What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-02-11 compared with 2025-02-11 · 165 added, 177 removed, 474 unchanged (42% of the section changed)

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2025 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.

Our 2025 operating income was $5.8 billion, a decrease of $173 million compared to 2024, and operating income, adjusted (a non-GAAP financial measure) was $5.8 billion, a decrease of $212 million compared to 2024.

The decreases in operating income and operating income, adjusted primarily result from nearly offsetting increases in both revenue and operating expenses, as described below.

As a result of our strong performance in 2024 and 2025, we paid profit sharing of $1.4 billion in February 2025 to our employees and will pay another $1.3 billion in February 2026 in recognition of these achievements.

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.

Compared to 2024, our 2025 operating revenue increased $1.7 billion, or 3%, primarily due to a 3% increase in capacity driven by continued strength in demand for premium products, particularly from corporate customers, growth in loyalty travel awards, increased refinery sales to third parties and growth of our Delta TechOps third-party maintenance, repair and overhaul ("MRO") business.

In addition, revenue increased year over year due to the Crowdstrike-caused outage in 2024, which led to a direct revenue impact of approximately $380 million related to approximately 7,000 flight cancellations over five days.

Total revenue, adjusted (a non-GAAP financial measure) increased in 2025 by $1.3 billion, or 2.3%, compared to 2024.

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.

Adjustments were to exclude refinery sales to third parties.

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 increased $1.9 billion, or 3%, compared to 2024, primarily due to higher employee costs from increased wages, costs associated with a 3% increase in capacity, and higher expenses related to refinery sales to third parties.

These increases were partially offset by lower aircraft fuel costs.

In addition, approximately $170 million of additional operating expenses were incurred in 2024 associated with the Crowdstrike-caused outage primarily due to customer expense reimbursements and crew-related costs.

Total operating expense, adjusted (a non-GAAP financial measure) increased $1.5 billion, or 3%, compared to 2024.

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.

Current year adjustments were primarily to exclude expenses related to refinery sales to third parties.

Our total operating cost per available seat mile ("CASM") of 19.31 cents was comparable to 2024, primarily due to lower fuel expense and a 3% increase in capacity offset by higher employee costs.

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 2.4% to 13.86 cents compared to 2024, which was in line with our long-term target of low-single digit growth, on higher employee costs and investments in the customer experience.

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.

Total non-operating income was $363 million in 2025, compared to total non-operating expense of $1.3 billion in 2024, primarily due to mark-to-market gains on certain of our equity investments in 2025 compared to losses in 2024.

During 2025, operating activities generated $8.3 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.

Remuneration from American Express related to the SkyMiles program were $8.2 billion during 2025, an increase of approximately 11% compared to 2024.

Investing activities resulted in net cash outflows of approximately $4.2 billion, primarily for capital expenditures.

After adjusting for our strategic investment in WestJet and certain other items, these results generated $4.6 billion of free cash flow (a non-GAAP financial measure) in 2025.

Also, during 2025 we had financing cash outflows of $4.8 billion related to repayment of our debt and finance leases, including $2.9 billion for early repayments and the remainder for scheduled maturities.

Our proceeds from long-term obligations primarily related to the issuance of $2.0 billion in aggregate principal amount of unsecured notes.

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, 2025 was $7.4 billion.

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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.

Our operating revenue increased $1.7 billion, or 3%, compared to 2024 due to an increase in demand for premium products, particularly from corporate customers, growth in loyalty travel awards, increased refinery sales to third parties and growth of our MRO business.

Refinery sales and MRO are included in other revenue, discussed below.

These increases were partially offset by a decline in main cabin revenue due to industry-wide supply exceeding demand for main cabin travel in the uncertain economic environment.

Passenger Revenue by Geographic Region

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Atlantic 9,270 2 % 2 % 3 % (1) % (2) % (1) pt

Latin America 3,995 5 % 14 % 15 % (8) % (8) % — pts

Pacific 2,540 22 % 30 % 32 % (6) % (7) % (1) pt

Latin America 3,980 — % — % 1 % — % (1) % (1) pt

Pacific 2,787 10 % 16 % 9 % (5) % — % 4 pts

Total passenger revenue $ 51,768 2 % 1 % 3 % — % (2) % (2) pts

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.

Domestic passenger revenue in 2025 increased 1% on a 3% increase in capacity compared to 2024.

The increase in domestic revenue primarily resulted from strong demand for premium products across our 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.

Domestic passenger unit revenue ("PRASM") for 2025 decreased 2% compared to 2024 primarily due to weakness in main cabin demand.

International

International passenger revenue in 2025 increased 2% on a 4% increase in capacity compared to 2024, with growth primarily driven by improvement in the Atlantic and Pacific regions, while Latin America remained stable compared to 2024.

Revenue in the Atlantic region increased 2% on a 3% increase in capacity as we introduced new routes and destinations to Europe and Africa in 2025.

Revenue growth in the Atlantic was led by demand for our premium product offerings.

Delta Air Lines, Inc.

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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.

Revenue in the Latin America region remained consistent with 2024 on a slight increase in capacity.

We experienced slight revenue growth in the Caribbean and South America compared to 2024.

In South America, we continued to build on the strength of our joint venture with LATAM through greater network connectivity and a more streamlined airport experience.

Revenue in the Pacific region increased 10% on a 9% increase in capacity compared to 2024 on strong demand to Japan and South Korea, particularly with our premium product offerings.

We continued to invest in our joint venture partnership with Korean Air through the introduction of a new route from Salt Lake City to Seoul-Incheon.

Other Revenue

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This represents refinery sales of non-jet fuel products to third parties.

These sales increased $1.3 billion compared to 2023.

These sales increased $435 million compared to 2024.

See "Refinery Segment" below for additional details on the refinery's operations, including third party refinery sales recorded in other revenue, during each period.

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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.

These revenues are mainly driven by customer spend on American Express cards and new cardholder acquisitions, which both grew double-digit on a percentage basis compared to 2024.

Ancillary Businesses.

This includes revenues from aircraft maintenance services we provide to third parties and our vacation package operations.

This includes revenues from our MRO business and our vacation package operations.

During the years ended December 31, 2025 and 2024, the MRO business generated revenues of $822 million and $658 million, respectively.

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.

This is primarily composed of revenues related to lounge access, including access provided to certain American Express cardholders, travel products (e.g., car rentals or hotels booked with our commercial partners), codeshare agreements and international joint venture partnership contractual settlements.

The increase in revenues was primarily driven by growth in travel products, codeshare and lounge access.

Delta Air Lines, Inc.

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Landing fees and other rents 3,564 3,150 414 13 %

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 2,553 2,328 225 10 %

Passenger commissions and other selling expenses 2,485 2,485 — — %

Depreciation and amortization 2,443 2,513 (70) (3) %

Aircraft maintenance materials and outside repairs 2,432 2,616 (184) (7) %

Passenger service 1,855 1,788 67 4 %

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Aircraft rent 542 548 (6) (1) %

Pilot agreement and related expenses — 864 (864) NM

Other 2,388 2,460 (72) (3) %

Total operating expense $ 57,542 $ 55,648 $ 1,894 3 %

(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.

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 4% effective June 1, 2025, and 4% for Delta pilots on January 1, 2025.

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 decreased $747 million compared to 2024 primarily due to a 9% decrease in the market price of jet fuel partially offset by a 4% increase in consumption on a 3% increase in capacity.

Fuel expense and average price per gallon

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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.

Ancillary businesses and refinery includes expenses associated with refinery sales to third parties, MRO and our vacation package operations.

The increase in these expenses was primarily related to higher refinery sales to third parties, which increased $435 million compared to 2024.

See "Refinery Segment" below for additional details on the refinery's operations, including third party refinery sales.

In addition, the expenses related to our MRO business increased $141 million, to $751 million during 2025, due to an approximately 25% growth in that business.

Contracted Services.

The increase in contracted services resulted from inflationary rate increases in our operations, volume increases on a 3% increase in capacity and additional contract labor costs associated with the expansion of our Sky Club network, particularly our Delta One lounges.

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 2024.

Regional Carrier Expense.

The increase in regional carrier expense primarily resulted from higher volume of regional flights and annual rate increases.

Delta Air Lines, Inc.

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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.

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.

Aircraft Maintenance Materials and Outside Repairs.

The decrease in aircraft maintenance materials and outside repairs expense primarily resulted from the timing of engine maintenance activities, renegotiated engine maintenance agreements and a gain from the sale of our MRO JV located in Queretaro, Mexico.

These decreases were partially offset by a higher volume of airframe checks in 2025.

The decrease in other operating expense primarily resulted from gains from several sale-leaseback transactions and lower irregular operations expense in 2025.

Non-Operating Results

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Miscellaneous, net (144) (232) 88

Total non-operating (expense)/income, net $ (1,337) $ 87 $ (1,424)

Total non-operating income/(expense), net $ 363 $ (1,337) $ 1,700

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.

This decreased compared to the prior year primarily due to reduced interest expense resulting from our debt reduction initiatives.

During 2024, we made payments of $4.0 billion related to our debt and finance lease obligations.

We continued to prioritize strengthening the balance sheet and reducing debt with $4.8 billion of payments on debt and finance lease obligations during 2025.

During the June 2025 quarter, we issued $2.0 billion in aggregate principal amount of unsecured notes and used a portion of the proceeds to repay the Payroll Support Program ("PSP") loan due 2030 ("PSP1 Loan").

The new unsecured notes carry a lower interest rate than the repaid PSP1 Loan.

We continue to seek opportunities to pre-pay our debt, in addition to periodic amortization and scheduled maturities, and refinance higher cost debt.

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.

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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).

Miscellaneous, net primarily includes employee benefit plans net periodic cost, charitable contributions, our share of our equity method investments' results, dividend income from our equity investments and foreign exchange gains/(losses).

The decrease compared to 2024 primarily relates to lower employee benefit plan costs and an increase in dividend income.

See Note 4 of the Notes to the Consolidated Financial Statements for additional information on our equity investments.

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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.

Excluding the mark-to-market results, we project our annual effective tax rate to be between 23% and 25% for 2026.

On July 4, 2025, the One Big Beautiful Bill Act was signed into law.

The legislation did not have a material impact on our income tax expense or effective income tax rate for the year ended December 31, 2025.

For more information about our income taxes, see Note 10 of the Notes to the Consolidated Financial Statements.

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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.

Monroe has agreements in place to exchange or sell the non-jet fuel products the refinery produces with third parties to obtain jet fuel for consumption in our airline operations.

The refinery provides approximately 200,000 barrels per day, or approximately 75% of our consumption, for use in our airline operations through the production of jet fuel and through exchanges and sales of gasoline and diesel fuel produced by the refinery.

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.

The volume of exchange transactions has declined in recent years due to changes in the counterparties used to supply jet fuel and our related buy/sell agreements.

As of December 31, 2025, we do not plan to use exchange agreements to procure significant volumes of fuel.

The decline in exchange transaction volume has driven an increase in third-party refinery sales.

Refinery revenues decreased in 2025, primarily driven by lower pricing of refined products.

The refinery's operating income increased in 2025 compared to 2024 mainly due to higher industry refining margins.

Refinery segment financial information

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Sales to airline segment 1,150 1,421 (19) %

Third-party refinery sales 4,642 3,379 37 %

Third-party sales 5,077 4,642 9 %

Operating revenue $ 6,961 $ 7,767 (10) %

Operating income $ 38 $ 385 (90) %

Refinery segment impact on average price per fuel gallon $ (0.01) $ (0.10) (90) %

Operating income $ 157 $ 38 NM

Refinery segment impact on average price per fuel gallon $ (0.04) $ (0.01) NM

(1) Certain variances are labeled as not meaningful ("NM") throughout management's discussion and analysis.

A refinery is subject to annual EPA requirements to blend renewable fuels into the gasoline and on-road diesel fuel it produces.

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For more information regarding the refinery's results, see Note 14 of the Notes to the Consolidated Financial Statements.

Delta Air Lines, Inc.

| 2025 Form 10-K

MD&A - Operating Statistics

Operating Statistics

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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.

Remuneration from American Express was $8.2 billion during 2025, an increase of 11% 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.

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The average fuel price per gallon decreased in 2025.

We expect continued higher market price volatility compared to historical levels due to geopolitical events.

Fuel prices have historically been volatile due to many factors, including geopolitical events.

As capacity increased throughout the year, fuel consumption was higher in 2025 than 2024.

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.

We expect fuel consumption to increase in 2026 generally aligned with capacity.

Employee Benefit Obligations.

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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.

We had minimum funding requirements of $70 million during 2025 and estimate that there will be approximately $5 million of minimum funding requirements under these plans in 2026.

Payments to defined contribution plans were approximately $1.4 billion during the year ended December 31, 2025.

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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.

As of December 31, 2025 the total of these minimum amounts was $6.0 billion, decreasing on an annual basis from approximately $1.8 billion in 2026 to $300 million in 2030.

See Note 9 of the Notes to the Consolidated Financial Statements for more information on our contract carrier obligations.

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As described further in Note 7 of the Notes to the Consolidated Financial Statements, as of December 31, 2025 we had a total of $7.8 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.

These minimum lease payments decrease on an annual basis from approximately $1.0 billion in 2026 to $500 million in 2030.

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.

As of December 31, 2025, we had approximately $11.2 billion of such obligations, decreasing on an annual basis from approximately $1.4 billion in 2026 to $800 million in 2030.

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.

During 2025, we utilized substantially all of our remaining pre-2018 net operating loss carryforwards and, due to the limitations on post-2017 net operating losses, began making cash federal income tax payments.

We expect income tax cash payments to increase in 2026 based on our projected financial results.

As of December 31, 2025, we had approximately $2.4 billion of U.S.

federal pre-tax net operating loss carryforwards which we are expecting to utilize during 2026.

These net operating loss carryforwards were primarily generated in 2020 and do not expire.

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 $4.5 billion and $5.1 billion in 2025 and 2024, respectively.

Our capital expenditures are primarily related to the purchases of aircraft, airport construction projects (discussed below), fleet modifications and technology enhancements.

Our capital expenditures are primarily related to the purchases of aircraft, fleet modifications, airport construction projects 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 2026 capital spend of approximately $5.5 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.

On January 12, 2026, we entered into a definitive agreement with The Boeing Company to acquire 30 Boeing 787-10 aircraft, with an option to purchase up to an additional 30 of the same aircraft.

The B-787-10 aircraft will include GEnx engines manufactured by General Electric.

Deliveries of the B-787-10 aircraft will begin in 2031.

On January 27, 2026, we entered into a definitive agreement with Airbus S.A.S.

to purchase 16 Airbus A330-900 aircraft and 15 Airbus A350-900 aircraft, with an option to purchase up to an additional 20 widebody aircraft.

The A330-900 aircraft will be powered by the Trent 7000 engine and the A350-900 aircraft will utilize the Trent XWB-84 EP engine, both manufactured by Rolls-Royce.

Deliveries of the aircraft will begin in 2029.

See Note 9 of the Notes to the Consolidated Financial Statements for additional information regarding our aircraft purchase commitments, which totaled approximately $15.4 billion as of December 31, 2025.

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.

Strategic Investment in WestJet.

In October 2025, we acquired a 12.7% equity stake in WestJet for $276 million.

As part of the transaction, we also assumed a commensurate portion of a shareholder loan receivable from the previous owner.

In 2025, other, net investing activities primarily included proceeds from several sale-leaseback transactions, the sale of a portion of our equity investment in Unifi Aviation and the sale of our engine maintenance, repair and overhaul joint venture with Aeroméxico located in Queretaro, Mexico.

In 2024, other, net investing activities primarily included proceeds from the sale of our equity ownership in Clear Secure, Inc.

Delta Air Lines, Inc.

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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.

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.

In 2025, we had cash outflows of approximately $4.8 billion related to repayments of our debt and finance leases.

We continue to seek opportunities to pre-pay our debt, in addition to periodic amortization payments and scheduled maturities, and refinance higher cost debt.

In June 2025, we issued $2.0 billion in aggregate principal amounts of unsecured notes, consisting of $1.0 billion of 4.95% Notes due 2028 and $1.0 billion of 5.25% Notes due 2030 (collectively, the "Notes").

The net proceeds from the offering of the Notes were used to repay the Payroll Support Program ("PSP") loan due 2030 and for general corporate purposes.

In September 2025, we and our indirect wholly-owned subsidiary SkyMiles IP Ltd.

entered into an amendment to the SkyMiles Term Loan credit and guaranty agreement (the "SkyMiles Credit Facility").

This amendment, among other things, (i) refinanced the existing term loans with the proceeds of replacement term loans bearing interest at a variable rate equal to an adjusted term Secured Overnight Financing Rate ("SOFR"), plus a reduced margin of 1.50% per annum, payable quarterly;

(ii) extended the scheduled maturity from October 2027 to October 2028;

(iii) reduced the principal amortization payments from 20% to 1% per year, payable quarterly;

and (iv) added a prepayment premium of 1.00% payable in connection with a Repricing Event (as defined in the amended SkyMiles Credit Facility) occurring within six months following September 30, 2025.

In January 2026, we entered into a $1.3 billion term loan issued by a group of lenders due December 2026.

The proceeds of the term loan were used to repay $957 million of the PSP loans due 2031 and for general corporate purposes.

In February 2025, Moody's credit rating agency upgraded its rating for Delta to Baa2, an investment grade rating.

In the September 2025 quarter, Fitch Ratings upgraded its outlook for Delta to Positive from Stable.

In January 2026, S&P Global upgraded its outlook for Delta to Positive from Stable.

The principal amount of our debt and finance leases was $14.1 billion at December 31, 2025.

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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.

Based on applicable interest rates and scheduled debt maturities as of December 31, 2025, these interest obligations total approximately $2.4 billion, decreasing on an annual basis from approximately $500 million in 2026 to $200 million in 2030.

Finance Lease Obligations.

As described further in Note 7 of the Notes to the Consolidated Financial Statements, as of December 31, 2025 we had a total of $870 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.

These minimum lease payments are generally decreasing on an annual basis from approximately $300 million in 2026 to $100 million in 2030.

Capital Returns to Shareholders.

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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.

Miles are redeemable by customers for air travel on Delta and other participating airlines, access to Delta Sky Clubs, and other program awards.

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

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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.

Customers earn miles based on their spending with participating companies, such as credit card, car rental, ridesharing, retail, 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.

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During the years ended December 31, 2025, 2024 and 2023, total cash sales from marketing agreements related to our loyalty program were $8.0 billion, $7.4 billion and $6.9 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.

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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 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, lounge access and priority boarding 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 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.

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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

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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.

| 2024 Form 10-K

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).

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Our goodwill balance, which is related to the airline segment, was $9.8 billion at December 31, 2025.

Delta Air Lines, Inc.

| 2025 Form 10-K

MD&A - Critical Accounting Estimates

Identifiable Intangible Assets.

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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.

As of December 31, 2025, the funded status for these plans recorded on our balance sheets was $2.3 billion, which is the net of our benefit obligation of $15.0 billion and plan assets of $17.3 billion.

We had minimum funding requirements of $70 million during 2025 and estimate that there will be approximately $5 million of minimum funding requirements under these plans in 2026.

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.

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We review our rate of return on plan assets assumptions annually.

Delta Air Lines, Inc.

| 2024 Form 10-K

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.

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Life Expectancy .

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

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

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.

| 2025 Form 10-K

MD&A - Critical Accounting Estimates

Our funding obligations for qualified defined benefit plans are governed by ERISA and any additional applicable legislation.

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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.

In December 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("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.

Delta Air Lines, Inc.

| 2024 Form 10-K

MD&A - Critical Accounting Estimates

We adopted this standard effective January 1, 2025.

See Note 10 of the Notes to the Consolidated Financial Statements for our income tax disclosures.

Standards Effective in Future Years

Disaggregation of Income Statement Expenses.

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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.

Internal Use Software.

In September 2025, the FASB issued ASU No.

2025-06, "Targeted Improvements to the Accounting for Internal-Use Software." This standard is intended to improve the operability and application of guidance related to capitalized software development costs and becomes effective January 1, 2028.

We are assessing the potential impact this ASU may have on our Consolidated Financial Statements upon adoption.

Interim Reporting.

In December 2025, the FASB issued ASU No.

2025-11, "Interim Reporting (Topic 270)." This standard clarifies interim reporting guidance, develops a list of disclosures required by other Topics and intends to enhance consistency in interim reporting across entities.

This standard becomes effective January 1, 2028 with early adoption permitted.

We do not expect this standard to have a material impact on our interim reporting.

Delta Air Lines, Inc.

| 2025 Form 10-K

MD&A - Supplemental Information

Supplemental Information

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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.

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MTM adjustments and settlements on hedges (17) 21

One-time pilot agreement expenses

Operating income, adjusted

$ 5,804 $ 6,016

Delta Air Lines, Inc.

| 2024 Form 10-K

MD&A - Supplemental Information

Total revenue, adjusted reconciliation

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MTM adjustments and settlements on hedges 17 (21)

One-time pilot agreement expenses — (864)

Operating expense, adjusted $ 52,483 $ 50,985

Delta Air Lines, Inc.

| 2025 Form 10-K

MD&A - Supplemental Information

Fuel expense, adjusted and Average fuel price per gallon, adjusted reconciliations

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Profit sharing (0.45) (0.48)

One-time pilot agreement expenses — (0.32)

CASM-Ex 13.86 ¢ 13.54 ¢

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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.

• Pension plan contributions.

Cash flows related to pension funding are included in our GAAP operating activities.

We adjust to exclude these contributions to allow investors to understand the cash flows related to our core 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.

• Strategic investments and related.

Certain cash flows related to our investments in and related transactions with other airlines and associated companies are included in our GAAP investing activities.

We adjust for this activity because it provides a more meaningful comparison to our airline industry peers.

Free cash flow reconciliation

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Adjusted for:

Net redemptions of short-term investments (1,137)

Pension plan contributions 70

Net cash flows related to certain airport construction projects and other 141

Strategic investments and related 276

Free cash flow $ 4,643

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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 7. Management’s Discussion and Analysis