fuel . Fuel expense represented approximately 19% of our total operating expense during 2024. The market price for jet fuel is volatile, which can impact the comparability of our periodic cash flows from operations. The average fuel price per gallon decreased in 2024. We expect continued higher market price volatility compared to historical levels due to geopolitical events. As capacity increased throughout the year, fuel consumption was higher in 2024 than 2023. We expect fuel consumption to increase in 2025 aligned with capacity, partially offset by improvements in the fuel efficiency of our fleet.
We expect our commitment to environmental sustainability to depend on increased use of SAF, which is not presently available at scale or at prices competitive to jet fuel. While we do not expect a material adverse effect on our Consolidated Financial Statements in the near-term from the use of SAF, we are unable to predict the financial impact of increased use of SAF on our Consolidated Financial Statements over the longer term as government policies and incentives for, and sufficient third-party investment in, SAF are necessary to make its use in larger quantities commercially and economically feasible.
Employee Benefit Obligations. We sponsor defined benefit and defined contribution pension plans for eligible employees and retirees. Our funding obligations for defined benefit plans are governed by the Employee Retirement Income Security Act ("ERISA") and any additional applicable legislation. We had no minimum funding requirements in 2024, and estimate that there will be approximately $80 million of minimum funding requirements under these plans in 2025. Payments to defined contribution plans were approximately $1.3 billion during the year ended December 31, 2024.
In addition, we have employee benefit obligations relating primarily to projected future benefit payments from our unfunded postretirement and postemployment plans. Benefit payments for these obligations are expected to be approximately $500 million on an annual basis over the next five years. See Note 9 of the Notes to the Consolidated Financial Statements for more information on our employee benefit obligations.
Profit Sharing. Our broad-based employee profit sharing program provides that, for each year in which we have an annual pre-tax profit, as defined by the terms of the program, we will pay a specified portion of that profit to employees. In determining the amount of profit sharing, the program defines profit as pre-tax profit adjusted for profit sharing and certain other items.
We pay profit sharing annually in February. We paid $1.4 billion in 2024 to our employees in recognition of their contributions toward meeting our financial goals. During the year ended December 31, 2024, we recorded $1.4 billion in profit sharing expense based on 2024 pre-tax profit, which we will pay to employees in February 2025.
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Item 7. MD&A - Financial Condition and Liquidity
Contract Carrier Obligations. We have certain estimated minimum fixed obligations under capacity purchase agreements with third-party regional carriers. These minimum amounts are based on the required minimum levels of flying by the regional carriers under the respective agreements and assumptions regarding the costs associated with such minimum levels of flying. As of December 31, 2024 the total of these minimum amounts was $7.7 billion and range from approximately $700 million to $1.8 billion on an annual basis over the next five years. See Note 10 of the Notes to the Consolidated Financial Statements for more information on our contract carrier obligations.
Operating Lease Obligations. As described further in Note 7 of the Notes to the Consolidated Financial Statements, as of December 31, 2024 we had a total of $8.4 billion of minimum operating lease obligations. These minimum lease payments range from approximately $600 million to $1.0 billion on an annual basis over the next five years.
Other Obligations. We have certain purchase obligations under which we are required to make minimum payments for goods and services, including, but not limited to, aviation-related, maintenance, technology, sponsorships, marketing, insurance and other third-party services and products. As of December 31, 2024, we had approximately $9.3 billion of such obligations, which range from approximately $400 million to $1.3 billion on an annual basis over the next five years.
Income Taxes. We expect to utilize our remaining net operating loss carryforwards during 2025. Once these are exhausted, under current tax laws, we expect to be a partial cash taxpayer during 2025.
Investing Activities
Short-Term Investments. In 2024, we redeemed a net of $1.1 billion in short-term investments. During 2024 our investment strategy shifted to no longer include short-term investments and accordingly as of December 31, 2024 we have no short-term investments and do not expect any further activity in the foreseeable future. See Note 1 and Note 3 of the Notes to the Consolidated Financial Statements for further information on these investments.
Capital Expenditures. Our capital expenditures (i.e., property and equipment additions in our Consolidated Statements of Cash Flows ("cash flows statement")) were $5.1 billion and $5.3 billion in 2024 and 2023, respectively. Our capital expenditures are primarily related to the purchases of aircraft, airport construction projects (discussed below), fleet modifications and technology enhancements.
We have committed to future aircraft purchases and have obtained, but are under no obligation to use, long-term financing commitments for a substantial portion of the purchase price of the aircraft. Our expected 2025 capital spend of approximately $5.0 billion, which may vary depending on financing decisions, will be primarily for aircraft, including deliveries and advance deposit payments, as well as fleet modifications and technology enhancements. As described in Part I, Item 1. "Business - Environmental Sustainability," aircraft fleet renewal is an important component of our environmental sustainability strategy and the path to achievement of our ambitious climate goals, which will continue to require extensive capital investment in future periods. See Note 10 of the Notes to the Consolidated Financial Statements for additional information regarding our aircraft purchase commitments, which totaled approximately $18.3 billion as of December 31, 2024.
New York-LaGuardia Redevelopment. In 2024, we substantially completed all construction for the replacement of Terminals C and D of the New York-LaGuardia Airport with a new state-of-the-art terminal facility.
The project cost approximately $4.2 billion and was funded through debt issuance, existing cash and a Port Authority contribution of approximately $500 million. We entered into loan agreements to fund a portion of the construction, which are recorded on our Consolidated Balance Sheets ("balance sheets") as debt with the proceeds reflected as restricted cash. Using funding primarily provided by these arrangements, we spent approximately $300 million, $500 million and $650 million during 2024, 2023 and 2022, respectively. We expect only a small amount of spend in 2025 as the project is finalized. See Note 6 of the Notes to the Consolidated Financial Statements for additional information on the debt related to the redevelopment project.
Los Angeles International Airport ("LAX") Construction. In 2023, we substantially completed all construction for the LAX upgrade and modernization project that consolidates Terminals 2 and 3, as well as connects these terminals to the Tom Bradley International Terminal. The project cost approximately $2.5 billion.
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Item 7. MD&A - Financial Condition and Liquidity
A substantial majority of the project costs were funded through the Regional Airports Improvement Corporation ("RAIC"), a California public benefit corporation, using a revolving credit facility provided by a group of lenders. The credit facility was executed in 2017 and we have guaranteed the obligations of the RAIC under the credit facility. Loans made under the credit facility are being repaid with the proceeds from the City of Los Angeles' (the "City") purchase of completed project assets. Under the lease agreement and subsequent project component approvals by the City's Board of Airport Commissioners, the City appropriated approximately $1.8 billion to purchase completed project assets, representing the maximum allowable reimbursement by the City. Costs incurred in excess of the $1.8 billion maximum were not reimbursed by the City.
Our net project costs were approximately $700 million, of which approximately $350 million has been reflected as investing activities and approximately $350 million as operating activities in our cash flows statement since the project started in 2017. We expect only a small amount of spend in 2025 as the project is finalized.
Financing Activities
Debt and Finance Leases. In 2024, we had cash outflows of approximately $4.0 billion related to repayments of our debt and finance leases, including approximately $1.1 billion of early repayments. This included early extinguishment of $844 million in principal related to a portion of the SkyMiles Term Loan and various secured and unsecured notes, and approximately $280 million for finance leased aircraft that were purchased. We continue to seek opportunities to pre-pay our debt, in addition to periodic amortization payments and scheduled maturities, during 2025 and beyond.
During 2024, Fitch and S&P Global upgraded their credit ratings of Delta to BBB-, an investment grade rating. When combined with Moody's, which affirmed our credit rating (Baa3) and upgraded its outlook for Delta to positive in 2024, we have now achieved investment-grade ratings across the major credit rating agencies. See Note 6 of the Notes to the Consolidated Financial Statements for further information on the effect of these ratings changes on our debt agreements.
The principal amount of our debt and finance leases was $16.2 billion at December 31, 2024.
Future Debt Obligations. As described further in Note 6 of the Notes to the Consolidated Financial Statements, as of December 31, 2024, scheduled maturities of our debt in 2025 are $1.8 billion, with maturities from 2026 through 2029 ranging between $600 million and $2.3 billion annually. As of December 31, 2024, scheduled maturities after 2029 aggregate to $6.6 billion. In addition, we are obligated to make periodic interest payments at fixed and variable rates, depending on the terms of the applicable debt agreements. Based on applicable interest rates and scheduled debt maturities as of December 31, 2024, these interest obligations total approximately $3.0 billion and range from approximately $200 million to $600 million on an annual basis over the next five years.
Finance Lease Obligations. As described further in Note 7 of the Notes to the Consolidated Financial Statements, as of December 31, 2024 we had a total of $897 million of minimum finance lease obligations. These minimum lease payments range from approximately $30 million to $400 million on an annual basis over the next five years.
Capital Returns to Shareholders. During 2024, we continued our quarterly dividend program with $0.10 per share payments in the March 2024 and June 2024 quarters and $0.15 per share payments in the September 2024 and December 2024 quarters. Total dividend payments during the year ended December 31, 2024 were $321 million.
On February 6, 2025, the Board of Directors approved and we will pay a quarterly dividend of $0.15 per share on March 20, 2025 to shareholders of record as of February 27, 2025.
Undrawn Lines of Credit. As of December 31, 2024 we had approximately $3.1 billion undrawn and available under our revolving credit facilities.
Covenants. We were in compliance with the covenants in our debt agreements at December 31, 2024. See Note 6 of the Notes to the Consolidated Financial Statements for more information on the covenants in our debt agreements.
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Item 7. MD&A - Critical Accounting Estimates
Critical Accounting Estimates
Our critical accounting estimates are those estimates made in accordance with generally accepted accounting principles in the U.S. ("GAAP") that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on our consolidated results of operations or financial condition. Accordingly, the actual results may differ materially from these estimates. For a discussion of our significant accounting policies, see Note 1 of the Notes to the Consolidated Financial Statements, unless otherwise noted below.
Loyalty Program
Our SkyMiles loyalty program generates customer loyalty by rewarding customers with incentives to travel on Delta. 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. Miles are redeemable by customers 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.
Passenger Ticket Sales Earning Miles. Passenger ticket sales earning miles provide customers with (1) miles earned and (2) air transportation, which are each considered performance obligations. We value each performance obligation on a standalone basis. To value the miles earned, we consider the quantitative value a passenger receives by redeeming miles for a ticket rather than paying cash, which is referred to as equivalent ticket value ("ETV"). Our estimate of ETV is adjusted for miles that are not likely to be redeemed ("mileage breakage"). We use statistical models to estimate mileage breakage based on historical redemption patterns. A change in assumptions regarding the redemption activity for miles or the estimated fair value of miles expected to be redeemed could have a material impact on our revenue in the year in which the change occurs and in future years. We recognize mileage breakage proportionally during the period in which the remaining miles are actually redeemed.
At December 31, 2024, the aggregate deferred revenue balance associated with the SkyMiles program was $8.8 billion. A hypothetical 10% change in the number of outstanding miles estimated to be redeemed would result in an impact of less than 1% of total operating revenue recognized for the year ended December 31, 2024.
We defer revenue for the miles when earned and recognize loyalty travel awards in passenger revenue as the miles are redeemed and transportation is provided. We record the air transportation portion of the passenger ticket sales in air traffic liability and recognize passenger revenue when we provide transportation or if the ticket goes unused. A hypothetical 10% increase in our estimate of the ETV of a mile would have decreased total operating revenue by less than 1% for the year ended December 31, 2024, as a result of an increase in the amount of revenue deferred associated with the miles earned.
Sale of Miles to Participating Companies. Customers earn miles based on their spending with participating companies, such as credit card, ridesharing, retail, 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 one to thirteen years. During the years ended December 31, 2024, 2023 and 2022, total cash sales from marketing agreements related to our loyalty program were $7.4 billion, $6.9 billion and $5.7 billion, respectively, which are allocated to travel and other performance obligations, as discussed below.
Our most significant arrangement to sell miles relates to our co-brand credit card relationship with American Express. Our agreements with American Express provide for joint marketing, grant certain benefits to Delta-American Express co-branded credit card holders ("cardholders") and American Express Membership Rewards program participants, and allow American Express to market its services or products using our customer database. Cardholders earn miles for making purchases using co-branded cards, and certain cardholders may also receive baggage fee waivers, lounge access, priority boarding and other benefits while traveling on Delta. Additionally, participants in the American Express Membership Rewards program may exchange their points for miles under the loyalty program. We sell miles to American Express which are then provided to their customers under the co-brand credit card program and the Membership Rewards program.
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Item 7. MD&A - Critical Accounting Estimates
We account for marketing agreements, including those with American Express, by allocating the consideration to the individual products and services delivered. We allocate the value based on the relative selling prices of those products and services, which generally consist of award travel, baggage fee waivers, lounge access, priority boarding and the use of our brand. We determine our best estimate of the selling prices by using a discounted cash flow analysis using multiple inputs and assumptions, including (1) the expected number of miles awarded and number of miles redeemed, (2) ETV for the award travel obligation adjusted for mileage breakage, (3) published rates on our website for baggage fees, Delta Sky Club lounge access and other benefits while traveling on Delta, (4) brand value (using estimated royalties generated from the use of our brand) and (5) volume discounts provided to certain partners.
We defer the amount allocated to award travel as part of loyalty program deferred revenue and recognize loyalty travel awards in passenger revenue as the miles are redeemed and transportation is provided. 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 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.
The timing of mile redemptions can vary widely; however, the majority of new miles have historically been redeemed within two years of being earned. The loyalty program deferred revenue classified as a current liability represents our estimate of revenue expected to be recognized in the next twelve months based on projected redemptions, while the balance classified as a noncurrent liability represents our estimate of revenue expected to be recognized beyond twelve months.
For additional information on our significant accounting policies related to the loyalty program, see Note 2 of the Notes to the Consolidated Financial Statements.
Passenger Ticket Sales
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. 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 travel credits, which can be applied as payment toward the cost of a ticket. We periodically evaluate the estimated air traffic liability and may record adjustments in our Consolidated Statement of Operations ("income statement"). These adjustments relate primarily to tickets that expire unused ("ticket breakage") and items for which final settlement occurs in periods subsequent to the sale of the related tickets such as refunds, exchanges and transactions with other airlines.
We estimate the value of ticket breakage and recognize revenue at the scheduled flight date. Our ticket breakage estimates are primarily based on historical experience, ticket contract terms and customers’ travel behavior. At December 31, 2024, the aggregate air traffic liability balance was $7.1 billion. A hypothetical 10% change in the amount of tickets estimated to expire unused would result in an impact of less than 1% of total operating revenue for the year ended December 31, 2024.
For additional information on our significant accounting policies related to passenger ticket sales, see Note 2 of the Notes to the Consolidated Financial Statements.
Goodwill and Indefinite-Lived Intangible Assets
We apply a fair value-based impairment test to the carrying value of goodwill and indefinite-lived intangible assets on an annual basis (as of October 1) and, if certain events or circumstances indicate that an impairment loss may have been incurred, on an interim basis. We assess the value of our goodwill and indefinite-lived assets under either a qualitative or quantitative approach. Under a qualitative approach, we consider various market factors, including certain of the key assumptions listed below. We analyze these factors to determine if events and circumstances have affected the fair value of goodwill and indefinite-lived intangible assets. If we determine that it is more likely than not that the asset may be impaired, we use the quantitative approach to assess the asset's fair value and the amount of the impairment. Under a quantitative approach, we calculate the fair value of the asset incorporating the key assumptions listed below into our calculation.
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Item 7. MD&A - Critical Accounting Estimates
When we evaluate goodwill for impairment using a quantitative approach, we estimate the fair value of the reporting unit by considering both comparable public company multiples (a market approach) and projected discounted future cash flows (an income approach). When we perform a quantitative impairment assessment of our indefinite-lived intangible assets, fair value is estimated based on (1) recent market transactions, where available, (2) the royalty method for the Delta tradename (which assumes hypothetical royalties generated from using our tradename) or (3) projected discounted future cash flows (an income approach).
Key Assumptions. The key assumptions in our impairment tests include (1) forecasted revenues, expenses and cash flows, (2) current discount rates, (3) observable market transactions and (4) anticipated changes to the regulatory environment (e.g., changes in slot access and/or availability, additional Open Skies agreements or changes to antitrust approvals). These assumptions are consistent with those that hypothetical market participants would use. Because we are required to make estimates and assumptions when evaluating goodwill and indefinite-lived intangible assets for impairment, actual transaction amounts may differ materially from these estimates. In addition, when performing a qualitative valuation, we consider the amount by which the intangible assets' fair values exceeded their respective carrying values in the most recent fair value measurements calculated using a quantitative approach.
Changes in certain events and circumstances could result in impairment or a change from indefinite-lived to definite-lived. 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, (3) lower passenger demand as a result of weakened U.S. and global economies or other factors, (4) prolonged interruption to our operations, (5) changes to the regulatory environment, (6) operational or performance changes by other airlines and (7) strategic changes to our operations leading to diminished utilization of the intangible assets.
Goodwill . Our goodwill balance, which is related to the airline segment, was $9.8 billion at December 31, 2024.
Identifiable Intangible Assets. Our identifiable intangible assets, which are related to the airline segment, had a net carrying amount of $6.0 billion at December 31, 2024, of which $5.9 billion related to indefinite-lived intangible assets. Indefinite-lived assets are not amortized and consist of routes, slots, the Delta tradename and assets related to alliances and collaborative arrangements. Definite-lived assets consist primarily of marketing and maintenance service agreements.
During the December 2024 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. We previously performed quantitative assessments in the December 2023 quarter, noting no impairment of goodwill or indefinite-lived intangible assets.
For additional information on our goodwill and indefinite-lived intangible assets' significant accounting policies and the related fair values and book values, see Note 5 of the Notes to the Consolidated Financial Statements.
Defined Benefit Pension Plans
We sponsor defined benefit pension plans for eligible employees and retirees. These plans are generally closed to new entrants and frozen for future benefit accruals. As of December 31, 2024, the funded status for these plans recorded on our balance sheets was $938 million, which is the net of our benefit obligation of $15.0 billion and plan assets of $15.9 billion. We had no minimum funding requirements in 2024, and estimate that there will be approximately $80 million of minimum funding requirements under these plans in 2025. The most critical assumptions impacting our defined benefit pension plan obligations, plan assets and net periodic cost/(benefit) are the discount rate, the expected long-term rate of return on plan assets and life expectancy of plan participants.
Discount Rate. We determine our discount rate on our measurement date primarily by reference to annualized rates earned on high-quality fixed income investments and yield-to-maturity analyses specific to our estimated future benefit payments for each plan. We used a weighted average discount rate to value the obligations of 5.71% and 5.31% at December 31, 2024 and 2023, respectively.
Expected Long-Term Rate of Return. Our expected long-term rate of return on plan assets is based primarily on plan-specific investment studies using historical market return and volatility data. Modest excess return expectations versus some public market indices are incorporated into the return projections based on the actively managed structure of the investment programs and their records of achieving such returns historically. We also expect to receive a premium for investing in less liquid private markets. We review our rate of return on plan assets assumptions annually.
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Item 7. MD&A - Critical Accounting Estimates
The investment strategy for our defined benefit pension plan assets is to earn a long-term return that meets or exceeds our annualized return target while taking an acceptable level of risk and maintaining sufficient liquidity to pay current benefits and other cash obligations of the plan. 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. The expected long-term rate of return on our defined benefit pension plan assets is 6.97%.
The impact of a 0.50% change in weighted average discount rate and 1.00% change in expected long-term rate of return on assets are shown in the table below:
Benefit plan effects of change in assumptions used
Change in Assumption Effect on 2025
Pension Cost/(Benefit)
Effect on Accrued Pension Liability at December 31, 2024
0.50% decrease in weighted average discount rate $ 12 million $ 674 million
0.50% increase in weighted average discount rate $ (12) million $ (624) million
1.00% decrease in expected long-term rate of return on assets $ 154 million $ —
1.00% increase in expected long-term rate of return on assets $ (154) million $ —
Life Expectancy . 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.
Funding. Our funding obligations for qualified defined benefit plans are governed by ERISA and any additional applicable legislation. Under current legislation, any required funding would be amortized over a rolling 15-year period and calculated using a discount rate of no less than 4.75% through 2030.
While recent legislation makes our funding obligations for these plans more predictable, factors outside our control continue to have an impact on the funding requirements. Estimates of future funding requirements are based on various assumptions and can vary materially from actual funding requirements. Assumptions include, among other things, the actual and projected market performance of assets, statutory requirements and demographic data for participants.
Investments Valued at Net Asset Value ("NAV") Per Share. On an annual basis we assess the potential for adjustments to the fair value of all investments. These investments valued using NAV as a practical expedient are typically valued on a monthly or quarterly basis by third-party administrators, valuation agents or fund managers with an annual audit performed by an independent third-party, but certain of these investments have a lag in the availability of data. We solicit valuation updates from the investment fund managers and use their information and corroborating data from public markets to determine any needed fair value adjustments.
For additional information on our significant accounting policies related to defined benefit pension plans, see Note 9 of the Notes to the Consolidated Financial Statements.
Recent Accounting Standards
Recently Adopted Standards
In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("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. We adopted this standard effective January 1, 2024. See Note 14 of the Notes to the Consolidated Financial Statements for further information regarding our segment reporting.
Standards Effective in Future Years
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 is effective beginning January 1, 2025. Upon adoption of this ASU we expect to include certain additional disclosures in the effective income tax rate reconciliation in the footnotes to our Consolidated Financial Statements.
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Item 7. MD&A - Critical Accounting Estimates
Disaggregation of Income Statement Expenses. In November 2024, the FASB issued ASU No. 2024-03, "Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40)." This standard requires disclosure of specific information about costs and expenses and becomes effective January 1, 2027. 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.
Supplemental Information
We sometimes use information ("non-GAAP financial measures") that is derived from the Consolidated Financial Statements, but that is not presented in accordance with GAAP. Under the U.S. Securities and Exchange Commission rules, non-GAAP financial measures may be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for or superior to GAAP results.
Included below are reconciliations of non-GAAP measures used within this Form 10-K to the most directly comparable GAAP financial measures. Reconciliations below may not calculate exactly due to rounding. These reconciliations include certain adjustments to GAAP measures to provide comparability between the reported periods, if applicable, as indicated below:
• MTM adjustments and settlements on hedges. Mark-to-market ("MTM") adjustments are defined as fair value changes recorded in periods other than the settlement period. Such fair value changes are not necessarily indicative of the actual settlement value of the underlying hedge in the contract settlement period, and therefore we remove this impact to allow investors to better understand and analyze our core performance. Settlements represent cash received or paid on hedge contracts settled during the applicable period.
• One-time pilot agreement expenses. During 2023, Delta pilots ratified a new four-year Pilot Working Agreement effective January 1, 2023. The agreement 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. Adjusting for these expenses allows investors to better understand and analyze our core cost performance.
• Third-party refinery sales. Refinery sales to third parties, and related expenses, are not related to our airline segment. Excluding these sales therefore provides a more meaningful comparison of our airline operations to the rest of the airline industry.
• Aircraft fuel and related taxes. The volatility in fuel prices impacts the comparability of year-over-year financial performance. The adjustment for aircraft fuel and related taxes allows investors to better understand and analyze our non-fuel costs and year-over-year financial performance.
• Profit sharing. We adjust for profit sharing because this adjustment allows investors to better understand and analyze our recurring cost performance and provides a more meaningful comparison of our core operating costs to the airline industry.
Operating income, adjusted reconciliation
Year Ended December 31,
(in millions) 2024 2023
Operating income
$ 5,995 $ 5,521
Adjusted for:
MTM adjustments and settlements on hedges 21 (52)
One-time pilot agreement expenses
— 864
Operating income, adjusted
$ 6,016 $ 6,334
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Item 7. MD&A - Supplemental Information
Total revenue, adjusted reconciliation
Year Ended December 31,
(in millions) 2024 2023
Total revenue $ 61,643 $ 58,048
Adjusted for:
Third-party refinery sales (4,642) (3,379)
Total revenue, adjusted $ 57,001 $ 54,669
Operating expense, adjusted reconciliation
Year Ended December 31,
(in millions) 2024 2023
Operating expense $ 55,648 $ 52,527
Adjusted for:
Third-party refinery sales (4,642) (3,379)
MTM adjustments and settlements on hedges (21) 52
One-time pilot agreement expenses — (864)
Operating expense, adjusted $ 50,985 $ 48,335
Fuel expense, adjusted and Average fuel price per gallon, adjusted reconciliations
Average Price Per Gallon
Year Ended December 31, Year Ended December 31,
(in millions, except per gallon data) 2024 2023 2024 2023
Total fuel expense $ 10,566 $ 11,069 $ 2.57 $ 2.82
Adjusted for:
MTM adjustments and settlements on hedges (21) 52 (0.01) 0.01
Total fuel expense, adjusted $ 10,544 $ 11,121 $ 2.56 $ 2.83
TRASM, adjusted reconciliation
Year Ended December 31,
(in cents) 2024 2023
TRASM 21.37 ¢ 21.34 ¢
Adjusted for:
Third-party refinery sales (1.61) (1.24)
TRASM, adjusted 19.76 ¢ 20.10 ¢
CASM-Ex reconciliation
Year Ended December 31,
(in cents) 2024 2023
CASM 19.30 ¢ 19.31 ¢
Adjusted for:
Aircraft fuel and related taxes (3.66) (4.07)
Third-party refinery sales (1.61) (1.24)
Profit sharing (0.48) (0.51)
One-time pilot agreement expenses — (0.32)
CASM-Ex 13.54 ¢ 13.17 ¢
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Item 7. MD&A - Supplemental Information
Free Cash Flow
The following table shows a reconciliation of net cash provided by operating activities (a GAAP measure) to free cash flow (a non-GAAP financial measure). We present free cash flow because management believes this metric is helpful to investors to evaluate the company's ability to generate cash that is available for use for debt service or general corporate initiatives. Adjustments include:
• Net redemptions of short-term investments. Net redemptions of short-term investments represent the net purchase and sale activity of investments and marketable securities in the period, including gains and losses. We adjust for this activity to provide investors a better understanding of the company's free cash flow generated by our operations.
• Net cash flows related to certain airport construction projects and other. Cash flows related to certain airport construction projects are included in our GAAP operating activities and capital expenditures. We have adjusted for these items, which were primarily funded by cash restricted for airport construction, to provide investors a better understanding of the company's free cash flow that is core to our operations.
Free cash flow reconciliation
Year Ended December 31,
(in millions) 2024
Net cash provided by operating activities $ 8,025
Net cash used in investing activities (3,739)
Adjusted for:
Net redemptions of short-term investments (1,137)
Net cash flows related to certain airport construction projects and other 276
Free cash flow $ 3,424
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Item 7. MD&A - Glossary of Defined Terms
Glossary of Defined Terms
ASM - Available Seat Mile. A measure of capacity. ASMs equal the total number of seats available for transporting passengers during a reporting period multiplied by the total number of miles flown during that period.
CASM - (Total Operating) Cost per Available Seat Mile. The amount of operating cost incurred per ASM during a reporting period. CASM is also referred to as "unit cost."
CASM-Ex - The amount of operating cost incurred per ASM during a reporting period, adjusted for the items shown above in "Supplemental Information."
Free Cash Flow - A measure of net cash from operating and investing activities, adjusted for items shown above in "Supplemental Information." Represents the cash available for use for debt service or general corporate initiatives.
Liquidity - Includes our cash and cash-like assets, including cash equivalents and short-term investments, as well as aggregate principal amount committed and available to be drawn under our revolving credit facilities.
Load Factor - A measure of utilized available seating capacity calculated by dividing RPMs by ASMs for a reporting period.
Passenger Mile Yield or Yield - The amount of passenger revenue earned per RPM during a reporting period.
PRASM - Passenger Revenue per ASM. The amount of passenger revenue earned per ASM during a reporting period. PRASM is also referred to as "passenger unit revenue."
RPM - Revenue Passenger Mile. One revenue-paying passenger transported one mile is one RPM. RPMs equal the number of revenue passengers during a reporting period multiplied by the number of miles flown by those passengers during that period. RPMs are also referred to as "traffic."
TRASM - Total Revenue per ASM. The amount of total revenue earned per ASM during a reporting period.
TRASM, adjusted - The amount of total revenue earned per ASM during a reporting period, adjusted for the item shown above in "Supplemental Information."
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Item 7A. Market Risk