QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2024
Or
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE 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 March 31, 2024
Common Stock, $0.0001 par value - 645,312,283 shares outstanding
This document is also available through our website at http://ir.delta.com/.
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, 2023 ("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. | March 2024 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, 2024, the related condensed consolidated statements of operations and comprehensive income/(loss), condensed consolidated statements of cash flows, and consolidated statements of stockholders' equity for the three-month periods ended March 31, 2024 and 2023, 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, 2023, 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 12, 2024, 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, 2023, 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 Securities and Exchange Commission (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 10, 2024
Delta Air Lines, Inc. | March 2024 Form 10-Q 2
Financial Statements
DELTA AIR LINES, INC.
Consolidated Balance Sheets
(Unaudited)
(in millions, except share data)
March 31, 2024
December 31, 2023
ASSETS
Current Assets:
Cash and cash equivalents
$
3,877
$
2,741
Short-term investments
589
1,127
Accounts receivable, net of allowance for uncollectible accounts of $16 and $17
3,748
3,130
Fuel, expendable parts and supplies inventories, net of allowance for obsolescence of $124 and $123
1,452
1,314
Prepaid expenses and other
1,913
1,957
Total current assets
11,579
10,269
Noncurrent Assets:
Property and equipment, net of accumulated depreciation and amortization of $22,156 and $21,707
35,915
35,486
Operating lease right-of-use assets
6,785
7,004
Goodwill
9,753
9,753
Identifiable intangibles, net of accumulated amortization of $913 and $911
5,981
5,983
Equity investments
3,247
3,457
Other noncurrent assets
1,709
1,692
Total noncurrent assets
63,390
63,375
Total assets
$
74,969
$
73,644
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current maturities of debt and finance leases
$
2,809
$
2,983
Current maturities of operating leases
742
759
Air traffic liability
10,193
7,044
Accounts payable
4,541
4,446
Accrued salaries and related benefits
3,037
4,561
Loyalty program deferred revenue
4,018
3,908
Fuel card obligation
1,100
1,100
Other accrued liabilities
2,038
1,617
Total current liabilities
28,478
26,418
Noncurrent Liabilities:
Debt and finance leases
16,555
17,071
Pension, postretirement and related benefits
3,524
3,601
Loyalty program deferred revenue
4,523
4,512
Noncurrent operating leases
6,203
6,468
Deferred income taxes, net
994
908
Other noncurrent liabilities
3,541
3,561
Total noncurrent liabilities
35,340
36,121
Commitments and Contingencies
Stockholders' Equity:
Common stock at $0.0001 par value; 1,500,000,000 shares authorized, 657,166,677 and 654,671,194
shares issued
—
—
Additional paid-in capital
11,688
11,641
Retained earnings
5,622
5,650
Accumulated other comprehensive loss
(5,793)
(5,845)
Treasury stock, at cost, 11,854,394 and 11,224,246 shares
(366)
(341)
Total stockholders' equity
11,151
11,105
Total liabilities and stockholders' equity
$
74,969
$
73,644
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
Delta Air Lines, Inc. | March 2024 Form 10-Q 3
Financial Statements
DELTA AIR LINES, INC.
Condensed Consolidated Statements of Operations and Comprehensive Income/(Loss)
(Unaudited)
Three Months Ended March 31,
(in millions, except per share data)
2024
2023
Operating Revenue:
Passenger
$
11,131
$
10,411
Cargo
178
209
Other
2,439
2,139
Total operating revenue
13,748
12,759
Operating Expense:
Salaries and related costs
3,791
3,386
Aircraft fuel and related taxes
2,598
2,676
Ancillary businesses and refinery
1,370
1,125
Contracted services
1,024
1,010
Landing fees and other rents
748
584
Aircraft maintenance materials and outside repairs
679
585
Depreciation and amortization
615
564
Regional carrier expense
550
559
Passenger commissions and other selling expenses
550
500
Passenger service
413
416
Aircraft rent
136
132
Profit sharing
125
72
Pilot agreement and related expenses
—
864
Other
535
563
Total operating expense
13,134
13,036
Operating Income/(Loss)
614
(277)
Non-Operating Expense:
Interest expense, net
(205)
(227)
Gain/(loss) on investments, net
(227)
122
Loss on extinguishment of debt
(4)
(22)
Miscellaneous, net
(56)
(102)
Total non-operating expense, net
(492)
(229)
Income/(Loss) Before Income Taxes
122
(506)
Income Tax (Provision)/Benefit
(85)
143
Net Income/(Loss)
$
37
$
(363)
Basic Earnings/(Loss) Per Share
$
0.06
$
(0.57)
Diluted Earnings/(Loss) Per Share
$
0.06
$
(0.57)
Comprehensive Income/(Loss)
$
89
$
(316)
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
Delta Air Lines, Inc. | March 2024 Form 10-Q 4
Financial Statements
DELTA AIR LINES, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Three Months Ended March 31,
(in millions)
2024
2023
Net Cash Provided by Operating Activities
$
2,408
$
2,235
Cash Flows from Investing Activities:
Property and equipment additions:
Flight equipment, including advance payments
(883)
(630)
Ground property and equipment, including technology
(310)
(370)
Purchase of short-term investments
—
(999)
Redemption of short-term investments
546
897
Other, net
10
2
Net cash used in investing activities
(637)
(1,100)
Cash Flows from Financing Activities:
Payments on debt and finance lease obligations
(712)
(1,166)
Cash dividends
(64)
—
Other, net
(11)
(13)
Net cash used in financing activities
(787)
(1,179)
Net Increase/(Decrease) in Cash, Cash Equivalents and Restricted Cash Equivalents
984
(44)
Cash, cash equivalents and restricted cash equivalents at beginning of period
3,395
3,473
Cash, cash equivalents and restricted cash equivalents at end of period
$
4,379
$
3,429
Non-Cash Transactions:
Right-of-use assets acquired or modified under operating leases
$
(34)
$
208
Flight and ground equipment acquired or modified under finance leases
6
25
Operating leases converted to finance leases
—
30
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)
2024
2023
Current assets:
Cash and cash equivalents
$
3,877
$
3,215
Restricted cash included in prepaid expenses and other
126
160
Noncurrent assets:
Restricted cash included in other noncurrent assets
376
54
Total cash, cash equivalents and restricted cash equivalents
$
4,379
$
3,429
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
Delta Air Lines, Inc. | March 2024 Form 10-Q 5
Financial Statements
DELTA AIR LINES, INC.
Consolidated Statements of Stockholders' Equity
(Unaudited)
Common Stock
Additional Paid-In Capital
Retained Earnings
Accumulated Other Comprehensive Loss
Treasury Stock
(in millions, except per share data)
Shares
Amount
Shares
Amount
Total
Balance at December 31, 2023
655
$
—
$
11,641
$
5,650
$
(5,845)
11
$
(341)
$
11,105
Net income
—
—
—
37
—
—
—
37
Dividends declared ($0.10 per share)
—
—
—
(65)
—
—
—
(65)
Other comprehensive income
—
—
—
—
52
—
—
52
Common stock issued for employee equity awards(1)
2
—
47
—
—
1
(25)
22
Balance at March 31, 2024
657
$
—
$
11,688
$
5,622
$
(5,793)
12
$
(366)
$
11,151
(1)Treasury shares were withheld for payment of taxes, at a weighted average price per share of $39.83 in the March 2024 quarter.
Common Stock
Additional Paid-In Capital
Retained Earnings
Accumulated Other Comprehensive Loss
Treasury Stock
(in millions, except per share data)
Shares
Amount
Shares
Amount
Total
Balance at December 31, 2022
652
$
—
$
11,526
$
1,170
$
(5,801)
11
$
(313)
$
6,582
Net loss
—
—
—
(363)
—
—
—
(363)
Other comprehensive income
—
—
—
—
47
—
—
47
Common stock issued for employee equity awards(1)
2
—
18
—
—
—
(24)
(6)
Balance at March 31, 2023
654
$
—
$
11,544
$
807
$
(5,754)
11
$
(337)
$
6,260
(1)Treasury shares were withheld for payment of taxes, at a weighted average price per share of $39.73 in the March 2023 quarter.
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
Delta Air Lines, Inc. | March 2024 Form 10-Q 6
Notes to the Condensed 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, 2023.
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 months ended March 31, 2024 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.
NOTE 2. REVENUE RECOGNITION
Passenger Revenue
Three Months Ended March 31,
(in millions)
2024
2023
Ticket
$
9,833
$
9,239
Loyalty travel awards
844
743
Travel-related services
454
429
Passenger revenue
$
11,131
$
10,411
Ticket
We recognized approximately $3.9 billion in passenger revenue during both the three months ended March 31, 2024 and 2023 that had been recorded in our air traffic liability balance at the beginning of those periods.
Loyalty Travel Awards
Loyalty travel awards revenue is related to the redemption of mileage credits ("miles") for air travel. Our SkyMiles loyalty program allows customers to earn 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, retail, ridesharing, car rental and hotel 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, 2024 and 2023, total cash sales from marketing agreements related to our loyalty program were $1.8 billion and $1.7 billion, 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, 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.
Delta Air Lines, Inc. | March 2024 Form 10-Q 7
Notes to the Condensed Consolidated Financial Statements
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)
2024
2023
Balance at January 1
$
8,420
$
7,882
Miles earned
1,021
999
Miles redeemed for air travel
(844)
(743)
Miles redeemed for non-air travel and other
(56)
(40)
Balance at March 31
$
8,541
$
8,098
Travel-Related Services
Travel-related services are primarily composed of services performed in conjunction with a passenger’s flight and include baggage fees, administrative fees and on-board sales.
Other Revenue
Three Months Ended March 31,
(in millions)
2024
2023
Refinery
$
1,185
$
916
Loyalty program
795
726
Ancillary businesses
180
231
Miscellaneous
279
266
Other revenue
$
2,439
$
2,139
Refinery. This represents refinery sales to third parties. See Note 9, "Segments," for more information on revenue recognition within our refinery segment.
Loyalty Program. This relates to revenues from brand usage by third parties and other performance obligations embedded in miles sold, which are included within the total cash sales from marketing agreements, discussed above. This also includes the redemption of miles for non-air travel and other awards.
Ancillary Businesses. This includes aircraft maintenance services we provide to third parties and our vacation wholesale operations.
Miscellaneous. This is primarily composed of lounge access, including access provided to certain American Express cardholders, and codeshare revenues.
Delta Air Lines, Inc. | March 2024 Form 10-Q 8
Notes to the Condensed 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
Three Months Ended March 31,
(in millions)
2024
2023
Domestic
$
7,983
$
7,594
Atlantic
1,305
1,244
Latin America
1,265
1,132
Pacific
578
441
Total
$
11,131
$
10,411
Operating revenue by geographic region
Three Months Ended March 31,
(in millions)
2024
2023
Domestic
$
10,031
$
9,396
Atlantic
1,581
1,548
Latin America
1,442
1,280
Pacific
694
535
Total
$
13,748
$
12,759
NOTE 3. FAIR VALUE MEASUREMENTS
Assets/(Liabilities) Measured at Fair Value on a Recurring Basis
(in millions)
March 31, 2024
Level 1
Level 2
Level 3
Cash equivalents
$
2,495
$
2,495
$
—
$
—
Restricted cash equivalents
501
501
—
—
Short-term investments
U.S. Government securities
473
101
372
—
Corporate obligations
86
—
86
—
Other fixed income securities
30
—
30
—
Long-term investments and related
2,641
2,387
139
115
Fuel hedge contracts
(22)
—
(22)
—
(in millions)
December 31, 2023
Level 1
Level 2
Level 3
Cash equivalents
$
1,545
$
1,545
$
—
$
—
Restricted cash equivalents
653
653
—
—
Short-term investments
U.S. Government securities
859
204
655
—
Corporate obligations
218
—
218
—
Other fixed income securities
50
—
50
—
Long-term investments and related
2,867
2,614
134
119
Fuel hedge contracts
5
—
5
—
Delta Air Lines, Inc. | March 2024 Form 10-Q 9
Notes to the Condensed Consolidated Financial Statements
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. Restricted cash equivalents 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 as well as certain self-insurance obligations and airport commitments. Restricted cash equivalents are recorded in prepaid expenses and other 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. The fair values of our 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. These investments are expected to mature in one year or less.
Long-Term Investments and Related. 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. 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 related to inventory at our wholly-owned subsidiary, Monroe Energy, LLC ("Monroe"). We recognized losses of $96 million and gains of $31 million on our fuel hedge contracts in aircraft fuel and related taxes on our Condensed Consolidated Statements of Operations and Comprehensive Income/(Loss) ("income statement") for the three months ended March 31, 2024 and 2023, respectively. The lossesrecognized during the first three months of 2024 were composed of $27 million of mark-to-market losses and $69 million of settlement losses on contracts. Gains and losses on settled contracts are reflected within Monroe's operating results. See Note 9, "Segments," for further information on our Monroe refinery segment.
NOTE 4. INVESTMENTS
Equity investments ownership interest and carrying value
Accounting Treatment
Ownership Interest
Carrying Value
(in millions)
March 31, 2024
December 31, 2023
March 31, 2024
December 31, 2023
Air France-KLM
Fair Value
3
%
3
%
$
82
$
110
China Eastern
Fair Value
2
%
2
%
116
134
Grupo Aeroméxico
Equity Method
20
%
20
%
441
421
Hanjin KAL
Fair Value(1)
15
%
15
%
439
561
LATAM
Fair Value
10
%
10
%
756
658
Unifi Aviation
Equity Method
49
%
49
%
161
162
Wheels Up
Fair Value(2)
38
%
38
%
756
903
Other investments
Various
496
508
Equity investments
$
3,247
$
3,457
(1)At March 31, 2024, we held 14.8% of the outstanding shares (including common and preferred), and 14.9% of the common shares, of Hanjin KAL.
(2)Our voting rights with respect to Wheels Up are capped at 29.9%.
Delta Air Lines, Inc. | March 2024 Form 10-Q 10
Notes to the Condensed Consolidated Financial Statements
NOTE 5. DEBT
Summary of outstanding debt by category
Maturity
Interest Rate(s) Per Annum at
March 31,
December 31,
(in millions)
Dates
March 31, 2024
2024
2023
Unsecured Payroll Support Program Loans
2030
to
2031
1.00%
$
3,496
$
3,496
Unsecured notes
2024
to
2029
2.90%
to
7.38%
2,575
2,590
Financing arrangements secured by SkyMiles assets:
SkyMiles Notes(1)
2024
to
2028
4.50%
and
4.75%
4,381
4,518
SkyMiles Term Loan(1)(2)
2024
to
2027
9.07%
1,598
1,772
NYTDC Special Facilities Revenue Bonds(1)
2025
to
2045
4.00%
to
6.00%
3,591
3,656
Financing arrangements secured by aircraft:
Certificates(1)
2024
to
2028
2.00%
to
8.00%
1,582
1,591
Notes(1)(2)
2024
to
2033
4.00%
to
7.59%
94
165
Financing arrangements secured by slots, gates and/or routes:
2020 Senior Secured Notes
2025
7.00%
812
838
2018 Revolving Credit Facility(2)
2026
to
2028
Undrawn
—
—
Other financings(1)(2)
2024
to
2030
2.51%
to
5.00%
67
67
Other revolving credit facilities(2)
2024
to
2026
Undrawn
—
—
Total secured and unsecured debt
$
18,196
$
18,693
Unamortized (discount)/premium and debt issue cost, net and other
(69)
(83)
Total debt
$
18,127
$
18,610
Less: current maturities
(2,551)
(2,625)
Total long-term debt
$
15,576
$
15,985
(1)Due in installments during the years shown above.
(2)Certain financings are comprised of variable rate debt. All variable rates are equal to SOFR (generally subject to a floor) or another index rate, plus a specified margin.
Availability Under Revolving Credit Facilities
As of March 31, 2024, we had approximately $2.9 billion undrawn and available under 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 underlying collateral. Debt is primarily classified as Level 2 within the fair value hierarchy.
Fair value of outstanding debt
(in millions)
March 31, 2024
December 31, 2023
Net carrying amount
$
18,127
$
18,610
Fair value
$
18,000
$
18,400
Covenants
Our debt agreements contain various affirmative, negative and financial covenants. We were in compliance with the covenants in our debt agreements at March 31, 2024.
Delta Air Lines, Inc. | March 2024 Form 10-Q 11
Notes to the Condensed Consolidated Financial Statements
NOTE 6. EMPLOYEE BENEFIT PLANS
Employee benefit plans net periodic cost
Pension Benefits
Other Postretirement and Postemployment Benefits
(in millions)
2024
2023
2024
2023
Three Months Ended March 31,
Service cost
$
3
$
—
$
23
$
18
Interest cost
201
213
45
50
Expected return on plan assets
(263)
(264)
(1)
—
Amortization of prior service credit
—
—
(1)
(1)
Recognized net actuarial loss
62
60
5
3
Net periodic cost
$
3
$
9
$
71
$
70
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.
NOTE 7. COMMITMENTS AND CONTINGENCIES
Aircraft Purchase Commitments
Our future aircraft purchase commitments totaled approximately $20.7 billion at March 31, 2024.
Aircraft purchase commitments(1)
(in millions)
Total
Nine months ending December 31, 2024
$
2,990
2025
3,970
2026
4,990
2027
5,020
2028
2,980
Thereafter
770
Total
$
20,720
(1)The timing of these commitments is based on our contractual agreements with the aircraft manufacturers and remains uncertain due to supply chain, manufacturing and regulatory constraints.
Our future aircraft purchase commitments included the following aircraft at March 31, 2024:
Aircraft purchase commitments by fleet type
Aircraft Type
Purchase Commitments
A220-300
76
A321-200neo
101
A330-900neo
12
A350-900
16
A350-1000
20
B-737-10
100
Total
325
Aircraft Orders
In January 2024, we entered into a purchase agreement with Airbus for 20 A350-1000 aircraft, with an option to purchase an additional 20 widebody aircraft. Deliveries of these aircraft are scheduled to begin in 2026.
Delta Air Lines, Inc. | March 2024 Form 10-Q 12
Notes to the Condensed Consolidated Financial Statements
Legal Contingencies
We are involved in various legal proceedings related to employment practices, environmental issues, commercial disputes, antitrust and other regulatory 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.
NOTE 8. ACCUMULATED OTHER COMPREHENSIVE LOSS
Components of accumulated other comprehensive loss
(in millions)
Pension and Other Benefit Liabilities
Other
Tax Effect
Total
Balance at January 1, 2024
$
(6,681)
$
40
$
796
$
(5,845)
Reclassifications into earnings(1)
66
—
(14)
52
Balance at March 31, 2024
$
(6,615)
$
40
$
782
$
(5,793)
Balance at January 1, 2023
$
(6,624)
$
41
$
782
$
(5,801)
Reclassifications into earnings(1)
62
—
(15)
47
Balance at March 31, 2023
$
(6,562)
$
41
$
767
$
(5,754)
(1)Amounts reclassified from accumulated other comprehensive loss for pension and other benefit liabilities are recorded in miscellaneous, net in non-operating expense in our income statement.
Delta Air Lines, Inc. | March 2024 Form 10-Q 13
Notes to the Condensed 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 from jet fuel obtained through agreements with third parties. The refinery's production consists of jet fuel, as well as non-jet fuel products. We use several counterparties to exchange non-jet fuel products produced by the refinery for jet fuel consumed in our airline operations.
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)
Airline
Refinery
Intersegment Sales/Other
Consolidated
Three Months Ended March 31, 2024
Operating revenue
$
12,563
$
2,049
$
(864)
(1)
$
13,748
Depreciation and amortization
615
27
(27)
(2)
615
Operating income(2)
565
49
—
614
Interest expense, net
205
5
(5)
205
Total assets, end of period
72,875
2,123
(29)
74,969
Capital expenditures
1,178
15
—
1,193
Three Months Ended March 31, 2023
Operating revenue
$
11,843
$
2,352
$
(1,436)
(1)
$
12,759
Depreciation and amortization
564
23
(23)
(2)
564
Operating (loss)/income(2)
(499)
222
—
(277)
Interest expense, net
227
4
(4)
227
Total assets, end of period
70,183
3,005
(54)
73,134
Capital expenditures
971
29
—
1,000
(1)See table below for detail of the intersegment operating revenue amounts.
(2)Refinery segment operating results, including depreciation and amortization, are included within aircraft fuel and related taxes in our income statement.
Operating Revenue Intersegment Sales/Other
Three Months Ended March 31,
(in millions)
2024
2023
Sales to airline segment(1)
$
(386)
$
(596)
Exchanged products(2)
(439)
(714)
Sales of refined products
(39)
(126)
Total Operating Revenue Intersegment Sales/Other
$
(864)
$
(1,436)
(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 for jet fuel from the refinery by reference to the market index for the primary delivery location, which is New York Harbor.
(2)Represents value of products delivered under our exchange agreements, as discussed above, determined on a market price basis.
Delta Air Lines, Inc. | March 2024 Form 10-Q 14
Notes to the Condensed Consolidated Financial Statements
NOTE 10. EARNINGS/(LOSS) PER SHARE
We calculate basic earnings/(loss) per share and diluted loss per share by dividing net income/(loss) by the weighted average number of common shares outstanding, excluding restricted shares. We calculate diluted earnings per share by dividing net income by the weighted average number of common shares outstanding plus the dilutive effect of outstanding share-based instruments, including stock options, restricted stock awards and warrants. Antidilutive common stock equivalents excluded from the diluted earnings per share calculation are not material. The following table shows the computation of basic and diluted earnings/(loss) per share:
Basic and diluted earnings/(loss) per share
Three Months Ended March 31,
(in millions, except per share data)
2024
2023
Net income/(loss)
$
37
$
(363)
Basic weighted average shares outstanding
640
639
Dilutive effect of share-based instruments
5
—
Diluted weighted average shares outstanding
645
639
Basic earnings/(loss) per share
$
0.06
$
(0.57)
Diluted earnings/(loss) per share
$
0.06
$
(0.57)
Delta Air Lines, Inc. | March 2024 Form 10-Q 15
Item 2. MD&A
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTSOF 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 2023 Form 10-K.
March 2024 Quarter Financial Highlights
Our operating income for the March 2024 quarter improved $891 million compared to the March 2023 quarter to $614 million for the reasons discussed below.
Revenue. Compared to the March 2023 quarter, our total revenue increased$989 million, or 8%, due primarily to a 7%increase in capacity and continued strength in travel demand across all geographic regions, particularly for our premium products. Total revenue, adjusted (a non-GAAP financial measure, which excludes revenue related to refinery sales to third parties) increased in the March 2024 quarter by $721 million, or 6%, compared to the March 2023 quarter.
Operating Expense. Total operating expense in the March 2024 quarter increased $98 million, or 1%, compared to the March 2023 quarter, primarily due to higher employee costs from increased wages and profit sharing and increased costs associated with higher capacity, partially offset by the one time pilot agreement-related expenses in 2023. Total operating expense, adjusted (a non-GAAP financial measure) in the March 2024 quarter increased $627 million, or 6%, compared to the March 2023 quarter. Adjustments were primarily to exclude expenses related to refinery sales to third parties and the one time pilot agreement-related expenses in 2023.
Our total operating cost per available seat mile ("CASM") decreased 6% compared to the March 2023 quarter, primarily due to a 7%increasein capacity, as well as the one time pilot agreement-related expenses in 2023. Non-fuel unit cost ("CASM-Ex", a non-GAAP financial measure) increased1.5%, primarily due to higher employee costs from increased wages and profit sharing.
Cash Flow. Our cash, cash equivalents, short-term investments and aggregate undrawn principal amount available under our revolving credit facilities ("liquidity") as of March 31, 2024 was $7.4 billion.
During the March 2024 quarter, operating activities generated $2.4 billion. Cash flows from operating activities benefited from the sale of tickets to managed corporate customers, including tickets for travel during and beyond the quarter, which grew 14% during the March 2024 quarter compared to the March 2023 quarter, led by large accounts, particularly in the technology, consumer services and financial services sectors. In addition, total cash sales to American Express were $1.7 billion in the March 2024 quarter, an increase of approximately 5% compared to the March 2023 quarter.
Cash flows used in investing activities during the quarter totaled $637 million as capital expenditures were partially offset by redemptions of short-term investments. These operating and investing activities yielded free cash flow (a non-GAAP financial measure) of $1.4 billionin the March 2024 quarter. Additionally, we had cash outflows of $712 million related to repayments of our debt and finance leases.
The non-GAAP financial measures referenced above for total revenue, adjusted, operating expense, adjusted, CASM-Ex and free cash flow are defined and reconciled in "Supplemental Information" below.
Delta Air Lines, Inc. | March 2024 Form 10-Q 16
Item 2. MD&A - Results of Operations
Results of Operations - Three Months Ended March 31, 2024 and 2023
Total Operating Revenue
Three Months Ended March 31,
Increase (Decrease)
% Increase (Decrease)
(in millions)(1)
2024
2023
Ticket - Main cabin
$
5,425
$
5,223
$
202
4
%
Ticket - Premium products
4,408
4,016
392
10
%
Loyalty travel awards
844
743
101
14
%
Travel-related services
454
429
25
6
%
Passenger revenue
$
11,131
$
10,411
$
720
7
%
Cargo
178
209
(31)
(15)
%
Other
2,439
2,139
300
14
%
Total operating revenue
$
13,748
$
12,759
$
989
8
%
TRASM (cents)
20.98
¢
20.80
¢
0.18
¢
1
%
Third-party refinery sales
(1.81)
(1.49)
(0.32)
21
%
TRASM, adjusted(2)
19.17
¢
19.30
¢
(0.13)
¢
(0.7)
%
(1)Total amounts in the table above may not calculate exactly due to rounding.
(2)Total Revenue per available seat mile ("TRASM"), adjusted is a non-GAAP financial measure. For additional information on adjustments to TRASM, see "Supplemental Information" below.
Compared to the March 2023 quarter, total revenue increased$989 million, or 8%, due primarily to a 7%increase in capacity and continued strength in travel demand across all geographic regions, particularly for our premium products.
See "Refinery Segment" below for additional details on the refinery's operations, including third party refinery sales.
Passenger Revenue by Geographic Region
Increase (Decrease)
vs. Three Months Ended March 31, 2023
(in millions)
Three Months Ended March 31, 2024
Passenger Revenue
RPMs(Traffic)
ASMs(Capacity)
Passenger Mile Yield
PRASM
Load Factor
Domestic
$
7,983
5
%
5
%
2
%
—
%
3
%
2
pts
Atlantic
1,305
5
%
6
%
2
%
(1)
%
2
%
3
pts
Latin America
1,265
12
%
26
%
27
%
(12)
%
(12)
%
—
pts
Pacific
578
31
%
34
%
36
%
(2)
%
(4)
%
(1)
pt
Total
$
11,131
7
%
9
%
7
%
(2)
%
—
%
2
pts
Domestic
Domestic passenger revenue increased5% in the March 2024 quarter compared to the March 2023 quarter on a 2%increase in capacity and two point increase in load factor. We experienced strong revenue results across the domestic network, with coastal hub markets such as New York and Boston improving significantly compared to the prior year period.
International
International passenger revenue for the March 2024 quarter increased compared to the March 2023 quarter in each geographic region. Passenger unit revenue declined 3% as we continued to invest in rebuilding our Latin and Pacific networks. Strong demand for international travel, particularly to leisure destinations, enabled a one point increase in load factor on a 16% increase in capacity compared to the March 2023 quarter.
Delta Air Lines, Inc. | March 2024 Form 10-Q 17
Item 2. MD&A - Results of Operations
Other Revenue
Three Months Ended March 31,
Increase (Decrease)
% Increase (Decrease)
(in millions)
2024
2023
Refinery
$
1,185
$
916
$
269
29
%
Loyalty program
795
726
69
10
%
Ancillary businesses
180
231
(51)
(22)
%
Miscellaneous
279
266
13
5
%
Other revenue
$
2,439
$
2,139
$
300
14
%
Refinery. Refinery sales to third parties increased$269 million compared to the March 2023 quarter due to higher sales volume. See "Refinery Segment" below for additional details on the refinery's operations, including third party refinery sales.
Loyalty Program. This relates to revenues from brand usage by third parties and other performance obligations embedded in miles sold, as well as redemption of miles for non-air travel and other awards. These revenues are mainly driven by customer spend on American Express cards and new cardholder acquisitions. Revenues from our relationship with American Express increased compared to the March 2023 quarter due to increased co-brand card spend.
Delta Air Lines, Inc. | March 2024 Form 10-Q 18
Item 2. MD&A - Results of Operations
Operating Expense
Three Months Ended March 31,
Increase (Decrease)
% Increase (Decrease)
(in millions)
2024
2023
Salaries and related costs
$
3,791
$
3,386
$
405
12
%
Aircraft fuel and related taxes
2,598
2,676
(78)
(3)
%
Ancillary businesses and refinery
1,370
1,125
245
22
%
Contracted services
1,024
1,010
14
1
%
Landing fees and other rents
748
584
164
28
%
Aircraft maintenance materials and outside repairs
679
585
94
16
%
Depreciation and amortization
615
564
51
9
%
Regional carrier expense
550
559
(9)
(2)
%
Passenger commissions and other selling expenses
550
500
50
10
%
Passenger service
413
416
(3)
(1)
%
Aircraft rent
136
132
4
3
%
Profit sharing
125
72
53
74
%
Pilot agreement and related expenses
—
864
(864)
NM
Other
535
563
(28)
(5)
%
Total operating expense
$
13,134
$
13,036
$
98
1
%
Salaries and Related Costs. We implemented a base pay increase for eligible employees of 5% effective April 1, 2023 and on January 1, 2024, Delta pilots received a 5% pay increase. Additionally, we had approximately 5,000 more employees as of March 31, 2024 than at March 31, 2023, principally in in-flight service, flight operations and aircraft maintenance, in order to support our operations. Each of these items contributed to the increase in salaries and related costs during the March 2024 quarter compared to the March 2023 quarter.
Aircraft Fuel and Related Taxes. Aircraft fuel and related taxes decreased $78 million compared to the March 2023 quarter primarily due to a 15% decrease in the market price of jet fuel partially offset by a 5% increase in consumption on a 7% increase in capacity. The refinery also provided a benefit of five cents per gallon compared to a benefit of 25 cents per gallon in the March 2023 quarter. We expect jet fuel prices to remain volatile.
See "Refinery Segment" below for additional details on the refinery's operations.
Fuel expense and average price per gallon
Average Price Per Gallon
Three Months Ended March 31,
Increase (Decrease)
Three Months Ended March 31,
Increase (Decrease)
(in millions, except per gallon data)
2024
2023
2024
2023
Fuel purchase cost(1)
$
2,620
$
2,939
$
(319)
$
2.81
$
3.31
$
(0.50)
Fuel hedge impact
27
(41)
68
0.03
(0.05)
0.08
Refinery segment impact
(49)
(222)
173
(0.05)
(0.25)
0.20
Total fuel expense
$
2,598
$
2,676
$
(78)
$
2.79
$
3.01
$
(0.22)
(1)Market price for jet fuel at airport locations, including related taxes and transportation costs.
Ancillary Businesses and Refinery. Ancillary businesses and refinery includes expenses associated with refinery sales to third parties, aircraft maintenance services we provide to third parties and our vacation wholesale operations. Refinery sales to third parties increased $269 million compared to the March 2023 quarter due to higher sales volume. See "Refinery Segment" below for additional details on the refinery's operations, including third party refinery sales.
Landing Fees and Other Rents. The increase in landing fees and other rents primarily resulted from higher rates charged by airports following extensive redevelopment projects at numerous facilities and more flights compared to the March 2023 quarter that contributed to our increased capacity.
Delta Air Lines, Inc. | March 2024 Form 10-Q 19
Item 2. MD&A - Results of Operations
Pilot agreement and related expenses. In the March 2023 quarter, Delta pilots ratified a new four-year Pilot Working Agreement effective January 1, 2023. The agreement includes numerous work rule changes and pay rate increases during the four-year term, including an initial pay rate increase of 18%. The agreement also includes a provision for a one-time payment made upon ratification in the March 2023 quarter of $735 million. Additionally, we recorded adjustments to other benefit-related items of approximately $130 million.
Non-Operating Results
Three Months Ended March 31,
Favorable (Unfavorable)
(in millions)
2024
2023
Interest expense, net
$
(205)
$
(227)
$
22
Gain/(loss) on investments, net
(227)
122
(349)
Loss on extinguishment of debt
(4)
(22)
18
Miscellaneous, net
(56)
(102)
46
Total non-operating expense, net
$
(492)
$
(229)
$
(263)
Interest expense, net. Interest expense, net includes interest expense and interest income. This decreased compared to the prior year primarily due to reduced interest expense resulting from our debt reduction initiatives. During 2023, we made payments of approximately $4.1 billion related to our debt and finance lease obligations and we have continued to pay down our debt during the three months ended March 31, 2024 with $712 million of payments on debt and finance lease obligations. We continue to seek opportunities to pre-pay our debt, in addition to periodic amortization and scheduled maturities.
Gain/(loss) on investments, net. Changes in the valuation of investments accounted for at fair value are recorded in gain/(loss) on investments, net and are driven by changes in stock prices, foreign currency fluctuations and other valuation techniques for investments in certain companies, particularly those without publicly-traded shares. See Note 4 of the Notes to the Condensed Consolidated Financial Statements for additional information on our equity investments measured at fair value on a recurring basis.
Loss on extinguishment of debt. Loss on extinguishment of debt reflects the losses incurred in the early repayment of certain loans and notes.
Miscellaneous, net. Miscellaneous, net primarily includes employee benefit plans net periodic cost, our share of our equity method investments' results, charitable contributions and foreign exchange gains/(losses).
Income Taxes
We project our annual effective tax rate for 2024 will be between 23% and 25%. In certain periods, we may have adjustments to our net deferred tax liabilities as a result of changes in prior year estimates, mark-to-market adjustments on our equity investments and tax laws enacted during the period, which will impact the effective tax rate for that period.
Delta Air Lines, Inc. | March 2024 Form 10-Q 20
Item 2. MD&A - Refinery Segment
Refinery Segment
The refinery operated by Monroe primarily produces gasoline, diesel and jet fuel. Monroe exchanges non-jet fuel products the refinery produces with third parties for jet fuel consumed in our airline operations. The jet fuel produced and procured through exchanging gasoline and diesel fuel produced by the refinery typically provides approximately 200,000 barrels per day, or approximately 75% of our consumption, for use in our airline operations. The refinery generated lower operating income in the three months ended March 31, 2024 compared to the three months ended March 31, 2023, primarily as a result of lower pricing.
For more information regarding the refinery's results, see Note 9 of the Notes to the Condensed Consolidated Financial Statements.
Refinery segment financial information
Three Months Ended March 31,
Increase (Decrease)
(in millions, except per gallon data)
2024
2023
Exchanged products
$
439
$
714
$
(275)
Sales of refined products
39
126
(87)
Sales to airline segment
386
596
(210)
Third party refinery sales
1,185
916
269
Operating revenue
$
2,049
$
2,352
$
(303)
Operating income
$
49
$
222
$
(173)
Refinery segment impact on airline average price per fuel gallon
$
(0.05)
$
(0.25)
$
0.20
Operating Statistics
Three Months Ended March 31,
% Increase (Decrease)
Consolidated(1)
2024
2023
Revenue passenger miles (in millions) ("RPM")
54,207
49,687
9
%
Available seat miles (in millions) ("ASM")
65,542
61,351
7
%
Passenger mile yield
20.53
¢
20.95
¢
(2)
%
Passenger revenue per available seat mile ("PRASM")
16.98
¢
16.97
¢
—
%
Total revenue per available seat mile ("TRASM")
20.98
¢
20.80
¢
1
%
TRASM, adjusted(2)
19.17
¢
19.30
¢
(0.7)
%
Cost per available seat mile ("CASM")
20.04
¢
21.25
¢
(6)
%
CASM-Ex(2)
14.08
¢
13.86
¢
1.5
%
Passenger load factor
83
%
81
%
2
pts
Fuel gallons consumed (in millions)
931
888
5
%
Average price per fuel gallon(3)
$
2.79
$
3.01
(7)
%
Average price per fuel gallon, adjusted(2)(3)
$
2.76
$
3.06
(10)
%
(1)Includes the operations of our regional carriers under capacity purchase agreements.
(2)Non-GAAP financial measures defined and reconciled to TRASM, CASM and average fuel price per gallon, respectively, in "Supplemental Information" below.
(3)Includes the impact of fuel hedge activity and refinery segment results.
Delta Air Lines, Inc. | March 2024 Form 10-Q 21
Item 2. MD&A - Fleet Information
Fleet Information
Our operating aircraft fleet, purchase commitments and options at March 31, 2024 are summarized in the following table.
Mainline aircraft information by fleet type
Current Fleet(1)
Commitments
Fleet Type
Owned
Finance Lease
Operating Lease
Total
Average Age (Years)
Purchase
Options
A220-100
45
—
—
45
4.3
A220-300
24
—
—
24
1.8
76
A319-100
57
—
—
57
22.1
A320-200
60
—
—
60
28.5
A321-200
70
15
42
127
5.3
A321-200neo
54
—
—
54
1.0
101
70
A330-200
11
—
—
11
19.0
A330-300
28
—
3
31
15.2
A330-900neo
20
2
5
27
2.3
12
10
A350-900
17
—
11
28
5.3
16
10
A350-1000
—
—
—
—
—
20
B-717-200
10
70
—
80
22.5
B-737-800
73
4
—
77
22.5
B-737-900ER
114
—
49
163
8.2
B-737-10
—
—
—
—
—
100
30
B-757-200
98
—
—
98
26.5
B-757-300
16
—
—
16
21.1
B-767-300ER
44
—
—
44
28.0
B-767-400ER
21
—
—
21
23.2
Total
762
91
110
963
14.9
325
120
(1)Excludes certain aircraft we own or lease that are operated by regional carriers on our behalf shown in the table below.
The table below summarizes the aircraft operated by regional carriers on our behalf at March 31, 2024.
Regional aircraft information by fleet type and carrier
Fleet Type(1)(2)
Carrier
CRJ-700
CRJ-900
Embraer 170
Embraer 175
Total
Endeavor Air, Inc.(3)
9
120
—
—
129
SkyWest Airlines, Inc.
8
37
—
85
130
Republic Airways, Inc.
—
—
11
46
57
Total
17
157
11
131
316
(1)We own 192 and have operating leases for three of these regional aircraft. The remainder are owned or leased by SkyWest Airlines, Inc. or Republic Airways, Inc.
(2)Excluded from the total operating count above are nine CRJ-700 and three CRJ-900 aircraft which are owned and temporarily parked as of March 31, 2024.
(3)Endeavor Air, Inc. is a wholly owned subsidiary of Delta.
Delta Air Lines, Inc. | March 2024 Form 10-Q 22
Item 2. MD&A - Financial Condition and Liquidity
Financial Condition and Liquidity
As of March 31, 2024, we had $7.4 billion in cash, cash equivalents, short-term investments and aggregate undrawn principal amount available under our revolving credit facilities. We expect to meet our liquidity needs for the next twelve months with cash and cash equivalents, short-term investments and cash flows from operations. We expect to meet our long-term liquidity needs with cash flows from operations and financing arrangements.
Undrawn Lines of Credit. As of March 31, 2024, we had approximately $2.9 billion undrawn and available under our revolving credit facilities.
Sources and Uses of Liquidity
Operating Activities
We generated cash flows from operations of $2.4 billion and $2.2 billion in the three months ended March 31, 2024 and 2023, respectively. We expect to continue generating positive cash flows from operations during the remainder of 2024.
Our operating cash flow is impacted by the following factors:
Seasonality of Advance Ticket Sales. We sell tickets for air travel in advance of the customer's travel date. When we receive a cash payment at the time of sale, we record the cash received on advance sales as deferred revenue in air traffic liability. The air traffic liability typically increases during the winter and spring months as advance ticket sales grow prior to the summer peak travel season and decreases during the summer and fall months.
Fuel. Fuel expense represented approximately 20% and 21% of our total operating expense for the three months ended March 31, 2024 and 2023, respectively. The market price for jet fuel is volatile, which can impact the comparability of our periodic cash flows from operations. The market price for jet fuel was lower in the March quarter 2024 compared to the March quarter 2023. Fuel consumption was higher during the three months ended March 31, 2024 compared to the prior year period due to the increase in capacity. We continue to expect that fuel consumption for the full year 2024 will increase compared to 2023 aligned with capacity, partially offset by increases in the fuel efficiency of our fleet.
Profit Sharing. We paid $1.4 billion in profit sharing payments in February 2024 related to our 2023 pre-tax profit in recognition of our employees' contributions toward achieving the year's financial results. This is an increase compared to our profit sharing payment made in February 2023, where we paid $563 million in profit sharing related to our 2022 pre-tax profit.
Our broad-based employee profit sharing program provides that for each year in which we have an annual pre-tax profit, as defined by the terms of the program, we will pay a specified portion of that profit to eligible employees. In determining the amount of profit sharing, the program defines profit as pre-tax profit adjusted for profit sharing and certain other items. During the three months ended March 31, 2024, we accrued $125 million in profit sharing expense based on the year-to-date performance and current expectations for 2024 profit.
Sale of Miles to Participating Companies. Customers earn miles based on their spending with participating companies such as credit card, retail, ridesharing, car rental and hotel companies with which we have marketing agreements to sell miles. Payments are typically due to us monthly based on the volume of miles sold during the period. Our most significant contract to sell miles relates to our co-brand credit card relationship with American Express. Total cash sales to American Express were $1.7 billion in the three months ended March 31, 2024, an increase of 5% compared to the prior year period. See Note 2 of the Notes to the Condensed Consolidated Financial Statements for further information regarding the cash sales from marketing agreements.
Delta Air Lines, Inc. | March 2024 Form 10-Q 23
Item 2. MD&A - Financial Condition and Liquidity
Investing Activities
Short-Term Investments. During the three months ended March 31, 2024, we redeemed a net of $546 million in short-term investments. See Note 3 of the Notes to the Condensed Consolidated Financial Statements for further information on these investments.
Capital Expenditures. Our capital expenditures were $1.2 billion and $1.0 billion for the three months ended March 31, 2024 and 2023, respectively. We have committed to future aircraft purchases and have obtained, but are under no obligation to use, long-term financing commitments for a substantial portion of the purchase price of the aircraft. Our expected 2024 capital spend of approximately $5.0 billion, excluding the New York-LaGuardia airport project discussed below, will be primarily for aircraft, including deliveries and advance deposit payments, as well as fleet modifications and technology enhancements and may vary depending on financing decisions.
New York-LaGuardia Redevelopment. As part of the terminal redevelopment project at LaGuardia Airport, we are partnering with the Port Authority of New York and New Jersey to replace Terminals C and D with a new state-of-the-art terminal facility. Construction is ongoing with completion expected by the end of 2024.
Using funding primarily provided by existing financing arrangements and other sources of funding, we expect to spend approximately $400 million on this project during 2024, of which $93 million was incurred in the three months ended March 31, 2024.
Financing Activities
Debt and Finance Leases. In the three months ended March 31, 2024, we had cash outflows of $712 million related to repayments of our debt and finance lease obligations. We continue to seek opportunities to pre-pay our debt, in addition to periodic amortization and scheduled maturities.
In February 2024, Moody's credit rating agency affirmed our credit rating and upgraded its outlook for Delta to positive.
Capital Return to Shareholders. In the March 2024 quarter, the Board of Directors approved a quarterly dividend of $0.10 per share, which we paid on March 18, 2024 for total cash dividends of $64 million.
Covenants. We were in compliance with the covenants in our debt agreements at March 31, 2024.
Critical Accounting Estimates
There have been no material changes in our Critical Accounting Estimates from the information provided in the "Critical Accounting Estimates" section of "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Form 10-K.
Delta Air Lines, Inc. | March 2024 Form 10-Q 24
Item 2. MD&A - Supplemental Information
Supplemental Information
We sometimes use information (non-GAAP financial measures) that is derived from the Condensed Consolidated Financial Statements, but that is not presented in accordance with GAAP. Under the U.S. Securities and Exchange Commission rules, non-GAAP financial measures may be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for or superior to GAAP results.
Included below are reconciliations of non-GAAP measures used within this Form 10-Q to the most directly comparable GAAP financial measures. Reconciliations below may not calculate exactly due to rounding. These reconciliations include certain adjustments to GAAP measures to provide comparability between the reported periods, if applicable, and for the reasons indicated below:
•Third-party refinery sales. Refinery sales to third parties, and related expenses, are not related to our airline segment. Excluding these sales therefore provides a more meaningful comparison of our airline operations to the rest of the airline industry.
•MTM adjustments and settlements on hedges. Mark-to-market ("MTM") adjustments are defined as fair value changes recorded in periods other than the settlement period. Such fair value changes are not necessarily indicative of the actual settlement value of the underlying hedge in the contract settlement period, and therefore we remove this impact to allow investors to better understand and analyze our core performance. Settlements represent cash received or paid on hedge contracts settled during the applicable period.
•One-time pilot agreement expenses. In the March 2023 quarter, Delta pilots ratified a new four-year Pilot Working Agreement effective January 1, 2023. The agreement includes numerous work rule changes and pay rate increases during the four-year term, including an initial pay rate increase of 18%. The agreement also includes a provision for a one-time payment made upon ratification in the March 2023 quarter of $735 million. Additionally, we recorded adjustments to other benefit-related items of approximately $130 million. Adjusting for these expenses allows investors to better understand and analyze our core cost performance.
•Aircraft fuel and related taxes. The volatility in fuel prices impacts the comparability of year-over-year financial performance. The adjustment for aircraft fuel and related taxes allows investors to better understand and analyze our non-fuel costs and year-over-year financial performance.
•Profit sharing. We adjust for profit sharing because this adjustment allows investors to better understand and analyze our recurring cost performance and provides a more meaningful comparison of our core operating costs to the airline industry.
Total revenue, adjusted reconciliation
Three Months Ended March 31,
(in millions)
2024
2023
Total revenue
$
13,748
$
12,759
Adjusted for:
Third-party refinery sales
(1,185)
(916)
Total revenue, adjusted
$
12,563
$
11,842
Operating expense, adjusted reconciliation
Three Months Ended March 31,
(in millions)
2024
2023
Operating expense
$
13,134
$
13,036
Adjusted for:
MTM adjustments and settlements on hedges
(27)
41
Third-party refinery sales
(1,185)
(916)
One-time pilot agreement expenses
—
(864)
Operating expense, adjusted
$
11,923
$
11,296
Delta Air Lines, Inc. | March 2024 Form 10-Q 25
Item 2. MD&A - Supplemental Information
Fuel expense, adjusted reconciliation
Average Price Per Gallon
Three Months Ended March 31,
Three Months Ended March 31,
(in millions, except per gallon data)
2024
2023
2024
2023
Total fuel expense
$
2,598
$
2,676
$
2.79
$
3.01
Adjusted for:
MTM adjustments and settlements on hedges
(27)
41
(0.03)
0.05
Total fuel expense, adjusted
$
2,571
$
2,718
$
2.76
$
3.06
TRASM, adjusted reconciliation
Three Months Ended March 31,
2024
2023
TRASM (cents)
20.98
¢
20.80
¢
Adjusted for:
Third-party refinery sales
(1.81)
(1.49)
TRASM, adjusted
19.17
¢
19.30
¢
CASM-Ex reconciliation
Three Months Ended March 31,
2024
2023
CASM (cents)
20.04
¢
21.25
¢
Adjusted for:
Aircraft fuel and related taxes
(3.96)
(4.36)
Third-party refinery sales
(1.81)
(1.49)
Profit sharing
(0.19)
(0.12)
One-time pilot agreement expenses
—
(1.41)
CASM-Ex
14.08
¢
13.86
¢
Delta Air Lines, Inc. | March 2024 Form 10-Q 26
Item 2. MD&A - Supplemental Information
Free Cash Flow
The following table shows a reconciliation of net cash provided by operating and used in investing activities (GAAP measures) to free cash flow (a non-GAAP financial measure). We present free cash flow because management believes this metric is helpful to investors to evaluate the company's ability to generate cash that is available for use for debt service or general corporate initiatives. Adjustments include:
•Net redemptions of short-term investments. Net redemptions of short-term investments represent the net purchase and sale activity of investments and marketable securities in the period, including gains and losses. We adjust for this activity to provide investors a better understanding of the company's free cash flow generated by our operations.
•Net cash flows related to certain airport construction projects and other. Cash flows related to certain airport construction projects are included in our GAAP operating activities and capital expenditures. We have adjusted for these items because management believes investors should be informed that a portion of these capital expenditures from airport construction projects are either reimbursed by a third party or funded with restricted cash specific to these projects.
Free cash flow reconciliation
Three Months Ended March 31,
(in millions)
2024
Net cash provided by operating activities
$
2,408
Net cash used in investing activities
(637)
Adjusted for:
Net redemptions of short-term investments
(546)
Net cash flows related to certain airport construction projects and other
154
Free cash flow
$
1,378
Delta Air Lines, Inc. | March 2024 Form 10-Q 27
Item 3. Market Risk
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes in market risk from the information provided in "Item 7A. Quantitative and Qualitative Disclosures About Market Risk" in our Form 10-K.
ITEM 4. CONTROLS AND PROCEDURES
Our management, including our Chief Executive Officer and Chief Financial Officer, performed an evaluation of our disclosure controls and procedures, which have been designed to permit us to effectively identify and timely disclose important information. Our management, including our Chief Executive Officer and Chief Financial Officer, concluded that the controls and procedures were effective as of March 31, 2024 to ensure that material information was accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
During the three months ended March 31, 2024, we did not make any changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
"Item 3. Legal Proceedings" of our Form 10-K includes a discussion of our legal proceedings. There have been no material changes from the legal proceedings described in our Form 10-K.
ITEM 1A. RISK FACTORS
“Item 1A. Risk Factors” of our Form 10-K includes a discussion of our known material risk factors, other than risks that could apply to any issuer or offering. There have been no material changes from the risk factors described in our Form 10-K.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
The following table presents information with respect to purchases of common stock we made during the March 2024 quarter. The table reflects shares withheld from employees to satisfy certain tax obligations due in connection with grants of stock under the Delta Air Lines, Inc. Performance Compensation Plan (the "Plan"). The Plan provides for the withholding of shares to satisfy tax obligations. It does not specify a maximum number of shares that can be withheld for this purpose. The shares of common stock withheld to satisfy tax withholding obligations may be deemed to be "issuer purchases" of shares that are required to be disclosed pursuant to this Item.
Shares purchased / withheld from employee awards during the March 2024 quarter
Period
Total Number of Shares Purchased
Average Price Paid Per Share
Total Number of Shares Purchased as Part of Publicly Announced Plans
Approximate Dollar Value (in millions) of Shares That May Yet be Purchased Under the Plan
101.INS Inline XBRL Instance Document - The instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document.
104 The cover page from this Quarterly Report on Form 10-Q for the quarter ended March 31, 2024, formatted in Inline XBRL (included in Exhibit 101)
_______________
* Incorporated by reference.
** Portions of this exhibit have been omitted as confidential information.
Delta Air Lines, Inc. | March 2024 Form 10-Q 29
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
