filings.toolsItem 6. (RESERVED)
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Item 6. (RESERVED)
| Delta Air Lines, Inc. | 2025 Form 10-K | 32 |
Item 7. MD&A
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This section of Form 10-K does not address certain items regarding the year ended December 31, 2023. Discussion and analysis of 2023 and year-to-year comparisons between 2024 and 2023 not included in this Form 10-K can be found in "Item 7. Management's Discussion and Analysis" of our Annual Report on Form 10-K for the year ended December 31, 2024. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our audited Consolidated Financial Statements and the related notes and other financial information as well as the material risk factors included elsewhere in this Annual Report on Form 10-K.
2025 Financial Overview
Our 2025 operating income was $5.8 billion, a decrease of $173 million compared to 2024, and operating income, adjusted (a non-GAAP financial measure) was $5.8 billion, a decrease of $212 million compared to 2024. The decreases in operating income and operating income, adjusted primarily result from nearly offsetting increases in both revenue and operating expenses, as described below. As a result of our strong performance in 2024 and 2025, we paid profit sharing of $1.4 billion in February 2025 to our employees and will pay another $1.3 billion in February 2026 in recognition of these achievements.
Revenue. Compared to 2024, our 2025 operating revenue increased $1.7 billion, or 3%, primarily due to a 3% increase in capacity driven by continued strength in demand for premium products, particularly from corporate customers, growth in loyalty travel awards, increased refinery sales to third parties and growth of our Delta TechOps third-party maintenance, repair and overhaul ("MRO") business. In addition, revenue increased year over year due to the Crowdstrike-caused outage in 2024, which led to a direct revenue impact of approximately $380 million related to approximately 7,000 flight cancellations over five days. Total revenue, adjusted (a non-GAAP financial measure) increased in 2025 by $1.3 billion, or 2.3%, compared to 2024. Adjustments were to exclude refinery sales to third parties.
Operating Expense. Total operating expense increased $1.9 billion, or 3%, compared to 2024, primarily due to higher employee costs from increased wages, costs associated with a 3% increase in capacity, and higher expenses related to refinery sales to third parties. These increases were partially offset by lower aircraft fuel costs. In addition, approximately $170 million of additional operating expenses were incurred in 2024 associated with the Crowdstrike-caused outage primarily due to customer expense reimbursements and crew-related costs. Total operating expense, adjusted (a non-GAAP financial measure) increased $1.5 billion, or 3%, compared to 2024. Current year adjustments were primarily to exclude expenses related to refinery sales to third parties.
Our total operating cost per available seat mile ("CASM") of 19.31 cents was comparable to 2024, primarily due to lower fuel expense and a 3% increase in capacity offset by higher employee costs. Non-fuel unit costs ("CASM-Ex", a non-GAAP financial measure), which excludes fuel, expenses related to refinery sales to third parties and other items, increased 2.4% to 13.86 cents compared to 2024, which was in line with our long-term target of low-single digit growth, on higher employee costs and investments in the customer experience.
Non-Operating Results. Total non-operating income was $363 million in 2025, compared to total non-operating expense of $1.3 billion in 2024, primarily due to mark-to-market gains on certain of our equity investments in 2025 compared to losses in 2024.
Cash Flow. During 2025, operating activities generated $8.3 billion, primarily from ticket sales and the sale of SkyMiles to our partners. Remuneration from American Express related to the SkyMiles program were $8.2 billion during 2025, an increase of approximately 11% compared to 2024. Investing activities resulted in net cash outflows of approximately $4.2 billion, primarily for capital expenditures. After adjusting for our strategic investment in WestJet and certain other items, these results generated $4.6 billion of free cash flow (a non-GAAP financial measure) in 2025.
Also, during 2025 we had financing cash outflows of $4.8 billion related to repayment of our debt and finance leases, including $2.9 billion for early repayments and the remainder for scheduled maturities. Our proceeds from long-term obligations primarily related to the issuance of $2.0 billion in aggregate principal amount of unsecured notes. Our cash, cash equivalents, short-term investments and aggregate principal amount committed and available to be drawn under our revolving credit facilities ("liquidity") at December 31, 2025 was $7.4 billion.
The non-GAAP financial measures of operating income, adjusted, total revenue, adjusted, total operating expense, adjusted, CASM-Ex and free cash flow used above are defined and reconciled in "Supplemental Information" below.
| Delta Air Lines, Inc. | 2025 Form 10-K | 33 |
Item 7. MD&A - Results of Operations
Results of Operations
Operating Revenue
| Year Ended December 31, | Increase (Decrease) | % Increase (Decrease) | |||||||||||||||
| (in millions)(1) | 2025 | 2024 | |||||||||||||||
| Ticket - Main cabin | $ | 23,391 | $ | 24,497 | $ | (1,106) | (5) | % | |||||||||
| Ticket - Premium products | 22,097 | 20,599 | 1,498 | 7 | % | ||||||||||||
| Loyalty travel awards | 4,237 | 3,841 | 396 | 10 | % | ||||||||||||
| Travel-related services | 2,043 | 1,957 | 86 | 4 | % | ||||||||||||
| Total passenger revenue | $ | 51,768 | $ | 50,894 | $ | 874 | 2 | % | |||||||||
| Cargo | 900 | 822 | 78 | 9 | % | ||||||||||||
| Other | 10,696 | 9,927 | 769 | 8 | % | ||||||||||||
| Total operating revenue | $ | 63,364 | $ | 61,643 | $ | 1,721 | 3 | % | |||||||||
| TRASM (cents) | 21.26 | ¢ | 21.37 | ¢ | (0.11) | ¢ | (1) | % | |||||||||
| Third-party refinery sales(2) | (1.70) | (1.61) | (0.09) | 6 | % | ||||||||||||
| TRASM, adjusted (cents) | 19.56 | ¢ | 19.76 | ¢ | (0.20) | ¢ | (1) | % |
(1)Total amounts in the table above may not calculate exactly due to rounding.
(2)For additional information on adjustments to TRASM, see "Supplemental Information" below.
Operating Revenue
Our operating revenue increased $1.7 billion, or 3%, compared to 2024 due to an increase in demand for premium products, particularly from corporate customers, growth in loyalty travel awards, increased refinery sales to third parties and growth of our MRO business. Refinery sales and MRO are included in other revenue, discussed below. These increases were partially offset by a decline in main cabin revenue due to industry-wide supply exceeding demand for main cabin travel in the uncertain economic environment.
Passenger Revenue by Geographic Region
| Increase (Decrease) vs. Year Ended December 31, 2024 | ||||||||||||||||||||||||||
| (in millions) | Year Ended December 31, 2025 | Passenger Revenue | RPMs (Traffic) | ASMs (Capacity) | Passenger Mile Yield | PRASM | Load Factor | |||||||||||||||||||
| Domestic | $ | 35,731 | 1 | % | — | % | 3 | % | 2 | % | (2) | % | (3) | pts | ||||||||||||
| Atlantic | 9,270 | 2 | % | 2 | % | 3 | % | (1) | % | (2) | % | (1) | pt | |||||||||||||
| Latin America | 3,980 | — | % | — | % | 1 | % | — | % | (1) | % | (1) | pt | |||||||||||||
| Pacific | 2,787 | 10 | % | 16 | % | 9 | % | (5) | % | — | % | 4 | pts | |||||||||||||
| Total passenger revenue | $ | 51,768 | 2 | % | 1 | % | 3 | % | — | % | (2) | % | (2) | pts |
Domestic
Domestic passenger revenue in 2025 increased 1% on a 3% increase in capacity compared to 2024. The increase in domestic revenue primarily resulted from strong demand for premium products across our domestic network. We generated higher growth in premium products revenue compared to main cabin with the delivery of new aircraft that include more premium seat capacity and an increase in yield in premium products compared to main cabin, as we see more consumers choosing these premium offerings. Domestic passenger unit revenue ("PRASM") for 2025 decreased 2% compared to 2024 primarily due to weakness in main cabin demand.
International
International passenger revenue in 2025 increased 2% on a 4% increase in capacity compared to 2024, with growth primarily driven by improvement in the Atlantic and Pacific regions, while Latin America remained stable compared to 2024.
Revenue in the Atlantic region increased 2% on a 3% increase in capacity as we introduced new routes and destinations to Europe and Africa in 2025. Revenue growth in the Atlantic was led by demand for our premium product offerings.
| Delta Air Lines, Inc. | 2025 Form 10-K | 34 |
Item 7. MD&A - Results of Operations
Revenue in the Latin America region remained consistent with 2024 on a slight increase in capacity. We experienced slight revenue growth in the Caribbean and South America compared to 2024. In South America, we continued to build on the strength of our joint venture with LATAM through greater network connectivity and a more streamlined airport experience.
Revenue in the Pacific region increased 10% on a 9% increase in capacity compared to 2024 on strong demand to Japan and South Korea, particularly with our premium product offerings. We continued to invest in our joint venture partnership with Korean Air through the introduction of a new route from Salt Lake City to Seoul-Incheon.
Other Revenue
| Year Ended December 31, | Increase (Decrease) | % Increase (Decrease) | |||||||||||||||
| (in millions) | 2025 | 2024 | |||||||||||||||
| Refinery | $ | 5,077 | $ | 4,642 | $ | 435 | 9 | % | |||||||||
| Loyalty program | 3,362 | 3,297 | 65 | 2 | % | ||||||||||||
| Ancillary businesses | 937 | 772 | 165 | 21 | % | ||||||||||||
| Miscellaneous | 1,320 | 1,216 | 104 | 9 | % | ||||||||||||
| Total other revenue | $ | 10,696 | $ | 9,927 | $ | 769 | 8 | % |
Refinery. This represents refinery sales of non-jet fuel products to third parties. These sales increased $435 million compared to 2024. See "Refinery Segment" below for additional details on the refinery's operations, including third party refinery sales recorded in other revenue, during each period.
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, which both grew double-digit on a percentage basis compared to 2024.
Ancillary Businesses. This includes revenues from our MRO business and our vacation package operations. During the years ended December 31, 2025 and 2024, the MRO business generated revenues of $822 million and $658 million, respectively.
Miscellaneous. This is primarily composed of revenues related to lounge access, including access provided to certain American Express cardholders, travel products (e.g., car rentals or hotels booked with our commercial partners), codeshare agreements and international joint venture partnership contractual settlements. The increase in revenues was primarily driven by growth in travel products, codeshare and lounge access.
| Delta Air Lines, Inc. | 2025 Form 10-K | 35 |
Item 7. MD&A - Results of Operations
Operating Expense
| Year Ended December 31, | Increase (Decrease) | % Increase (Decrease) | |||||||||||||||
| (in millions) | 2025 | 2024 | |||||||||||||||
| Salaries and related costs | $ | 17,520 | $ | 16,161 | $ | 1,359 | 8 | % | |||||||||
| Aircraft fuel and related taxes | 9,819 | 10,566 | (747) | (7) | % | ||||||||||||
| Ancillary businesses and refinery | 5,987 | 5,416 | 571 | 11 | % | ||||||||||||
| Contracted services | 4,617 | 4,228 | 389 | 9 | % | ||||||||||||
| Landing fees and other rents | 3,564 | 3,150 | 414 | 13 | % | ||||||||||||
| Regional carrier expense | 2,553 | 2,328 | 225 | 10 | % | ||||||||||||
| Passenger commissions and other selling expenses | 2,485 | 2,485 | — | — | % | ||||||||||||
| Depreciation and amortization | 2,443 | 2,513 | (70) | (3) | % | ||||||||||||
| Aircraft maintenance materials and outside repairs | 2,432 | 2,616 | (184) | (7) | % | ||||||||||||
| Passenger service | 1,855 | 1,788 | 67 | 4 | % | ||||||||||||
| Profit sharing | 1,337 | 1,389 | (52) | (4) | % | ||||||||||||
| Aircraft rent | 542 | 548 | (6) | (1) | % | ||||||||||||
| Other | 2,388 | 2,460 | (72) | (3) | % | ||||||||||||
| Total operating expense | $ | 57,542 | $ | 55,648 | $ | 1,894 | 3 | % |
Salaries and Related Costs. The increase in salaries and related costs primarily resulted from the implementation of base pay increases for eligible employees of 5% effective June 1, 2024 and 4% effective June 1, 2025, and 4% for Delta pilots on January 1, 2025.
Aircraft Fuel and Related Taxes. Fuel expense decreased $747 million compared to 2024 primarily due to a 9% decrease in the market price of jet fuel partially offset by a 4% increase in consumption on a 3% increase in capacity.
| Fuel expense and average price per gallon | |||||||||||||||||||||||
| Average Price Per Gallon | |||||||||||||||||||||||
| Year Ended December 31, | Increase (Decrease) | Year Ended December 31, | Increase (Decrease) | ||||||||||||||||||||
| (in millions, except per gallon data) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
| Fuel purchase cost(1) | $ | 9,993 | $ | 10,583 | $ | (590) | $ | 2.34 | $ | 2.57 | $ | (0.23) | |||||||||||
| Fuel hedge impact | (17) | 21 | (38) | — | 0.01 | (0.01) | |||||||||||||||||
| Refinery segment impact | (157) | (38) | (119) | (0.04) | (0.01) | (0.03) | |||||||||||||||||
| Total fuel expense | $ | 9,819 | $ | 10,566 | $ | (747) | $ | 2.30 | $ | 2.57 | $ | (0.27) | |||||||||||
(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, MRO and our vacation package operations. The increase in these expenses was primarily related to higher refinery sales to third parties, which increased $435 million compared to 2024. See "Refinery Segment" below for additional details on the refinery's operations, including third party refinery sales. In addition, the expenses related to our MRO business increased $141 million, to $751 million during 2025, due to an approximately 25% growth in that business.
Contracted Services. The increase in contracted services resulted from inflationary rate increases in our operations, volume increases on a 3% increase in capacity and additional contract labor costs associated with the expansion of our Sky Club network, particularly our Delta One lounges.
Landing Fees and Other Rents. The increase in landing fees and other rents resulted from higher rates charged by airports following extensive redevelopment projects at numerous facilities and more flights compared to 2024.
Regional Carrier Expense. The increase in regional carrier expense primarily resulted from higher volume of regional flights and annual rate increases.
| Delta Air Lines, Inc. | 2025 Form 10-K | 36 |
Item 7. MD&A - Results of Operations
Aircraft Maintenance Materials and Outside Repairs. The decrease in aircraft maintenance materials and outside repairs expense primarily resulted from the timing of engine maintenance activities, renegotiated engine maintenance agreements and a gain from the sale of our MRO JV located in Queretaro, Mexico. These decreases were partially offset by a higher volume of airframe checks in 2025.
Other. The decrease in other operating expense primarily resulted from gains from several sale-leaseback transactions and lower irregular operations expense in 2025.
Non-Operating Results
| Year Ended December 31, | Favorable (Unfavorable) | |||||||||||||
| (in millions) | 2025 | 2024 | ||||||||||||
| Interest expense, net | $ | (679) | $ | (747) | $ | 68 | ||||||||
| Gain/(loss) on investments, net | 1,212 | (319) | 1,531 | |||||||||||
| Loss on extinguishment of debt | (26) | (39) | 13 | |||||||||||
| Miscellaneous, net | (144) | (232) | 88 | |||||||||||
| Total non-operating income/(expense), net | $ | 363 | $ | (1,337) | $ | 1,700 |
Interest expense, net. Interest expense, net includes interest expense and interest income. This decreased compared to the prior year primarily due to reduced interest expense resulting from our debt reduction initiatives. During 2024, we made payments of $4.0 billion related to our debt and finance lease obligations. We continued to prioritize strengthening the balance sheet and reducing debt with $4.8 billion of payments on debt and finance lease obligations during 2025. During the June 2025 quarter, we issued $2.0 billion in aggregate principal amount of unsecured notes and used a portion of the proceeds to repay the Payroll Support Program ("PSP") loan due 2030 ("PSP1 Loan"). The new unsecured notes carry a lower interest rate than the repaid PSP1 Loan. We continue to seek opportunities to pre-pay our debt, in addition to periodic amortization and scheduled maturities, and refinance higher cost debt.
Gain/(loss) on investments, net. See Note 4 of the Notes to the Consolidated Financial Statements for additional information on our equity investments measured at fair value on a recurring basis.
Loss on extinguishment of debt. This reflects the losses incurred in the early repayment of debt referenced above.
Miscellaneous, net. Miscellaneous, net primarily includes employee benefit plans net periodic cost, charitable contributions, our share of our equity method investments' results, dividend income from our equity investments and foreign exchange gains/(losses). The decrease compared to 2024 primarily relates to lower employee benefit plan costs and an increase in dividend income. See Note 4 of the Notes to the Consolidated Financial Statements for additional information on our equity investments.
Income Taxes
Our effective tax rate was 19% and 26% for 2025 and 2024, respectively. Our effective tax rate is impacted by net pre-tax income or loss recognized on our equity investments, which are considered capital assets for tax purposes, because realized capital losses can only be deducted against realized capital gains. As of December 31, 2025, we had approximately $2.4 billion of U.S. federal pre-tax net operating loss carryforwards which we are expecting to utilize during 2026. These net operating loss carryforwards were primarily generated in 2020 and do not expire.
In certain periods, we may have adjustments to our net deferred tax liabilities as a result of changes in prior year estimates, mark-to-market adjustments on our equity investments and tax laws enacted during the period, which will impact the effective tax rate for that period. Excluding the mark-to-market results, we project our annual effective tax rate to be between 23% and 25% for 2026.
On July 4, 2025, the One Big Beautiful Bill Act was signed into law. The legislation did not have a material impact on our income tax expense or effective income tax rate for the year ended December 31, 2025.
For more information about our income taxes, see Note 10 of the Notes to the Consolidated Financial Statements.
| Delta Air Lines, Inc. | 2025 Form 10-K | 37 |
Item 7. MD&A - Refinery Segment
Refinery Segment
The refinery operated by our wholly owned subsidiary, Monroe, primarily produces gasoline, diesel and jet fuel. Monroe has agreements in place to exchange or sell the non-jet fuel products the refinery produces with third parties to obtain jet fuel for consumption in our airline operations. The refinery provides approximately 200,000 barrels per day, or approximately 75% of our consumption, for use in our airline operations through the production of jet fuel and through exchanges and sales of gasoline and diesel fuel produced by the refinery.
The refinery regularly optimizes its sales and exchange activities of non-jet fuel products based on market conditions and the availability of counterparties for exchanges. The volume of exchange transactions has declined in recent years due to changes in the counterparties used to supply jet fuel and our related buy/sell agreements. As of December 31, 2025, we do not plan to use exchange agreements to procure significant volumes of fuel. The decline in exchange transaction volume has driven an increase in third-party refinery sales. Refinery revenues decreased in 2025, primarily driven by lower pricing of refined products. The refinery's operating income increased in 2025 compared to 2024 mainly due to higher industry refining margins.
| Refinery segment financial information | |||||||||||
| Year Ended December 31, | % Increase (Decrease)****(1) | ||||||||||
| (in millions, except per gallon data) | 2025 | 2024 | |||||||||
| Exchanged products | $ | 580 | $ | 1,473 | (61) | % | |||||
| Sales of refined products | 154 | 231 | (33) | % | |||||||
| Sales to airline segment | 1,150 | 1,421 | (19) | % | |||||||
| Third-party sales | 5,077 | 4,642 | 9 | % | |||||||
| Operating revenue | $ | 6,961 | $ | 7,767 | (10) | % | |||||
| Operating income | $ | 157 | $ | 38 | NM | ||||||
| Refinery segment impact on average price per fuel gallon | $ | (0.04) | $ | (0.01) | NM |
(1)Certain variances are labeled as not meaningful ("NM") throughout management's discussion and analysis.
A refinery is subject to annual EPA requirements to blend renewable fuels into the gasoline and on-road diesel fuel it produces. A refinery may meet its obligation by blending the necessary volumes of renewable fuels, by purchasing Renewable Identification Numbers ("RINs") in the open market, or through a combination of blending and purchasing RINs. Because Monroe is able to blend only a small amount of renewable fuels, it must purchase the majority of its RINs requirement in the secondary market. Monroe incurred $312 million in RINs compliance costs during 2025, compared to $203 million incurred in 2024.
For more information regarding the refinery's results, see Note 14 of the Notes to the Consolidated Financial Statements.
| Delta Air Lines, Inc. | 2025 Form 10-K | 38 |
Item 7. MD&A - Operating Statistics
Operating Statistics
| Year Ended December 31, | ||||||||||||||
| Consolidated (1) | 2025 | 2024 | ||||||||||||
| Revenue passenger miles (in millions) | 249,578 | 246,145 | ||||||||||||
| Available seat miles (in millions) | 298,045 | 288,394 | ||||||||||||
| Passenger mile yield | 20.74 | ¢ | 20.68 | ¢ | ||||||||||
| Passenger revenue per available seat mile ("PRASM") | 17.37 | ¢ | 17.65 | ¢ | ||||||||||
| Total revenue per available seat mile ("TRASM") | 21.26 | ¢ | 21.37 | ¢ | ||||||||||
| TRASM, adjusted(2) | 19.56 | ¢ | 19.76 | ¢ | ||||||||||
| Cost per available seat mile ("CASM") | 19.31 | ¢ | 19.30 | ¢ | ||||||||||
| CASM-Ex(2) | 13.86 | ¢ | 13.54 | ¢ | ||||||||||
| Passenger load factor | 84 | % | 85 | % | ||||||||||
| Fuel gallons consumed (in millions) | 4,269 | 4,114 | ||||||||||||
| Average price per fuel gallon(3) | $ | 2.30 | $ | 2.57 | ||||||||||
| Average price per fuel gallon, adjusted(2)(3) | $ | 2.30 | $ | 2.56 | ||||||||||
| Approximate full-time equivalent employees, end of period | 103,000 | 103,000 |
(1)Includes the operations of our regional carriers under capacity purchase agreements. Full-time equivalent employees exclude employees of regional carriers that we do not own.
(2)Non-GAAP financial measures are defined and reconciled to TRASM, CASM and average fuel price per gallon, respectively, in "Supplemental Information" below.
(3)Includes the impact of refinery segment results and fuel hedge activity.
| Delta Air Lines, Inc. | 2025 Form 10-K | 39 |
Item 7. MD&A - Financial Condition and Liquidity
Financial Condition and Liquidity
As of December 31, 2025, we had $7.4 billion in cash, cash equivalents, short-term investments and aggregate principal amount committed and available to be drawn under our revolving credit facilities ("liquidity"). We expect to meet our liquidity needs for the next twelve months with cash and cash equivalents, restricted cash equivalents and cash flows from operations. We expect to meet our long-term liquidity needs with cash flows from operations and financing arrangements.
Sources and Uses of Liquidity
Operating Activities
Operating activities in 2025 provided $8.3 billion of cash flow compared to $8.0 billion in 2024. We expect to continue generating cash flows from operations during 2026.
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 advanced ticket sales grow prior to the summer peak travel season and decreases during the summer and fall months.
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. Remuneration from American Express was $8.2 billion during 2025, an increase of 11% compared to the prior year. See Note 2 of the Notes to the Consolidated Financial Statements for further information regarding the cash sales from marketing agreements.
Fuel. Fuel expense represented approximately 17% of our total operating expense during 2025. The market price for jet fuel is volatile, which can impact the comparability of our periodic cash flows from operations. The average fuel price per gallon decreased in 2025. Fuel prices have historically been volatile due to many factors, including geopolitical events. As capacity increased throughout the year, fuel consumption was higher in 2025 than 2024. We expect fuel consumption to increase in 2026 generally aligned with capacity.
Employee Benefit Obligations. We sponsor defined benefit and defined contribution pension plans for eligible employees and retirees. Our funding obligations for defined benefit plans are governed by the Employee Retirement Income Security Act ("ERISA") and any additional applicable legislation. We had minimum funding requirements of $70 million during 2025 and estimate that there will be approximately $5 million of minimum funding requirements under these plans in 2026. Payments to defined contribution plans were approximately $1.4 billion during the year ended December 31, 2025.
In addition, we have employee benefit obligations relating primarily to projected future benefit payments from our unfunded postretirement and postemployment plans. Benefit payments for these obligations are expected to be approximately $500 million on an annual basis over the next five years. See Note 8 of the Notes to the Consolidated Financial Statements for more information on our employee benefit obligations.
Profit Sharing. 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 employees. In determining the amount of profit sharing, the program defines profit as pre-tax profit adjusted for profit sharing and certain other items.
We pay profit sharing annually in February. We paid $1.4 billion in 2025 to our employees in recognition of their contributions toward meeting our financial goals. During the year ended December 31, 2025, we recorded $1.3 billion in profit sharing expense based on 2025 pre-tax profit, which we will pay to employees in February 2026.
| Delta Air Lines, Inc. | 2025 Form 10-K | 40 |
Item 7. MD&A - Financial Condition and Liquidity
Contract Carrier Obligations. We have certain estimated minimum fixed obligations under capacity purchase agreements with third-party regional carriers. These minimum amounts are based on the required minimum levels of flying by the regional carriers under the respective agreements and assumptions regarding the costs associated with such minimum levels of flying. As of December 31, 2025 the total of these minimum amounts was $6.0 billion, decreasing on an annual basis from approximately $1.8 billion in 2026 to $300 million in 2030. See Note 9 of the Notes to the Consolidated Financial Statements for more information on our contract carrier obligations.
Operating Lease Obligations. As described further in Note 7 of the Notes to the Consolidated Financial Statements, as of December 31, 2025 we had a total of $7.8 billion of minimum operating lease obligations. These minimum lease payments decrease on an annual basis from approximately $1.0 billion in 2026 to $500 million in 2030.
Other Obligations. We have certain purchase obligations under which we are required to make minimum payments for goods and services, including, but not limited to, aviation-related, maintenance, technology, sponsorships, marketing, insurance and other third-party services and products. As of December 31, 2025, we had approximately $11.2 billion of such obligations, decreasing on an annual basis from approximately $1.4 billion in 2026 to $800 million in 2030.
Income Taxes. During 2025, we utilized substantially all of our remaining pre-2018 net operating loss carryforwards and, due to the limitations on post-2017 net operating losses, began making cash federal income tax payments. We expect income tax cash payments to increase in 2026 based on our projected financial results. As of December 31, 2025, we had approximately $2.4 billion of U.S. federal pre-tax net operating loss carryforwards which we are expecting to utilize during 2026. These net operating loss carryforwards were primarily generated in 2020 and do not expire.
Investing Activities
Capital Expenditures. Our capital expenditures (i.e., property and equipment additions in our Consolidated Statements of Cash Flows ("cash flows statement")) were $4.5 billion and $5.1 billion in 2025 and 2024, respectively. Our capital expenditures are primarily related to the purchases of aircraft, fleet modifications, airport construction projects and technology enhancements.
We have committed to future aircraft purchases and have obtained, but are under no obligation to use, long-term financing commitments for a substantial portion of the purchase price of the aircraft. Our expected 2026 capital spend of approximately $5.5 billion, which may vary depending on financing decisions, will be primarily for aircraft, including deliveries and advance deposit payments, as well as fleet modifications and technology enhancements.
On January 12, 2026, we entered into a definitive agreement with The Boeing Company to acquire 30 Boeing 787-10 aircraft, with an option to purchase up to an additional 30 of the same aircraft. The B-787-10 aircraft will include GEnx engines manufactured by General Electric. Deliveries of the B-787-10 aircraft will begin in 2031.
On January 27, 2026, we entered into a definitive agreement with Airbus S.A.S. to purchase 16 Airbus A330-900 aircraft and 15 Airbus A350-900 aircraft, with an option to purchase up to an additional 20 widebody aircraft. The A330-900 aircraft will be powered by the Trent 7000 engine and the A350-900 aircraft will utilize the Trent XWB-84 EP engine, both manufactured by Rolls-Royce. Deliveries of the aircraft will begin in 2029.
See Note 9 of the Notes to the Consolidated Financial Statements for additional information regarding our aircraft purchase commitments, which totaled approximately $15.4 billion as of December 31, 2025.
Strategic Investment in WestJet. In October 2025, we acquired a 12.7% equity stake in WestJet for $276 million. As part of the transaction, we also assumed a commensurate portion of a shareholder loan receivable from the previous owner.
Other. In 2025, other, net investing activities primarily included proceeds from several sale-leaseback transactions, the sale of a portion of our equity investment in Unifi Aviation and the sale of our engine maintenance, repair and overhaul joint venture with Aeroméxico located in Queretaro, Mexico. In 2024, other, net investing activities primarily included proceeds from the sale of our equity ownership in Clear Secure, Inc.
| Delta Air Lines, Inc. | 2025 Form 10-K | 41 |
Item 7. MD&A - Financial Condition and Liquidity
Financing Activities
Debt and Finance Leases. In 2025, we had cash outflows of approximately $4.8 billion related to repayments of our debt and finance leases. We continue to seek opportunities to pre-pay our debt, in addition to periodic amortization payments and scheduled maturities, and refinance higher cost debt.
In June 2025, we issued $2.0 billion in aggregate principal amounts of unsecured notes, consisting of $1.0 billion of 4.95% Notes due 2028 and $1.0 billion of 5.25% Notes due 2030 (collectively, the "Notes"). The net proceeds from the offering of the Notes were used to repay the Payroll Support Program ("PSP") loan due 2030 and for general corporate purposes.
In September 2025, we and our indirect wholly-owned subsidiary SkyMiles IP Ltd. entered into an amendment to the SkyMiles Term Loan credit and guaranty agreement (the "SkyMiles Credit Facility"). This amendment, among other things, (i) refinanced the existing term loans with the proceeds of replacement term loans bearing interest at a variable rate equal to an adjusted term Secured Overnight Financing Rate ("SOFR"), plus a reduced margin of 1.50% per annum, payable quarterly; (ii) extended the scheduled maturity from October 2027 to October 2028; (iii) reduced the principal amortization payments from 20% to 1% per year, payable quarterly; and (iv) added a prepayment premium of 1.00% payable in connection with a Repricing Event (as defined in the amended SkyMiles Credit Facility) occurring within six months following September 30, 2025.
In January 2026, we entered into a $1.3 billion term loan issued by a group of lenders due December 2026. The proceeds of the term loan were used to repay $957 million of the PSP loans due 2031 and for general corporate purposes.
In February 2025, Moody's credit rating agency upgraded its rating for Delta to Baa2, an investment grade rating. In the September 2025 quarter, Fitch Ratings upgraded its outlook for Delta to Positive from Stable. In January 2026, S&P Global upgraded its outlook for Delta to Positive from Stable.
The principal amount of our debt and finance leases was $14.1 billion at December 31, 2025.
Future Debt Obligations. As described further in Note 6 of the Notes to the Consolidated Financial Statements, as of December 31, 2025, scheduled maturities of our debt in 2026 are $1.4 billion, with maturities from 2027 through 2030 ranging between $600 million and $3.5 billion annually. As of December 31, 2025, scheduled maturities after 2030 aggregate to $4.8 billion. In addition, we are obligated to make periodic interest payments at fixed and variable rates, depending on the terms of the applicable debt agreements. Based on applicable interest rates and scheduled debt maturities as of December 31, 2025, these interest obligations total approximately $2.4 billion, decreasing on an annual basis from approximately $500 million in 2026 to $200 million in 2030.
Finance Lease Obligations. As described further in Note 7 of the Notes to the Consolidated Financial Statements, as of December 31, 2025 we had a total of $870 million of minimum finance lease obligations. These minimum lease payments are generally decreasing on an annual basis from approximately $300 million in 2026 to $100 million in 2030.
Capital Returns to Shareholders. During 2025, we continued our quarterly dividend program with $0.15 per share payments in the March 2025 and June 2025 quarters and $0.1875 per share payments in the September 2025 and December 2025 quarters. Total dividend payments during the year ended December 31, 2025 were $440 million.
On February 4, 2026, the Board of Directors approved and we will pay a quarterly dividend of $0.1875 per share on March 19, 2026 to shareholders of record as of February 26, 2026.
Undrawn Lines of Credit. As of December 31, 2025 we had approximately $3.1 billion undrawn and available under our revolving credit facilities.
Covenants. We were in compliance with the covenants in our debt agreements at December 31, 2025. See Note 6 of the Notes to the Consolidated Financial Statements for more information on the covenants in our debt agreements.
| Delta Air Lines, Inc. | 2025 Form 10-K | 42 |
Item 7. MD&A - Critical Accounting Estimates
Critical Accounting Estimates
Our critical accounting estimates are those estimates made in accordance with generally accepted accounting principles in the U.S. ("GAAP") that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on our consolidated results of operations or financial condition. Accordingly, the actual results may differ materially from these estimates. For a discussion of our significant accounting policies, see Note 1 of the Notes to the Consolidated Financial Statements, unless otherwise noted below.
Loyalty Program
Our SkyMiles loyalty program generates customer loyalty by rewarding customers with incentives to travel on Delta. This program allows customers to earn miles by flying on Delta, Delta Connection carriers and other airlines that participate in the loyalty program. When traveling, customers earn miles primarily based on the passenger's loyalty program status, fare class and ticket price. Customers can also earn miles through participating companies. Miles are redeemable by customers for air travel on Delta and other participating airlines, access to Delta Sky Clubs, and other program awards. To facilitate transactions with participating companies, we sell miles to non-airline businesses and other airlines.
The loyalty program includes two types of transactions that are considered revenue arrangements with multiple performance obligations (1) passenger ticket sales earning miles and (2) sale of miles to participating companies.
Passenger Ticket Sales Earning Miles. Passenger ticket sales earning miles provide customers with (1) miles earned and (2) air transportation, which are each considered performance obligations. We value each performance obligation on a standalone basis. To value the miles earned, we consider the quantitative value a passenger receives by redeeming miles for a ticket rather than paying cash, which is referred to as equivalent ticket value ("ETV"). Our estimate of ETV is adjusted for miles that are not likely to be redeemed ("mileage breakage"). We use statistical models to estimate mileage breakage based on historical redemption patterns. A change in assumptions regarding the redemption activity for miles or the estimated fair value of miles expected to be redeemed could have a material impact on our revenue in the year in which the change occurs and in future years. We recognize mileage breakage proportionally during the period in which the remaining miles are actually redeemed.
At December 31, 2025, the aggregate deferred revenue balance associated with the SkyMiles program was $9.3 billion. A hypothetical 10% change in the number of outstanding miles estimated to be redeemed would result in an impact of less than 1% of total operating revenue recognized for the year ended December 31, 2025.
We defer revenue for the miles when earned and recognize loyalty travel awards in passenger revenue as the miles are redeemed and transportation is provided. We record the air transportation portion of the passenger ticket sales in air traffic liability and recognize passenger revenue when we provide transportation or if the ticket goes unused. A hypothetical 10% increase in our estimate of the ETV of a mile would have decreased total operating revenue by less than 1% for the year ended December 31, 2025, as a result of an increase in the amount of revenue deferred associated with the miles earned.
Sale of Miles to Participating Companies. Customers earn miles based on their spending with participating companies, such as credit card, car rental, ridesharing, retail, and hotel companies, with which we have marketing agreements to sell miles. Our contracts to sell miles under these marketing agreements have multiple performance obligations. Payments are typically due to us monthly based on the volume of miles sold during the period, and the initial terms of our marketing contracts are from one to thirteen years. During the years ended December 31, 2025, 2024 and 2023, total cash sales from marketing agreements related to our loyalty program were $8.0 billion, $7.4 billion and $6.9 billion, respectively, which are allocated to travel and other performance obligations, as discussed below.
Our agreements with American Express provide for joint marketing, grant certain benefits to Delta-American Express co-branded credit card holders ("cardholders") and American Express Membership Rewards program participants, and allow American Express to market its services or products using our customer database. Cardholders earn miles for making purchases using co-branded cards, and certain cardholders may also receive baggage fee waivers, lounge access, priority boarding and other benefits while traveling on Delta. Additionally, participants in the American Express Membership Rewards program may exchange their points for miles under the loyalty program. We sell miles to American Express which are then provided to their customers under the co-brand credit card program and the Membership Rewards program.
| Delta Air Lines, Inc. | 2025 Form 10-K | 43 |
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