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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2021
Or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 001-5424
dal-20210331_g1.jpg
DELTA AIR LINES, INC.
(Exact name of registrant as specified in its charter)
Delaware58-0218548
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
Post Office Box 20706
Atlanta, Georgia
30320-6001
(Address of principal executive offices)(Zip Code)
Registrant's telephone number, including area code: (404) 715-2600

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common Stock, par value $0.0001 per shareDALNew York Stock Exchange
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 No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).
Yes No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth 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.
Large accelerated filerAccelerated filer Non-accelerated filer 
Smaller reporting companyEmerging growth company
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.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes No
Number of shares outstanding by each class of common stock, as of March 31, 2021:
Common Stock, $0.0001 par value - 639,661,387 shares outstanding
This document is also available through our website at http://ir.delta.com/.





Table of Contents
Page



Forward Looking Statements
Unless otherwise indicated or the context otherwise requires, 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, 2020 ("Form 10-K"), 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 except as required by law.

Delta Air Lines, Inc. 2021 March Form 10-Q                                 1


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To 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 March 31, 2021, the related condensed consolidated statements of operations and comprehensive loss, cash flows and stockholders' equity for the three-month periods ended March 31, 2021 and 2020, 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 the Company as of December 31, 2020, the related consolidated statements of operations, comprehensive loss, cash flows, and stockholders' equity for the year then ended, and the related notes (not presented herein); and in our report dated February 12, 2021, 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, 2020, 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
April 15, 2021

Delta Air Lines, Inc. 2021 March Form 10-Q                                 2

Financial Statements

DELTA AIR LINES, INC.
Consolidated Balance Sheets
(Unaudited)
(in millions, except share data)March 31,
2021
December 31,
2020
ASSETS
Current Assets:
Cash and cash equivalents$8,460 $8,307 
Short-term investments5,575 5,789 
Accounts receivable, net of an allowance for uncollectible accounts of $75 and $89
1,837 1,396 
Fuel inventory457 377 
Expendable parts and supplies inventories, net of an allowance for obsolescence of $176 and $188
371 355 
Prepaid expenses and other1,153 1,180 
Total current assets17,853 17,404 
Noncurrent Assets:
Property and equipment, net of accumulated depreciation and amortization of $17,922 and $17,511
26,862 26,529 
Operating lease right-of-use assets5,577 5,733 
Goodwill9,753 9,753 
Identifiable intangibles, net of accumulated amortization of $885 and $883
6,009 6,011 
Cash restricted for airport construction1,223 1,556 
Equity investments1,929 1,665 
Deferred income taxes, net2,306 1,988 
Other noncurrent assets1,571 1,357 
Total noncurrent assets55,230 54,592 
Total assets$73,083 $71,996 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current maturities of debt and finance leases$2,983 $1,732 
Current maturities of operating leases653 678 
Air traffic liability5,105 4,044 
Accounts payable3,432 2,840 
Accrued salaries and related benefits2,182 2,086 
Loyalty program deferred revenue2,439 1,777 
Fuel card obligation1,100 1,100 
Other accrued liabilities2,794 1,670 
Total current liabilities20,688 15,927 
Noncurrent Liabilities:
Debt and finance leases26,061 27,425 
Noncurrent air traffic liability250 500 
Pension, postretirement and related benefits10,396 10,630 
Loyalty program deferred revenue4,846 5,405 
Noncurrent operating leases5,568 5,713 
Other noncurrent liabilities4,792 4,862 
Total noncurrent liabilities51,913 54,535 
Commitments and Contingencies
Stockholders' Equity:
Common stock at $0.0001 par value; 1,500,000,000 shares authorized, 649,361,047 and 647,352,203
shares issued
  
Additional paid-in capital11,326 11,259 
Accumulated deficit(1,605)(428)
Accumulated other comprehensive loss(8,960)(9,038)
Treasury stock, at cost, 9,699,660 and 9,169,683 shares
(279)(259)
Total stockholders' equity482 1,534 
Total liabilities and stockholders' equity$73,083 $71,996 
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

Delta Air Lines, Inc. 2021 March Form 10-Q                                 3

Financial Statements
DELTA AIR LINES, INC.
Condensed Consolidated Statements of Operations and Comprehensive Loss
(Unaudited)
Three Months Ended March 31,
(in millions, except per share data)20212020
Operating Revenue:
Passenger$2,748 $7,569 
Cargo215 152 
Other1,187 871 
  Total operating revenue4,150 8,592 
Operating Expense:
Salaries and related costs2,202 2,862 
Aircraft fuel and related taxes1,017 1,595 
Ancillary businesses and refinery706 219 
Contracted services519 748 
Landing fees and other rents493 550 
Depreciation and amortization492 678 
Regional carrier expense401 577 
Aircraft maintenance materials and outside repairs294 469 
Passenger service118 273 
Passenger commissions and other selling expenses110 398 
Aircraft rent104 100 
Restructuring charges(44) 
Government grant recognition(1,186) 
Other322 533 
Total operating expense5,548 9,002 
Operating Loss(1,398)(410)
Non-Operating Expense:
Interest expense, net(361)(79)
Impairments and equity method losses(54)(260)
Gain/(loss) on investments, net262 (112)
Miscellaneous, net36 254 
Total non-operating expense, net(117)(197)
Loss Before Income Taxes(1,515)(607)
Income Tax Benefit338 73 
Net Loss$(1,177)$(534)
Basic Loss Per Share$(1.85)$(0.84)
Diluted Loss Per Share$(1.85)$(0.84)
Cash Dividends Declared Per Share$ $0.40 
Comprehensive Loss$(1,099)$(443)
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

Delta Air Lines, Inc. 2021 March Form 10-Q                                 4

Financial Statements
DELTA AIR LINES, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)

Three Months Ended March 31,
(in millions)20212020
Net Cash Provided by Operating Activities$691 $358 
Cash Flows from Investing Activities:
Property and equipment additions:
Flight equipment, including advance payments(132)(629)
Ground property and equipment, including technology(306)(308)
Purchase of short-term investments(3,161) 
Redemption of short-term investments3,371  
Purchase of equity investments (2,099)
Other, net168 65 
Net cash used in investing activities(60)(2,971)
Cash Flows from Financing Activities:
Proceeds from short-term obligations 2,882 
Proceeds from long-term obligations924 3,962 
Payments on debt and finance lease obligations(1,775)(1,238)
Repurchase of common stock (344)
Cash dividends (260)
Fuel card obligation 364 
Other, net61 (22)
Net cash (used in)/provided by financing activities(790)5,344 
Net (Decrease)/Increase in Cash, Cash Equivalents and Restricted Cash Equivalents(159)2,731 
Cash, cash equivalents and restricted cash equivalents at beginning of period10,055 3,730 
Cash, cash equivalents and restricted cash equivalents at end of period$9,896 $6,461 
Non-Cash Transactions:
Flight and ground equipment acquired under finance leases$473 $184 
Right-of-use assets acquired under operating leases20 55 
Other financings200  
The following table provides a reconciliation of cash, cash equivalents and restricted cash equivalents reported within the Consolidated Balance Sheets to the total of the same such amounts shown above:
March 31,
(in millions)20212020
Current assets:
Cash and cash equivalents$8,460 $5,967 
Restricted cash included in prepaid expenses and other213 39 
Noncurrent assets:
Cash restricted for airport construction1,223 455 
Total cash, cash equivalents and restricted cash equivalents$9,896 $6,461 
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

Delta Air Lines, Inc. 2021 March Form 10-Q                                 5

Financial Statements
DELTA AIR LINES, INC.
Consolidated Statements of Stockholders' Equity
(Unaudited)

Common StockAdditional
Paid-In Capital
Accumulated DeficitAccumulated
Other
Comprehensive Loss
Treasury Stock
(in millions, except per share data)SharesAmountSharesAmountTotal
Balance at December 31, 2020
647 $ $11,259 $(428)$(9,038)9 $(259)$1,534 
Net loss— — — (1,177)— — — (1,177)
Other comprehensive income— — — — 78 — — 78 
Common stock issued for employee equity awards(1)
2 — 23 — — 1 (20)3 
Government grant warrant issuance— — 44 — — — — 44 
Balance at March 31, 2021
649 $ $11,326 $(1,605)$(8,960)10 $(279)$482 

(1)Treasury shares were withheld for payment of taxes, at a weighted average price per share of $38.35 in the March 2021 quarter.



Common StockAdditional
Paid-In Capital
 Retained
Earnings
Accumulated
Other
Comprehensive Loss
Treasury Stock
(in millions, except per share data)SharesAmountSharesAmountTotal
Balance at December 31, 2019
652 $ $11,129 $12,454 $(7,989)9 $(236)$15,358 
Net loss— — — (534)— — — (534)
Dividends declared— — — (257)— — — (257)
Other comprehensive income— — — — 91 — — 91 
Common stock issued for employee equity awards(1)
1 — 29 — — 1 (34)(5)
Stock purchased and retired(6)— (104)(240)— — — (344)
Balance at March 31, 2020
647 $ $11,054 $11,423 $(7,898)10 $(270)$14,309 

(1)Treasury shares were withheld for payment of taxes, at a weighted average price per share of $56.48 in the March 2020 quarter.

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
Delta Air Lines, Inc. 2021 March Form 10-Q                                 6

Notes to the Consolidated Financial Statements
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 consolidated 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, 2020.

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 impacts from the COVID-19 pandemic and the uncertain pace of recovery, seasonal variations in the demand for air travel, the volatility of aircraft fuel prices and other factors, operating results for the three months ended March 31, 2021 are not necessarily indicative of operating results for the entire year.

We reclassified certain prior period amounts to conform to the current period presentation. Unless otherwise noted, all amounts disclosed are stated before consideration of income taxes.

Regional Carrier Expense

We previously allocated certain costs (such as landing fees and other rents, salaries and related costs and contracted services) to regional carrier expense in our Condensed Consolidated Statements of Operations and Comprehensive Loss ("income statement") based on relevant statistics (such as passenger counts). Beginning in the March 2021 quarter we are no longer performing this allocation and have reclassified the costs presented in prior periods to align with this presentation. This reclassification better reflects the nature of, and how management views, these regional carrier related expenses. This allocation was approximately $900 million in 2020, including $325 million in the March 2020 quarter, and $1.4 billion in 2019, including $355 million in the March 2019 quarter. The remaining amounts in regional carrier expense represent payments to our regional carriers under capacity purchase agreements and the expenses of our wholly owned regional subsidiary, Endeavor Air, Inc.


Delta Air Lines, Inc. 2021 March Form 10-Q                                 7

Notes to the Consolidated Financial Statements
NOTE 2. REVENUE RECOGNITION

Passenger Revenue
Three Months Ended March 31,
(in millions)20212020
Ticket$2,277 $6,511 
Loyalty travel awards241 543 
Travel-related services230 515 
Total passenger revenue$2,748 $7,569 

We recognized approximately $822 million and $2.8 billion in passenger revenue during the three months ended March 31, 2021 and 2020, respectively, that had been recorded in our air traffic liability balance at the beginning of those periods.

In March 2021, we announced the extension of the validity of all passenger tickets and travel credits expiring in 2021 or purchased in 2021 to December 2022. In addition, we have waived change fees for all tickets purchased through April 30, 2021, as well as eliminated change fees for domestic and international tickets originating from North America with the exception of Basic Economy tickets.

Other Revenue
Three Months Ended March 31,
(in millions)20212020
Ancillary businesses and refinery$726 $223 
Loyalty program368 474 
Miscellaneous93 174 
Total other revenue$1,187 $871 

Ancillary Businesses and Refinery. Ancillary businesses and refinery includes refinery sales to third parties, aircraft maintenance services we provide to third parties and our vacation wholesale operations.

Loyalty Program. Our SkyMiles loyalty program allows customers to earn mileage credits ("miles") by flying on Delta, Delta Connection and other airlines that participate in the loyalty program. Customers can also earn miles through participating companies, such as credit card companies, hotels, car rental agencies and ridesharing companies, who purchase miles from us. Our most significant contract to sell miles relates to our co-brand credit card relationship with American Express. During the three months ended March 31, 2021 and 2020, total cash sales from marketing agreements related to our loyalty program were $760 million and $992 million, respectively, which are allocated to travel and other performance obligations.

Current Activity of the Loyalty Program. Miles are combined in one homogeneous pool and are not separately identifiable. Therefore, the revenue is comprised of miles that were part of the loyalty program 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 loyalty program deferred revenue and includes miles earned through travel and miles sold to participating companies, which are primarily through marketing agreements.

Loyalty program activity
(in millions)20212020
Balance at January 1$7,182 $6,728 
Miles earned354 660 
Travel miles redeemed(241)(543)
Non-travel miles redeemed(10)(28)
Balance at March 31
$7,285 $6,817 

The timing of mile redemptions can vary widely; however, the majority of miles have historically been redeemed within two years of being earned.
Delta Air Lines, Inc. 2021 March Form 10-Q                                 8

Notes to the Consolidated Financial Statements

Revenue by Geographic Region

Operating revenue for the airline segment is recognized in a specific geographic region based on the origin, flight path and destination of each flight segment. A significant portion of the refinery segment's revenues typically consists of fuel sales to support the airline, which is eliminated in the Condensed Consolidated Financial Statements. The remaining operating revenue for the refinery segment is included in the domestic region. Our passenger and operating revenue by geographic region is summarized in the following tables:

Passenger revenue by geographic region
Passenger Revenue
Three Months Ended March 31,
(in millions)20212020
Domestic$2,280 $5,601 
Atlantic142 818 
Latin America264 765 
Pacific62 385 
Total$2,748 $7,569 

Operating revenue by geographic region
Operating Revenue
Three Months Ended March 31,
(in millions)20212020
Domestic$3,368 $6,267 
Atlantic267 994 
Latin America381 863 
Pacific134 468 
Total$4,150 $8,592 



Delta Air Lines, Inc. 2021 March Form 10-Q                                 9

Notes to the Consolidated Financial Statements
NOTE 3. FAIR VALUE MEASUREMENTS

Assets Measured at Fair Value on a Recurring Basis
(in millions)March 31,
2021
Level 1Level 2Level 3
Cash equivalents$6,004 $6,004 $ $ 
Restricted cash equivalents1,436 1,436   
Short-term investments5,575 3,564 2,011  
Long-term investments1,673 895 557 221 

(in millions)December 31,
2020
Level 1Level 2Level 3
Cash equivalents$5,755 $5,755 $ $ 
Restricted cash equivalents1,747 1,747   
Short-term investments5,789 3,919 1,870  
Long-term investments1,417 948 38 431 

Cash Equivalents and Restricted Cash Equivalents. Cash equivalents generally consist of money market funds. Restricted cash equivalents are recorded in prepaid expenses and other and cash restricted for airport construction on the Consolidated Balance Sheet ("balance sheet") and generally consist of money market funds, time deposits, commercial paper and negotiable certificates of deposit, which primarily relate to proceeds from debt issued to finance, among other things, a portion of the construction costs for our new terminal facilities at New York's LaGuardia Airport. The fair value of these cash equivalents is based on a market approach using prices generated by market transactions involving identical or comparable assets.

Short-Term Investments. Short-term investments consist of U.S. government securities. The fair values of these 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.

At March 31, 2021, the estimated fair value of our short-term investments was $5.6 billion, which approximates cost. Of these investments, $4.7 billion are expected to mature in one year or less, with the remainder maturing during 2022. Investments with maturities beyond one year when purchased are classified as short-term investments if they are expected to be available to support our short-term liquidity needs.

Long-Term Investments. Our long-term investments that are measured at fair value primarily consist of equity investments, which are valued based on market prices or other observable transactions and inputs, and are recorded in equity investments on our balance sheet. In the March 2021 quarter, due to its agreement to merge with Aspirational Consumer Lifestyle Corp ("Aspirational"), a publicly-traded special purpose acquisition company, our investment in Wheels Up was classified as Level 2. In addition, our equity investments in private companies are classified as Level 3 in the fair value hierarchy as their equity is not traded on a public exchange and our valuations incorporate certain unobservable inputs, including non-public equity issuances and forecasts provided by our investees. Fair value measurement using unobservable inputs is inherently uncertain, and a change in significant inputs could result in different fair values. See Note 4, "Investments," for further information on our equity investments.


Delta Air Lines, Inc. 2021 March Form 10-Q                                 10

Notes to the Consolidated Financial Statements
NOTE 4. INVESTMENTS

We have developed strategic relationships with a number of airlines and airline services companies through joint ventures and other forms of cooperation and support, including equity investments. Our equity investments reinforce our commitment to these relationships and generally enhance our ability to offer input to the investee on strategic issues and direction, in some cases through representation on the board of directors.

Changes in the valuation of investments accounted for at fair value are recorded in gain/(loss) on investments in our income statement within non-operating expense and are driven by changes in stock prices, other valuation techniques for investments in companies without publicly-traded shares and foreign currency fluctuations. We recorded gains of $262 million and losses of $112 million on our fair value investments during the three months ended March 31, 2021 and 2020, respectively.

Our share of Unifi Aviation's financial results is recorded in contracted services in our income statement as this entity is integral to the operations of our business, while our share of other equity method investees' financial results is recorded in impairments and equity method losses in our income statement under non-operating expense. If an investment accounted for under the equity method experiences a loss in value that is determined to be other than temporary, we will reduce our carrying value of the investment to fair value and record the loss in impairments and equity method losses in our income statement.

Equity investments ownership interest and carrying value
Accounting TreatmentOwnership InterestCarrying Value
(in millions)March 31, 2021December 31, 2020March 31, 2021December 31, 2020
Wheels UpFair Value24 %24 %$520 $210 
Hanjin-KALFair Value13 %13 %447 512 
Air France-KLMFair Value9 %9 %225 235 
China EasternFair Value3 %3 %219 201 
Unifi AviationEquity Method49 %49 %165 154 
Other investmentsVarious353 353 
Equity investments$1,929 $1,665 


Wheels Up. In February 2021, Wheels Up entered into a definitive agreement to become publicly-traded via a merger with Aspirational. The transaction is expected to close in the June 2021 quarter. We account for our investment using the fair value option, as this election better reflects the economics of our ownership interest, and we have recorded our investment primarily based on Aspirational’s stock price and information included in its public filings.

Other Investments. This category includes various investments that are accounted for at fair value or under the equity method, depending on our ownership interest and the level of influence conveyed by our investment. Included in this category are our investments in Grupo Aeroméxico, LATAM Airlines Group S.A. ("LATAM") and Virgin Atlantic, all of which are undergoing in-court or out-of-court restructurings, and the carrying values of these investments remain zero at March 31, 2021. In order to support our relationships with these carriers, we have provided them with strategic and operational assistance through their restructurings. We have notes payable of $480 million, which are recorded in current maturities of debt and finance leases, and receivables from those partners recorded within other noncurrent assets as of March 31, 2021.


Delta Air Lines, Inc. 2021 March Form 10-Q                                 11

Notes to the Consolidated Financial Statements
NOTE 5. DEBT

Summary of outstanding debt by category
MaturityInterest Rate(s) Per Annum atMarch 31,December 31,
(in millions)DatesMarch 31, 202120212020
Unsecured notes2021to20292.90%to7.38%$5,350 $5,350 
Unsecured Payroll Support Program Loan20301.00%1,648 1,648 
Unsecured Payroll Support Program Extension Loan20311.00%828  
Financing arrangements secured by SkyMiles assets:
SkyMiles Notes(1)
2023to20284.50%and4.75%6,000 6,000 
SkyMiles Term Loan(1)(2)
2023to20274.75%3,000 3,000 
Financing arrangements secured by slots, gates and/or routes:
2020 Senior Secured Notes20257.00%3,500 3,500 
2020 Term Loann/an/a 1,493 
2018 Revolving Credit Facility(2)
2021to2023Undrawn  
Financing arrangements secured by aircraft:
Certificates(1)
2021to20282.00%to8.02%2,518 2,633 
Notes(1)(2)
2021to20330.77%to5.75%1,350 1,284 
NYTDC Special Facilities Revenue Bonds, Series 2020(1)
2026to20454.00%to5.00%1,511 1,511 
NYTDC Special Facilities Revenue Bonds, Series 2018(1)
2022to20364.00%to5.00%1,383 1,383 
Other financings(1)(2)
2021to20302.25%to8.75%611 412 
Other revolving credit facilities(2)
2021to2022Undrawn  
Total secured and unsecured debt27,699 28,214 
Unamortized (discount)/premium and debt issue cost, net and other(226)(240)
Total debt27,473 27,974 
Less: current maturities(2,671)(1,443)
Total long-term debt$24,802 $26,531 
(1)Due in installments.
(2)Certain financings are comprised of variable rate debt. All variable rates are equal to LIBOR (generally subject to a floor) or another index rate, in each case plus a specified margin.

Unsecured Payroll Support Program Extension Loans

The Consolidated Appropriations Act, 2021 was enacted on December 27, 2020, and included an extension of the payroll support program created under the Coronavirus Aid, Relief and Economic Security Act ("CARES Act") providing an additional $15 billion in grants and loans to be used for airline employee wages, salaries and benefits. In January 2021, we entered into a payroll support program extension agreement with the U.S. Department of the Treasury. In the March 2021 quarter, we received $2.9 billion in payroll support payments, which must be used exclusively for the payment of employee wages, salaries and benefits and is conditioned on our agreement to refrain from conducting involuntary employee layoffs or furloughs from the date of the extension agreement through March 2021. Other conditions include prohibitions on share repurchases and dividends through March 2022 and certain limitations on executive compensation until October 2022. The Department of Transportation also has the authority until March 1, 2022 to require airlines that received payroll support program funds to maintain scheduled air service deemed necessary to any point served by the airline before March 1, 2020.

These support payments consisted of approximately $2.0 billion in a grant and $828 million in an unsecured 10-year low interest loan. The loan bears interest at an annual rate of 1.00% for the first five years and the applicable Secured Overnight Financing Rate ("SOFR") plus 2.00% in the final five years. In return, we entered into a promissory note for the $828 million and issued warrants to the U.S. Department of the Treasury to acquire approximately 2.1 million shares of Delta common stock, representing approximately 0.3% of our outstanding shares. These warrants have an initial exercise price of $39.73 per share, subject to adjustment in certain cases, and a five-year term. We have recorded the value of the promissory note and warrants on a relative fair value basis as $784 million of noncurrent debt, net of discount, and $44 million in additional paid in capital, respectively.
Delta Air Lines, Inc. 2021 March Form 10-Q                                 12

Notes to the Consolidated Financial Statements
We have participated in the initial payroll support program, and as described above, the first extension of the payroll support program. A summary of the amounts received and warrants issued to date under these programs is set forth in the following table:

Summary of payroll support program activity
(in millions, except percentages)Total AmountGrantLoanNumber of WarrantsPercentage of Outstanding Shares at March 31, 2021
Payroll Support Program (PSP1)$5,594 $3,946 $1,648 6.8 1.1 %
First Payroll Support Program Extension (PSP2) (1)
2,861 2,033 828 2.1 0.3 %
(1)During the March 2021 quarter $1.2 billion of this grant was recognized in government grant recognition in our income statement and $847 million is deferred in other accrued liabilities on our balance sheet as of March 31, 2021.

The American Rescue Plan Act of 2021 was enacted on March 11, 2021, and included a second extension of the payroll support program providing an additional $14 billion in grants and loans to be used for airline employee wages, salaries and benefits. We expect to enter into similar agreements as those discussed above with the U.S. Department of the Treasury. Based on the share of funds we received from the first extension of the payroll support program, and the similar structures of both extensions, we estimate that we will receive approximately $2.7 billion, consisting of $1.9 billion in a grant and $800 million in an unsecured 10-year low interest loan. However, the actual amounts received and the allocation between the grant and loan could differ from our estimates. These payments are expected to be conditioned on our agreement to refrain from conducting involuntary employee layoffs or furloughs through September 2021 or the date on which assistance provided under the agreement is exhausted, whichever is later. Other conditions would include prohibitions on share repurchases and dividends through September 2022 and certain limitations on executive compensation until April 2023. In return, we expect to enter into a promissory note for the amount of the loan and to issue warrants to the U.S. Department of the Treasury to acquire shares of Delta common stock in an amount to be determined consistent with the structure of the prior warrant issuances.

2020 Term Loan

In 2020 we entered into a $1.5 billion term loan secured by certain slots, gates and routes. In the March 2021 quarter we repaid in full the term loan, which was scheduled to mature in April 2023, and incurred a $56 million loss on extinguishment of debt, which is recorded in miscellaneous, net in non-operating expense in the income statement.

Availability Under Revolving Facilities

As of March 31, 2021, we had approximately $2.6 billion undrawn and available under our revolving credit facilities. In addition, we had outstanding letters of credit as of March 31, 2021, including approximately $400 million that reduced the availability under our revolving credit facilities and approximately $300 million that did not affect the availability of our revolving credit facilities.

Fair Value of Debt

Market risk associated with our fixed- and variable-rate debt relates to the potential reduction in fair value and negative impact to future earnings, respectively, from an increase in interest rates. The fair value of debt, shown below, is principally based on reported market values, recently completed market transactions and estimates based on interest rates, maturities, credit risk and where applicable, underlying collateral. Debt is primarily classified as Level 2 within the fair value hierarchy.
    
Fair value of outstanding debt
(in millions)March 31,
2021
December 31,
2020
Net carrying amount$27,473 $27,974 
Fair value$29,500 $29,800 

Covenants

Our debt agreements contain various affirmative, negative and financial covenants. We were in compliance with the covenants in these debt agreements at March 31, 2021.

Delta Air Lines, Inc. 2021 March Form 10-Q                                 13

Notes to the Consolidated Financial Statements

NOTE 6. EMPLOYEE BENEFIT PLANS

Employee benefit plans net periodic (benefit) cost
Pension BenefitsOther Postretirement and Postemployment Benefits
(in millions)2021202020212020
Three Months Ended March 31,
Service cost$ $ $21 $24 
Interest cost146 175 29 28 
Expected return on plan assets(375)(343)(9)(11)
Amortization of prior service credit  (2)(2)
Recognized net actuarial loss89 75 15 10 
Net periodic (benefit) cost$(140)$(93)$54 $49 

Service cost is recorded in salaries and related costs in our income statement, while all other components are recorded within miscellaneous, net under non-operating expense.

We have no minimum funding requirements for our defined benefit pension plans in 2021, however we voluntarily contributed $1.0 billion to these plans in April 2021.


NOTE 7. COMMITMENTS AND CONTINGENCIES

Aircraft Purchase Commitments

Our future aircraft purchase commitments totaled approximately $13.4 billion at March 31, 2021:

Aircraft purchase commitments
(in millions)Total
Nine months ending December 31, 2021
$750 
20222,480 
20232,310 
20242,960 
20252,750 
Thereafter2,110 
Total$13,360 

Legal Contingencies

We are involved in various legal proceedings related to employment practices, environmental issues, antitrust matters and other matters concerning our business. We record liabilities for losses from legal proceedings when we determine that it is probable that the outcome in a legal proceeding will be unfavorable and the amount of loss can be reasonably estimated. Although the outcome of the legal proceedings in which we are involved cannot be predicted with certainty, we believe that the resolution of current matters will not have a material adverse effect on our Condensed Consolidated Financial Statements.

Delta Air Lines, Inc. 2021 March Form 10-Q                                 14

Notes to the Consolidated Financial Statements
Other Contingencies

General Indemnifications

We are the lessee under many commercial real estate leases. It is common in these transactions for us, as the lessee, to agree to indemnify the lessor and the lessor's related parties for tort, environmental and other liabilities that arise out of or relate to our use or occupancy of the leased premises. This type of indemnity would typically make us responsible to indemnified parties for liabilities arising out of the conduct of, among others, contractors, licensees and invitees at, or in connection with, the use or occupancy of the leased premises. This indemnity often extends to related liabilities arising from the negligence of the indemnified parties but usually excludes any liabilities caused by either their sole or gross negligence or their willful misconduct.

Our aircraft and other equipment lease and financing agreements typically contain provisions requiring us, as the lessee or obligor, to indemnify the other parties to those agreements, including certain of those parties' related persons, against virtually any liabilities that might arise from the use or operation of the aircraft or other equipment.

We believe that our insurance would cover most of our exposure to liabilities and related indemnities associated with the commercial real estate leases and aircraft and other equipment lease and financing agreements described above. While our insurance does not typically cover environmental liabilities, we have insurance policies in place as required by applicable environmental laws.

Some of our aircraft and other financing transactions include provisions that require us to make payments to preserve an expected economic return to the lenders if that economic return is diminished due to specified changes in laws or regulations. In some of these financing transactions, we also bear the risk of changes in tax laws that would subject payments to non-U.S. lenders to withholding taxes.

We cannot reasonably estimate our potential future payments under the indemnities and related provisions described above because we cannot predict (1) when and under what circumstances these provisions may be triggered and (2) the amount that would be payable if the provisions were triggered because the amounts would be based on facts and circumstances existing at such time.

Other

We have certain contracts for goods and services that require us to pay a penalty, acquire inventory specific to us or purchase contract-specific equipment, as defined by each respective contract, if we terminate the contract without cause prior to its expiration date. Because these obligations are contingent on our termination of the contract without cause prior to its expiration date, no obligation would exist unless such a termination occurs.


NOTE 8. ACCUMULATED OTHER COMPREHENSIVE LOSS

Components of accumulated other comprehensive loss
(in millions)
Pension and Other Benefit Liabilities(2)
OtherTotal
Balance at January 1, 2021 (net of tax effect of $1,764)
$(9,078)$40 $(9,038)
Reclassifications into earnings (net of tax effect of $23)(1)
78  78 
Balance at March 31, 2021 (net of tax effect of $1,741)
$(9,000)$40 $(8,960)

Balance at January 1, 2020 (net of tax effect of $1,549)
$(8,095)$106 $(7,989)
Changes in value (net of tax effect of $3)
 21 21 
Reclassifications into earnings (net of tax effect of $21)(1)
70  70 
Balance at March 31, 2020 (net of tax effect of $1,531)
$(8,025)$127 $(7,898)

(1)Amounts reclassified from AOCI for pension and other benefit liabilities are recorded in miscellaneous, net in non-operating expense in our income statement.
(2)Includes approximately $750 million of deferred income tax expense primarily related to pension and other benefit obligations that will not be recognized in net income until these obligations are fully extinguished. We consider all income sources, including other comprehensive income, in determining the amount of tax benefit allocated to results from operations.
Delta Air Lines, Inc. 2021 March Form 10-Q                                 15

Notes to the Consolidated Financial Statements
NOTE 9. SEGMENTS

Refinery Operations

Our refinery segment operates for the benefit of the airline segment by providing jet fuel to the airline segment from its own production and through jet fuel obtained through agreements with third parties. The refinery's production consists of jet fuel, as well as non-jet fuel products. Due to the decrease in demand for jet fuel caused by the COVID-19 pandemic, the refinery has shifted production to more non-jet fuel products. We use several counterparties to exchange the non-jet fuel products produced by the refinery for jet fuel consumed in our airline operations. The gross fair value of the products exchanged under these agreements during the three months ended March 31, 2021 and 2020 was $503 million and $831 million, respectively.

Segment Reporting

Segment results are prepared based on our internal accounting methods described below, with reconciliations to consolidated amounts in accordance with GAAP. Our segments are not designed to measure operating income or loss directly related to the products and services included in each segment on a stand-alone basis.

Financial information by segment
(in millions)AirlineRefineryIntersegment Sales/OtherConsolidated
Three Months Ended March 31, 2021
Operating revenue:$3,610 $1,047 $4,150 
Sales to airline segment$ 
(1)
Exchanged products(503)
(2)
Sales of refined products(4)
(3)
Operating loss(1,273)(125) (1,398)
Interest expense, net360 1  361 
Depreciation and amortization492 24 (24)
(4)
492 
Total assets, end of period71,505 1,578  73,083 
Fair value obligations, end of period(5)
 (346) (346)
Capital expenditures425 13  438 
Three Months Ended March 31, 2020
Operating revenue:$8,592 $1,184 $8,592 
Sales to airline segment$(210)
(1)
Exchanged products(831)
(2)
Sales of refined products(143)
(3)
Operating (loss)/income(439)29  (410)
Interest expense (income), net80 (1) 79 
Depreciation and amortization678 25 (25)
(4)
678 
Total assets, end of period66,864 1,874  68,738 
Fair value obligations, end of period(5)
 (33) (33)
Capital expenditures926 11  937 
(1)Represents transfers, valued on a market price basis, from the refinery to the airline segment for use in airline operations. We determine market price by reference to the market index for the primary delivery location, which is New York Harbor, for jet fuel from the refinery.
(2)Represents value of products delivered under our exchange agreements, as discussed above, determined on a market price basis.
(3)These sales were at or near cost; accordingly, the margin on these sales is de minimis.
(4)Refinery segment operating results, including depreciation and amortization, are included within aircraft fuel and related taxes in our income statement.
(5)The fair values of these obligations, which are related to renewable fuel compliance costs, are based on quoted market prices and other observable information and are classified as Level 2 in the fair value hierarchy.


Delta Air Lines, Inc. 2021 March Form 10-Q                                 16

Notes to the Consolidated Financial Statements
NOTE 10. LOSS PER SHARE

We calculate basic loss per share and diluted loss per share by dividing net loss by the weighted average number of common shares outstanding, excluding restricted shares. Antidilutive common stock equivalents excluded from the diluted loss per share calculation are not material. The following table shows the computation of basic and diluted loss per share:

Basic and diluted loss per share
Three Months Ended March 31,
(in millions, except per share data)20212020
Net loss$(1,177)$(534)
Basic weighted average shares outstanding636 637 
Dilutive effect of share-based awards  
Diluted weighted average shares outstanding636 637 
Basic loss per share$(1.85)$(0.84)
Diluted loss per share$(1.85)$(0.84)

Delta Air Lines, Inc. 2021 March Form 10-Q                                 17

Item 2. MD&A
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our Condensed Consolidated Financial Statements and the related notes and other financial information included elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated financial statements and related notes included in our 2020 Annual Report on Form 10-K.

Our business and operating results for 2021 continue to be significantly impacted by the COVID-19 pandemic. However, as described further below, we have seen improvement in our business during the March 2021 quarter, which we expect to continue throughout 2021. Given the drastic and unprecedented impact of the pandemic on our operating results in 2020, we believe that for the financial overview discussion below, a comparison of our results in 2021 to 2019 allows for an understanding of the full impact of the COVID-19 pandemic and the progress of our recovery. Throughout the remainder of this management's discussion and analysis, we present results for 2021, 2020 and 2019, and our commentary includes comparisons of 2021 results to both 2020 and 2019 results.

March 2021 Quarter Financial Overview

Our pre-tax loss for the March 2021 quarter was $1.5 billion, including the $1.2 billion benefit related to recognition of a portion of the first payroll support program extension grant during the quarter. This represents a $2.5 billion decrease compared to the March 2019 quarter primarily resulting from a 60% decrease in revenue. Pre-tax loss, adjusted (a non-GAAP financial measure) was $2.9 billion, a decrease of $3.8 billion compared to the March 2019 quarter.

Revenue. Compared to the March 2019 quarter, our operating revenue decreased $6.3 billion, or 60%, due to reduced demand resulting from the COVID-19 pandemic.

Operating Expense. Total operating expense in the March 2021 quarter decreased $3.9 billion, or 41%, compared to the March 2019 quarter, primarily resulting from lower volume-related expenses, mainly fuel and passenger commissions and other selling expenses, recognition of the first payroll support program extension grant and significant cost reduction measures taken across all aspects of our operation in response to the COVID-19 pandemic. Total operating expense, adjusted (a non-GAAP financial measure) for the March 2021 quarter decreased $3.1 billion, or 33%, compared to the March 2019 quarter.

Non-Operating Results. Total non-operating expense was $117 million in the March 2021 quarter, $43 million higher than the March 2019 quarter, primarily due to higher interest expense as a result of our increased debt due to financing arrangements entered into during 2020, partially offset by mark-to-market gains on our equity investments.

Cash Flow. Our cash, cash equivalents, short-term investments and aggregate principal amount committed and available to be drawn under our revolving credit facilities ("liquidity") at March 31, 2021 was $16.6 billion. During the March 2021 quarter, operating activities provided $691 million, which included $2.0 billion from the first payroll support program extension grant. Also during the quarter we incurred $60 million of investing cash outflows, primarily from capital expenditures related to our airport redevelopment projects, the purchase of aircraft and fleet modifications, partially offset by the net redemption of short-term investments. These results generated $710 million of free cash flow (a non-GAAP financial measure) in the March 2021 quarter. Additionally, during the March 2021 quarter we repaid $1.8 billion on our debt and finance leases, of which $1.5 billion was early repayment of the term loan secured by certain of our slots, gates and routes and issued $924 million of debt primarily in connection with the first payroll support program extension.

The above non-GAAP financial measures for pre-tax loss, adjusted, operating expense, adjusted, and free cash flow are defined and reconciled in "Supplemental Information" below.

Environmental Sustainability. In February 2020, we announced plans to invest $1.0 billion over the next 10 years in our effort to achieve carbon neutrality from March 1, 2020 forward, a commitment we have reiterated despite the challenges faced during the COVID-19 pandemic. Our carbon neutrality plan seeks to balance immediate actions (such as carbon offset credits from projects that maintain, protect and expand forests) and long-term solutions (such as sustainable aviation fuel and carbon sequestration technologies). We plan to spend more than $30 million in 2021 to address 13 million metric tons of carbon emissions generated by our airline segment from March 1 to December 31, 2020 through carbon offset credits, including $20 million on credits that we purchased and retired during the March 2021 quarter.
Delta Air Lines, Inc. 2021 March Form 10-Q                                 18

Item 2. MD&A - Results of Operations
Results of Operations - Three Months Ended March 31, 2021, 2020 and 2019

Operating Revenue
Three Months Ended March 31,
2021 vs. 2020
% Increase (Decrease)
2021 vs. 2019
% Increase (Decrease)
(in millions)(1)
202120202019
Ticket - Main cabin$1,399 $3,798 $4,721 (63)%(70)%