P5Y70000000061000000false--12-31Q220180000027904Large Accelerated FilerDELTA AIR LINES INC /DE/1409700000015097000000113000000122000000120000001300000014580000001424000000140000000014260000000.00010.00011500000000150000000071467416069948694430000000002028-12-312023-12-312021-12-312027-12-312021-12-312027-12-312036-12-312030-12-312023-12-312028-12-312022-12-312018-01-012019-01-012018-01-012022-01-012019-01-012021-01-012021-01-012020-01-01P5YP3YP3YP10YP3Y84500000085300000012000000240000006000000100000040000000350000002000000000P2Y74761818155625 0000027904 2018-01-01 2018-06-30 0000027904 2018-06-30 0000027904 2017-12-31 0000027904 dal:PassengerFrequentFlyerMember 2018-06-30 0000027904 dal:PassengerAirTrafficMember 2018-06-30 0000027904 dal:PassengerFrequentFlyerMember 2017-12-31 0000027904 dal:PassengerAirTrafficMember 2017-12-31 0000027904 2017-04-01 2017-06-30 0000027904 2018-04-01 2018-06-30 0000027904 us-gaap:PassengerMember 2018-04-01 2018-06-30 0000027904 2017-01-01 2017-06-30 0000027904 us-gaap:ProductAndServiceOtherMember 2017-01-01 2017-06-30 0000027904 us-gaap:CargoAndFreightMember 2017-04-01 2017-06-30 0000027904 us-gaap:PassengerMember 2017-04-01 2017-06-30 0000027904 us-gaap:CargoAndFreightMember 2018-01-01 2018-06-30 0000027904 us-gaap:CargoAndFreightMember 2018-04-01 2018-06-30 0000027904 us-gaap:ProductAndServiceOtherMember 2017-04-01 2017-06-30 0000027904 us-gaap:ProductAndServiceOtherMember 2018-01-01 2018-06-30 0000027904 us-gaap:CargoAndFreightMember 2017-01-01 2017-06-30 0000027904 us-gaap:PassengerMember 2017-01-01 2017-06-30 0000027904 us-gaap:ProductAndServiceOtherMember 2018-04-01 2018-06-30 0000027904 us-gaap:PassengerMember 2018-01-01 2018-06-30 0000027904 2016-12-31 0000027904 2017-06-30 0000027904 srt:RestatementAdjustmentMember us-gaap:AccountingStandardsUpdate201707Member 2017-04-01 2017-06-30 0000027904 us-gaap:PassengerMember srt:RestatementAdjustmentMember us-gaap:AccountingStandardsUpdate201409Member 2017-01-01 2017-12-31 0000027904 us-gaap:AccountingStandardsUpdate201601Member 2018-01-01 0000027904 dal:PassengerAirTrafficMember srt:RestatementAdjustmentMember us-gaap:AccountingStandardsUpdate201409Member 2017-12-31 0000027904 dal:AirFranceKLMMember us-gaap:AccountingStandardsUpdate201601Member 2018-01-01 2018-06-30 0000027904 srt:RestatementAdjustmentMember us-gaap:AccountingStandardsUpdate201707Member 2017-01-01 2017-06-30 0000027904 dal:PassengerFrequentFlyerMember srt:RestatementAdjustmentMember us-gaap:AccountingStandardsUpdate201409Member 2017-12-31 0000027904 dal:PassengerFrequentFlyerMember srt:ScenarioPreviouslyReportedMember us-gaap:NewAccountingPronouncementMember 2017-12-31 0000027904 dal:PassengerAirTrafficMember srt:RestatementAdjustmentMember us-gaap:NewAccountingPronouncementMember 2017-12-31 0000027904 srt:RestatementAdjustmentMember us-gaap:NewAccountingPronouncementMember 2017-12-31 0000027904 srt:ScenarioPreviouslyReportedMember us-gaap:NewAccountingPronouncementMember 2017-12-31 0000027904 dal:PassengerAirTrafficMember srt:ScenarioPreviouslyReportedMember us-gaap:NewAccountingPronouncementMember 2017-12-31 0000027904 dal:PassengerFrequentFlyerMember srt:RestatementAdjustmentMember us-gaap:NewAccountingPronouncementMember 2017-12-31 0000027904 srt:ScenarioPreviouslyReportedMember us-gaap:NewAccountingPronouncementMember 2017-04-01 2017-06-30 0000027904 srt:ScenarioPreviouslyReportedMember us-gaap:NewAccountingPronouncementMember 2017-01-01 2017-06-30 0000027904 us-gaap:PassengerMember srt:ScenarioPreviouslyReportedMember us-gaap:NewAccountingPronouncementMember 2017-01-01 2017-06-30 0000027904 srt:RestatementAdjustmentMember us-gaap:NewAccountingPronouncementMember 2017-01-01 2017-06-30 0000027904 srt:RestatementAdjustmentMember us-gaap:NewAccountingPronouncementMember 2017-04-01 2017-06-30 0000027904 us-gaap:PassengerMember srt:RestatementAdjustmentMember us-gaap:NewAccountingPronouncementMember 2017-04-01 2017-06-30 0000027904 us-gaap:CargoAndFreightMember srt:ScenarioPreviouslyReportedMember us-gaap:NewAccountingPronouncementMember 2017-01-01 2017-06-30 0000027904 us-gaap:PassengerMember srt:RestatementAdjustmentMember us-gaap:NewAccountingPronouncementMember 2017-01-01 2017-06-30 0000027904 us-gaap:ProductAndServiceOtherMember srt:RestatementAdjustmentMember us-gaap:NewAccountingPronouncementMember 2017-04-01 2017-06-30 0000027904 us-gaap:CargoAndFreightMember srt:RestatementAdjustmentMember us-gaap:NewAccountingPronouncementMember 2017-01-01 2017-06-30 0000027904 us-gaap:ProductAndServiceOtherMember srt:ScenarioPreviouslyReportedMember us-gaap:NewAccountingPronouncementMember 2017-01-01 2017-06-30 0000027904 us-gaap:PassengerMember srt:ScenarioPreviouslyReportedMember us-gaap:NewAccountingPronouncementMember 2017-04-01 2017-06-30 0000027904 us-gaap:CargoAndFreightMember srt:RestatementAdjustmentMember us-gaap:NewAccountingPronouncementMember 2017-04-01 2017-06-30 0000027904 us-gaap:ProductAndServiceOtherMember srt:RestatementAdjustmentMember us-gaap:NewAccountingPronouncementMember 2017-01-01 2017-06-30 0000027904 us-gaap:ProductAndServiceOtherMember srt:ScenarioPreviouslyReportedMember us-gaap:NewAccountingPronouncementMember 2017-04-01 2017-06-30 0000027904 us-gaap:CargoAndFreightMember srt:ScenarioPreviouslyReportedMember us-gaap:NewAccountingPronouncementMember 2017-04-01 2017-06-30 0000027904 us-gaap:ProductAndServiceOtherMember srt:RestatementAdjustmentMember us-gaap:AccountingStandardsUpdate201409Member 2018-01-01 2018-06-30 0000027904 us-gaap:PassengerMember us-gaap:DomesticDestinationMember 2018-04-01 2018-06-30 0000027904 us-gaap:PassengerMember us-gaap:DomesticDestinationMember 2018-01-01 2018-06-30 0000027904 us-gaap:PassengerMember us-gaap:AtlanticDestinationMember 2017-04-01 2017-06-30 0000027904 us-gaap:PassengerMember us-gaap:DomesticDestinationMember 2017-01-01 2017-06-30 0000027904 us-gaap:PassengerMember us-gaap:LatinAmericaDestinationMember 2017-04-01 2017-06-30 0000027904 us-gaap:PassengerMember us-gaap:PacificDestinationMember 2017-01-01 2017-06-30 0000027904 us-gaap:PassengerMember us-gaap:PacificDestinationMember 2018-01-01 2018-06-30 0000027904 us-gaap:PassengerMember us-gaap:AtlanticDestinationMember 2017-01-01 2017-06-30 0000027904 us-gaap:PassengerMember us-gaap:AtlanticDestinationMember 2018-01-01 2018-06-30 0000027904 us-gaap:PassengerMember us-gaap:LatinAmericaDestinationMember 2017-01-01 2017-06-30 0000027904 us-gaap:PassengerMember us-gaap:PacificDestinationMember 2017-04-01 2017-06-30 0000027904 us-gaap:PassengerMember us-gaap:AtlanticDestinationMember 2018-04-01 2018-06-30 0000027904 us-gaap:PassengerMember us-gaap:PacificDestinationMember 2018-04-01 2018-06-30 0000027904 us-gaap:PassengerMember us-gaap:LatinAmericaDestinationMember 2018-04-01 2018-06-30 0000027904 us-gaap:PassengerMember us-gaap:LatinAmericaDestinationMember 2018-01-01 2018-06-30 0000027904 us-gaap:PassengerMember us-gaap:DomesticDestinationMember 2017-04-01 2017-06-30 0000027904 dal:PassengerFrequentFlyerMember 2016-12-31 0000027904 dal:PassengerFrequentFlyerMember 2017-06-30 0000027904 dal:PassengerLoyaltyTravelAwardsMember 2018-04-01 2018-06-30 0000027904 dal:PassengerLoyaltyTravelAwardsMember 2018-01-01 2018-06-30 0000027904 dal:PassengerTravelRelatedServicesMember 2018-01-01 2018-06-30 0000027904 dal:PassengerAirTrafficMember 2018-01-01 2018-06-30 0000027904 dal:PassengerTravelRelatedServicesMember 2018-04-01 2018-06-30 0000027904 dal:PassengerLoyaltyTravelAwardsMember 2017-01-01 2017-06-30 0000027904 dal:PassengerTravelRelatedServicesMember 2017-01-01 2017-06-30 0000027904 dal:PassengerTravelRelatedServicesMember 2017-04-01 2017-06-30 0000027904 dal:PassengerLoyaltyTravelAwardsMember 2017-04-01 2017-06-30 0000027904 dal:PassengerAirTrafficMember 2017-04-01 2017-06-30 0000027904 dal:PassengerAirTrafficMember 2017-01-01 2017-06-30 0000027904 dal:PassengerAirTrafficMember 2018-04-01 2018-06-30 0000027904 dal:ProductAndServiceOtherAncillaryBusinessesAndRefineryMember 2017-01-01 2017-06-30 0000027904 dal:ProductAndServiceOtherMiscellaneousMember 2017-01-01 2017-06-30 0000027904 dal:ProductAndServiceOtherLoyaltyProgramMember 2018-04-01 2018-06-30 0000027904 dal:ProductAndServiceOtherAncillaryBusinessesAndRefineryMember 2018-01-01 2018-06-30 0000027904 dal:ProductAndServiceOtherMiscellaneousMember 2018-04-01 2018-06-30 0000027904 dal:ProductAndServiceOtherLoyaltyProgramMember 2018-01-01 2018-06-30 0000027904 dal:ProductAndServiceOtherLoyaltyProgramMember 2017-01-01 2017-06-30 0000027904 dal:ProductAndServiceOtherAncillaryBusinessesAndRefineryMember 2018-04-01 2018-06-30 0000027904 dal:ProductAndServiceOtherMiscellaneousMember 2018-01-01 2018-06-30 0000027904 dal:ProductAndServiceOtherMiscellaneousMember 2017-04-01 2017-06-30 0000027904 dal:ProductAndServiceOtherLoyaltyProgramMember 2017-04-01 2017-06-30 0000027904 dal:ProductAndServiceOtherAncillaryBusinessesAndRefineryMember 2017-04-01 2017-06-30 0000027904 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2018-06-30 0000027904 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:CorporateDebtSecuritiesMember 2018-06-30 0000027904 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:USTreasuryAndGovernmentMember 2018-06-30 0000027904 us-gaap:FairValueMeasurementsRecurringMember 2018-06-30 0000027904 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:CashEquivalentsMember 2018-06-30 0000027904 us-gaap:FairValueMeasurementsRecurringMember us-gaap:AssetBackedSecuritiesMember 2018-06-30 0000027904 us-gaap:FairValueMeasurementsRecurringMember us-gaap:EquitySecuritiesMember 2018-06-30 0000027904 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:OtherDebtSecuritiesMember 2018-06-30 0000027904 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:ForeignExchangeContractMember 2018-06-30 0000027904 us-gaap:FairValueMeasurementsRecurringMember us-gaap:InterestRateSwapMember 2018-06-30 0000027904 us-gaap:FairValueMeasurementsRecurringMember us-gaap:CashEquivalentsMember 2018-06-30 0000027904 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:ForeignExchangeContractMember 2018-06-30 0000027904 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:InterestRateSwapMember 2018-06-30 0000027904 us-gaap:FairValueMeasurementsRecurringMember us-gaap:CorporateDebtSecuritiesMember 2018-06-30 0000027904 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:EquitySecuritiesMember 2018-06-30 0000027904 us-gaap:FairValueMeasurementsRecurringMember us-gaap:EnergyRelatedDerivativeMember 2018-06-30 0000027904 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:CashEquivalentsMember 2018-06-30 0000027904 us-gaap:FairValueMeasurementsRecurringMember us-gaap:OtherDebtSecuritiesMember 2018-06-30 0000027904 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:EnergyRelatedDerivativeMember 2018-06-30 0000027904 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:EnergyRelatedDerivativeMember 2018-06-30 0000027904 us-gaap:FairValueMeasurementsRecurringMember us-gaap:ForeignExchangeContractMember 2018-06-30 0000027904 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:OtherDebtSecuritiesMember 2018-06-30 0000027904 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:InterestRateSwapMember 2018-06-30 0000027904 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:AssetBackedSecuritiesMember 2018-06-30 0000027904 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:AssetBackedSecuritiesMember 2018-06-30 0000027904 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:EquitySecuritiesMember 2018-06-30 0000027904 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:USTreasuryAndGovernmentMember 2018-06-30 0000027904 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2018-06-30 0000027904 us-gaap:FairValueMeasurementsRecurringMember us-gaap:USTreasuryAndGovernmentMember 2018-06-30 0000027904 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:CorporateDebtSecuritiesMember 2018-06-30 0000027904 srt:MaximumMember us-gaap:EnergyRelatedDerivativeMember us-gaap:MeasurementInputOptionVolatilityMember us-gaap:ValuationTechniqueOptionPricingModelMember 2018-06-30 0000027904 srt:MinimumMember us-gaap:EnergyRelatedDerivativeMember us-gaap:MeasurementInputOptionVolatilityMember us-gaap:ValuationTechniqueOptionPricingModelMember 2018-06-30 0000027904 us-gaap:FairValueMeasurementsRecurringMember 2017-12-31 0000027904 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:AssetBackedSecuritiesMember 2017-12-31 0000027904 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:CorporateDebtSecuritiesMember 2017-12-31 0000027904 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:OtherDebtSecuritiesMember 2017-12-31 0000027904 us-gaap:FairValueMeasurementsRecurringMember us-gaap:CorporateDebtSecuritiesMember 2017-12-31 0000027904 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:EnergyRelatedDerivativeMember 2017-12-31 0000027904 us-gaap:FairValueMeasurementsRecurringMember us-gaap:USTreasuryAndGovernmentMember 2017-12-31 0000027904 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:CorporateDebtSecuritiesMember 2017-12-31 0000027904 us-gaap:FairValueMeasurementsRecurringMember us-gaap:OtherDebtSecuritiesMember 2017-12-31 0000027904 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:OtherDebtSecuritiesMember 2017-12-31 0000027904 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:USTreasuryAndGovernmentMember 2017-12-31 0000027904 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2017-12-31 0000027904 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:ForeignExchangeContractMember 2017-12-31 0000027904 us-gaap:FairValueMeasurementsRecurringMember us-gaap:EquitySecuritiesMember 2017-12-31 0000027904 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:EnergyRelatedDerivativeMember 2017-12-31 0000027904 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:ForeignExchangeContractMember 2017-12-31 0000027904 us-gaap:FairValueMeasurementsRecurringMember us-gaap:ForeignExchangeContractMember 2017-12-31 0000027904 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:CashEquivalentsMember 2017-12-31 0000027904 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:CashEquivalentsMember 2017-12-31 0000027904 us-gaap:FairValueMeasurementsRecurringMember us-gaap:AssetBackedSecuritiesMember 2017-12-31 0000027904 us-gaap:FairValueMeasurementsRecurringMember us-gaap:CashEquivalentsMember 2017-12-31 0000027904 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2017-12-31 0000027904 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:EquitySecuritiesMember 2017-12-31 0000027904 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:USTreasuryAndGovernmentMember 2017-12-31 0000027904 us-gaap:FairValueMeasurementsRecurringMember us-gaap:EnergyRelatedDerivativeMember 2017-12-31 0000027904 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:AssetBackedSecuritiesMember 2017-12-31 0000027904 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:EquitySecuritiesMember 2017-12-31 0000027904 dal:GOLMember 2018-06-30 0000027904 dal:AirFranceKLMMember us-gaap:CorporateJointVentureMember 2018-06-30 0000027904 dal:GrupoAeromexicoMember 2018-06-30 0000027904 dal:VirginAtlanticMember 2018-06-30 0000027904 dal:GOLMember dal:TermLoanFacilityMember 2018-01-01 2018-06-30 0000027904 dal:ChinaEasternMember 2018-06-30 0000027904 us-gaap:OtherCurrentAssetsMember us-gaap:ForeignExchangeContractMember us-gaap:DesignatedAsHedgingInstrumentMember 2017-12-31 0000027904 us-gaap:OtherAssetsMember us-gaap:EnergyRelatedDerivativeMember us-gaap:NondesignatedMember 2017-12-31 0000027904 us-gaap:OtherLiabilitiesMember 2017-12-31 0000027904 us-gaap:ForeignExchangeContractMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2017-12-31 0000027904 us-gaap:OtherLiabilitiesMember us-gaap:EnergyRelatedDerivativeMember us-gaap:NondesignatedMember 2017-12-31 0000027904 us-gaap:ForeignExchangeContractMember us-gaap:DesignatedAsHedgingInstrumentMember 2017-12-31 0000027904 us-gaap:OtherAssetsMember 2017-12-31 0000027904 us-gaap:OtherCurrentLiabilitiesMember us-gaap:ForeignExchangeContractMember us-gaap:DesignatedAsHedgingInstrumentMember 2017-12-31 0000027904 us-gaap:OtherCurrentLiabilitiesMember 2017-12-31 0000027904 us-gaap:EnergyRelatedDerivativeMember us-gaap:NondesignatedMember 2017-12-31 0000027904 us-gaap:OtherCurrentLiabilitiesMember us-gaap:EnergyRelatedDerivativeMember us-gaap:NondesignatedMember 2017-12-31 0000027904 us-gaap:OtherAssetsMember us-gaap:ForeignExchangeContractMember us-gaap:DesignatedAsHedgingInstrumentMember 2017-12-31 0000027904 us-gaap:OtherCurrentAssetsMember 2017-12-31 0000027904 us-gaap:OtherCurrentAssetsMember us-gaap:EnergyRelatedDerivativeMember us-gaap:NondesignatedMember 2017-12-31 0000027904 us-gaap:OtherLiabilitiesMember us-gaap:ForeignExchangeContractMember us-gaap:DesignatedAsHedgingInstrumentMember 2017-12-31 0000027904 us-gaap:ForeignExchangeContractMember us-gaap:CashFlowHedgingMember us-gaap:NondesignatedMember 2018-01-31 0000027904 us-gaap:InterestRateSwapMember us-gaap:FairValueHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2018-04-30 0000027904 us-gaap:EnergyRelatedDerivativeMember 2017-04-01 2017-06-30 0000027904 us-gaap:ForeignExchangeContractMember 2018-01-01 2018-06-30 0000027904 us-gaap:EnergyRelatedDerivativeMember 2018-01-01 2018-06-30 0000027904 us-gaap:EnergyRelatedDerivativeMember 2018-04-01 2018-06-30 0000027904 us-gaap:EnergyRelatedDerivativeMember 2017-01-01 2017-06-30 0000027904 us-gaap:ForeignExchangeContractMember 2018-04-01 2018-06-30 0000027904 us-gaap:OtherCurrentAssetsMember 2018-06-30 0000027904 us-gaap:OtherLiabilitiesMember 2018-06-30 0000027904 us-gaap:OtherCurrentLiabilitiesMember 2018-06-30 0000027904 us-gaap:OtherAssetsMember 2018-06-30 0000027904 us-gaap:EnergyRelatedDerivativeMember us-gaap:NondesignatedMember 2018-06-30 0000027904 us-gaap:OtherCurrentAssetsMember us-gaap:EnergyRelatedDerivativeMember us-gaap:NondesignatedMember 2018-06-30 0000027904 us-gaap:ForeignExchangeContractMember us-gaap:DesignatedAsHedgingInstrumentMember 2018-06-30 0000027904 us-gaap:OtherLiabilitiesMember us-gaap:ForeignExchangeContractMember us-gaap:NondesignatedMember 2018-06-30 0000027904 us-gaap:OtherCurrentLiabilitiesMember us-gaap:EnergyRelatedDerivativeMember us-gaap:NondesignatedMember 2018-06-30 0000027904 us-gaap:OtherCurrentAssetsMember us-gaap:ForeignExchangeContractMember us-gaap:NondesignatedMember 2018-06-30 0000027904 us-gaap:OtherAssetsMember us-gaap:ForeignExchangeContractMember us-gaap:DesignatedAsHedgingInstrumentMember 2018-06-30 0000027904 us-gaap:ForeignExchangeContractMember us-gaap:NondesignatedMember 2018-06-30 0000027904 us-gaap:InterestRateSwapMember us-gaap:DesignatedAsHedgingInstrumentMember 2018-06-30 0000027904 us-gaap:OtherCurrentLiabilitiesMember us-gaap:InterestRateSwapMember us-gaap:DesignatedAsHedgingInstrumentMember 2018-06-30 0000027904 us-gaap:OtherAssetsMember us-gaap:InterestRateSwapMember us-gaap:DesignatedAsHedgingInstrumentMember 2018-06-30 0000027904 us-gaap:OtherAssetsMember us-gaap:EnergyRelatedDerivativeMember us-gaap:NondesignatedMember 2018-06-30 0000027904 us-gaap:OtherLiabilitiesMember us-gaap:EnergyRelatedDerivativeMember us-gaap:NondesignatedMember 2018-06-30 0000027904 us-gaap:InterestRateSwapMember us-gaap:FairValueHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2018-06-30 0000027904 us-gaap:ForeignExchangeContractMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2018-06-30 0000027904 us-gaap:OtherLiabilitiesMember us-gaap:InterestRateSwapMember us-gaap:DesignatedAsHedgingInstrumentMember 2018-06-30 0000027904 us-gaap:OtherLiabilitiesMember us-gaap:ForeignExchangeContractMember us-gaap:DesignatedAsHedgingInstrumentMember 2018-06-30 0000027904 us-gaap:OtherCurrentLiabilitiesMember us-gaap:ForeignExchangeContractMember us-gaap:DesignatedAsHedgingInstrumentMember 2018-06-30 0000027904 us-gaap:OtherCurrentAssetsMember us-gaap:InterestRateSwapMember us-gaap:DesignatedAsHedgingInstrumentMember 2018-06-30 0000027904 us-gaap:OtherCurrentLiabilitiesMember us-gaap:ForeignExchangeContractMember us-gaap:NondesignatedMember 2018-06-30 0000027904 us-gaap:OtherCurrentAssetsMember us-gaap:ForeignExchangeContractMember us-gaap:DesignatedAsHedgingInstrumentMember 2018-06-30 0000027904 us-gaap:OtherAssetsMember us-gaap:ForeignExchangeContractMember us-gaap:NondesignatedMember 2018-06-30 0000027904 us-gaap:ForeignExchangeContractMember 2017-01-01 2017-06-30 0000027904 us-gaap:ForeignExchangeContractMember 2017-04-01 2017-06-30 0000027904 srt:MaximumMember us-gaap:InterestRateSwapMember us-gaap:FairValueHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2018-04-01 2018-04-30 0000027904 us-gaap:ForeignExchangeContractMember us-gaap:CashFlowHedgingMember us-gaap:NondesignatedMember 2018-01-01 2018-01-31 0000027904 srt:MinimumMember us-gaap:InterestRateSwapMember us-gaap:FairValueHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2018-04-01 2018-04-30 0000027904 dal:CertificatesMember us-gaap:SecuredDebtMember 2018-06-30 0000027904 dal:PacificTermLoanB1Member us-gaap:LoansPayableMember 2017-12-31 0000027904 dal:CertificatesMember us-gaap:SecuredDebtMember 2017-12-31 0000027904 dal:RevolvingCreditFacility2018Member us-gaap:UnsecuredDebtMember 2017-12-31 0000027904 dal:AircraftFinancingsMember us-gaap:SecuredDebtMember 2017-12-31 0000027904 dal:OtherFinancingsMember dal:SecuredAndUnsecuredDebtMember 2018-06-30 0000027904 dal:BankRevolvingCreditFacilitiesMember us-gaap:RevolvingCreditFacilityMember 2017-12-31 0000027904 dal:UnsecuredNotes2018Member us-gaap:UnsecuredDebtMember 2018-06-30 0000027904 dal:UnsecuredNotesMember us-gaap:UnsecuredDebtMember 2018-06-30 0000027904 srt:MinimumMember dal:UnsecuredNotesMember us-gaap:UnsecuredDebtMember 2018-06-30 0000027904 srt:MinimumMember dal:NYTDCSpecialFacilitiesRevenueBondsSeries2018Member us-gaap:BondsMember 2018-06-30 0000027904 dal:RevolvingCreditFacility2018Member us-gaap:UnsecuredDebtMember 2018-06-30 0000027904 dal:AircraftFinancingsMember us-gaap:SecuredDebtMember 2018-06-30 0000027904 srt:MaximumMember dal:CertificatesMember us-gaap:SecuredDebtMember 2018-06-30 0000027904 dal:RevolvingCreditFacility2015Member us-gaap:RevolvingCreditFacilityMember 2017-12-31 0000027904 dal:RevolvingCreditFacility2015Member us-gaap:RevolvingCreditFacilityMember 2018-06-30 0000027904 dal:PacificRevolvingCreditFacilityMember us-gaap:RevolvingCreditFacilityMember 2017-12-31 0000027904 dal:NYTDCSpecialFacilitiesRevenueBondsSeries2018Member us-gaap:BondsMember 2017-12-31 0000027904 srt:MinimumMember dal:UnsecuredNotes2018Member us-gaap:UnsecuredDebtMember 2018-06-30 0000027904 dal:TermLoanFacility2015Member us-gaap:LoansPayableMember 2017-12-31 0000027904 srt:MaximumMember dal:OtherFinancingsMember dal:SecuredAndUnsecuredDebtMember 2018-06-30 0000027904 srt:MaximumMember dal:UnsecuredNotesMember us-gaap:UnsecuredDebtMember 2018-06-30 0000027904 srt:MaximumMember dal:NYTDCSpecialFacilitiesRevenueBondsSeries2018Member us-gaap:BondsMember 2018-06-30 0000027904 srt:MinimumMember dal:OtherFinancingsMember dal:SecuredAndUnsecuredDebtMember 2018-06-30 0000027904 dal:TermLoanFacility2015Member us-gaap:LoansPayableMember 2018-06-30 0000027904 srt:MaximumMember dal:AircraftFinancingsMember us-gaap:SecuredDebtMember 2018-06-30 0000027904 dal:OtherFinancingsMember dal:SecuredAndUnsecuredDebtMember 2017-12-31 0000027904 srt:MinimumMember dal:AircraftFinancingsMember us-gaap:SecuredDebtMember 2018-06-30 0000027904 dal:NYTDCSpecialFacilitiesRevenueBondsSeries2018Member us-gaap:BondsMember 2018-06-30 0000027904 dal:PacificRevolvingCreditFacilityMember us-gaap:RevolvingCreditFacilityMember 2018-06-30 0000027904 srt:MinimumMember dal:CertificatesMember us-gaap:SecuredDebtMember 2018-06-30 0000027904 dal:BankRevolvingCreditFacilitiesMember us-gaap:RevolvingCreditFacilityMember 2018-06-30 0000027904 srt:MaximumMember dal:UnsecuredNotes2018Member us-gaap:UnsecuredDebtMember 2018-06-30 0000027904 dal:UnsecuredNotesMember us-gaap:UnsecuredDebtMember 2017-12-31 0000027904 dal:UnsecuredNotes2018Member us-gaap:UnsecuredDebtMember 2017-12-31 0000027904 dal:PacificTermLoanB1Member us-gaap:LoansPayableMember 2018-06-30 0000027904 dal:FiveYearRevolvingCreditFacility2018Member us-gaap:UnsecuredDebtMember 2018-06-30 0000027904 us-gaap:LetterOfCreditMember dal:RevolvingCreditFacility2018Member us-gaap:UnsecuredDebtMember 2018-06-30 0000027904 dal:ThreePointFourPercentUnsecuredNotes2018Member us-gaap:UnsecuredDebtMember 2018-06-30 0000027904 dal:FourPointThreeSevenFivePercentUnsecuredNotes2018Member us-gaap:UnsecuredDebtMember 2018-06-30 0000027904 dal:ThreeYearRevolvingCreditFacility2018Member us-gaap:UnsecuredDebtMember 2018-06-30 0000027904 dal:ThreePointEightPercentUnsecuredNotes2018Member us-gaap:UnsecuredDebtMember 2018-06-30 0000027904 dal:UnsecuredNotes2018Member us-gaap:UnsecuredDebtMember us-gaap:LondonInterbankOfferedRateLIBORMember 2018-01-01 2018-06-30 0000027904 dal:ThreeYearRevolvingCreditFacility2018Member us-gaap:UnsecuredDebtMember 2018-01-01 2018-06-30 0000027904 dal:ThreePointFourPercentUnsecuredNotes2018Member us-gaap:UnsecuredDebtMember 2018-01-01 2018-06-30 0000027904 dal:FourPointThreeSevenFivePercentUnsecuredNotes2018Member us-gaap:UnsecuredDebtMember 2018-01-01 2018-06-30 0000027904 dal:FiveYearRevolvingCreditFacility2018Member us-gaap:UnsecuredDebtMember 2018-01-01 2018-06-30 0000027904 dal:ThreePointEightPercentUnsecuredNotes2018Member us-gaap:UnsecuredDebtMember 2018-01-01 2018-06-30 0000027904 dal:UnsecuredNotes2018Member us-gaap:UnsecuredDebtMember 2018-01-01 2018-06-30 0000027904 dal:RevolvingCreditFacility2018Member us-gaap:UnsecuredDebtMember 2018-01-01 2018-06-30 0000027904 dal:OtherFinancingsMember dal:SecuredAndUnsecuredDebtMember 2018-01-01 2018-06-30 0000027904 dal:BankRevolvingCreditFacilitiesMember us-gaap:RevolvingCreditFacilityMember 2018-01-01 2018-06-30 0000027904 dal:AircraftFinancingsMember us-gaap:SecuredDebtMember 2018-01-01 2018-06-30 0000027904 dal:NYTDCSpecialFacilitiesRevenueBondsSeries2018Member us-gaap:BondsMember 2018-01-01 2018-06-30 0000027904 dal:UnsecuredNotesMember us-gaap:UnsecuredDebtMember 2018-01-01 2018-06-30 0000027904 dal:CertificatesMember us-gaap:SecuredDebtMember 2018-01-01 2018-06-30 0000027904 us-gaap:PensionPlansDefinedBenefitMember 2018-04-01 2018-06-30 0000027904 us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember 2017-01-01 2017-06-30 0000027904 us-gaap:PensionPlansDefinedBenefitMember 2017-04-01 2017-06-30 0000027904 us-gaap:PensionPlansDefinedBenefitMember 2018-01-01 2018-06-30 0000027904 us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember 2017-04-01 2017-06-30 0000027904 us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember 2018-04-01 2018-06-30 0000027904 us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember 2018-01-01 2018-06-30 0000027904 us-gaap:PensionPlansDefinedBenefitMember 2017-01-01 2017-06-30 0000027904 us-gaap:CapitalAdditionsMember 2018-06-30 0000027904 dal:A330900neoMember us-gaap:CapitalAdditionsMember 2018-06-30 0000027904 dal:A321200neoMember us-gaap:CapitalAdditionsMember 2018-06-30 0000027904 dal:A220100Member us-gaap:CapitalAdditionsMember 2018-06-30 0000027904 dal:A321200Member us-gaap:CapitalAdditionsMember 2018-06-30 0000027904 srt:CRJ900Member us-gaap:CapitalAdditionsMember 2018-06-30 0000027904 dal:B737900ErMember us-gaap:CapitalAdditionsMember 2018-06-30 0000027904 dal:A350900Member us-gaap:CapitalAdditionsMember 2018-06-30 0000027904 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2018-01-01 2018-06-30 0000027904 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2017-01-01 2017-06-30 0000027904 us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember 2017-01-01 2017-06-30 0000027904 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2017-01-01 2017-06-30 0000027904 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2016-12-31 0000027904 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2017-06-30 0000027904 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2017-01-01 2017-06-30 0000027904 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2017-06-30 0000027904 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2017-06-30 0000027904 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2016-12-31 0000027904 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2016-12-31 0000027904 us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember 2017-06-30 0000027904 us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember 2016-12-31 0000027904 us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember 2017-12-31 0000027904 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2018-01-01 2018-06-30 0000027904 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2018-06-30 0000027904 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-01-01 2018-06-30 0000027904 us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember 2018-01-01 2018-06-30 0000027904 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2017-12-31 0000027904 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2017-12-31 0000027904 us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember 2018-06-30 0000027904 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2018-06-30 0000027904 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-06-30 0000027904 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2017-12-31 0000027904 us-gaap:OperatingSegmentsMember dal:AirlineMember 2017-04-01 2017-06-30 0000027904 us-gaap:OperatingSegmentsMember dal:RefineryMember 2018-04-01 2018-06-30 0000027904 us-gaap:OperatingSegmentsMember dal:AirlineMember 2018-04-01 2018-06-30 0000027904 us-gaap:OperatingSegmentsMember dal:AirlineMember 2018-06-30 0000027904 us-gaap:IntersegmentEliminationMember dal:SalestoairlinesegmentMember 2017-04-01 2017-06-30 0000027904 us-gaap:IntersegmentEliminationMember dal:SalesofrefinedproductstothirdpartiesMember 2018-04-01 2018-06-30 0000027904 us-gaap:OperatingSegmentsMember dal:RefineryMember 2017-04-01 2017-06-30 0000027904 us-gaap:OperatingSegmentsMember dal:RefineryMember 2018-06-30 0000027904 us-gaap:OperatingSegmentsMember dal:AirlineMember 2017-06-30 0000027904 us-gaap:OperatingSegmentsMember dal:RefineryMember 2017-06-30 0000027904 us-gaap:IntersegmentEliminationMember dal:SalesofrefinedproductstothirdpartiesMember 2017-04-01 2017-06-30 0000027904 us-gaap:IntersegmentEliminationMember dal:ExchangedProductsMember 2018-04-01 2018-06-30 0000027904 us-gaap:IntersegmentEliminationMember dal:SalestoairlinesegmentMember 2018-04-01 2018-06-30 0000027904 us-gaap:IntersegmentEliminationMember dal:ExchangedProductsMember 2017-04-01 2017-06-30 0000027904 us-gaap:OperatingSegmentsMember dal:RefineryMember 2018-01-01 2018-06-30 0000027904 us-gaap:IntersegmentEliminationMember dal:SalesofrefinedproductstothirdpartiesMember 2017-01-01 2017-06-30 0000027904 us-gaap:OperatingSegmentsMember dal:AirlineMember 2017-01-01 2017-06-30 0000027904 us-gaap:OperatingSegmentsMember dal:AirlineMember 2018-01-01 2018-06-30 0000027904 us-gaap:IntersegmentEliminationMember dal:ExchangedProductsMember 2017-01-01 2017-06-30 0000027904 us-gaap:OperatingSegmentsMember dal:RefineryMember 2017-01-01 2017-06-30 0000027904 us-gaap:IntersegmentEliminationMember dal:ExchangedProductsMember 2018-01-01 2018-06-30 0000027904 us-gaap:IntersegmentEliminationMember dal:SalesofrefinedproductstothirdpartiesMember 2018-01-01 2018-06-30 0000027904 us-gaap:IntersegmentEliminationMember dal:SalestoairlinesegmentMember 2017-01-01 2017-06-30 0000027904 us-gaap:IntersegmentEliminationMember dal:SalestoairlinesegmentMember 2018-01-01 2018-06-30 0000027904 us-gaap:LeaseAgreementsMember 2018-01-01 2018-06-30 0000027904 us-gaap:LeaseAgreementsMember 2017-12-31 0000027904 us-gaap:LeaseAgreementsMember 2018-06-30 0000027904 us-gaap:RegionalCarrierMember us-gaap:DomesticDestinationMember 2018-01-01 2018-06-30 iso4217:EUR utreg:gal dal:aircraft xbrli:shares dal:rating_agency iso4217:USD xbrli:shares iso4217:JPY iso4217:CAD iso4217:USD xbrli:pure dal:seat
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
þ
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2018
Or
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 001-5424
deltacra01a01a01a02a41.jpg
DELTA AIR LINES, INC.
(Exact name of registrant as specified in its charter)

State of Incorporation: Delaware

I.R.S. Employer Identification No.: 58-0218548

Post Office Box 20706, Atlanta, Georgia 30320-6001

Telephone: (404) 715-2600
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes þ No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes þ No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer 
þ
Accelerated filer 
o
Non-accelerated filer 
o
(Do not check if a smaller reporting company)
Smaller reporting company
o
Emerging growth company
o
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes o No þ
Number of shares outstanding by each class of common stock, as of June 30, 2018:
Common Stock, $0.0001 par value - 691,331,319 shares outstanding
This document is also available through our website at http://ir.delta.com/.
 



Table of Contents
 
 
 
Page
 
 
 
 
 
 
 
 




Unless otherwise indicated, the terms "Delta," "we," "us" and "our" refer to Delta Air Lines, Inc. and its subsidiaries.

FORWARD-LOOKING STATEMENTS

Statements in this Form 10-Q (or otherwise made by us or on our behalf) that are not historical facts, including statements about our estimates, expectations, beliefs, intentions, projections or strategies for the future, may be "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from historical experience or our present expectations. Known material risk factors applicable to Delta are described in "Item 1A. Risk Factors" of our Annual Report on Form 10-K for the fiscal year ended December 31, 2017 ("Form 10-K") and "Item 1A. Risk Factors" of Part II of the Form 10-Q for the quarter ended March 31, 2018, other than risks that could apply to any issuer or offering. All forward-looking statements speak only as of the date made, and we undertake no obligation to publicly update or revise any forward-looking statements to reflect events or circumstances that may arise after the date of this report.


1


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders of
Delta Air Lines, Inc.

Results of Review of Interim Financial Statements
        
We have reviewed the accompanying consolidated balance sheet of Delta Air Lines, Inc. (the Company) as of June 30, 2018, the related condensed consolidated statements of operations and comprehensive income for the three-month and six-month periods ended June 30, 2018 and 2017, and the condensed consolidated statements of cash flows for the six-month periods ended June 30, 2018 and 2017, and the related notes (collectively referred to as the "condensed consolidated interim financial statements"). Based on our reviews, we are not aware of any material modifications that should be made to the condensed consolidated interim financial statements for them to be in conformity with U.S. generally accepted accounting principles.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheet of Delta Air Lines, Inc. as of December 31, 2017, the related consolidated statements of operations, comprehensive income, cash flows, and stockholders' equity for the year then ended, and the related notes (not presented herein); and in our report dated February 23, 2018, we expressed an unqualified audit opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of December 31, 2017, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

Basis for Review Results

These financial statements are the responsibility of the Company's management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the SEC and the PCAOB. We conducted our review in accordance with the standards of the PCAOB. A review of interim financial statements consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

            

 
/s/ Ernst & Young LLP
Atlanta, Georgia
 
July 12, 2018
 


2



DELTA AIR LINES, INC.
Consolidated Balance Sheets
(Unaudited)
(in millions, except share data)
June 30,
2018
 
December 31,
2017
ASSETS
Current Assets:
 
 
 
Cash and cash equivalents
$
1,886

 
$
1,814

Short-term investments
520

 
825

Accounts receivable, net of an allowance for uncollectible accounts of $13 and $12 at June 30, 2018
and December 31, 2017, respectively
2,427

 
2,377

Fuel inventory
1,149

 
916

Expendable parts and supplies inventories, net of an allowance for obsolescence of $122 and $113
at June 30, 2018 and December 31, 2017, respectively
440

 
413

Prepaid expenses and other
1,219

 
1,499

Total current assets
7,641

 
7,844

Property and Equipment, Net:
 
 
 
Property and equipment, net of accumulated depreciation and amortization of $15,097 and $14,097
at June 30, 2018 and December 31, 2017, respectively
28,124

 
26,563

Other Assets:
 
 
 
Goodwill
9,794

 
9,794

Identifiable intangibles, net of accumulated amortization of $853 and $845 at June 30, 2018
and December 31, 2017, respectively
4,839

 
4,847

Cash restricted for airport construction
1,326

 

Deferred income taxes, net
804

 
1,354

Other noncurrent assets
3,268

 
3,309

Total other assets
20,031

 
19,304

Total assets
$
55,796

 
$
53,711

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
 
 
 
Current maturities of long-term debt and capital leases
$
1,342

 
$
2,242

Air traffic liability
6,360

 
4,364

Accounts payable
3,749

 
3,674

Accrued salaries and related benefits
2,436

 
3,022

Frequent flyer deferred revenue
2,799

 
2,762

Fuel card obligation
1,062

 
1,067

Other accrued liabilities
1,521

 
1,868

Total current liabilities
19,269

 
18,999

Noncurrent Liabilities:
 
 
 
Long-term debt and capital leases
8,562

 
6,592

Pension, postretirement and related benefits
9,052

 
9,810

Frequent flyer deferred revenue
3,692

 
3,559

Other noncurrent liabilities
2,365

 
2,221

Total noncurrent liabilities
23,671


22,182

Commitments and Contingencies

 

Stockholders' Equity:
 
 
 
Common stock at $0.0001 par value; 1,500,000,000 shares authorized, 699,486,944 and 714,674,160
shares issued at June 30, 2018 and December 31, 2017, respectively

 

Additional paid-in capital
11,807

 
12,053

Retained earnings
8,851

 
8,256

Accumulated other comprehensive loss
(7,606
)
 
(7,621
)
Treasury stock, at cost, 8,155,625 and 7,476,181 shares at June 30, 2018 and December 31, 2017,
respectively
(196
)
 
(158
)
Total stockholders' equity
12,856

 
12,530

Total liabilities and stockholders' equity
$
55,796

 
$
53,711

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

3


DELTA AIR LINES, INC.
Condensed Consolidated Statements of Operations and Comprehensive Income
(Unaudited)
 
Three Months Ended June 30,
 
Six Months Ended June 30,
(in millions, except per share data)
2018
 
2017
 
2018
 
2017
Operating Revenue:
 
 
 
 
 
 
 
Passenger
$
10,546

 
$
9,768

 
19,311

 
17,946

Cargo
223

 
187

 
425

 
350

Other
1,006

 
792

 
2,007

 
1,552

  Total operating revenue
11,775

 
10,747

 
21,743

 
19,848

 
 
 
 
 
 
 
 
Operating Expense:
 
 
 
 
 
 
 
Salaries and related costs
2,668

 
2,521

 
5,252

 
4,906

Aircraft fuel and related taxes
2,341

 
1,687

 
4,195

 
3,169

Regional carriers expense, excluding fuel
883

 
838

 
1,739

 
1,702

Depreciation and amortization
590

 
531

 
1,200

 
1,068

Contracted services
540

 
525

 
1,084

 
1,029

Ancillary businesses and refinery
494

 
296

 
987

 
588

Passenger commissions and other selling expenses
511

 
467

 
938

 
872

Aircraft maintenance materials and outside repairs
427

 
392

 
862

 
824

Landing fees and other rents
407

 
373

 
780

 
734

Profit sharing
400

 
338

 
583

 
489

Passenger service
300

 
284

 
563

 
518

Aircraft rent
97

 
86

 
191

 
170

Other
437

 
427

 
849

 
798

Total operating expense
10,095

 
8,765

 
19,223

 
16,867

 
 
 
 
 
 
 
 
Operating Income
1,680

 
1,982

 
2,520

 
2,981

 
 
 
 
 
 
 
 
Non-Operating Expense:

 

 
 
 
 
Interest expense, net
(89
)
 
(103
)
 
(191
)
 
(197
)
Unrealized gain/(loss) on investments, net
(238
)
 

 
(220
)
 

Miscellaneous, net
19

 
(48
)
 
(19
)
 
(104
)
Total non-operating expense, net
(308
)
 
(151
)
 
(430
)
 
(301
)
 
 
 
 
 
 
 
 
Income Before Income Taxes
1,372

 
1,831

 
2,090

 
2,680

 
 
 
 
 
 
 
 
Income Tax Provision
(347
)
 
(645
)
 
(518
)
 
(933
)
 
 
 
 
 
 
 
 
Net Income
$
1,025

 
$
1,186

 
$
1,572

 
$
1,747

 
 
 
 
 
 
 
 
Basic Earnings Per Share
$
1.47

 
$
1.63

 
$
2.25

 
$
2.40

Diluted Earnings Per Share
$
1.47

 
$
1.62

 
$
2.24

 
$
2.39

Cash Dividends Declared Per Share
$
0.31

 
$
0.20

 
$
0.61

 
$
0.41

 
 
 
 
 
 
 
 
Comprehensive Income
$
1,100

 
$
1,208

 
$
1,587

 
$
1,834

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

4


DELTA AIR LINES, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
 
Six Months Ended June 30,
(in millions)
2018
 
2017
Net Cash Provided by Operating Activities
$
4,150

 
$
1,539

 
 
 
 
Cash Flows from Investing Activities:
 
 
 
Property and equipment additions:
 
 
 
Flight equipment, including advance payments
(2,263
)
 
(1,292
)
Ground property and equipment, including technology
(583
)
 
(498
)
Purchase of equity investments

 
(622
)
Purchase of short-term investments
(118
)
 
(567
)
Redemption of short-term investments
421

 
307

Other, net
71

 
6

Net cash used in investing activities
(2,472
)

(2,666
)
 
 
 
 
Cash Flows from Financing Activities:
 
 
 
Payments on long-term debt and capital lease obligations
(2,093
)
 
(564
)
Repurchase of common stock
(925
)
 
(800
)
Cash dividends
(430
)
 
(297
)
Fuel card obligation
(5
)
 
341

Proceeds from long-term obligations
3,124

 
2,004

Other, net
58

 
(78
)
Net cash (used in) provided by financing activities
(271
)
 
606

 
 
 
 
Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash
1,407

 
(521
)
Cash, cash equivalents and restricted cash at beginning of period
1,853

 
2,826

Cash, cash equivalents and restricted cash at end of period
$
3,260

 
$
2,305

 
 
 
 
Non-Cash Transactions:
 
 
 
Treasury stock contributed to our qualified defined benefit pension plans
$

 
$
350

Flight and ground equipment acquired under capital leases
57

 
208

 
 
 
 
 
 
 
 
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the Consolidated Balance Sheets to the total of the same such amounts shown above:
 
June 30,
(in millions)
2018
 
2017
Current assets:
 
 
 
Cash and cash equivalents
$
1,886

 
$
2,241

Restricted cash included in prepaid expenses and other
48

 
64

Other assets:
 
 
 
Cash restricted for airport construction
1,326

 

Total cash, cash equivalents and restricted cash
$
3,260

 
$
2,305

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




5


DELTA AIR LINES, INC.
Notes to the Condensed Consolidated Financial Statements
(Unaudited)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited Condensed Consolidated Financial Statements include the accounts of Delta Air Lines, Inc. and our wholly owned subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP") for interim financial information. Consistent with these requirements, this Form 10-Q does not include all the information required by GAAP for complete financial statements. As a result, this Form 10-Q should be read in conjunction with the Consolidated Financial Statements and accompanying Notes in our Form 10-K for the year ended December 31, 2017.

Management believes the accompanying unaudited Condensed Consolidated Financial Statements reflect all adjustments, including normal recurring items, considered necessary for a fair statement of results for the interim periods presented.

Due to seasonal variations in the demand for air travel, the volatility of aircraft fuel prices and other factors, operating results for the three and six months ended June 30, 2018 are not necessarily indicative of operating results for the entire year.

We recast prior period financial statements to conform with the adoption of the revenue recognition and retirement benefits standards described below. In addition, we have reclassified regional carriers fuel expense from regional carriers expense to aircraft fuel and related taxes, and consolidated ancillary businesses and refinery expenses into one financial statement line item, in addition to making other classification changes to conform to the current year presentation.

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

Recent Accounting Standards

Standards Effective in Future Years

Leases. In 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-02, "Leases (Topic 842)." This standard will require leases with durations greater than 12 months to be recognized on the balance sheet and is effective for interim and annual reporting periods beginning after December 15, 2018. We will adopt this standard effective January 1, 2019.

We have not completed our assessment, but the adoption of this standard will have a significant impact on our Consolidated Balance Sheets. However, we do not expect the adoption to have a material impact on the recognition, measurement or presentation of lease expenses within the Condensed Consolidated Statements of Operations and Comprehensive Income ("income statement") or the Condensed Consolidated Statements of Cash Flows ("cash flows statement"). Information about our undiscounted future lease payments and the timing of those payments is in Note 7, "Lease Obligations," in our Form 10-K.

Comprehensive Income. In February 2018, the FASB issued ASU No. 2018-02, "Income Statement—Reporting Comprehensive Income (Topic 220)." This standard provides an option to reclassify stranded tax effects within accumulated other comprehensive income/(loss) ("AOCI") to retained earnings due to the U.S. federal corporate income tax rate change in the Tax Cuts and Jobs Act of 2017. This standard is effective for interim and annual reporting periods beginning after December 15, 2018, and early adoption is permitted. We have not completed our assessment, but the adoption of the standard may impact tax amounts stranded in AOCI related to our pension plans. We will adopt this standard effective January 1, 2019.

Recently Adopted Standards

Revenue from Contracts with Customers. In 2014, the FASB issued ASU No. 2014-09, "Revenue from Contracts with Customers (Topic 606)." Under this ASU and subsequently issued amendments, revenue is recognized at the time a good or service is transferred to a customer for the amount of consideration received. Entities may use a full retrospective approach or report the cumulative effect as of the date of adoption. We adopted this standard using the full retrospective transition method effective January 1, 2018 and recast prior year results as shown below.


6


While the adoption of the new standard did not have a significant effect on earnings, approximately $2 billion of certain annual revenues that were previously classified in other revenue have been reclassified to passenger revenue. These revenues include baggage fees, administrative charges and other travel-related fees, which are deemed part of the single performance obligation of providing passenger transportation.

In addition, the adoption of the new standard increases the rate used to account for frequent flyer miles. We previously analyzed our standalone sales of mileage credits to other airlines and customers to establish the accounting value for frequent flyer miles. Considering the guidance in the new standard, we changed our valuation of a mileage credit to an analysis of the award redemption value. The new valuation considers the quantitative value a passenger receives by redeeming miles for a ticket rather than paying cash. This change increased our frequent flyer liability at December 31, 2017 by $2.2 billion. The mileage deferral and redemption rates are approximately the same; therefore, assuming stable volume, there would not be a significant change in revenue recognized from the program in a given period.

The adoption of the new standard also reduced our air traffic liability at December 31, 2017 by $524 million. This change primarily results from estimating the tickets that will expire unused and recognizing revenue at the scheduled flight date rather than when the unused tickets expire.

See Note 2, "Revenue Recognition," for more information.

Statement of Cash Flows. In 2016, the FASB issued ASU Nos. 2016-15 and 2016-18 related to the classification of certain cash receipts and cash payments, and the presentation of restricted cash within an entity's cash flows statement, respectively. We adopted these standards effective January 1, 2018.

Financial Instruments. In 2016, the FASB issued ASU No. 2016-01, "Financial Instruments—Overall (Subtopic 825-10)." This standard makes several changes, including the elimination of the available-for-sale classification of equity investments, and requires equity investments with readily determinable fair values to be measured at fair value with changes in fair value recognized in net income. In February 2018, the FASB issued ASU No. 2018-03, "Technical Corrections and Improvements to Financial Instruments—Overall (Subtopic 825-10)" to clarify certain aspects of ASU No. 2016-01. We adopted these standards effective January 1, 2018.

Our investments in GOL Linhas Aéreas Inteligentes, the parent company of VRG Linhas Aéreas (operating as GOL), and China Eastern were accounted for as available-for-sale with changes in fair value recognized in other comprehensive income. At the time of adoption, we reclassified an unrealized gain of $162 million related to these investments from AOCI to retained earnings.

Our investment in Air France-KLM was accounted for at cost during 2017 as our investment agreement restricts the sale or transfer of these shares for five years. Upon adopting ASU Nos. 2016-01 and 2018-03, we recognized a $148 million gain in unrealized gain/(loss) on investments in our income statement related to the value of Air France-KLM's stock compared to our investment basis at December 31, 2017. Consistent with our investments in GOL and China Eastern, this investment is now accounted for at fair value with changes in fair value recognized in net income.

Retirement Benefits. In 2017, the FASB issued ASU No. 2017-07, "Compensation—Retirement Benefits (Topic 715)." This standard requires an entity to report the service cost component in the same line item as other compensation costs. The other components of net (benefit) cost are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations. We adopted this standard effective January 1, 2018. The components of the net (benefit) cost are shown in Note 7, "Employee Benefit Plans." As a result of the adoption, for the three and six months ended June 30, 2017, we reclassified expense of $12 million and $24 million, respectively, from operating expense into non-operating expense in our income statement.





7


Impact of Recently Adopted Standards

We recast certain prior period amounts to conform with the adoption of the revenue recognition and retirement benefits standards, as shown in the tables below.
 
Three Months Ended June 30, 2017
 
Six Months Ended June 30, 2017

(in millions, except per share data)
As Previously Reported
Adjustments
Current Presentation
 
As Previously Reported
Adjustments
Current Presentation
Income statement:
 
 
 
 
 
 
 
Passenger revenue
$
9,231

$
537

$
9,768

 
$
16,919

$
1,027

$
17,946

Cargo revenue
183

4

187

 
343

7

350

Other revenue
1,377

(585
)
792

 
2,677

(1,125
)
1,552

Total operating revenue
10,791

(44
)
10,747

 
19,939

(91
)
19,848

Operating expense
8,763

2

8,765

 
16,858

9

16,867

Non-operating expense
(137
)
(14
)
(151
)
 
(275
)
(26
)
(301
)
Income tax provision
(667
)
22

(645
)
 
(979
)
46

(933
)
Net income
1,224

(38
)
1,186

 
1,827

(80
)
1,747

Diluted earnings per share
$
1.68

$
(0.06
)
$
1.62

 
$
2.50

$
(0.11
)
$
2.39


 
December 31, 2017

(in millions)
As Previously Reported
Adjustments
Current Presentation
Balance sheet:
 
 
 
Deferred income taxes, net
$
935

$
419

$
1,354

Air traffic liability
4,888

(524
)
4,364

Frequent flyer deferred revenue (current and noncurrent)
4,118

2,203

6,321

Other accrued and other noncurrent liabilities
3,969

120

4,089

Retained earnings
9,636

(1,380
)
8,256




NOTE 2. REVENUE RECOGNITION

Passenger Revenue

Passenger revenue is primarily composed of passenger ticket sales, loyalty travel awards and travel-related services performed in conjunction with a passenger’s flight.
 
Three Months Ended June 30,
 
Six Months Ended June 30,
(in millions)
2018
2017
 
2018
2017
Ticket
$
9,308

$
8,606

 
$
16,961

$
15,711

Loyalty travel awards
680

622

 
1,298

1,204

Travel-related services
558

540

 
1,052

1,031

Total passenger revenue
$
10,546

$
9,768

 
$
19,311

$
17,946



Ticket

Passenger tickets. We record sales of passenger tickets to be flown by us or that we sell on behalf of other airlines in air traffic liability. Passenger revenue is recognized when we provide transportation or when ticket breakage occurs. For tickets that we sell on behalf of other airlines, we reduce the air traffic liability when consideration is remitted to those airlines. We periodically evaluate the estimated air traffic liability and record any adjustments in our income statement. These adjustments relate primarily to refunds, exchanges, ticket breakage, transactions with other airlines and other items for which final settlement occurs in periods subsequent to the sale of the related tickets at amounts other than the original sales price.


8


We recognized approximately $3 billion in passenger revenue during each of the six months ended June 30, 2018 and 2017 that was recorded in our air traffic liability balances at December 31, 2017 and 2016, respectively. We expect the remaining balance of the December 31, 2017 liability to be recognized during 2018.

Ticket breakage. We estimate the value of tickets that will expire unused and recognize revenue at the scheduled flight date.

Regional carriers. Our regional carriers include both our contract carrier agreements with third-party regional carriers ("contract carriers") and Endeavor Air, Inc., our wholly owned subsidiary. Our contract carrier agreements are primarily structured as capacity purchase agreements where we purchase all or a portion of the contract carrier's capacity and are responsible for selling the seat inventory we purchase. We record revenue related to our capacity purchase agreements in passenger revenue and the related expenses in regional carriers expense, excluding fuel.

Loyalty Travel Awards

Loyalty travel awards revenue is related to the redemption of mileage credits for travel. We recognize loyalty travel awards revenue in passenger revenue as mileage credits are redeemed and travel is provided. See below for discussion of our frequent flyer program accounting policies.

Travel-Related Services

Travel-related services are primarily composed of services performed in conjunction with a passenger’s flight, including administrative fees (such as ticket change fees), baggage fees and on-board sales. We recognize revenue for these services when the related transportation service is provided. Prior to the adoption of the new standard, the majority of these fees were classified in other revenue.

Frequent Flyer Program

Our frequent flyer program (the "SkyMiles program") generates customer loyalty by rewarding customers with incentives to travel on Delta. This program allows customers to earn mileage credits by flying on Delta, Delta Connection and other airlines that participate in the SkyMiles program. When traveling, customers earn redeemable mileage credits based on the passenger's loyalty program status and travel fare paid. Customers can also earn mileage credits through participating companies such as credit card companies, hotels and car rental agencies. To facilitate transactions with participating companies, we sell mileage credits to non-airline businesses, customers and other airlines. Mileage credits are redeemable by customers in future periods for air travel on Delta and other participating airlines, membership in our Sky Club and other program awards.

To reflect the mileage credits earned, the SkyMiles program includes two types of transactions that are considered revenue arrangements with multiple performance obligations: (1) mileage credit earned with travel and (2) mileage credit sold to participating companies.

Passenger ticket sales earning mileage credits. Passenger ticket sales earning mileage credits under our SkyMiles program provide customers with (1) mileage credits earned and (2) air transportation. We value each performance obligation on a standalone basis. To value the mileage credits 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").

We defer revenue for the mileage credits when earned and recognize loyalty travel awards in passenger revenue as the miles are redeemed and services are 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.

Sale of mileage credits. Customers may earn mileage credits based on their spending with participating companies such as credit card companies, hotels and car rental agencies with which we have marketing agreements to sell mileage credits. Our contracts to sell mileage credits under these marketing agreements have multiple performance obligations. During the six months ended June 30, 2018 and 2017, total cash sales from marketing agreements were $1.7 billion and $1.5 billion, respectively, which are allocated to travel and other performance obligations, as discussed below.


9


Our most significant contract to sell mileage credits 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 using our customer database. Cardholders earn mileage credits for making purchases using co-branded cards, may check their first bag for free, are granted discounted access to Delta Sky Club lounges and receive other benefits while traveling on Delta. Additionally, participants in the American Express Membership Rewards program may exchange their points for mileage credits under the SkyMiles program. We sell mileage credits at agreed-upon rates to American Express which are then provided to their customers under the co-brand credit card program and the Membership Rewards program.

We account for marketing agreements, including American Express, consistent with the accounting method that allocates the consideration received 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 and the use of our brand. We determined our best estimate of the selling prices by considering 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, (3) published rates on our website for baggage fees, discounted access to Delta Sky Club lounges and other benefits while traveling on Delta and (4) brand value.

We defer the amount for award travel obligation as part of frequent flyer deferred revenue and recognize loyalty travel awards in passenger revenue as the mileage credits are used for travel. Revenue allocated to services performed in conjunction with a passenger’s flight, such as baggage fee waivers, is recognized as travel-related services in passenger revenue when the related service is performed. Revenue allocated to access Delta Sky Club lounges is recognized as miscellaneous in other revenue as access is provided. Revenue allocated to the remaining performance obligations, primarily brand value, is recorded as loyalty program in other revenue over time as miles are delivered.

Mileage breakage. For mileage credits that we estimate are not likely to be redeemed ("breakage"), we recognize the associated value proportionally during the period in which the remaining mileage credits are expected to be redeemed. Management uses statistical models to estimate breakage based on historical redemption patterns. A change in assumptions as to the period over which mileage credits are expected to be redeemed, the actual redemption activity for mileage credits or the estimated fair value of mileage credits expected to be redeemed could have a material impact on our revenue in the year in which the change occurs and in future years.

Current activity of the frequent flyer program. Mileage credits are combined in one homogeneous pool and are not separately identifiable. As such, the revenue is comprised of miles that were part of the frequent flyer deferred revenue balance at the beginning of the period as well as miles that were issued during the period.

The table below presents the activity of the current and noncurrent frequent flyer liability, and includes miles earned through travel and miles sold, which are primarily through marketing agreements.
(in millions)
 
 
2018
2017
Balance at January 1
 
 
$
6,321

$
5,922

Mileage credits earned
 
 
1,550

1,459

Travel mileage credits redeemed
 
 
(1,298
)
(1,204
)
Non-travel mileage credits redeemed
 
 
(82
)
(81
)
Balance at June 30
 
 
$
6,491

$
6,096



The timing of mileage redemptions can vary widely; however, the majority of new miles are redeemed within two years.


10


Passenger Revenue by Geographic Region

Passenger revenue is recognized in a specific geographic region based on the origin and destination of each flight segment. Our passenger revenue by geographic region (as defined by the U.S. Department of Transportation) is summarized in the following table:
 
Three Months Ended June 30,
 
Six Months Ended June 30,
(in millions)
2018
2017
 
2018
2017
Domestic
$
7,413

$
6,888

 
$
13,714

$
12,790

Atlantic
1,782

1,566

 
2,841

2,495

Latin America
709

714

 
1,536

1,489

Pacific
642

600

 
1,220

1,172

Total passenger revenue
$
10,546

$
9,768

 
$
19,311

$
17,946



Cargo Revenue

Cargo revenue is recognized when we provide the transportation.

Other Revenue
 
Three Months Ended June 30,
 
Six Months Ended June 30,
(in millions)
2018
2017
 
2018
2017
Ancillary businesses and refinery
$
522

$
320

 
$
1,042

$
632

Loyalty program
358

316

 
705

621

Miscellaneous
126

156

 
260

299

Total other revenue
$
1,006

$
792

 
$
2,007

$
1,552



Ancillary businesses and refinery. Ancillary businesses and refinery includes aircraft maintenance and staffing services we provide to third parties, our vacation wholesale operations, our private jet operations and refinery production sales to third parties. Third-party refinery production sales are at or near cost; accordingly, the margin on these sales is de minimis. See Note 10, "Segments," for more information on revenue recognition within our refinery segment.

Loyalty program. Loyalty program revenues relate to brand usage and other performance obligations embedded in mileage credits sold, including redemption of mileage credits for non-travel awards. These revenues are included within the total cash sales from marketing agreements, discussed above.

Miscellaneous. Miscellaneous revenue is primarily composed of lounge access and codeshare revenues.

Accounts Receivable

Accounts receivable primarily consist of amounts due from credit card companies from the sale of passenger tickets, ancillary businesses and refinery sales, and other companies for the purchase of mileage credits under the SkyMiles program. We provide an allowance for uncollectible accounts equal to the estimated losses expected to be incurred based on historical chargebacks, write-offs, bankruptcies and other specific analyses. Bad debt expense was not material in any period presented.

Passenger Taxes and Fees

We are required to charge certain taxes and fees on our passenger tickets, including U.S. federal transportation taxes, federal security charges, airport passenger facility charges and foreign arrival and departure taxes. These taxes and fees are assessments on the customer for which we act as a collection agent. Because we are not entitled to retain these taxes and fees, we do not include such amounts in passenger revenue. We record a liability when the amounts are collected and reduce the liability when payments are made to the applicable government agency or operating carrier (i.e., for codeshare-related fees).



11


NOTE 3. FAIR VALUE MEASUREMENTS

Assets (Liabilities) Measured at Fair Value on a Recurring Basis
(in millions)
June 30,
2018
Level 1
Level 2
Cash equivalents
$
1,445

$
1,445

$

Short-term investments
 
 

U.S. government and agency securities
64

58

6

Asset- and mortgage-backed securities
105


105

Corporate obligations
275


275

Other fixed income securities
76


76

Restricted cash equivalents
1,374

1,374


Long-term investments
739

712

27

Hedge derivatives, net
 
 
 
Fuel hedge contracts
(32
)
8

(40
)
Interest rate contracts
(24
)

(24
)
Foreign currency exchange contracts
5


5

(in millions)
December 31,
2017
Level 1
Level 2
Cash equivalents
$
1,357

$
1,357

$

Short-term investments
 
 


U.S. government and agency securities
93

84

9

Asset- and mortgage-backed securities
173


173

Corporate obligations
467


467

Other fixed income securities
92


92

Restricted cash equivalents
38

38


Long-term investments
513

485

28

Hedge derivatives, net
 
 
 
Fuel hedge contracts
(66
)
(43
)
(23
)
Foreign currency exchange contracts
(17
)

(17
)


Cash Equivalents and Restricted Cash Equivalents. Cash equivalents generally consist of money market funds. Restricted cash equivalents generally consist of money market funds and time deposits, which primarily relate to proceeds from debt issued to finance a portion of the construction costs for the new terminal facilities at the LaGuardia Airport, certain self-insurance obligations and other airport commitments. The fair value of these cash equivalents is based on a market approach using prices and other relevant information generated by market transactions involving identical or comparable assets.

Short-Term Investments. The fair values of short-term investments are based on a market approach using industry standard valuation techniques that incorporate observable inputs such as quoted market prices, interest rates, benchmark curves, credit ratings of the security and other observable information.

Long-Term Investments. Our long-term investments that are measured at fair value primarily consist of equity investments in the parent company of GOL, China Eastern and, as of January 1, 2018, Air France-KLM. Our equity investments are valued based on market prices and are classified in other noncurrent assets.


12


Hedge Derivatives. A portion of our derivative contracts are negotiated over-the-counter with counterparties without going through a public exchange. Accordingly, our fair value assessments give consideration to the risk of counterparty default (as well as our own credit risk). Such contracts are classified as Level 2 within the fair value hierarchy. The remainder of our hedge contracts are comprised of futures contracts, which are traded on a public exchange. These contracts are classified within Level 1 of the fair value hierarchy.

Fuel Contracts. Our fuel hedge portfolio consists of options, swaps and futures. The hedge contracts include crude oil and refined products, as these commodities are highly correlated with the price of fuel that we consume. Option contracts are valued under an income approach using option pricing models based on data either readily observable in public markets, derived from public markets or provided by counterparties who regularly trade in public markets. Volatilities used in these valuations ranged from 16% to 32% depending on the maturity dates, underlying commodities and strike prices of the option contracts. Swap contracts are valued under an income approach using a discounted cash flow model based on data either readily observable or provided by counterparties who regularly trade in public markets. Discount rates used in these valuations vary based on maturity dates utilizing the London interbank offered rate ("LIBOR"). Futures contracts and options on futures contracts are traded on a public exchange and valued based on quoted market prices.

Interest Rate Contracts. Our interest rate derivatives are swap contracts and they are valued based on data readily observable in public markets.

Foreign Currency Exchange Contracts. Our foreign currency derivatives consist of Japanese yen and Euro forward contracts and are valued based on data readily observable in public markets.


NOTE 4. INVESTMENTS

Short-Term Investments

The estimated fair values of short-term investments, which approximate cost at June 30, 2018, are shown below by contractual maturity. Actual maturities may differ from contractual maturities because issuers of the securities may have the right to retire our investments without prepayment penalties.
(in millions)
Total
Due in one year or less
$
189

Due after one year through three years
306

Due after three years through five years
10

Due after five years
15

Total
$
520



Long-Term Investments

We have developed strategic relationships with a number of airlines through equity investments and other forms of cooperation and support. Strategic relationships improve our coordination with these airlines and enable our customers to seamlessly connect to more places while enjoying a consistent, high-quality travel experience.

Equity Method Investments

Aeroméxico. We have a non-controlling 49% equity stake in Grupo Aeroméxico, the parent company of Aeroméxico.

Virgin Atlantic. We have a non-controlling 49% equity stake in Virgin Atlantic Limited, the parent company of Virgin Atlantic Airways.

We account for these investments under the equity method of accounting and recognize our portion of their financial results in miscellaneous, net in our income statement under non-operating expense.

13


Fair Value Investments

Air France-KLM. We own 9% of the outstanding shares of Air France-KLM. In addition, we have developed a combined long-term joint venture with Air France-KLM and Virgin Atlantic, subject to required regulatory approvals.

GOL. Through our investment in preferred shares of GOL's parent company, we own 9% of GOL's outstanding capital stock.

Additionally, GOL has a $300 million five-year term loan facility with third parties, which we have guaranteed. Our entire guaranty is secured by GOL's ownership interest in Smiles, GOL's publicly traded loyalty program. Because GOL remains in compliance with the terms of its loan facility, we have not recorded a liability on our Consolidated Balance Sheet as of June 30, 2018.

China Eastern. We have a 3% equity interest in China Eastern.

We account for these investments at fair value with adjustments to fair value recognized in unrealized gain/(loss) on investments, net in our income statement under non-operating expense.


NOTE 5. DERIVATIVES AND RISK MANAGEMENT

Changes in fuel prices, interest rates and foreign currency exchange rates impact our results of operations. In an effort to manage our exposure to these risks, we enter into derivative contracts and adjust our derivative portfolio as market conditions change.

Fuel Price Risk

Changes in fuel prices materially impact our results of operations. Although we do not currently hedge the financial risk of fuel price volatility within our airline segment, we enter into derivatives with third parties to hedge financial risk related to Monroe’s refining margins.

During the three and six months ended June 30, 2018, we recorded fuel hedge losses of $94 million and $92 million, respectively. During the three and six months ended June 30, 2017, we recorded fuel hedge gains of $40 million and $97 million, respectively.

Foreign Currency Exchange Risk

We are subject to foreign currency exchange rate risk because we have revenue and expense denominated in foreign currencies with our primary exposures being the Japanese yen and the Euro. To manage exchange rate risk, we execute both our international revenue and expense transactions in the same foreign currency to the extent practicable. From time to time, we may also enter into foreign currency option and forward contracts. Our Japanese yen foreign currency exchange contracts are designated as cash flow hedges with the effective portion of the gains or losses on the derivatives recorded in passenger revenue in the income statement in the same period in which the hedged transaction affects earnings.

In January 2018, we entered into a three-year U.S. dollar-Euro cross currency swap with a notional value of 375 million Euro. This swap is intended to mitigate foreign currency volatility resulting from our Euro-denominated investment in Air France-KLM. During the three and six months ended June 30, 2018, we recorded gains of $22 million and $6 million, respectively, which are reflected in unrealized gain/(loss) on investments in the income statement.

Interest Rate Risk

Our exposure to market risk from adverse changes in interest rates is primarily associated with our long-term debt obligations. Market risk associated with our fixed and variable rate long-term debt relates to the potential reduction in fair value and negative impact to future earnings, respectively, from an increase in interest rates.


14


In April 2018, we entered into interest rate swaps which are designated as fair value hedges. These swaps range from three to ten years and have a total notional value of $1.6 billion. The objective of the swaps is to manage toward a higher percentage of net floating rate debt by swapping payments of fixed rate interest on the unsecured notes that we issued in the June 2018 quarter for payments of floating rate interest. The gains/losses on the swaps are recorded within interest expense in the income statement and offset the gain/losses in the related debt obligations due to interest rate fluctuations.

Hedge Position as of June 30, 2018
(in millions)
Volume
 
Final Maturity Date
Prepaid Expenses and Other
Other Noncurrent Assets
Other Accrued Liabilities
Other Noncurrent Liabilities
Hedge Derivatives, net
Designated as hedges
 
 
 
 
 
 
 
 
Interest rate contracts (fair value hedges)
1,908

U.S. dollars
April 2028
$
4

$

$
(7
)
$
(21
)
$
(24
)
Foreign currency exchange contracts
15,285

Japanese yen
November 2019


(1
)

(1
)
Not designated as hedges
 
 
 
 
 
 
 
 
Foreign currency exchange contract
375

Euros
December 2020
10



(4
)
6

Fuel hedge contracts
334

gallons - crude oil and refined products
December 2019
70

12

(98
)
(16
)
(32
)
Total derivative contracts
 
 
$
84

$
12

$
(106
)
$
(41
)
$
(51
)

Hedge Position as of December 31, 2017
(in millions)
Volume
 
Final Maturity Date
Prepaid Expenses and Other
Other Noncurrent Assets
Other Accrued Liabilities
Other Noncurrent Liabilities
Hedge Derivatives, net
Designated as hedges
 
 
 
 
 
 
 
 
Foreign currency exchange contracts
23,512

Japanese yen
November 2019
$
1

$
1

$
(13
)
$
(6
)
$
(17
)
490

Canadian dollars
May 2020
Not designated as hedges
 
 
 
 
 
 
 
 
Fuel hedge contracts
249

gallons - crude oil and refined products
May 2019
638

8

(694
)
(18
)
(66
)
Total derivative contracts
 
 
$
639

$
9

$
(707
)
$
(24
)
$
(83
)

Offsetting Assets and Liabilities

We have master netting arrangements with our counterparties giving us the right to offset hedge assets and liabilities. However, we have elected not to offset the fair value positions recorded on our Consolidated Balance Sheets. The following table shows the net fair value positions by counterparty had we elected to offset.
(in millions)
Prepaid Expenses and Other
Other Noncurrent Assets
Other Accrued Liabilities
Other Noncurrent Liabilities
Hedge Derivatives, net
June 30, 2018
 
 
 
 
 
Net derivative contracts
$
22

$
9

$
(54
)
$
(28
)
$
(51
)
December 31, 2017
 
 
 
 
 
Net derivative contracts
$

$
1

$
(68
)
$
(16
)
$
(83
)


15


Designated Hedge Gains (Losses)

Gains (losses) related to our foreign currency exchange contracts are as follows:
 
Effective Portion Reclassified from AOCI to Earnings
 
Effective Portion Recognized in Other Comprehensive Income
(in millions)
2018
2017
 
2018
2017
Three Months Ended June 30,
 
 
 
 
 
Foreign currency exchange contracts
$
(2
)
$
4

 
$
9

$
(8
)
Six Months Ended June 30,
 
 
 
 
 
Foreign currency exchange contracts
$
3

$
11

 
$

$
(33
)


Credit Risk

To manage credit risk associated with our fuel price, interest rate and foreign currency hedging programs, we evaluate counterparties based on several criteria including their credit ratings.


NOTE 6. LONG-TERM DEBT

The following table summarizes our long-term debt:
 
Maturity
Interest Rate(s)(5) Per Annum at
June 30,
December 31,
(in millions)
Dates
June 30, 2018
2018
2017
Pacific Facilities:
 
 
 
 
 
 
 
 
Pacific Term Loan B-1
n/a
n/a
 
n/a
$

$
1,048

Pacific Revolving Credit Facility
n/a
n/a
 
n/a


2015 Credit Facilities:
 
 
 
 
 
 
 
 
Term Loan Facility
n/a
n/a
 
n/a

490

Revolving Credit Facility
n/a
n/a
 
n/a


Financing arrangements secured by aircraft:
 
 
 
 
 
 
 
 
Certificates(1)
2018
to
2027
3.63%
to
8.02%
2,207

2,380

Notes(1)
2018
to
2027
2.75%
to
6.76%
1,647