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 June 30, 2022

Or
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 001-5424

DELTA AIR LINES, INC.

(Exact name of registrant as specified in its charter)

Delaware	58-0218548
(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 class	Trading Symbol	Name of each exchange on which registered
Common Stock, par value $0.0001 per share	DAL	New 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 filer	☑	Accelerated filer	☐	Non-accelerated filer	☐
Smaller reporting company			☐	Emerging 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 June 30, 2022:

Common Stock, $0.0001 par value - 641,197,918 shares outstanding

This document is also available through our website at http://ir.delta.com/.

Table of Contents
	Page
Forward Looking Statements	1
Report of Independent Registered Public Accounting Firm	2
Part I. Financial Information
Item 1. Financial Statements	3
Consolidated Balance Sheets	3
Condensed Consolidated Statements of Operations and Comprehensive Loss	4
Condensed Consolidated Statements of Cash Flows	5
Consolidated Statements of Stockholders' Equity	6
Notes to the Condensed Consolidated Financial Statements	7
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3. Quantitative and Qualitative Disclosures About Market Risk	37
Item 4. Controls and Procedures	37
Part II. Other Information
Item 1. Legal Proceedings	37
Item 1A. Risk Factors	37
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	38
Item 6. Exhibits	39
Signature	40

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, goals, aspirations, commitments 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, 2021 ("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. June 2022 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 June 30, 2022, the related condensed consolidated statements of operations and comprehensive income/(loss) and consolidated statements of stockholders' equity for the three-month and six-month periods ended June 30, 2022 and 2021, the condensed consolidated statements of cash flows for the six-month periods ended June 30, 2022 and 2021, 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, 2021, the related consolidated statements of operations, comprehensive income/(loss), cash flows, and stockholders' equity for the year then ended, and the related notes (not presented herein); and in our report dated February 11, 2022, 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, 2021, 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 13, 2022

Delta Air Lines, Inc. June 2022 Form 10-Q                                 2

Financial Statements

DELTA AIR LINES, INC.

Consolidated Balance Sheets

(Unaudited)

(in millions, except share data)	June 30, 2022		December 31, 2021
ASSETS
Current Assets:
Cash and cash equivalents	$	9,221	$	7,933
Short-term investments	1,549		3,386
Accounts receivable, net of allowance for uncollectible accounts of $41 and $50	3,093		2,404
Fuel, expendable parts and supplies inventories, net of allowance for obsolescence of $152 and $176	1,734		1,098
Prepaid expenses and other	1,716		1,119
Total current assets	17,313		15,940
Noncurrent Assets:
Property and equipment, net of accumulated depreciation and amortization of $19,338 and $18,671	30,519		28,749
Operating lease right-of-use assets	7,189		7,237
Goodwill	9,753		9,753
Identifiable intangibles, net of accumulated amortization of $897 and $893	5,997		6,001
Equity investments	1,771		1,712
Deferred income taxes, net	1,219		1,294
Other noncurrent assets	1,044		1,773
Total noncurrent assets	57,492		56,519
Total assets	$	74,805	$	72,459
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current maturities of debt and finance leases	$	1,936	$	1,782
Current maturities of operating leases	726		703
Air traffic liability	9,664		6,228
Accounts payable	5,353		4,240
Accrued salaries and related benefits	2,565		2,457
Loyalty program deferred revenue	2,994		2,710
Fuel card obligation	1,100		1,100
Other accrued liabilities	1,986		1,746
Total current liabilities	26,324		20,966
Noncurrent Liabilities:
Debt and finance leases	22,903		25,138
Noncurrent air traffic liability	250		130
Pension, postretirement and related benefits	5,654		6,035
Loyalty program deferred revenue	4,763		4,849
Noncurrent operating leases	7,006		7,056
Other noncurrent liabilities	4,094		4,398
Total noncurrent liabilities	44,670		47,606
Commitments and Contingencies
Stockholders' Equity:
Common stock at $0.0001 par value; 1,500,000,000 shares authorized, 651,700,403 and 649,720,387 shares issued	—		—
Additional paid-in capital	11,485		11,447
Accumulated deficit	(353)		(148)
Accumulated other comprehensive loss	(7,008)		(7,130)
Treasury stock, at cost, 10,502,485 and 9,752,872 shares	(313)		(282)
Total stockholders' equity	3,811		3,887
Total liabilities and stockholders' equity	$	74,805	$	72,459
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

Delta Air Lines, Inc. June 2022 Form 10-Q                                 3

Financial Statements

DELTA AIR LINES, INC.

Condensed Consolidated Statements of Operations and Comprehensive Income/(Loss)

(Unaudited)

	Three Months Ended June 30,				Six Months Ended June 30,
(in millions, except per share data)	2022		2021		2022		2021
Operating Revenue:
Passenger	$	10,958	$	5,339	$	17,865	$	8,087
Cargo	272		251		561		466
Other	2,594		1,536		4,747		2,723
Total operating revenue	13,824		7,126		23,173		11,276
Operating Expense:
Salaries and related costs	2,955		2,328		5,782		4,530
Aircraft fuel and related taxes	3,223		1,487		5,315		2,504
Ancillary businesses and refinery	1,718		939		3,100		1,645
Contracted services	791		570		1,544		1,089
Landing fees and other rents	546		460		1,050		953
Regional carrier expense	528		403		1,018		804
Depreciation and amortization	510		501		1,016		993
Aircraft maintenance materials and outside repairs	522		287		988		581
Passenger commissions and other selling expenses	526		222		838		332
Passenger service	369		175		644		294
Aircraft rent	127		104		249		208
Profit sharing	54		—		54		—
Government grant recognition	—		(1,504)		—		(2,689)
Other	436		338		840		614
Total operating expense	12,305		6,310		22,438		11,858
Operating Income/(Loss)	1,519		816		735		(582)
Non-Operating Expense:
Interest expense, net	(269)		(338)		(543)		(700)
Equity method results	(12)		—		(12)		(54)
Gain/(loss) on investments, net	(221)		211		(368)		473
Loss on extinguishment of debt	(41)		(26)		(66)		(83)
Pension and related benefit/(expense)	73		119		145		226
Miscellaneous, net	(16)		(6)		(58)		(19)
Total non-operating expense, net	(486)		(40)		(902)		(157)
Income/(Loss) Before Income Taxes	1,033		776		(167)		(739)
Income Tax (Provision)/Benefit	(298)		(124)		(38)		214
Net Income/(Loss)	$	735	$	652	$	(205)	$	(525)
Basic Earnings/(Loss) Per Share	$	1.15	$	1.02	$	(0.32)	$	(0.82)
Diluted Earnings/(Loss) Per Share	$	1.15	$	1.02	$	(0.32)	$	(0.82)
Comprehensive Income/(Loss)	$	798	$	730	$	(83)	$	(369)
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

Delta Air Lines, Inc. June 2022 Form 10-Q                                 4

Financial Statements

DELTA AIR LINES, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	Six Months Ended June 30,
(in millions)	2022		2021
Net Cash Provided by Operating Activities	$	4,306	$	2,557
Cash Flows from Investing Activities:
Property and equipment additions:
Flight equipment, including advance payments	(1,879)		(527)
Ground property and equipment, including technology	(845)		(672)
Purchase of short-term investments	(474)		(5,587)
Redemption of short-term investments	2,289		6,494
Purchase of equity investments	(100)		—
Other, net	108		258
Net cash used in investing activities	(901)		(34)
Cash Flows from Financing Activities:
Proceeds from long-term obligations	—		1,902
Payments on debt and finance lease obligations	(2,395)		(3,133)
Other, net	(27)		111
Net cash used in financing activities	(2,422)		(1,120)
Net Increase in Cash, Cash Equivalents and Restricted Cash Equivalents	983		1,403
Cash, cash equivalents and restricted cash equivalents at beginning of period	8,569		10,055
Cash, cash equivalents and restricted cash equivalents at end of period	$	9,552	$	11,458
Non-Cash Transactions:
Flight and ground equipment acquired under finance leases	$	81	$	752
Right-of-use assets acquired under operating leases	324		259
Operating leases converted to finance leases	140		26
Equity investments and other financings	330		240
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:
	June 30,
(in millions)	2022		2021
Current assets:
Cash and cash equivalents	$	9,221	$	10,357
Restricted cash included in prepaid expenses and other	154		172
Noncurrent assets:
Restricted cash included in other noncurrent assets	177		929
Total cash, cash equivalents and restricted cash equivalents	$	9,552	$	11,458
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

Delta Air Lines, Inc. June 2022 Form 10-Q                                 5

Financial Statements

DELTA AIR LINES, INC.

Consolidated Statements of Stockholders' Equity

(Unaudited)

	Common Stock			Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Treasury Stock
(in millions, except per share data)	Shares	Amount								Shares	Amount		Total
Balance at December 31, 2021	650	$	—	$	11,447	$	(148)	$	(7,130)	10	$	(282)	$	3,887
Net loss	—	—		—		(940)		—		—	—		(940)
Other comprehensive income	—	—		—		—		59		—	—		59
Common stock issued for employee equity awards(1)	2	—		15		—		—		1	(30)		(15)
Balance at March 31, 2022	652	$	—	$	11,462	$	(1,088)	$	(7,071)	11	$	(312)	$	2,991
Net income	—	—		—		735		—		—	—		735
Other comprehensive income	—	—		—		—		63		—	—		63
Common stock issued for employee equity awards(1)	—	—		23		—		—		—	(1)		22
Balance at June 30, 2022	652	$	—	$	11,485	$	(353)	$	(7,008)	11	$	(313)	$	3,811

(1)Treasury shares were withheld for payment of taxes, at a weighted average price per share of $41.00 and $38.11 in the March 2022 quarter and June 2022 quarter, respectively.

	Common Stock			Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Treasury Stock
(in millions, except per share data)	Shares	Amount								Shares	Amount		Total
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
Net income	—	—		—		652		—		—	—		652
Other comprehensive income	—	—		—		—		78		—	—		78
Common stock issued for employee equity awards(1)	1	—		28		—		—		—	(1)		27
Government grant warrant issuance	—	—		42		—		—		—	—		42
Balance at June 30, 2021	650	$	—	$	11,396	$	(953)	$	(8,882)	10	$	(280)	$	1,281

(1)Treasury shares were withheld for payment of taxes, at a weighted average price per share of $38.35 and $46.21 in the March 2021 quarter and June 2021 quarter, respectively.

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

Delta Air Lines, Inc. June 2022 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, 2021.

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 ongoing recovery, 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, 2022 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.

Recent Accounting Standards

Standards Effective in Future Years

Fair Value of Equity Investments. In 2022, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2022-03, "Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions." Under this standard, a contractual restriction on the sale of an equity security is not considered in measuring the security's fair value. The standard also requires certain disclosures for equity securities that are subject to contractual restrictions. The ASU becomes effective January 1, 2024, and we are evaluating the potential impact of this standard on our investments.

NOTE 2. REVENUE RECOGNITION

Passenger Revenue

	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2022		2021		2022		2021
Ticket	$	9,773	$	4,553	$	15,759	$	6,830
Loyalty travel awards	744		428		1,287		669
Travel-related services	441		358		819		588
Total passenger revenue	$	10,958	$	5,339	$	17,865	$	8,087

Ticket

We recognized approximately $3.3 billion and $1.4 billion in passenger revenue during the six months ended June 30, 2022 and 2021, respectively, that had been recorded in our air traffic liability balance at the beginning of those periods.

Delta Air Lines, Inc. June 2022 Form 10-Q                                 7

Notes to the Consolidated Financial Statements

In order to provide our customers more flexibility and time to plan or rebook their travel, we announced in January 2022 that all existing travel credit holders will have until December 31, 2023 to rebook their ticket for travel throughout 2024. Additionally, all Delta customers with upcoming 2022 travel or who purchase a ticket in 2022 will also have the flexibility to rebook their ticket through December 31, 2023, and travel throughout 2024. The air traffic liability classified as current as of June 30, 2022 represents our estimate of tickets and travel credits to be used within one year. We will continue to monitor our customers' travel behavior and may adjust our estimates in the future.

We estimate the value of tickets that will expire unused (“ticket breakage”) and recognize the related revenue at the scheduled flight date. Our ticket breakage estimates are primarily based on historical experience, ticket contract terms and customers’ travel behavior. Given the impact of the COVID-19 pandemic on customer behavior and changes made in ticket validity terms, as well as the elimination of change fees for most tickets, our estimates of revenue that will be recognized from the air traffic liability for unused tickets may vary in future periods.

Loyalty Travel Awards

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 six months ended June 30, 2022 and 2021, total cash sales from marketing agreements related to our loyalty program were $2.6 billion and $1.8 billion, respectively, which are allocated to travel and other performance obligations. Loyalty travel awards revenue is related to the redemption of miles for air travel.

Current Activity of the Loyalty Program. Miles are combined in one homogeneous pool and are not separately identifiable. Therefore, 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 timing of mile redemptions can vary widely; however, the majority of miles have historically been redeemed within two years of being earned.

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)	2022		2021
Balance at January 1	$	7,559	$	7,182
Miles earned	1,558		915
Miles redeemed for air travel	(1,287)		(669)
Miles redeemed for non-air travel and other	(73)		(27)
Balance at June 30	$	7,757	$	7,401

Travel-Related Services

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

Other Revenue

	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2022		2021		2022		2021
Refinery	$	1,514	$	777	$	2,700	$	1,317
Loyalty program	650		439		1,221		807
Ancillary businesses	206		185		416		371
Miscellaneous	224		135		410		228
Total other revenue	$	2,594	$	1,536	$	4,747	$	2,723

Delta Air Lines, Inc. June 2022 Form 10-Q                                 8

Notes to the Consolidated Financial Statements

Refinery. This represents refinery sales to third parties, which are at or near cost; accordingly, the recorded margin on these sales is de minimis.

Loyalty Program. This relates to brand usage by third parties and other performance obligations embedded in miles sold, including redemption of miles for non-air travel and other awards. These revenues are mainly included within the total cash sales from marketing agreements, discussed above.

Ancillary Businesses. This represents revenues from aircraft maintenance services we provide to third parties and our vacation wholesale operations.

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

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 June 30,				Six Months Ended June 30,
(in millions)	2022		2021		2022		2021
Domestic	$	8,318	$	4,478	$	13,881	$	6,758
Atlantic	1,701		288		2,240		430
Latin America	745		485		1,425		749
Pacific	194		88		319		150
Total	$	10,958	$	5,339	$	17,865	$	8,087

Operating revenue by geographic region
	Operating Revenue
	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2022		2021		2022		2021
Domestic	$	10,655	$	5,894	$	18,204	$	9,262
Atlantic	2,057		467		2,833		734
Latin America	854		586		1,665		967
Pacific	258		179		471		313
Total	$	13,824	$	7,126	$	23,173	$	11,276

Delta Air Lines, Inc. June 2022 Form 10-Q                                 9

Notes to the Consolidated Financial Statements

NOTE 3. FAIR VALUE MEASUREMENTS

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

(in millions)	June 30, 2022		Level 1		Level 2		Level 3
Cash equivalents	$	6,873	$	6,873	$	—	$	—
Restricted cash equivalents	331		331		—		—
Short-term investments	1,549		75		1,474		—
Long-term investments	1,089		958		34		97
Fuel hedge contracts	59		—		59		—

(in millions)	December 31, 2021		Level 1		Level 2		Level 3
Cash equivalents	$	5,450	$	5,450	$	—	$	—
Restricted cash equivalents	635		635		—		—
Short-term investments	3,386		1,376		2,010		—
Long-term investments	1,459		1,326		36		97
Fuel hedge contracts	(18)		—		(18)		—

Cash Equivalents and Restricted Cash Equivalents. Cash equivalents generally consist of money market funds. Restricted cash equivalents 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. Restricted cash equivalents are recorded in prepaid expenses and other and other noncurrent assets on our Consolidated Balance Sheet ("balance sheet"). 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 and agency 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.

As of June 30, 2022, the estimated fair value of our short-term investments was $1.5 billion. Of these investments, $821 million are expected to mature in one year or less, with the remainder maturing by the first half of 2024. 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 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. 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.

Fuel Hedge Contracts. Our derivative contracts to hedge the financial risk from changing fuel prices are primarily related to inventory at our wholly-owned subsidiary, Monroe Energy, LLC ("Monroe"). Our fuel hedge portfolio may consist of a combination of options, swaps or futures contracts, most of which have a duration of less than three months. Option and swap contracts are valued under income approaches using option pricing models and discounted cash flow models, respectively, based on data either readily observable in public markets, derived from public markets or provided by counterparties who regularly trade in public markets. Futures contracts and options on futures contracts are traded on a public exchange and valued based on quoted market prices. We recognized losses of $239 million and $478 million on our fuel hedge contracts in aircraft fuel and related taxes on our Condensed Consolidated Statements of Operations and Comprehensive Loss ("income statement") for the three and six months ended June 30, 2022, respectively, compared to losses of $63 million and $120 million, for the three and six months ended June 30, 2021, respectively. The losses recognized during 2022 are composed of $555 million of settlements on contracts and $77 million of mark-to-market adjustments. Expense from the settlement of closed contracts is offset by higher operating profits at Monroe from higher pricing. See Note 9, "Segments," for further information on our Monroe refinery segment.

Delta Air Lines, Inc. June 2022 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.

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

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

Equity investments ownership interest and carrying value
	Accounting Treatment	Ownership Interest				Carrying Value
(in millions)		June 30, 2022		December 31, 2021		June 30, 2022		December 31, 2021
Air France-KLM	Fair Value	3	%	6	%	$	86	$	165
China Eastern	Fair Value	2	%	2	%	179		177
CLEAR	Fair Value	6	%	6	%	166		260
Grupo Aeroméxico	Equity Method(1)	20	%	51	%	420		—
Hanjin-KAL	Fair Value	13	%	13	%	419		455
Unifi Aviation	Equity Method(2)	49	%	49	%	163		159
Wheels Up	Fair Value(3)	21	%	21	%	101		241
Other investments	Various					237		255
Equity investments						$	1,771	$	1,712

(1)Results are included in equity method results in our income statement under non-operating expense.

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

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

Air France-KLM. During the June 2022 quarter, Air France-KLM ("AFKL") executed a €2.3 billion rights issue, through the issuance of 1.9 billion new AFKL shares. We participated in the rights issue on a cash neutral basis by subscribing to approximately 36 million new AFKL shares using the proceeds from the sale of part of our rights to a third party. The net impact of these transactions reduced our ownership interest to approximately 3% and the change in the fair value of our investment in AFKL is recorded in gain/(loss) on investments, net in our income statement within non-operating expense.

Grupo Aeroméxico. In March 2022, Grupo Aeroméxico ("Aeroméxico") emerged from its voluntary proceedings to reorganize under Chapter 11 of the United States bankruptcy code ("bankruptcy process"). At the conclusion of the bankruptcy process, Aeroméxico's previously outstanding capital stock was consolidated and exchanged for less than 0.01% of new capital stock, which effectively eliminated our historical 51% ownership stake. Upon emergence, Delta received a 20% equity stake in the newly restructured Aeroméxico in exchange for (1) our receivables under Aeroméxico's debtor-in-possession financing, (2) $100 million (recorded as an investing outflow on our Condensed Consolidated Statements of Cash Flows), and (3) our agreement to provide expanded commercial services to Aeroméxico in future periods. We account for our investment in Aeroméxico under the equity method of accounting and record our share of Aeroméxico's financial results in equity method results in our income statement.

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.

Virgin Atlantic. Virgin Atlantic has completed an out-of-court restructuring, during which we provided and continue to provide strategic and operational assistance. The carrying value of our investment in Virgin Atlantic remains zero as of June 30, 2022. We maintained our 49% equity interest and continue to track our share of Virgin Atlantic's losses under the equity method of accounting, which are only recorded to the extent we make additional investments in Virgin Atlantic.

Delta Air Lines, Inc. June 2022 Form 10-Q                                 11

Notes to the Consolidated Financial Statements

LATAM. LATAM Airlines Group S.A. ("LATAM") is undergoing voluntary proceedings to reorganize under Chapter 11 of the United States bankruptcy code, and the carrying value of our investment in LATAM remains zero as of June 30, 2022. In order to support our relationship with LATAM, we are providing strategic and operational assistance through the bankruptcy process. After LATAM's refinancing in April 2022, we have a $71 million noncurrent receivable outstanding associated with LATAM's debtor-in-possession financing. LATAM's plan of reorganization has been confirmed by the Bankruptcy Court and is expected to take effect before the end of 2022. As our pre-bankruptcy equity ownership of approximately 20% will be substantially diluted to a de minimis level, we expect to participate in certain of the offerings contemplated under the reorganization plan at an additional investment level commensurate with an equity stake not to exceed approximately 10% in the reorganized LATAM.

NOTE 5. DEBT

Summary of outstanding debt by category
	Maturity			Interest Rate(s) Per Annum at			June 30,		December 31,
(in millions)	Dates			June 30, 2022			2022		2021
Unsecured Payroll Support Program Loans	2030	to	2031	1.00%			$	3,496	$	3,496
Unsecured notes	2023	to	2029	2.90%	to	7.38%	3,146		4,354
Financing arrangements secured by SkyMiles assets:
SkyMiles Notes(1)	2023	to	2028	4.50%	and	4.75%	6,000		6,000
SkyMiles Term Loan(1)(2)	2023	to	2027	4.81%			2,820		2,820
Financing arrangements secured by aircraft:
Certificates(1)	2022	to	2028	2.00%	to	8.00%	1,867		1,932
Notes(1)(2)	2022	to	2033	1.99%	to	5.75%	987		1,139
NYTDC Special Facilities Revenue Bonds(1)	2023	to	2045	4.00%	to	5.00%	2,838		2,894
Financing arrangements secured by slots, gates and/or routes:
2020 Senior Secured Notes	2025			7.00%			2,019		2,589
2018 Revolving Credit Facility(2)	2023	to	2024	Undrawn			—		—
Other financings(1)(2)	2022	to	2030	2.51%	to	5.00%	68		68
Other revolving credit facilities(2)	2023	to	2024	Undrawn			—		—
Total secured and unsecured debt							23,241		25,292
Unamortized (discount)/premium and debt issue cost, net and other							(176)		(208)
Total debt							23,065		25,084
Less: current maturities							(1,621)		(1,502)
Total long-term debt							$	21,444	$	23,582

(1)Due in installments during the years shown above.

(2)Certain financings are comprised of variable rate debt. All variable rates are equal to LIBOR (generally subject to a floor) or another index rate plus a specified margin.

Availability Under Revolving Credit Facilities

As of June 30, 2022, we had approximately $2.8 billion undrawn and available under our revolving credit facilities. In addition, we had outstanding letters of credit as of June 30, 2022, including approximately $100 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.

Delta Air Lines, Inc. June 2022 Form 10-Q                                 12

Notes to the Consolidated Financial Statements

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 underlying collateral. Debt is primarily classified as Level 2 within the fair value hierarchy.

    

Fair value of outstanding debt
(in millions)	June 30, 2022		December 31, 2021
Net carrying amount	$	23,065	$	25,084
Fair value	$	22,200	$	26,900

Covenants

Our debt agreements contain various affirmative, negative and financial covenants. We were in compliance with the covenants in our debt agreements at June 30, 2022.

NOTE 6. EMPLOYEE BENEFIT PLANS

Employee benefit plans net periodic (benefit) cost
	Pension Benefits				Other Postretirement and Postemployment Benefits
(in millions)	2022		2021		2022		2021
Three Months Ended June 30,
Service cost	$	—	$	—	$	18	$	21
Interest cost	153		146		32		29
Expected return on plan assets	(330)		(381)		(4)		(9)
Amortization of prior service credit	—		—		(1)		(2)
Recognized net actuarial loss	64		88		13		15
Net periodic (benefit) cost	$	(113)