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Cover and table of contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
| ☑ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2024
| Or | |||||
| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission File Number 001-5424
DELTA AIR LINES, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 58-0218548 | |||||||
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||||
| Post Office Box 20706 | ||||||||
| Atlanta, Georgia | 30320-6001 | |||||||
| (Address of principal executive offices) | (Zip Code) |
Registrant's telephone number, including area code: (404) 715-2600
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol | Name of each exchange on which registered | ||||||||||||
| Common Stock, par value $0.0001 per share | DAL | New York Stock Exchange |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes ☑ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes ☑ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☑ | Accelerated filer | ☐ | Non-accelerated filer | ☐ | ||||||||||||
| Smaller reporting company | ☐ | Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No ☑
Number of shares outstanding by each class of common stock, as of June 30, 2024
Common Stock, $0.0001 par value - 645,419,328 shares outstanding
This document is also available through our website at http://ir.delta.com/.
Forward Looking Statements
Unless otherwise indicated or the context otherwise requires, the terms "Delta," "we," "us" and "our" refer to Delta Air Lines, Inc. and its subsidiaries.
FORWARD-LOOKING STATEMENTS
Statements in this Form 10-Q (or otherwise made by us or on our behalf) that are not historical facts, including statements about our estimates, expectations, beliefs, intentions, projections, goals, aspirations, commitments or strategies for the future, may be "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from historical experience or our present expectations. Known material risk factors applicable to Delta are described in "Item 1A. Risk Factors" of our Annual Report on Form 10-K for the fiscal year ended December 31, 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. | June 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 June 30, 2024, the related condensed consolidated statements of operations and comprehensive income and consolidated statements of stockholders' equity for the three-month and six-month periods ended June 30, 2024 and 2023, condensed consolidated statements of cash flows for the six-month periods ended June 30, 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 | |||||
| July 11, 2024 |
Delta Air Lines, Inc. | June 2024 Form 10-Q 2
Financial Statements
DELTA AIR LINES, INC.
Consolidated Balance Sheets
(Unaudited)
| (in millions, except share data) | June 30, 2024 | December 31, 2023 | |||||||||
| ASSETS | |||||||||||
| Current Assets: | |||||||||||
| Cash and cash equivalents | $ | 4,110 | $ | 2,741 | |||||||
| Short-term investments | 124 | 1,127 | |||||||||
| Accounts receivable, net of allowance for uncollectible accounts of $16 and $17 | 3,812 | 3,130 | |||||||||
| Fuel, expendable parts and supplies inventories, net of allowance for obsolescence of $129 and $123 | 1,486 | 1,314 | |||||||||
| Prepaid expenses and other | 2,056 | 1,957 | |||||||||
| Total current assets | 11,588 | 10,269 | |||||||||
| Noncurrent Assets: | |||||||||||
| Property and equipment, net of accumulated depreciation and amortization of $22,477 and $21,707 | 36,339 | 35,486 | |||||||||
| Operating lease right-of-use assets | 6,808 | 7,004 | |||||||||
| Goodwill | 9,753 | 9,753 | |||||||||
| Identifiable intangibles, net of accumulated amortization of $915 and $911 | 5,979 | 5,983 | |||||||||
| Equity investments | 3,022 | 3,457 | |||||||||
| Other noncurrent assets | 1,708 | 1,692 | |||||||||
| Total noncurrent assets | 63,609 | 63,375 | |||||||||
| Total assets | $ | 75,197 | $ | 73,644 | |||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||
| Current Liabilities: | |||||||||||
| Current maturities of debt and finance leases | $ | 2,950 | $ | 2,983 | |||||||
| Current maturities of operating leases | 775 | 759 | |||||||||
| Air traffic liability | 9,437 | 7,044 | |||||||||
| Accounts payable | 4,876 | 4,446 | |||||||||
| Accrued salaries and related benefits | 3,655 | 4,561 | |||||||||
| Loyalty program deferred revenue | 4,038 | 3,908 | |||||||||
| Fuel card obligation | 1,100 | 1,100 | |||||||||
| Other accrued liabilities | 1,928 | 1,617 | |||||||||
| Total current liabilities | 28,759 | 26,418 | |||||||||
| Noncurrent Liabilities: | |||||||||||
| Debt and finance leases | 15,033 | 17,071 | |||||||||
| Pension, postretirement and related benefits | 3,453 | 3,601 | |||||||||
| Loyalty program deferred revenue | 4,596 | 4,512 | |||||||||
| Noncurrent operating leases | 6,053 | 6,468 | |||||||||
| Deferred income taxes, net | 1,410 | 908 | |||||||||
| Other noncurrent liabilities | 3,507 | 3,561 | |||||||||
| Total noncurrent liabilities | 34,052 | 36,121 | |||||||||
| Commitments and Contingencies | |||||||||||
| Stockholders' Equity: | |||||||||||
| Common stock at $0.0001 par value; 1,500,000,000 shares authorized, 654,682,022 and 654,671,194 shares issued | — | — | |||||||||
| Additional paid-in capital | 11,647 | 11,641 | |||||||||
| Retained earnings | 6,765 | 5,650 | |||||||||
| Accumulated other comprehensive loss | (5,740) | (5,845) | |||||||||
| Treasury stock, at cost, 9,262,694 and 11,224,246 shares | (286) | (341) | |||||||||
| Total stockholders' equity | 12,386 | 11,105 | |||||||||
| Total liabilities and stockholders' equity | $ | 75,197 | $ | 73,644 | |||||||
| The accompanying notes are an integral part of these Condensed Consolidated Financial Statements. |
Delta Air Lines, Inc. | June 2024 Form 10-Q 3
Financial Statements
DELTA AIR LINES, INC.
Condensed Consolidated Statements of Operations and Comprehensive Income
(Unaudited)
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| (in millions, except per share data) | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||
| Operating Revenue: | |||||||||||||||||||||||
| Passenger | $ | 13,841 | $ | 13,205 | $ | 24,972 | $ | 23,616 | |||||||||||||||
| Cargo | 199 | 172 | 377 | 381 | |||||||||||||||||||
| Other | 2,618 | 2,201 | 5,057 | 4,340 | |||||||||||||||||||
| Total operating revenue | 16,658 | 15,578 | 30,406 | 28,337 | |||||||||||||||||||
| Operating Expense: | |||||||||||||||||||||||
| Salaries and related costs | 4,012 | 3,692 | 7,803 | 7,078 | |||||||||||||||||||
| Aircraft fuel and related taxes | 2,813 | 2,516 | 5,410 | 5,192 | |||||||||||||||||||
| Ancillary businesses and refinery | 1,463 | 1,173 | 2,833 | 2,298 | |||||||||||||||||||
| Contracted services | 1,041 | 994 | 2,065 | 2,004 | |||||||||||||||||||
| Landing fees and other rents | 766 | 617 | 1,515 | 1,201 | |||||||||||||||||||
| Aircraft maintenance materials and outside repairs | 684 | 614 | 1,363 | 1,199 | |||||||||||||||||||
| Depreciation and amortization | 620 | 573 | 1,235 | 1,137 | |||||||||||||||||||
| Passenger commissions and other selling expenses | 672 | 651 | 1,222 | 1,152 | |||||||||||||||||||
| Regional carrier expense | 580 | 559 | 1,130 | 1,117 | |||||||||||||||||||
| Passenger service | 463 | 442 | 876 | 859 | |||||||||||||||||||
| Profit sharing | 519 | 595 | 644 | 667 | |||||||||||||||||||
| Aircraft rent | 138 | 132 | 274 | 264 | |||||||||||||||||||
| Pilot agreement and related expenses | — | — | — | 864 | |||||||||||||||||||
| Other | 620 | 529 | 1,155 | 1,090 | |||||||||||||||||||
| Total operating expense | 14,391 | 13,087 | 27,525 | 26,122 | |||||||||||||||||||
| Operating Income | 2,267 | 2,491 | 2,881 | 2,215 | |||||||||||||||||||
| Non-Operating Expense: | |||||||||||||||||||||||
| Interest expense, net | (188) | (203) | (394) | (430) | |||||||||||||||||||
| Gain/(loss) on investments, net | (196) | 128 | (423) | 251 | |||||||||||||||||||
| Loss on extinguishment of debt | (32) | (29) | (36) | (50) | |||||||||||||||||||
| Miscellaneous, net | (78) | (70) | (133) | (174) | |||||||||||||||||||
| Total non-operating expense, net | (494) | (174) | (986) | (403) | |||||||||||||||||||
| Income Before Income Taxes | 1,773 | 2,317 | 1,895 | 1,812 | |||||||||||||||||||
| Income Tax Provision | (468) | (490) | (553) | (348) | |||||||||||||||||||
| Net Income | $ | 1,305 | $ | 1,827 | $ | 1,342 | $ | 1,464 | |||||||||||||||
| Basic Earnings Per Share | $ | 2.04 | $ | 2.86 | $ | 2.10 | $ | 2.29 | |||||||||||||||
| Diluted Earnings Per Share | $ | 2.01 | $ | 2.84 | $ | 2.08 | $ | 2.28 | |||||||||||||||
| Comprehensive Income | $ | 1,358 | $ | 1,872 | $ | 1,447 | $ | 1,556 | |||||||||||||||
| The accompanying notes are an integral part of these Condensed Consolidated Financial Statements. |
Delta Air Lines, Inc. | June 2024 Form 10-Q 4
Financial Statements
DELTA AIR LINES, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
| Six Months Ended June 30, | |||||||||||
| (in millions) | 2024 | 2023 | |||||||||
| Net Cash Provided by Operating Activities | $ | 4,857 | $ | 4,843 | |||||||
| Cash Flows from Investing Activities: | |||||||||||
| Property and equipment additions: | |||||||||||
| Flight equipment, including advance payments | (1,891) | (1,704) | |||||||||
| Ground property and equipment, including technology | (611) | (748) | |||||||||
| Purchase of short-term investments | — | (2,011) | |||||||||
| Redemption of short-term investments | 1,013 | 1,961 | |||||||||
| Other, net | 43 | 20 | |||||||||
| Net cash used in investing activities | (1,446) | (2,482) | |||||||||
| Cash Flows from Financing Activities: | |||||||||||
| Payments on debt and finance lease obligations | (2,149) | (2,986) | |||||||||
| Cash dividends | (128) | — | |||||||||
| Other, net | (22) | (24) | |||||||||
| Net cash used in financing activities | (2,299) | (3,010) | |||||||||
| Net Increase/(Decrease) in Cash, Cash Equivalents and Restricted Cash Equivalents | 1,112 | (649) | |||||||||
| 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 | $ | 4,507 | $ | 2,824 | |||||||
| Non-Cash Transactions: | |||||||||||
| Right-of-use assets acquired or modified under operating leases | $ | 161 | $ | 144 | |||||||
| Flight and ground equipment acquired or modified under finance leases | 18 | 36 | |||||||||
| Operating leases converted to finance leases | — | 43 | |||||||||
| The following table provides a reconciliation of cash, cash equivalents and restricted cash equivalents reported within the Consolidated Balance Sheets to the total of the same such amounts shown above: | |||||||||||
| June 30, | |||||||||||
| (in millions) | 2024 | 2023 | |||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 4,110 | $ | 2,668 | |||||||
| Restricted cash included in prepaid expenses and other | 114 | 156 | |||||||||
| Noncurrent assets: | |||||||||||
| Restricted cash included in other noncurrent assets | 283 | — | |||||||||
| Total cash, cash equivalents and restricted cash equivalents | $ | 4,507 | $ | 2,824 | |||||||
| The accompanying notes are an integral part of these Condensed Consolidated Financial Statements. |
Delta Air Lines, Inc. | June 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 | ||||||||||||
| Net income | — | — | — | 1,305 | — | — | — | 1,305 | ||||||||||||||||||
| Dividends declared ($0.10 and $0.15 per share) | — | — | — | (162) | — | — | — | (162) | ||||||||||||||||||
| Other comprehensive income | — | — | — | — | 53 | — | — | 53 | ||||||||||||||||||
| Common stock issued for employee equity awards(1) | (2) | — | (41) | — | — | (3) | 80 | 39 | ||||||||||||||||||
| Balance at June 30, 2024 | 655 | $ | — | $ | 11,647 | $ | 6,765 | $ | (5,740) | 9 | $ | (286) | $ | 12,386 | ||||||||||||
(1)Treasury shares were withheld for payment of taxes, at a weighted average price per share of $39.83 and $50.04 in the March 2024 quarter and June 2024 quarter, respectively.
| 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 | ||||||||||||
| Net income | — | — | — | 1,827 | — | — | — | 1,827 | ||||||||||||||||||
| Dividends declared ($0.10 per share) | — | — | — | (65) | — | — | — | (65) | ||||||||||||||||||
| Other comprehensive income | — | — | — | — | 45 | — | — | 45 | ||||||||||||||||||
| Common stock issued for employee equity awards(1) | 1 | — | 34 | — | — | — | (1) | 33 | ||||||||||||||||||
| Balance at June 30, 2023 | 655 | $ | — | $ | 11,578 | $ | 2,569 | $ | (5,709) | 11 | $ | (338) | $ | 8,100 | ||||||||||||
(1)Treasury shares were withheld for payment of taxes, at a weighted average price per share of $39.73 and $36.76 in the March 2023 quarter and June 2023 quarter, respectively.
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
Delta Air Lines, Inc. | June 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 and six months ended June 30, 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 June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||
| (in millions) | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||||||||||||||
| Ticket | $ | 12,349 | $ | 11,829 | $ | 22,182 | $ | 21,068 | |||||||||||||||||||||||||||
| Loyalty travel awards | 975 | 902 | 1,820 | 1,645 | |||||||||||||||||||||||||||||||
| Travel-related services | 517 | 474 | 970 | 903 | |||||||||||||||||||||||||||||||
| Passenger revenue | $ | 13,841 | $ | 13,205 | $ | 24,972 | $ | 23,616 |
Ticket
We recognized approximately $5.6 billion and $5.7 billion in passenger revenue during the six months ended June 30, 2024 and 2023, respectively, 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 six months ended June 30, 2024 and 2023, total cash sales from marketing agreements related to our loyalty program were $3.6 billion and $3.4 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. | June 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 | 2,148 | 2,110 | |||||||||
| Miles redeemed for air travel | (1,820) | (1,645) | |||||||||
| Miles redeemed for non-air travel and other | (114) | (80) | |||||||||
| Balance at June 30 | $ | 8,634 | $ | 8,267 |
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 June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||
| (in millions) | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||||||||||||||
| Refinery | $ | 1,251 | $ | 965 | $ | 2,436 | $ | 1,882 | |||||||||||||||||||||||||||
| Loyalty program | 836 | 774 | 1,631 | 1,500 | |||||||||||||||||||||||||||||||
| Ancillary businesses | 213 | 214 | 393 | 445 | |||||||||||||||||||||||||||||||
| Miscellaneous | 318 | 248 | 597 | 513 | |||||||||||||||||||||||||||||||
| Other revenue | $ | 2,618 | $ | 2,201 | $ | 5,057 | $ | 4,340 |
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 revenues from aircraft maintenance services we provide to third parties and our vacation wholesale operations.
Miscellaneous. This is primarily composed of revenues related to lounge access, including access provided to certain American Express cardholders, codeshare agreements and certain other commercial relationships.
Delta Air Lines, Inc. | June 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 June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||
| (in millions) | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||||||||||||||
| Domestic | $ | 9,398 | $ | 8,944 | $ | 17,381 | $ | 16,538 | |||||||||||||||||||||||||||
| Atlantic | 2,825 | 2,803 | 4,130 | 4,047 | |||||||||||||||||||||||||||||||
| Latin America | 964 | 926 | 2,229 | 2,058 | |||||||||||||||||||||||||||||||
| Pacific | 654 | 532 | 1,232 | 973 | |||||||||||||||||||||||||||||||
| Total | $ | 13,841 | $ | 13,205 | $ | 24,972 | $ | 23,616 |
| Operating revenue by geographic region | |||||||||||||||||||||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||
| (in millions) | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||||||||||||||
| Domestic | $ | 11,575 | $ | 10,749 | $ | 21,607 | $ | 20,145 | |||||||||||||||||||||||||||
| Atlantic | 3,210 | 3,178 | 4,791 | 4,726 | |||||||||||||||||||||||||||||||
| Latin America | 1,102 | 1,037 | 2,543 | 2,317 | |||||||||||||||||||||||||||||||
| Pacific | 771 | 614 | 1,465 | 1,149 | |||||||||||||||||||||||||||||||
| Total | $ | 16,658 | $ | 15,578 | $ | 30,406 | $ | 28,337 |
NOTE 3. FAIR VALUE MEASUREMENTS
Assets/(Liabilities) Measured at Fair Value on a Recurring Basis
| (in millions) | June 30, 2024 | Level 1 | Level 2 | Level 3 | ||||||||||
| Cash equivalents | $ | 2,840 | $ | 2,840 | $ | — | $ | — | ||||||
| Restricted cash equivalents | 397 | 397 | — | — | ||||||||||
| Short-term investments | ||||||||||||||
| U.S. Government securities | 100 | — | 100 | — | ||||||||||
| Corporate obligations | 10 | — | 10 | — | ||||||||||
| Other fixed income securities | 14 | — | 14 | — | ||||||||||
| Long-term investments and related | 2,445 | 2,188 | 143 | 114 | ||||||||||
| Fuel hedge contracts | (23) | — | (23) | — | ||||||||||
| (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. | June 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 gains of $16 million and losses of $80 million on our fuel hedge contracts in aircraft fuel and related taxes on our Condensed Consolidated Statements of Operations and Comprehensive Income ("income statement") for the three and six months ended June 30, 2024, respectively, compared to gains of $12 million and $43 million for the three and six months ended June 30, 2023, respectively. The losses recognized during the first six months of 2024 were composed of $28 million of mark-to-market losses and $52 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) | June 30, 2024 | December 31, 2023 | June 30, 2024 | December 31, 2023 | |||||||||||||||||||
| Air France-KLM | Fair Value | 3 | % | 3 | % | $ | 65 | $ | 110 | ||||||||||||||
| China Eastern | Fair Value | 2 | % | 2 | % | 117 | 134 | ||||||||||||||||
| Grupo Aeroméxico | Equity Method | 20 | % | 20 | % | 438 | 421 | ||||||||||||||||
| Hanjin KAL | Fair Value(1) | 15 | % | 15 | % | 467 | 561 | ||||||||||||||||
| LATAM | Fair Value | 10 | % | 10 | % | 829 | 658 | ||||||||||||||||
| Unifi Aviation | Equity Method | 49 | % | 49 | % | 139 | 162 | ||||||||||||||||
| Wheels Up | Fair Value(2) | 38 | % | 38 | % | 498 | 903 | ||||||||||||||||
| Other investments | Various | 469 | 508 | ||||||||||||||||||||
| Equity investments | $ | 3,022 | $ | 3,457 |
(1)At June 30, 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. | June 2024 Form 10-Q 10
Notes to the Condensed Consolidated Financial Statements
NOTE 5. DEBT
| Summary of outstanding debt by category | ||||||||||||||||||||||||||
| (in millions) | Maturity Dates | Interest Rate(s) Per Annum at June 30, 2024 | June 30, 2024 | December 31, 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% | 4,244 | 4,518 | ||||||||||||||||||
| SkyMiles Term Loan(1)(2) | 2024 | to | 2027 | 9.07% | 915 | 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% | 1,041 | 1,591 | ||||||||||||||||||
| Notes(1)(2) | 2024 | to | 2033 | 7.58% | to | 7.60% | 92 | 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% | 66 | 67 | ||||||||||||||||||
| Other revolving credit facilities(2) | 2025 | to | 2026 | Undrawn | — | — | ||||||||||||||||||||
| Total secured and unsecured debt | $ | 16,832 | $ | 18,693 | ||||||||||||||||||||||
| Unamortized (discount)/premium and debt issue cost, net and other | (49) | (83) | ||||||||||||||||||||||||
| Total debt | $ | 16,783 | $ | 18,610 | ||||||||||||||||||||||
| Less: current maturities | (2,699) | (2,625) | ||||||||||||||||||||||||
| Total long-term debt | $ | 14,084 | $ | 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 June 30, 2024, we had approximately $2.9 billion undrawn and available under our revolving credit facilities.
Early Settlement of Outstanding Notes
During the six months ended June 30, 2024, through early principal repayments and open market repurchases, we extinguished an aggregate principal amount of $744 million related to a portion of the SkyMiles Term Loan and various secured and unsecured notes. These payments resulted in a $36 million loss on extinguishment of debt recorded in non-operating expense in our income statement.
Fair Value of Debt
Market risk associated with our fixed- and variable-rate debt relates to the potential reduction in fair value and negative impact to future earnings, respectively, from an increase in interest rates. The fair value of debt shown below is principally based on reported market values, recently completed market transactions and estimates based on interest rates, maturities, credit risk and underlying collateral. Debt is primarily classified as Level 2 within the fair value hierarchy.
| Fair value of outstanding debt | ||||||||
| (in millions) | June 30, 2024 | December 31, 2023 | ||||||
| Net carrying amount | $ | 16,783 | $ | 18,610 | ||||
| Fair value | $ | 16,700 | $ | 18,400 |
Delta Air Lines, Inc. | June 2024 Form 10-Q 11
Notes to the Condensed Consolidated Financial Statements
Covenants
Our debt agreements contain various affirmative, negative and financial covenants. We were in compliance with the covenants in our debt agreements at June 30, 2024.
NOTE 6. EMPLOYEE BENEFIT PLANS
We sponsor defined benefit and defined contribution pension plans, healthcare plans and disability and survivorship plans for eligible employees and retirees and their eligible family members. The net periodic cost table below includes our domestic defined benefit pension plans and postretirement healthcare plans.
| Employee benefit plans net periodic cost | |||||||||||||||||
| Pension Benefits | Other Postretirement and Postemployment Benefits | ||||||||||||||||
| (in millions) | 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Three Months Ended June 30, | |||||||||||||||||
| Service cost | $ | — | $ | — | $ | 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 | $ | — | $ | 9 | $ | 71 | $ | 70 | |||||||||
| Six Months Ended June 30, | |||||||||||||||||
| Service cost | $ | — | $ | — | $ | 46 | $ | 36 | |||||||||
| Interest cost | 402 | 426 | 91 | 100 | |||||||||||||
| Expected return on plan assets | (526) | (528) | (1) | — | |||||||||||||
| Amortization of prior service credit | — | — | (2) | (3) | |||||||||||||
| Recognized net actuarial loss | 124 | 119 | 9 | 6 | |||||||||||||
| Net periodic cost | $ | — | $ | 17 | $ | 143 | $ | 139 |
Service cost is recorded in salaries and related costs in our income statement, while all other components are recorded within miscellaneous, net under non-operating expense.
We also sponsor defined benefit pension plans for eligible employees in certain foreign countries and a market based cash balance plan for eligible pilots, which have immaterial obligations. These plans are not included in the net periodic cost table above.
Delta Air Lines, Inc. | June 2024 Form 10-Q 12
Notes to the Condensed Consolidated Financial Statements
NOTE 7. COMMITMENTS AND CONTINGENCIES
Aircraft Purchase Commitments
Our future aircraft purchase commitments totaled approximately $19.9 billion at June 30, 2024.
| Aircraft purchase commitments**(1)** | |||||
| (in millions) | Total | ||||
| Six months ending December 31, 2024 | $ | 1,850 | |||
| 2025 | 4,320 | ||||
| 2026 | 4,970 | ||||
| 2027 | 5,010 | ||||
| 2028 | 2,980 | ||||
| Thereafter | 770 | ||||
| Total | $ | 19,900 |
(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 June 30, 2024:
| Aircraft purchase commitments by fleet type | |||||
| Aircraft Type | Purchase Commitments | ||||
| A220-300 | 74 | ||||
| A321-200neo | 94 | ||||
| A330-900neo | 12 | ||||
| A350-900 | 14 | ||||
| A350-1000 | 20 | ||||
| B-737-10 | 100 | ||||
| Total | 314 |
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.
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.
Delta Air Lines, Inc. | June 2024 Form 10-Q 13
Notes to the 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) | ||||||
| Changes in value | — | 3 | — | 3 | ||||||||||
| Reclassifications into earnings(1) | 133 | — | (31) | 102 | ||||||||||
| Balance at June 30, 2024 | $ | (6,548) | $ | 43 | $ | 765 | $ | (5,740) |
| Balance at January 1, 2023 | $ | (6,624) | $ | 41 | $ | 782 | $ | (5,801) | ||||||
| Changes in value | — | (3) | 1 | (2) | ||||||||||
| Reclassifications into earnings(1) | 122 | — | (28) | 94 | ||||||||||
| Balance at June 30, 2023 | $ | (6,502) | $ | 38 | $ | 755 | $ | (5,709) |
(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. | June 2024 Form 10-Q 14
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 June 30, 2024 | ||||||||||||||||||||
| Operating revenue | $ | 15,407 | $ | 2,051 | $ | (800) | (1) | $ | 16,658 | |||||||||||
| Depreciation and amortization | 620 | 30 | (30) | (2) | 620 | |||||||||||||||
| Operating income | 2,207 | 60 | (2) | — | 2,267 | |||||||||||||||
| Interest expense, net | 188 | 6 | (6) | 188 | ||||||||||||||||
| Total assets, end of period | 72,938 | 2,337 | (78) | 75,197 | ||||||||||||||||
| Capital expenditures | 1,292 | 16 | — | 1,308 | ||||||||||||||||
| Three Months Ended June 30, 2023 | ||||||||||||||||||||
| Operating revenue | $ | 14,613 | $ | 2,037 | $ | (1,072) | (1) | $ | 15,578 | |||||||||||
| Depreciation and amortization | 573 | 23 | (23) | (2) | 573 | |||||||||||||||
| Operating income | 2,447 | 44 | (2) | — | 2,491 | |||||||||||||||
| Interest expense, net | 203 | 3 | (3) | 203 | ||||||||||||||||
| Total assets, end of period | 70,265 | 3,309 | (77) | 73,497 | ||||||||||||||||
| Capital expenditures | 1,422 | 30 | — | 1,452 |
| (in millions) | Airline | Refinery | Intersegment Sales/Other | Consolidated | ||||||||||||||||
| Six Months Ended June 30, 2024 | ||||||||||||||||||||
| Operating revenue | $ | 27,970 | $ | 4,100 | $ | (1,664) | (1) | $ | 30,406 | |||||||||||
| Depreciation and amortization | 1,235 | 57 | (57) | (2) | 1,235 | |||||||||||||||
| Operating income | 2,773 | 108 | (2) | — | 2,881 | |||||||||||||||
| Interest expense, net | 394 | 11 | (11) | 394 | ||||||||||||||||
| Capital expenditures | 2,472 | 30 | — | 2,502 | ||||||||||||||||
| Six Months Ended June 30, 2023 | ||||||||||||||||||||
| Operating revenue | $ | 26,455 | $ | 4,388 | $ | (2,506) | (1) | $ | 28,337 | |||||||||||
| Depreciation and amortization | 1,137 | 46 | (46) | (2) | 1,137 | |||||||||||||||
| Operating income | 1,949 | 266 | (2) | — | 2,215 | |||||||||||||||
| Interest expense, net | 430 | 8 | (8) | 430 | ||||||||||||||||
| Capital expenditures | 2,393 | 59 | — | 2,452 |
(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.
Delta Air Lines, Inc. | June 2024 Form 10-Q 15
Notes to the Condensed Consolidated Financial Statements
| Operating revenue intersegment sales/other | ||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||
| (in millions) | 2024 | 2023 | 2024 | 2023 | ||||||||||
| Sales to airline segment(1) | $ | (393) | $ | (365) | $ | (780) | $ | (961) | ||||||
| Exchanged products(2) | (361) | (618) | (798) | (1,330) | ||||||||||
| Sales of refined products | (46) | (89) | (86) | (215) | ||||||||||
| Total operating revenue intersegment sales/other | $ | (800) | $ | (1,072) | $ | (1,664) | $ | (2,506) |
(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.
NOTE 10. EARNINGS PER SHARE
We calculate basic earnings per share by dividing net income 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 per share:
| Basic and diluted earnings per share | |||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||
| (in millions, except per share data) | 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Net income | $ | 1,305 | $ | 1,827 | $ | 1,342 | $ | 1,464 | |||||||||
| Basic weighted average shares outstanding | 641 | 639 | 640 | 639 | |||||||||||||
| Dilutive effect of share-based instruments | 7 | 3 | 7 | 3 | |||||||||||||
| Diluted weighted average shares outstanding | 648 | 642 | 647 | 642 | |||||||||||||
| Basic earnings per share | $ | 2.04 | $ | 2.86 | $ | 2.10 | $ | 2.29 | |||||||||
| Diluted earnings per share | $ | 2.01 | $ | 2.84 | $ | 2.08 | $ | 2.28 |
Delta Air Lines, Inc. | June 2024 Form 10-Q 16
Item 2. MD&A
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our Condensed Consolidated Financial Statements and the related notes and other financial information included elsewhere in this Quarterly Report on Form 10-Q and our audited Consolidated Financial Statements and related notes included in our 2023 Form 10-K.
June 2024 Quarter Financial Highlights
Our operating income for the June 2024 quarter was $2.3 billion, a decrease of $224 million compared to the June 2023 quarter.
Revenue. Compared to the June 2023 quarter, our total revenue increased $1.1 billion, or 7%, due primarily to an 8% increase in capacity on strong operational performance. Passenger revenue increased 5% resulting from strength in travel demand, particularly for our premium products, partially offset by a decrease in yield. Total revenue, adjusted (a non-GAAP financial measure, which excludes revenue related to refinery sales to third parties) increased in the June 2024 quarter by $794 million, or 5.4%, compared to the June 2023 quarter.
Operating Expense. Total operating expense in the June 2024 quarter increased $1.3 billion, or 10%, compared to the June 2023 quarter, primarily due to higher employee costs from increased wages, higher fuel expense and increased costs associated with higher capacity. Total operating expense, adjusted (a non-GAAP financial measure, which primarily excludes expenses related to refinery sales to third parties) in the June 2024 quarter increased $1.0 billion, or 8%, compared to the June 2023 quarter.
Our total operating cost per available seat mile ("CASM") increased 2% compared to the June 2023 quarter. Non-fuel unit cost ("CASM-Ex", a non-GAAP financial measure) increased 0.6%, primarily due to higher employee costs from increased wages.
Cash Flow. Our cash, cash equivalents, short-term investments and aggregate undrawn principal amount available under our revolving credit facilities ("liquidity") as of June 30, 2024 was $7.2 billion.
During the June 2024 quarter, operating activities generated $2.5 billion, primarily from ticket sales. Total cash sales to American Express were $1.9 billion in the June 2024 quarter, an increase of approximately 9% compared to the June 2023 quarter.
Cash flows used in investing activities during the quarter totaled $809 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 $1.3 billion in the June 2024 quarter. Additionally, we had cash outflows of $1.4 billion 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. | June 2024 Form 10-Q 17
Item 2. MD&A - Results of Operations
Results of Operations - Three Months Ended June 30, 2024 and 2023
Total Operating Revenue
| Three Months Ended June 30, | Increase (Decrease) | % Increase (Decrease) | ||||||||||||||||||
| (in millions)(1) | 2024 | 2023 | ||||||||||||||||||
| Ticket - Main cabin | $ | 6,716 | $ | 6,694 | $ | 22 | — | % | ||||||||||||
| Ticket - Premium products | 5,633 | 5,135 | 498 | 10 | % | |||||||||||||||
| Loyalty travel awards | 975 | 902 | 73 | 8 | % | |||||||||||||||
| Travel-related services | 517 | 474 | 43 | 9 | % | |||||||||||||||
| Passenger revenue | $ | 13,841 | $ | 13,205 | $ | 636 | 5 | % | ||||||||||||
| Cargo | 199 | 172 | 27 | 16 | % | |||||||||||||||
| Other | 2,618 | 2,201 | 417 | 19 | % | |||||||||||||||
| Total operating revenue | $ | 16,658 | $ | 15,578 | $ | 1,080 | 7 | % | ||||||||||||
| TRASM (cents) | 22.31 | ¢ | 22.58 | ¢ | (0.27) | ¢ | (1) | % | ||||||||||||
| Third-party refinery sales | (1.68) | (1.40) | (0.28) | 20 | % | |||||||||||||||
| TRASM, adjusted(2) | 20.64 | ¢ | 21.18 | ¢ | (0.54) | ¢ | (3) | % |
(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 June 2023 quarter, total revenue increased $1.1 billion, or 7%, due primarily to an 8% increase in capacity resulting from strength in travel demand, particularly for our premium products, and strong operational performance, partially offset by a decrease in yield for main cabin.
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 June 30, 2023 | ||||||||||||||||||||||||||
| (in millions) | Three Months Ended June 30, 2024 | Passenger Revenue | RPMs (Traffic) | ASMs (Capacity) | Passenger Mile Yield | PRASM | Load Factor | |||||||||||||||||||
| Domestic | $ | 9,398 | 5 | % | 7 | % | 8 | % | (2) | % | (2) | % | — | pts | ||||||||||||
| Atlantic | 2,825 | 1 | % | — | % | 2 | % | 1 | % | (1) | % | (1) | pt | |||||||||||||
| Latin America | 964 | 4 | % | 18 | % | 19 | % | (12) | % | (12) | % | (1) | pt | |||||||||||||
| Pacific | 654 | 23 | % | 28 | % | 30 | % | (4) | % | (5) | % | (1) | pt | |||||||||||||
| Total | $ | 13,841 | 5 | % | 7 | % | 8 | % | (2) | % | (3) | % | (1) | pt |
Domestic
Domestic passenger revenue increased 5% in the June 2024 quarter compared to the June 2023 quarter on an 8% increase in capacity and a stable 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 June 2024 quarter increased compared to the June 2023 quarter in each geographic region. Demand in the Atlantic region remains robust, with unit revenue down slightly compared to the June 2023 quarter primarily due to the impact from the summer Olympics on travel to Paris. The Pacific and Latin America regions accounted for the majority of international capacity growth on continued network restoration and improving connectivity with our international joint venture partners.
Delta Air Lines, Inc. | June 2024 Form 10-Q 18
Item 2. MD&A - Results of Operations
Other Revenue
| Three Months Ended June 30, | Increase (Decrease) | % Increase (Decrease) | ||||||||||||||||||
| (in millions) | 2024 | 2023 | ||||||||||||||||||
| Refinery | $ | 1,251 | $ | 965 | $ | 286 | 30 | % | ||||||||||||
| Loyalty program | 836 | 774 | 62 | 8 | % | |||||||||||||||
| Ancillary businesses | 213 | 214 | (1) | — | % | |||||||||||||||
| Miscellaneous | 318 | 248 | 70 | 28 | % | |||||||||||||||
| Other revenue | $ | 2,618 | $ | 2,201 | $ | 417 | 19 | % | ||||||||||||
Refinery. Refinery sales to third parties increased $286 million compared to the June 2023 quarter. 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 June 2023 quarter due to increased co-brand card spend and more premium card account acquisitions.
Miscellaneous. This is primarily composed of revenues related to lounge access, including access provided to certain American Express cardholders, codeshare agreements and certain other commercial relationships. The increase in revenues compared to the June 2023 quarter was primarily driven by codeshare and other commercial relationships.
Delta Air Lines, Inc. | June 2024 Form 10-Q 19
Item 2. MD&A - Results of Operations
Operating Expense
| Three Months Ended June 30, | Increase (Decrease) | % Increase (Decrease) | ||||||||||||||||||
| (in millions) | 2024 | 2023 | ||||||||||||||||||
| Salaries and related costs | $ | 4,012 | $ | 3,692 | $ | 320 | 9 | % | ||||||||||||
| Aircraft fuel and related taxes | 2,813 | 2,516 | 297 | 12 | % | |||||||||||||||
| Ancillary businesses and refinery | 1,463 | 1,173 | 290 | 25 | % | |||||||||||||||
| Contracted services | 1,041 | 994 | 47 | 5 | % | |||||||||||||||
| Landing fees and other rents | 766 | 617 | 149 | 24 | % | |||||||||||||||
| Aircraft maintenance materials and outside repairs | 684 | 614 | 70 | 11 | % | |||||||||||||||
| Depreciation and amortization | 620 | 573 | 47 | 8 | % | |||||||||||||||
| Passenger commissions and other selling expenses | 672 | 651 | 21 | 3 | % | |||||||||||||||
| Regional carrier expense | 580 | 559 | 21 | 4 | % | |||||||||||||||
| Passenger service | 463 | 442 | 21 | 5 | % | |||||||||||||||
| Profit sharing | 519 | 595 | (76) | (13) | % | |||||||||||||||
| Aircraft rent | 138 | 132 | 6 | 5 | % | |||||||||||||||
| Other | 620 | 529 | 91 | 17 | % | |||||||||||||||
| Total operating expense | $ | 14,391 | $ | 13,087 | $ | 1,304 | 10 | % |
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 for Delta pilots on January 1, 2024. In June 2024 we also increased the minimum starting wage to $19 per hour.
Aircraft Fuel and Related Taxes. Aircraft fuel and related taxes increased $297 million compared to the June 2023 quarter primarily due to a 5% increase in the market price of jet fuel and a 7% increase in consumption on an 8% increase in capacity. We continue to expect that fuel consumption throughout 2024 will increase compared to 2023 aligned with capacity, partially offset by increases in the fuel efficiency of our fleet. The refinery also provided a benefit of six cents per gallon compared to a benefit of four cents per gallon in the June 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 June 30, | Increase (Decrease) | Three Months Ended June 30, | Increase (Decrease) | |||||||||||||||||||||||
| (in millions, except per gallon data) | 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||||
| Fuel purchase cost(1) | $ | 2,872 | $ | 2,557 | $ | 315 | $ | 2.70 | $ | 2.56 | $ | 0.14 | ||||||||||||||
| Fuel hedge impact | 1 | 3 | (2) | — | — | — | ||||||||||||||||||||
| Refinery segment impact | (60) | (44) | (16) | (0.06) | (0.04) | (0.02) | ||||||||||||||||||||
| Total fuel expense | $ | 2,813 | $ | 2,516 | $ | 297 | $ | 2.64 | $ | 2.52 | $ | 0.12 |
(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 $286 million compared to the June 2023 quarter. 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 June 2023 quarter that contributed to our increased capacity.
Aircraft Maintenance Materials and Outside Repairs. Aircraft maintenance materials and outside repairs increased compared to the June 2023 quarter primarily as a result of investments in the operational reliability of our fleet leading into the peak summer season and higher materials costs.
Other. The increase in other is primarily due to higher volume-related expenses associated with increased capacity, such as flight crew and other employee travel and incidental costs, and inflationary pressures.
Delta Air Lines, Inc. | June 2024 Form 10-Q 20
Item 2. MD&A - Results of Operations
Results of Operations - Six Months Ended June 30, 2024 and 2023
Total Operating Revenue
| Six Months Ended June 30, | Increase (Decrease) | % Increase (Decrease) | ||||||||||||||||||
| (in millions)(1) | 2024 | 2023 | ||||||||||||||||||
| Ticket - Main cabin | $ | 12,141 | $ | 11,917 | $ | 224 | 2 | % | ||||||||||||
| Ticket - Premium products | 10,041 | 9,151 | 890 | 10 | % | |||||||||||||||
| Loyalty travel awards | 1,820 | 1,645 | 175 | 11 | % | |||||||||||||||
| Travel-related services | 970 | 903 | 67 | 7 | % | |||||||||||||||
| Passenger revenue | $ | 24,972 | $ | 23,616 | $ | 1,356 | 6 | % | ||||||||||||
| Cargo | 377 | 381 | (4) | (1) | % | |||||||||||||||
| Other | 5,057 | 4,340 | 717 | 17 | % | |||||||||||||||
| Total operating revenue | $ | 30,406 | $ | 28,337 | $ | 2,069 | 7 | % | ||||||||||||
| TRASM (cents) | 21.69 | ¢ | 21.74 | ¢ | (0.05) | ¢ | — | % | ||||||||||||
| Third-party refinery sales | (1.74) | (1.44) | (0.30) | 21 | % | |||||||||||||||
| TRASM, adjusted(2) | 19.95 | ¢ | 20.30 | ¢ | (0.35) | ¢ | (2) | % |
(1)Total amounts in the table above may not calculate exactly due to rounding.
(2)TRASM, adjusted is a non-GAAP financial measure. For additional information on adjustments to TRASM, see "Supplemental Information" below.
Unless otherwise discussed below, the changes in total revenue line items, as well as the underlying reasons for these changes, compared to the six months ended June 30, 2023 are consistent with the discussion above under Results of Operations - Three Months Ended June 30, 2024 and 2023.
Compared to the six months ended June 30, 2023, total revenue increased $2.1 billion, or 7%, due primarily to an 8% increase in capacity resulting from strength in travel demand, particularly for our premium products, and strong operational performance, partially offset by a decrease in yield for main cabin.
Passenger Revenue by Geographic Region
| Increase (Decrease) vs. Six Months Ended June 30, 2023 | ||||||||||||||||||||||||||
| (in millions) | Six Months Ended June 30, 2024 | Passenger Revenue | RPMs (Traffic) | ASMs (Capacity) | Passenger Mile Yield | PRASM | Load Factor | |||||||||||||||||||
| Domestic | $ | 17,381 | 5 | % | 6 | % | 5 | % | (1) | % | — | % | 1 | pt | ||||||||||||
| Atlantic | 4,130 | 2 | % | 2 | % | 2 | % | — | % | — | % | — | pts | |||||||||||||
| Latin America | 2,229 | 8 | % | 23 | % | 23 | % | (12) | % | (12) | % | — | pts | |||||||||||||
| Pacific | 1,232 | 27 | % | 31 | % | 33 | % | (3) | % | (5) | % | (1) | pt | |||||||||||||
| Total | $ | 24,972 | 6 | % | 8 | % | 8 | % | (2) | % | (2) | % | — | pts |
Domestic passenger unit revenue for the six months ended June 30, 2024 increased on strong demand and higher capacity compared to the six months ended June 30, 2023. International passenger revenue for the six months ended June 30, 2024 increased 7% on 12% higher capacity compared to the six months ended June 30, 2023 due to strong demand for international travel, particularly to leisure destinations. The Pacific and Latin America regions accounted for the majority of international capacity growth on continued network restoration.
Other Revenue
| Six Months Ended June 30, | Increase (Decrease) | % Increase (Decrease) | ||||||||||||||||||
| (in millions) | 2024 | 2023 | ||||||||||||||||||
| Refinery | $ | 2,436 | $ | 1,882 | $ | 554 | 29 | % | ||||||||||||
| Loyalty program | 1,631 | 1,500 | 131 | 9 | % | |||||||||||||||
| Ancillary businesses | 393 | 445 | (52) | (12) | % | |||||||||||||||
| Miscellaneous | 597 | 513 | 84 | 16 | % | |||||||||||||||
| Other revenue | $ | 5,057 | $ | 4,340 | $ | 717 | 17 | % |
Delta Air Lines, Inc. | June 2024 Form 10-Q 21
Item 2. MD&A - Results of Operations
Operating Expense
| Six Months Ended June 30, | Increase (Decrease) | % Increase (Decrease)****(1) | ||||||||||||||||||
| (in millions) | 2024 | 2023 | ||||||||||||||||||
| Salaries and related costs | $ | 7,803 | $ | 7,078 | $ | 725 | 10 | % | ||||||||||||
| Aircraft fuel and related taxes | 5,410 | 5,192 | 218 | 4 | % | |||||||||||||||
| Ancillary businesses and refinery | 2,833 | 2,298 | 535 | 23 | % | |||||||||||||||
| Contracted services | 2,065 | 2,004 | 61 | 3 | % | |||||||||||||||
| Landing fees and other rents | 1,515 | 1,201 | 314 | 26 | % | |||||||||||||||
| Aircraft maintenance materials and outside repairs | 1,363 | 1,199 | 164 | 14 | % | |||||||||||||||
| Depreciation and amortization | 1,235 | 1,137 | 98 | 9 | % | |||||||||||||||
| Passenger commissions and other selling expenses | 1,222 | 1,152 | 70 | 6 | % | |||||||||||||||
| Regional carrier expense | 1,130 | 1,117 | 13 | 1 | % | |||||||||||||||
| Passenger service | 876 | 859 | 17 | 2 | % | |||||||||||||||
| Profit sharing | 644 | 667 | (23) | (3) | % | |||||||||||||||
| Aircraft rent | 274 | 264 | 10 | 4 | % | |||||||||||||||
| Pilot agreement and related expenses | — | 864 | (864) | NM | ||||||||||||||||
| Other | 1,155 | 1,090 | 65 | 6 | % | |||||||||||||||
| Total operating expense | $ | 27,525 | $ | 26,122 | $ | 1,403 | 5 | % |
(1)Certain variances are labeled as not meaningful ("NM") throughout management's discussion and analysis.
Unless otherwise discussed below, the changes in operating expense line items, as well as the underlying reasons for these changes, compared to the six months ended June 30, 2023 are consistent with the discussion above under Results of Operations - Three Months Ended June 30, 2024 and 2023.
Aircraft Fuel and Related Taxes. Aircraft fuel and related taxes increased $218 million compared to the six months ended June 30, 2023 due to a 6% increase in consumption on an 8% increase in capacity partially offset by a 5% decrease in the market price per gallon of jet fuel. The refinery also provided a benefit of five cents per gallon compared to a benefit of 14 cents per gallon in the six months ended June 30, 2023.
See "Refinery Segment" below for additional details on the refinery's operations.
| Fuel expense and average price per gallon | ||||||||||||||||||||||||||
| Average Price Per Gallon | ||||||||||||||||||||||||||
| Six Months Ended June 30, | Increase (Decrease) | Six Months Ended June 30, | Increase (Decrease) | |||||||||||||||||||||||
| (in millions, except per gallon data) | 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||||
| Fuel purchase cost(1) | $ | 5,490 | $ | 5,497 | $ | (7) | $ | 2.75 | $ | 2.91 | $ | (0.16) | ||||||||||||||
| Fuel hedge impact | 28 | (39) | 67 | 0.01 | (0.02) | 0.03 | ||||||||||||||||||||
| Refinery segment impact | (108) | (266) | 158 | (0.05) | (0.14) | 0.09 | ||||||||||||||||||||
| Total fuel expense | $ | 5,410 | $ | 5,192 | $ | 218 | $ | 2.71 | $ | 2.75 | $ | (0.04) |
(1)Market price for jet fuel at airport locations, including related taxes and transportation costs.
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.
Delta Air Lines, Inc. | June 2024 Form 10-Q 22
Item 2. MD&A - Non-Operating Results
Non-Operating Results
| Three Months Ended June 30, | Favorable (Unfavorable) | Six Months Ended June 30, | Favorable (Unfavorable) | |||||||||||||||||||||||
| (in millions) | 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||||
| Interest expense, net | $ | (188) | $ | (203) | $ | 15 | $ | (394) | $ | (430) | $ | 36 | ||||||||||||||
| Gain/(loss) on investments, net | (196) | 128 | (324) | (423) | 251 | (674) | ||||||||||||||||||||
| Loss on extinguishment of debt | (32) | (29) | (3) | (36) | (50) | 14 | ||||||||||||||||||||
| Miscellaneous, net | (78) | (70) | (8) | (133) | (174) | 41 | ||||||||||||||||||||
| Total non-operating expense, net | $ | (494) | $ | (174) | $ | (320) | $ | (986) | $ | (403) | $ | (583) |
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. We have continued to pay down our debt during the six months ended June 30, 2024 with $2.1 billion of payments on debt and finance lease obligations, including approximately $900 million of early repayments. This included early extinguishment of $744 million in principal related to a portion of the SkyMiles Term Loan and various secured and unsecured notes, and approximately $150 million on finance leases that were scheduled to be paid later in 2024. 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, charitable contributions, our share of our equity method investments' results and foreign exchange gains/(losses).
Income Taxes
We project our annual effective tax rate for 2024 will be between 24% and 26%. 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. | June 2024 Form 10-Q 23
Next: Item 2. MD&A - Refinery Segment