Item 2. MD&A - Refinery Segment

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Item 2. MD&A - Refinery Segment

Refinery Segment

The refinery operated by Monroe primarily produces gasoline, diesel and jet fuel. Monroe exchanges non-jet fuel products the refinery produces with third parties for jet fuel consumed in our airline operations. The jet fuel produced and procured through exchanging gasoline and diesel fuel produced by the refinery typically provides approximately 200,000 barrels per day, or approximately 75% of our consumption, for use in our airline operations. The refinery regularly optimizes its sales and exchange activities based on market conditions. The refinery generated a small operating loss in the six months ended June 30, 2025 compared to operating income in the six months ended June 30, 2024, primarily as a result of lower pricing of refined products.

For more information regarding the refinery's results, see Note 9 of the Notes to the Condensed Consolidated Financial Statements.

Refinery segment financial information
Three Months Ended June 30,Increase (Decrease)Six Months Ended June 30,Increase (Decrease)
(in millions, except per gallon data)2025202420252024
Exchanged products$186$361$(175)$527$798$(271)
Sales of refined products614615968610
Sales to airline segment332393(61)592780(188)
Third party refinery sales1,1411,251(110)2,2032,436(233)
Operating revenue$1,720$2,051$(331)$3,418$4,100$(682)
Operating (loss)/income$(10)$60$(70)$(10)$108$(118)
Refinery segment impact on airline average price per fuel gallon$0.01$(0.06)$0.07$0.01$(0.05)$0.06

Operating Statistics

Three Months Ended June 30,% Increase (Decrease)Six Months Ended June 30,% Increase (Decrease)
Consolidated**(1)**2025202420252024
Revenue passenger miles (in millions) ("RPM")66,41765,2412%122,095119,4482%
Available seat miles (in millions) ("ASM")77,64574,6564%146,045140,1984%
Passenger mile yield20.88¢21.22¢(2)%20.76¢20.91¢(1)%
Passenger revenue per available seat mile ("PRASM")17.86¢18.54¢(4)%17.36¢17.81¢(3)%
Total revenue per available seat mile ("TRASM")21.44¢22.31¢(4)%21.01¢21.69¢(3)%
TRASM, adjusted(2)19.97¢20.64¢(3)%19.50¢19.95¢(2)%
Cost per available seat mile ("CASM")18.73¢19.28¢(3)%19.18¢19.63¢(2)%
CASM-Ex(2)13.49¢13.14¢2.7%13.93¢13.58¢2.6%
Passenger load factor86%87%(1.8)pts84%85%(1.6)pts
Fuel gallons consumed (in millions)1,1121,0664%2,0881,9985%
Average price per fuel gallon(3)$2.21$2.64(16)%$2.33$2.71(14)%
Average price per fuel gallon, adjusted(2)(3)$2.26$2.64(14)%$2.35$2.69(13)%

(1)Includes the operations of our regional carriers under capacity purchase agreements.

(2)Non-GAAP financial measures defined and reconciled to TRASM, CASM and average fuel price per gallon, respectively, in "Supplemental Information" below.

(3)Includes the impact of fuel hedge activity and refinery segment results.

Delta Air Lines, Inc. | June 2025 Form 10-Q24

Item 2. MD&A - Fleet Information

Fleet Information

Our operating aircraft fleet, purchase commitments and options at June 30, 2025 are summarized in the following table.

Mainline aircraft information by fleet type
Current Fleet**(1)**Commitments
Fleet TypeOwnedFinance LeaseOperating LeaseTotalAverage Age (Years)PurchaseOptions
A220-10045——455.5
A220-30033——332.467
A319-10057——5723.3
A320-20050——5028.9
A321-200778421276.5
A321-200neo76——761.87970
A330-20011——1120.2
A330-30028—33116.4
A330-900neo2925362.8310
A350-90027—11385.0610
A350-1000—————20
B-717-200791—8023.8
B-737-800734—7723.8
B-737-900ER1196381639.5
B-737-10—————10030
B-757-20080——8027.0
B-757-30016——1622.4
B-767-300ER39——3928.8
B-767-400ER21——2124.5
Total860219998014.8275120

(1)Excludes certain aircraft we own or lease that are operated by regional carriers on our behalf shown in the table below.

The following table summarizes the aircraft operated by regional carriers on our behalf at June 30, 2025.

Regional aircraft information by fleet type and carrier
Fleet Type**(1)(2)**
CarrierCRJ-700CRJ-900Embraer 170Embraer 175Total
Endeavor Air, Inc.(3)17121——138
SkyWest Airlines, Inc.535—87127
Republic Airways, Inc.——114657
Total2215611133322

(1)We own 201 and have operating leases for two of these regional aircraft. The remainder are owned or leased by SkyWest Airlines, Inc. or Republic Airways, Inc.

(2)Excluded from the total operating count above are three owned CRJ-700 aircraft and one operating leased CRJ-900 aircraft which are temporarily parked as of June 30, 2025.

(3)Endeavor Air, Inc. is a wholly owned subsidiary of Delta.

Delta Air Lines, Inc. | June 2025 Form 10-Q25

Item 2. MD&A - Financial Condition and Liquidity

Financial Condition and Liquidity

As of June 30, 2025, we had $6.4 billion in cash, cash equivalents, short-term investments and aggregate undrawn principal amount available under our revolving credit facilities. We expect to meet our liquidity needs for the next twelve months with cash and cash equivalents and cash flows from operations. We expect to meet our long-term liquidity needs with cash flows from operations and financing arrangements.

Undrawn Lines of Credit. As of June 30, 2025, we had approximately $3.1 billion undrawn and available under our revolving credit facilities.

Sources and Uses of Liquidity

Operating Activities

We generated cash flows from operations of $4.2 billion and $4.9 billion in the six months ended June 30, 2025 and 2024. We expect to continue generating positive cash flows from operations during the remainder of 2025.

Our operating cash flow is impacted by the following factors:

Seasonality of Advance Ticket Sales. We sell tickets for air travel in advance of the customer's travel date. When we receive a cash payment at the time of sale, we record the cash received on advance sales as deferred revenue in air traffic liability. The air traffic liability typically increases during the winter and spring months as advance ticket sales grow prior to the summer peak travel season and decreases during the summer and fall months.

Fuel. Fuel expense represented approximately 17% and 20% of our total operating expense for the six months ended June 30, 2025 and 2024, respectively. The market price for jet fuel is volatile, which can impact the comparability of our periodic cash flows from operations. Fuel consumption was higher during the three and six months ended June 30, 2025 compared to the prior year period due to the increase in capacity. We expect that fuel consumption for the remainder of 2025 will increase compared to 2024 aligned with capacity, partially offset by improvements in the fuel efficiency from our new aircraft acquisitions.

Profit Sharing. We paid $1.4 billion in profit sharing payments in February 2025 related to our 2024 pre-tax profit in recognition of our employees' contributions toward achieving the year's financial results.

Our broad-based employee profit sharing program provides that for each year in which we have an annual pre-tax profit, as defined by the terms of the program, we will pay a specified portion of that profit to eligible employees. In determining the amount of profit sharing, the program defines profit as pre-tax profit adjusted for profit sharing and certain other items. During the six months ended June 30, 2025, we accrued $594 million in profit sharing expense based on the year-to-date performance and current expectations for 2025 profit.

Sale of Miles to Participating Companies. Customers earn miles based on their spending with participating companies such as credit card, retail, ridesharing, car rental and hotel companies with which we have marketing agreements to sell miles. Payments are typically due to us monthly based on the volume of miles sold during the period. Our most significant contract to sell miles relates to our co-brand credit card relationship with American Express. Total cash sales to American Express were $3.9 billion in the six months ended June 30, 2025, an increase of 9% compared to the prior year period. See Note 2 of the Notes to the Condensed Consolidated Financial Statements for further information regarding the cash sales from marketing agreements.

Delta Air Lines, Inc. | June 2025 Form 10-Q26

Item 2. MD&A - Financial Condition and Liquidity

Investing Activities

Capital Expenditures. Our capital expenditures were $2.4 billion and $2.5 billion for the six months ended June 30, 2025 and 2024, respectively. We have committed to future aircraft purchases and have obtained, but are under no obligation to use, long-term financing commitments for a substantial portion of the purchase price of the aircraft. Our expected 2025 capital spend of approximately $5.0 billion will be primarily for aircraft, including deliveries and advance deposit payments, as well as fleet modifications and technology enhancements.

Financing Activities

Debt and Finance Leases. In the six months ended June 30, 2025, we had cash outflows of $3.5 billion related to repayments of our debt and finance lease obligations. We continue to seek opportunities to pre-pay our debt, in addition to periodic amortization and scheduled maturities, 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 PSP1 Loan and for general corporate purposes.

In February 2025, Moody's credit rating agency upgraded its rating for Delta to Baa2, an investment grade rating.

See Note 5 of the Notes to the Condensed Consolidated Financial Statements for further information on our debt agreements.

Capital Return to Shareholders. On April 24, 2025, the Board of Directors approved a quarterly dividend of $0.15 per share which we paid on June 3, 2025 for total cash dividends of $97 million. Total cash dividends for the six months ended June 30, 2025 were $196 million.

On June 18, 2025, the Board of Directors approved a quarterly dividend of $0.1875 per share to shareholders of record as of July 31, 2025, which we will pay on August 21, 2025.

In the June 2025 quarter, the Board of Directors authorized a $1.0 billion opportunistic share repurchase program open through June 30, 2028. No shares were repurchased under this program in the June 2025 quarter.

Covenants. We were in compliance with the covenants in our debt agreements at June 30, 2025.

Critical Accounting Estimates

There have been no material changes in our Critical Accounting Estimates from the information provided in the "Critical Accounting Estimates" section of "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Form 10-K.

Delta Air Lines, Inc. | June 2025 Form 10-Q27

Item 2. MD&A - Supplemental Information

Supplemental Information

We sometimes use information (non-GAAP financial measures) that is derived from the Condensed Consolidated Financial Statements, but that is not presented in accordance with GAAP. Under the U.S. Securities and Exchange Commission rules, non-GAAP financial measures may be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for or superior to GAAP results.

Included below are reconciliations of non-GAAP measures used within this Form 10-Q to the most directly comparable GAAP financial measures. Reconciliations below may not calculate exactly due to rounding. These reconciliations include certain adjustments to GAAP measures to provide comparability between the reported periods, if applicable, and for the reasons indicated below:

*•*Third-party refinery sales. Refinery sales to third parties, and related expenses, are not related to our airline segment. Excluding these sales therefore provides a more meaningful comparison of our airline operations to the rest of the airline industry.

*•*MTM adjustments and settlements on hedges. Mark-to-market ("MTM") adjustments are defined as fair value changes recorded in periods other than the settlement period. Such fair value changes are not necessarily indicative of the actual settlement value of the underlying hedge in the contract settlement period, and therefore we remove this impact to allow investors to better understand and analyze our core performance. Settlements represent cash received or paid on hedge contracts settled during the applicable period.

  • Aircraft fuel and related taxes. The volatility in fuel prices impacts the comparability of year-over-year financial performance. The adjustment for aircraft fuel and related taxes allows investors to better understand and analyze our non-fuel costs and year-over-year financial performance.

  • Profit sharing. We adjust for profit sharing because this adjustment allows investors to better understand and analyze our recurring cost performance and provides a more meaningful comparison of our core operating costs to the airline industry.

Total revenue, adjusted reconciliation
Three Months Ended June 30,
(in millions)20252024
Total revenue$16,648$16,658
Adjusted for:
Third-party refinery sales(1,141)(1,251)
Total revenue, adjusted$15,507$15,407
Operating expense, adjusted reconciliation
Three Months Ended June 30,
(in millions)20252024
Operating expense$14,546$14,391
Adjusted for:
Third-party refinery sales(1,141)(1,251)
MTM adjustments and settlements on hedges54(1)
Operating expense, adjusted$13,458$13,138
Delta Air Lines, Inc. | June 2025 Form 10-Q28

Item 2. MD&A - Supplemental Information

Fuel expense, adjusted reconciliation
Average Price Per Gallon
Three Months Ended June 30,Three Months Ended June 30,
(in millions, except per gallon data)2025202420252024
Total fuel expense$2,458$2,813$2.21$2.64
Adjusted for:
MTM adjustments and settlements on hedges54(1)0.05—
Total fuel expense, adjusted$2,512$2,811$2.26$2.64
Average Price Per Gallon
Six Months Ended June 30,Six Months Ended June 30,
(in millions, except per gallon data)2025202420252024
Total fuel expense$4,869$5,410$2.33$2.71
Adjusted for:
MTM adjustments and settlements on hedges32(28)0.02(0.01)
Total fuel expense, adjusted$4,900$5,382$2.35$2.69
TRASM, adjusted reconciliation
Three Months Ended June 30,Six Months Ended June 30,
2025202420252024
TRASM (cents)21.44¢22.31¢21.01¢21.69¢
Adjusted for:
Third-party refinery sales(1.47)(1.68)(1.51)(1.74)
TRASM, adjusted19.97¢20.64¢19.50¢19.95¢
CASM-Ex reconciliation
Three Months Ended June 30,Six Months Ended June 30,
2025202420252024
CASM (cents)18.73¢19.28¢19.18¢19.63¢
Adjusted for:
Aircraft fuel and related taxes(3.17)(3.77)(3.33)(3.86)
Third-party refinery sales(1.47)(1.68)(1.51)(1.74)
Profit sharing(0.61)(0.70)(0.41)(0.46)
CASM-Ex13.49¢13.14¢13.93¢13.58¢
Delta Air Lines, Inc. | June 2025 Form 10-Q29

Item 2. MD&A - Supplemental Information

Free Cash Flow

The following table shows a reconciliation of net cash provided by operating and used in investing activities (GAAP measures) to free cash flow (a non-GAAP financial measure). We present free cash flow because management believes this metric is helpful to investors to evaluate the company's ability to generate cash that is available for use for debt service or general corporate initiatives. Adjustments include:

*•*Pension plan contributions. Cash flows related to pension funding are included in our GAAP operating activities. We adjust to exclude these contributions to allow investors to understand the cash flows related to our core operations.

*•*Net cash flows related to certain airport construction projects and other. Cash flows related to certain airport construction projects are included in our GAAP operating activities and capital expenditures. We have adjusted for these items because management believes investors should be informed that a portion of these capital expenditures from airport construction projects are either reimbursed by a third party or funded with restricted cash specific to these projects.

Free cash flow reconciliation
(in millions)Three Months Ended June 30, 2025
Net cash provided by operating activities$1,856
Net cash used in investing activities(1,199)
Adjusted for:
Pension plan contributions47
Net cash flows related to certain airport construction projects and other28
Free cash flow$733
Delta Air Lines, Inc. | June 2025 Form 10-Q30

Item 3. Market Risk

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