CPNG 6. Income Taxes

Our valuation allowances were $82 million and $1.1 billion as of December 31, 2023 and 2022, respectively. The valuation allowance at December 31, 2022 was primarily related to our Korea net operating loss carryforwards that, in our judgment, were not more likely than not to be realized. During 2023, we continued to see improved and sustained profitability in Korea, which represents objective positive evidence for the realizability of certain deferred tax assets. As such, based on our analysis of the positive and negative evidence in each tax jurisdiction, during 2023 we released the valuation allowance primarily related to the Korea net operating loss deferred tax assets. The release of the valuation allowance in 2023 resulted in an increase to the carrying value of deferred tax assets on the balance sheet and a benefit to our provision for income taxes of $905 million. Changes in the valuation allowances were as follows: (in millions)####2023####2022####2021 Beginning balance, January 1##$##(1,085)##$##(1,284)##$##(975) Changes to existing valuation allowances####140####103####(393) Derecognition of valuation allowances####905####41####— Changes in foreign exchange rates, statutory rates and other####(42)####55####84 Ending balance, December 31##$##(82)##$##(1,085)##$##(1,284)


CPNG 6. Income Taxes

As of December 31, 2023, we have net operating loss carryforwards for corporate income tax purposes of $2.6 billion which are available to offset future corporate taxable income, if any. The net operating loss carryforwards in Korea expire as follows: (in millions)####Korea 2026####14 2027####506 2028####819 2029####128 2035 - 2037####899 Total net operating loss carryforwards##$##2,366


CPNG 6. Income Taxes

At December 31, 2023, we had $255 million of net operating loss carryforwards in other jurisdictions, including Taiwan, Japan and China which begin to expire in 2026. Coupang, Inc.##2023 Form 10-K##75


CPNG 6. Income Taxes

We have corporate tax credit carryforwards of $67 million in the US which are available to reduce future corporate regular income taxes and $49 million of which expires between 2037 and 2043.


CPNG 6. Income Taxes

We did not have any material uncertain tax positions as of December 31, 2023 and 2022.


CPNG 6. Income Taxes

The open tax years for our major tax jurisdictions are 2019 - 2023 for the United States and 2018 - 2023 for Korea.


CPNG 7. Earnings per Share

The following table presents the calculation of basic and diluted earnings per share: (in millions, except per share amounts)####2023####2022####2021 Numerator############ Net income (loss)##$##1,360##$##(92)##$##(1,543) Denominator############ Weighted-average shares used in computing net income (loss) per share attributable to Class A and Class B common stockholders:############ Basic####1,782####1,765####1,424 Dilutive effect of equity compensation awards####21####—####— Diluted####1,803####1,765####1,424 Earnings per share:############ Basic##$##0.76##$##(0.05)##$##(1.08) Diluted##$##0.75##$##(0.05)##$##(1.08) Anti-dilutive shares####3####24####46


CPNG 8. Fair Value Measurement

Fair value represents the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements are reported in one of three levels reflecting the significant inputs used to determine fair value.


CPNG 8. Fair Value Measurement

The following summarizes our financial assets and financial liabilities that are measured at fair value on a recurring basis: (in millions of US dollars)##Classification##Measurement Level####December 31, 2023####December 31, 2022 Financial assets############ Money market trust##Cash and cash equivalents##Level 1##$##1,582##$##390 Money market fund##Cash and cash equivalents##Level 1##$##1,205##$##— Money market trust##Restricted cash##Level 1##$##86##$##77


CPNG 8. Fair Value Measurement

Our long-term debt is recorded at amortized cost. The fair value is estimated using Level 2 inputs based on our current interest rates for similar types of borrowing arrangements. The carrying amount of the long-term debt approximates its fair value as of December 31, 2023 and 2022, due primarily to the interest rates approximating market interest rates. Coupang, Inc.##2023 Form 10-K##76


CPNG 9. Property and Equipment, net (1)Lesser of useful life or remaining lease term

The following summarizes our property and equipment, net: (in millions)##Useful Life####December 31, 2023####December 31, 2022 Land####$##323##$##296 Buildings##40 years####751####302 Equipment and furniture##1 - 8 years####914####648 Leasehold improvements##(1)####662####525 Vehicles##4 - 6 years####79####134 Software##4 years####26####26 Construction in progress######347####428 Property and equipment, gross####$##3,102##$##2,359 Less: Accumulated depreciation and amortization######(637)####(539) Property and equipment, net####$##2,465##$##1,820


For 2023, 2022, and 2021, depreciation and amortization expense on property and equipment was $271 million, $229 million, and $200 million, respectively.


Property and equipment under construction, which primarily consists of fulfillment centers and deposits for equipment, is recorded as construction in progress until it is ready for its intended use; thereafter, it is transferred to the related class of property and equipment and depreciated over its estimated useful life.


CPNG 10. Leases

We are obligated under operating leases primarily for vehicles, equipment, warehouses, and facilities that expire over the next ten years. These leases can contain renewal options. Because we are not reasonably certain to exercise these renewal options, or the renewal options are not solely within our discretion, the options are not considered in determining the lease term, and the associated potential option payments are excluded from expected minimum lease payments. Our leases generally do not include termination options for either party or restrictive financial or other covenants.


CPNG 10. Leases

Our finance leases as of December 31, 2023 and 2022 were not material and are included in property and equipment, net, on our consolidated balance sheets.


CPNG 10. Leases

The components of operating lease cost were as follows: (in millions)####2023####2022####2021 Operating lease cost##$##457##$##410##$##341 Variable and short-term lease cost####42####40####38 Total operating lease cost##$##499##$##450##$##379


CPNG 10. Leases

Supplemental disclosure of cash flow information related to operating leases were as follows: (in millions)####2023####2022####2021 Cash paid for the amount used to measure the operating lease liabilities##$##445##$##367##$##288 Operating lease assets obtained in exchange for lease obligations##$##428##$##426##$##599 Net increase to operating lease ROU assets resulting from remeasurements of lease obligations##$##133##$##8##$##109


CPNG 10. Leases

Amounts disclosed for ROU assets obtained in exchange for lease obligations include amounts added to the carrying amount of ROU assets resulting from lease modifications and reassessments, and new leases. Coupang, Inc.##2023 Form 10-K##77


CPNG 10. Leases

The assumptions used to value operating leases for the periods presented were as follows: ##December 31, 2023####December 31, 2022## Weighted-average remaining lease term##5.7 years####5.7 years## Weighted-average discount rate##7.77##%##6.76##%


CPNG 10. Leases

As of December 31, 2023, we had entered into operating leases that have not commenced with future minimum lease payments of $355 million, that have not been recognized on our consolidated balance sheets. These leases have non-cancellable lease terms of 1 to 10 years.


CPNG Supplemental Disclosure of Cash Flow Information

(in millions)####2023####2022####2021 Supplemental disclosure of cash-flow information############ Cash paid for income taxes, net of refunds##$##110##$##6##$##3 Cash paid for interest##$##31##$##19##$##21 Non-cash investing and financing activities############ Increase (decrease) in property and equipment-related accounts payable##$##23##$##(68)##$##45 Conversion of common units into Class A and Class B common stock##$##—##$##—##$##87 Conversion of redeemable convertible preferred units into Class A and Class B common stock##$##—##$##—##$##3,466 Conversion of convertible notes into Class A common stock##$##—##$##—##$##610


The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown within the consolidated statements of cash flows. ########December 31,#### (in millions)####2023####2022####2021 Current assets############ Cash and cash equivalents##$##5,243##$##3,509##$##3,488 Restricted cash####353####176####320 Noncurrent assets############ Restricted cash included in long-term leasehold deposits and other####1####2####2 Total cash, cash equivalents and restricted cash##$##5,597##$##3,687##$##3,810


CPNG Supplier Financing Arrangements

We have agreements with third-party financial institutions to facilitate participating vendors’ and suppliers’ ability to settle payment obligations from us to designated third-party financial institutions. Participating vendors and suppliers may, at their sole discretion, settle obligations prior to their scheduled due dates at a discounted price to the participating financial institutions. The invoices that have been confirmed as valid under the program require payment, in full, based on the original standard invoice terms. Confirmed invoices owed to financial institutions under these programs are included within accounts payable and were $459 million and $337 million as of December 31, 2023 and 2022, respectively. Coupang or the financial institutions may terminate the agreement upon given notice. Coupang, Inc.##2023 Form 10-K##78


CPNG Short-Term Borrowings

Details of carrying amounts of short-term borrowings were as follows: (in millions)##########Borrowing Limit####December 31, 2023## Maturity Date####Interest rate (%)############ September 2024####(1)####$##23##$##—## January 2024 - December 2024##2.10##–##5.70####283####282## Total principal short-term borrowings########$##306##$##282## Less: unamortized discounts##############—## Total short-term borrowings############$##282## Weighted-average interest rates##############3.49##%


CPNG Short-Term Borrowings

(1)The interest rate is based on an average of AAA rated financial bonds rate in Korea plus 1.35%.


CPNG Short-Term Borrowings

Our short-term borrowings generally include lines of credit and loan facilities with financial institutions to be drawn upon for general operating purposes.


CPNG Long-Term Debt

Details of carrying amounts of long-term debt were as follows: (in millions)##Maturity Date##########Borrowing Limit####December 31, 2023 Description######Interest rate (%)########## Revolving Credit Facility##Feb 2024####(2)####$##1,000##$##— Revolving Credit Agreement##Nov 2024####CD interest rate (91 days) + 2.30######124####— August 2021 Term Loan(1)##Aug 2024####3.16######155####155 April 2023 Term Loan(1)##Apr 2026####6.76######178####178 March 2022 Term Loan(1)##Mar 2027####4.26######310####310 Other Term Loan Facilities(1)##Aug 2024 - Nov 2026##3.68##-##6.00####92####92 Total principal long-term debt##########$##1,859##$##735 Less: current portion of long-term debt################(203) Less: unamortized discounts################(3) Total long-term debt##############$##529


CPNG Long-Term Debt

(1)At December 31, 2023, we had pledged up to $882 million of land and buildings as collateral against long-term loan facilities.


CPNG Long-Term Debt

(2)Borrowings under the 2021 revolving credit facility bear interest, at our option, at a rate per annum equal to (i) a base rate equal to the highest of (A) the prime rate, (B) the higher of the federal funds rate or a composite overnight bank borrowing rate plus 0.50%, or (C) an adjusted Term Secured Overnight Financing Rate (SOFR) for a one-month interest period plus 1.00% or (ii) an adjusted Term SOFR plus a margin equal to 1.00%.


CPNG Revolving Credit Agreement

In October 2022, we entered into a two-year Revolving Credit Agreement with a borrowing limit of $124 million that bears interest at the average of 91-day CD interest rate plus 2.30%. The Revolving Credit Agreement is secured by $508 million of inventories.


CPNG Revolving Credit Facility

In January 2024, our senior unsecured credit facility (“the Revolving Credit Facility”) was amended to extend the maturity date to February 2026 and to bring the aggregate principal amount to $875 million. The Revolving Credit Facility continues to provide us the right to request incremental commitments up to $1.25 billion, subject to customary conditions.


CPNG Revolving Credit Facility

The Revolving Credit Facility contains customary affirmative and negative covenants, including certain financial covenants. The Revolving Credit Facility is guaranteed on a senior unsecured basis by all our material restricted subsidiaries, subject to customary exceptions. Coupang, Inc.##2023 Form 10-K##79


CPNG Revolving Credit Facility

The Revolving Credit Facility and Revolving Credit Agreement both contain financial covenants that require us to maintain certain maximum net leverage ratios and minimum liquidity amounts.


CPNG Term Loan Facility Agreements

In April 2023, we entered into a new three-year term loan facility agreement to borrow $178 million to finance the purchase of a fulfillment center and land. We pledged up to $214 million of certain land and buildings as collateral. The loan bears interest at a fixed rate of 6.76%.


CPNG Term Loan Facility Agreements

We were in compliance with the covenants for each of our borrowings and debt agreements as of December 31, 2023 and 2022.


CPNG Term Loan Facility Agreements

Future principal payments for long-term debt as of December 31, 2023 were as follows: (in millions)####Long-term debt 2024##$##203 2025####— 2026####222 2027####310 2028####— Thereafter####— Total##$##735


CPNG Commitments

The following summarizes our minimum contractual commitments as of December 31, 2023: (in millions)####Unconditional purchase obligations (unrecognized)####Long-term debt (including interest)####Operating leases####Total 2024##$##298##$##239##$##506##$##1,043 2025####249####27####430####706 2026####197####243####329####769 2027####188####313####266####767 2028####101####—####215####316 Thereafter####97####—####499####596 Total undiscounted payments##$##1,130##$##822##$##2,245##$##4,197 Less: lease imputed interest############(472)#### Total lease commitments##########$##1,773####


CPNG Commitments

Unconditional purchase obligations include legally binding contracts with terms in excess of one year that are not reflected on the consolidated balance sheets. These contractual commitments primarily relate to the purchases of technology related services, fulfillment center construction contracts, and software licenses. For contracts with variable terms, we do not estimate the total obligation beyond any minimum pricing as of the reporting date.


CPNG Legal Matters

From time to time, we may become party to litigation incidents and other legal proceedings, including regulatory proceedings, in the ordinary course of business. We assess the likelihood of any adverse judgments or outcomes with respect to these matters and determines loss contingency assessments on a gross basis after assessing the probability of incurrence of a loss and whether a loss is reasonably estimable. In addition, we consider other relevant factors that could impact our ability to reasonably estimate a loss. A determination of the amount of reserves required, if any, for these contingencies is made after analyzing each matter. Our reserves may change in the future due to new developments or changes in strategy in handling these matters. Although the results of litigation and claims cannot be predicted with certainty, we currently believe that the final outcome of currently pending legal matters will not have a material adverse effect on our business, consolidated financial position, results of operations, or cash flows. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources, and other factors. Coupang, Inc.##2023 Form 10-K##80


CPNG Litigation

On August 26, 2022, a putative class action was filed on behalf of all purchasers of Coupang Class A common stock pursuant and/or traceable to Coupang’s registration statement issued in connection with our initial public offering. Choi v. Coupang, Inc et al was brought against Coupang, Inc., and certain of its former and current directors, current officers, and certain underwriters of the offering. The action was filed in the United States District Court for the Southern District of New York alleging inaccurate and misleading or omitted statements of material fact in Coupang's Registration Statement in violation of Sections 11, 12, and 15 of the Securities Act of 1933. The action was amended on May 22, 2023, and added allegations of securities fraud under Sections 10 and 20 of the Securities Exchange Act of 1934. The action seeks unspecified compensatory damages, attorneys’ fees, and reasonable costs and expenses. Between August and December 2023, three separate stockholders’ derivative actions were filed in the United States District Court for the Southern District of New York against certain of Coupang’s former and current directors and current officers. Coupang was named as a nominal defendant in the actions. These derivative actions purport to assert claims on behalf of Coupang and make substantially similar factual allegations to Choi v. Coupang, Inc. et al, bringing claims for, among other things, breach of fiduciary duty, unjust enrichment, and violations of securities laws. The actions seek compensatory damages, governance reforms, and other relief. We believe all the aforementioned actions are without merit and intend to vigorously defend against the aforementioned actions. A reasonable estimate of the amount of any possible loss or range of loss cannot be made at this time. Accordingly, we can provide no assurance as to the scope and outcome of this matter and no assurance as to whether our business, financial position, results of operations or cash flows will not be materially adversely affected.


CPNG Korean Fair Trade Commission Investigations

On June 28, 2021, the Korean Fair Trade Commission (“KFTC”) initiated an investigation into a potential violation of the Monopoly Regulation and Fair Trade Act, including alleged preferential treatments of private labelled products provided by our subsidiary, Coupang Private Label Business. The KFTC is also investigating us on other matters related to the alleged violations of certain KFTC regulations. We are diligently cooperating with these investigations, and actively defending our practices as appropriate.


Under Korean law, the issues addressed in the investigations can be resolved through civil, administrative, or criminal proceedings. The ultimate case resolution could include fines, orders to alter our processes or procedures, and criminal investigations or charges against individuals or us. We cannot reasonably estimate any penalties, loss or range of loss that may arise from the various KFTC Investigations. Accordingly, we can provide no assurance as to the scope and outcome of these matters and no assurance as to whether our business, financial position, results of operations or cash flows will not be materially adversely affected.


CPNG 14. Stockholders' Equity

Our certificate of incorporation provides for two classes of common stock, and authorizes shares of undesignated preferred stock, the rights, preferences, and privileges of which may be designated from time to time by our board of directors. Our authorized capital stock consists of 10 billion shares of Class A common stock, par value $0.0001 per share; 250 million shares of Class B common stock, par value $0.0001 per share; and 2 billion shares of undesignated preferred stock, par value $0.0001 per share. No preferred stock was issued and outstanding as of December 31, 2023 and 2022.


CPNG 14. Stockholders' Equity

The shares of Class A common stock and Class B common stock are identical, except with respect to voting, conversion, and transfer rights. Each share of Class A common stock is entitled to one vote. Each share of Class B common stock is entitled to twenty-nine votes. In addition, each share of our Class B common stock will convert automatically into one share of our Class A common stock upon any transfer, whether or not for value, except certain transfers to entities, to the extent the transferor retains sole dispositive power and exclusive voting control with respect to the shares of Class B common stock.


CPNG 14. Stockholders' Equity

In connection with our IPO in March 2021, the principal balance and accrued interest on our previously issued convertible notes were automatically converted into 171,750,446 shares of our Class A common stock.


CPNG Accumulated Other Comprehensive Income (Loss)

Accumulated other comprehensive (loss) income includes all changes in equity during a period that have yet to be recognized in income. The major components are foreign currency translation adjustments and actuarial gains (losses) on our defined severance benefits. As of December 31, 2023 and 2022, the ending balance in accumulated other comprehensive income (loss) related to foreign currency translation adjustments was $43 million and $45 million, respectively, and the amount related to actuarial losses on defined severance benefits was $(61) million and $(43) million, respectively.


CPNG 15. Subsequent Event - Farfetch Acquisition

On December 18, 2023, we announced our pending acquisition of Farfetch, a leading global marketplace for the luxury fashion industry, which included a $500 million bridge loan to Farfetch and certain of its direct or indirect subsidiaries.


We established a limited partnership for the purposes of providing the bridge loan and acquiring all of the business and assets of Farfetch. The limited partnership is owned 80.1% by Coupang, Inc and 19.9% by certain funds advised or managed by Greenoaks Coupang, Inc.##2023 Form 10-K##81


Capital Partners, LLC (“Greenoaks”), a related party. The limited partnership is included in the Company’s consolidated operating results as of December 31, 2023.


As of December 31, 2023, $75 million was outstanding under the bridge loan. In January 2024, an additional $75 million was advanced under the bridge loan. Financings under the bridge loan, as well as capital contributions, are provided by the partners in accordance with their ownership percentages.


On January 30, 2024, we completed our acquisition and at closing the limited partnership provided additional cash funding to Farfetch of $150 million. Additionally, the $150 million previously provided under the bridge loan was contributed towards the Farfetch Acquisition. The limited partnership is further obligated to fund up to $200 million within twelve months of the acquisition date.


As part of the Farfetch Acquisition, a subsidiary of the limited partnership assumed Farfetch’s then outstanding syndicated Term Loans of $633 million, inclusive of fees incurred, under their Credit Agreement with certain banks and financial institutions. The Term Loans are due and payable on October 20, 2027, with early repayment permitted. Repayment of the Term Loans is due in quarterly installments of 0.25%. The Term Loans bear interest at a rate equal to SOFR plus 6.25% per annum. The Term Loans are not guaranteed by Coupang, Inc or the limited partnership.


Mr. Neil Mehta, a member of the Company’s Board of Directors, has served as a Managing Partner of Greenoaks since April 2012. Greenoaks and certain funds and accounts to which Greenoaks serves as the investment adviser and related persons or entities, including Mr. Mehta, have ownership in our Class A common stock.


Due to the timing of the acquisition, the initial accounting for the business combination is incomplete. As such, we are not able to disclose certain information relating to the acquisition, including the preliminary fair value of assets acquired and liabilities assumed. We expect to complete the initial accounting for the acquisition during the first quarter of 2024.


CPNG Redeemable Noncontrolling Interests

Greenoaks’ 19.9% equity interest in the limited partnership is subject to a put/call option after the acquisition was completed, whereby their equity interest can be purchased at either parties’ option after seven years has elapsed and no initial public offering of the acquired Farfetch assets has taken place. The put/call option is to be calculated based on market value of the Farfetch business at the time of exercise. As of December 31, 2023, we recognized a redeemable noncontrolling interest of $15 million for Greenoaks’ equity interest in the limited partnership. In January 2024, Greenoaks contributed a further $45 million in connection with the bridge loan and acquisition of Farfetch, which we recognized as additional redeemable noncontrolling interest. Coupang, Inc.##2023 Form 10-K##82


Changes in and Disagreements with Accountants on Accounting and Financial Disclosure


None.


CPNG Evaluation of Disclosure Controls and Procedures

As of December 31, 2023, our disclosure controls and procedures were evaluated, under the supervision and with the participation of our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), to assess whether they are effective in providing reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934, as amended, is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure and to provide reasonable assurance that such information is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.


Based on this evaluation, our CEO and CFO have concluded that, as of December 31, 2023, our disclosure controls and procedures were effective at a reasonable assurance level.


CPNG Management’s Annual Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act). Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.


Under the supervision and with the participation of our management, including our CEO and CFO, we conducted an evaluation of the effectiveness of our internal control over financial reporting using criteria described in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).


Based on our evaluation, our management concluded that our internal control over financial reporting was effective as of December 31, 2023 based on the criteria in Internal Control – Integrated Framework (2013).


The effectiveness of our internal control over financial reporting as of December 31, 2023 has been audited by Samil PricewaterhouseCoopers, an independent registered public accounting firm, as stated in their report which is included in Item 8 of this Annual Report on Form 10-K.


CPNG Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting identified in connection with the evaluation required by Rules 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the quarter ended December 31, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.


CPNG Limitations on Effectiveness of Controls and Procedures

Our management, including our CEO and CFO, does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected.


CPNG b) Trading Plans

During the quarter ended December 31, 2023, no director or Section 16 officer adopted or terminated any Rule 10b5-1 trading arrangements or non-Rule 10b5-1 trading arrangements.


CPNG Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable. Coupang, Inc.##2023 Form 10-K##83


CPNG Directors, Executive Officers and Corporate Governance

The information required by this item, including information about our Directors, Executive Officers and Audit Committee and Code of Business Conduct and Ethics, is incorporated by reference to the definitive Proxy Statement for our 2024 Annual Meeting of Stockholders, which will be filed with the SEC, no later than 120 days after December 31, 2023. To the extent permissible under applicable rules, we intend to disclose amendments to our Code of Business Conduct and Ethics, as well as waivers of the provisions thereof granted to executive officers and directors, on our investor relations website under the heading “Corporate Governance” at www.ir.aboutcoupang.com.


CPNG Executive Compensation

The information required by this item is incorporated by reference to the definitive Proxy Statement for our 2024 Annual Meeting of Stockholders, which will be filed with the SEC no later than 120 days after December 31, 2023.


CPNG Executive Compensation

Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters


CPNG Executive Compensation


CPNG Certain Relationships and Related Transactions, and Director Independence


CPNG Principal Accountant Fees and Services

Our independent registered public accounting firm is Samil PricewaterhouseCoopers, Seoul, Republic of Korea (PCAOB ID: 1103).


The information required by this item is incorporated by reference to the definitive Proxy Statement for our 2024 Annual Meeting of Stockholders, which will be filed with the SEC no later than 120 days after December 31, 2023. Coupang, Inc.##2023 Form 10-K##84


CPNG Exhibits and Financial Statement Schedules

a) Documents filed as part of this report: 1) Financial Statements (Item 8);


2) Financial Statement Schedules. Financial Statement Schedules of the Company, as required for 2023, 2022, and 2021, consist of Schedule I - Condensed Financial Information of Coupang, Inc. Schedules not included are omitted because of the absence of conditions under which they are required or because the required information is provided in the consolidated financial statements, including the notes thereto. Exhibit Number##Description of Exhibit##Provided Herewith######Incorporated by Reference#### ######Form##File No.####Exhibit##Filing Date 3.1##Certificate of Incorporation of the Registrant.####10-Q##001-40115####3.1##November 12, 2021 3.2##Bylaws of the Registrant.####10-Q##001-40115####3.2##November 12, 2021 4.1##Sixth Amended and Restated Registration Rights Agreement, by and among the Registrant and certain of its stockholders, dated December 21, 2018.####S-1##333-253030####4.1##February 12, 2020 4.2##Description of Securities.####10-K##001-40115####4.2##March 3, 2022 10.1##Form of Indemnification Agreement between the Registrant and each of its directors and executive officers.####S-1##333-253030####10.1##February 12, 2020 10.2+##Coupang, LLC Third Amended and Restated 2011 Equity Incentive Plan, as amended, and related form agreements.####S-8##333-254117####99.1##March 11, 2021 10.3+##Coupang, Inc. 2021 Equity Incentive Plan.####10-K##001-40115####10.5##March 1, 2023 10.4+##Amended and Restated Executive Severance Policy.##X########## 10.5+##Employment Agreement, by and between the Registrant and Bom Kim.####10-Q##001-40115####10.6##May 13, 2021 10.6+##Employment Agreement, by and between the Registrant and Gaurav Anand.####10-Q##001-40115####10.7##May 13, 2021 10.7+##Employment Agreement, by and between the Registrant and Hanseung Kang.####10-Q##001-40115####10.8##May 13, 2021 10.8+##Employment Agreement, by and between the Registrant and Harold Rogers.####10-Q##001-40115####10.11##May 13, 2021 10.9+##Employment Agreement, by and between the Registrant and Pranam Kolari.##X########## 10.10##Revolving Credit and Guaranty Agreement, dated as of February 27, 2021, among Coupang, Inc. as Borrower, the guarantors party thereto, the lenders and issuing banks party thereto and JPMorgan Chase Bank, N.A., as administrative agent.####10-Q##001-40115####10.12##May 13, 2021 10.11##First Amendment to Revolving Credit and Guaranty Agreement, dated as of August 3, 2021, among the Registrant, as Borrower, the guarantors party thereto, the lenders and issuing banks party thereto and JPMorgan Chase Bank, N.A., as administrative agent.####10-K##001-40115####10.12##March 3, 2022 Coupang, Inc.##2023 Form 10-K##85 10.12##Second Amendment to Revolving Credit and Guaranty Agreement, dated as of December 2, 2021, among the Registrant, as Borrower, the guarantors party thereto, the lenders and issuing banks party thereto and JPMorgan Chase Bank, N.A., as administrative agent.####10-K##001-40115##10.13##March 3, 2022 10.13##Third Amendment to Revolving Credit and Guaranty Agreement, dated as of March 1, 2022, among the Registrant, as Borrower, the guarantors party thereto, the lenders and issuing banks party thereto and JPMorgan Chase Bank, N.A., as administrative agent.####10-K##001-40115##10.15##March 3, 2022 10.14##Fourth Amendment to Revolving Credit and Guaranty Agreement, dated as of June 29, 2023, among the Registrant, the guarantors party thereto, the lenders and issuing banks party thereto and JPMorgan Chase Bank, N.A.####10-Q##001-40115##10.2##August 9, 2023 10.15##Fifth Amendment to Revolving Credit and Guaranty Agreement, dated as of January 29, 2024, by and among Coupang, Inc., as borrower, the guarantors party thereto, the lenders and issuing banks party thereto and JPMorgan Chase Bank, N.A., as administrative agent.####8-K##001-40115##10.1##February 1, 2024 10.16+##Form of Non-Employee Director Compensation Policy.####10-Q##001-40115##10.1##August 9, 2023 10.17+##Form of Annual RSU Award Notice & Agreement for Non-Employee Directors.####10-Q##001-40115##10.1##August 11, 2022 10.18+##Form of RSU Award Notice & Agreement for Executives.####10-Q##001-40115##10.2##May 12, 2022 10.19+##Form of PSU Award Notice & Agreement for Executives.####10-Q##001-40115##10.3##May 12, 2022 10.20+##Employment Agreement by and between the Company and Tae Jung Kim.####10-Q##001-40115##10.1##May 10, 2023 10.21##Sale and Purchase Agreement by and between Farfetch Holdings PLC, The Administrators, and Surpique Acquisition Limited dated as of January 30, 2024.##X######## 10.22##Farfetch Holdings PLC Fifth Amendment to Credit Agreement, Accession and Fee Agreement dated as of January 30, 2024##X######## 21.1##List of Significant Subsidiaries of the Registrant.##X######## 23.1##Consent of Samil PricewaterhouseCoopers, independent registered public accounting firm.##X######## 31.1##Chief Executive Officer Section 302 Certification##X######## 31.2##Chief Financial Officer Section 302 Certification##X######## 32.1*##Chief Executive Officer Section 906 Certification##X######## 32.2*##Chief Financial Officer Section 906 Certification##X######## 97.0##Coupang, Inc. Recoupment (Clawback) Policy##X######## 101.INS##XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.########## 101.SCH##XBRL Taxonomy Extension Schema Document.########## 101.CAL##XBRL Taxonomy Extension Calculation Linkbase Document.########## Coupang, Inc.##2023 Form 10-K##86 101.DEF##XBRL Taxonomy Extension Definition Linkbase Document. 101.LAB##XBRL Taxonomy Extension Labels Linkbase Document. 101.PRE##XBRL Taxonomy Extension Presentation Linkbase Document. 104##Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)


CPNG + Indicates management contract or compensatory plan

* The certifications attached as Exhibit 32.1 and 32.2 that accompany this Annual Report on Form 10-K are deemed furnished and not filed with the Securities and Exchange Commission and are not to be incorporated by reference into any filing of Coupang, Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Annual Report on Form 10-K, irrespective of any general incorporation language contained in such filing. Coupang, Inc.##2023 Form 10-K##87


COUPANG, INC.


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

(in millions)####2023####2022####2021 Management service fee revenues##$##18##$##17##$##17 Operating cost and expenses####(400)####(324)####(349) Interest expense####(2)####(2)####(22) Other income, net####84####28####2 Loss before equity in earnings (losses) of subsidiaries####(300)####(281)####(352) Equity in earnings (losses) of subsidiaries####1,783####189####(1,191) Income (loss) before taxes####1,483####(92)####(1,543) Income tax expense####123####—####— Net income (loss)##$##1,360##$##(92)##$##(1,543) Other comprehensive income (loss):############ Foreign currency translation adjustments, net of tax####(2)####9####41 Actuarial (loss) gain on defined severance benefits, net of tax####(18)####41####(57) Total other comprehensive (loss) income####(20)####50####(16) Comprehensive income (loss)##$##1,340##$##(42)##$##(1,559)


See accompanying notes to condensed financial statements. Coupang, Inc.##2023 Form 10-K##88


CPNG Condensed Balance Sheets

(in millions)####December 31, 2023####December 31, 2022 Assets######## Cash and cash equivalents##$##1,592##$##1,595 Restricted cash####79####57 Other current assets####20####10 Total current assets####1,691####1,662 Other assets####12####1 Investment in subsidiaries####2,438####763 Total assets##$##4,141##$##2,426 Liabilities and stockholders' equity######## Other current liabilities##$##42##$##12 Total current liabilities####42####12 Other liabilities####10####— Total liabilities####52####12 Stockholders' equity######## Common stock####—####— Additional paid-in capital####8,489####8,154 Accumulated other comprehensive (loss) income####(17)####3 Accumulated deficit####(4,383)####(5,743) Total stockholders' equity####4,089####2,414 Total liabilities and stockholders' equity##$##4,141##$##2,426


CPNG Condensed Balance Sheets

See accompanying notes to condensed financial statements. Coupang, Inc.##2023 Form 10-K##89


CPNG Condensed Balance Sheets

COUPANG, INC.


CPNG Condensed Statements of Cash Flows

(in millions)####2023####2022####2021 Operating activities############ Net cash provided by (used in) operating activities##$##95##$##(79)##$##(58) Investing activities############ Capital contribution to subsidiaries####(121)####(725)####(1,274) Return of capital contribution from subsidiaries####61####80####204 Increase of short-term loans####(25)####—####— Net cash used in investing activities####(85)####(645)####(1,070) Financing activities############ Proceeds from issuance of common units and preferred units, net of issuance costs####—####—####3,431 Deferred offering costs paid####—####—####(12) Proceeds from issuance of common stock/units, equity-based compensation plan####9####18####62 Other, net####—####—####(1) Net cash provided by financing activities####9####18####3,480 Cash and cash equivalents############ Net increase (decrease) in cash and cash equivalents####19####(706)####2,352 Cash and cash equivalents as of beginning of the period####1,652####2,358####6 Cash and cash equivalents as of end of the period##$##1,671##$##1,652##$##2,358


CPNG Condensed Statements of Cash Flows

See accompanying notes to condensed financial statements. Coupang, Inc.##2023 Form 10-K##90


CPNG Condensed Statements of Cash Flows

Coupang, Inc.


CPNG 1.Basis of Presentation

These condensed Parent company-only financial statements have been derived from its consolidated financial statements and should be read in conjunction with the consolidated financial statements and notes thereto of Coupang, Inc. and subsidiaries included in Part II, Item 8 of this Form 10-K. The Parent’s significant accounting policies are consistent with those described in Note 1 — "Description of Business and Summary of Significant Accounting Policies" in Part II, Item 8, except that all subsidiaries are accounted for as equity method investments.


CPNG 1.Basis of Presentation

Certain subsidiaries in Korea hold various licenses and/or are regulated by governmental requirements. As a result, the ability of these subsidiaries to pay dividends or loan money to our Parent company is restricted due to terms which require the subsidiaries to meet certain financial covenants, including maintaining a positive net equity balance; having a minimum percentage of its total assets in low-risk, cash-like assets; and maintaining a minimum current asset to current liability ratio. In addition, the Parent has certain regulatory restrictions that only allow dividend payments to be made while maintaining a positive net equity balance or if dividends are paid out of the current years' income, if any.


CPNG 2.Debt

The Parent has a $875 million unsecured credit facility (the “Revolving Credit Facility”) as further described in Note 12 — "Short-Term Borrowings and Long-Term Debt" which was amended to extend the term to February 2026. As of December 31, 2023, there was no balance outstanding on the Revolving Credit Facility.


CPNG 2.Debt

The Parent is the guarantor for certain debt issued by its subsidiaries and has pledged $79 million classified within restricted cash related to such debts. Coupang, Inc.##2023 Form 10-K##91


CPNG Form 10-K Summary

None. Coupang, Inc.##2023 Form 10-K##92


CPNG SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ##COUPANG, INC.## By:####/s/ Bom Kim ####Bom Kim ####Chief Executive Officer and Chairman of the Board


CPNG Dated: February 28, 2024

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Signature##Title##Date /s/ Bom Kim##Chief Executive Officer and Chairman of the Board##February 28, 2024 Bom Kim##(Principal Executive Officer)## /s/ Gaurav Anand##Chief Financial Officer##February 28, 2024 Gaurav Anand##(Principal Financial Officer)## /s/ Jonathan Lee##Chief Accounting Officer##February 28, 2024 Jonathan Lee##(Principal Accounting Officer)## /s/ Neil Mehta##Director##February 28, 2024 Neil Mehta#### /s/ Jason Child##Director##February 28, 2024 Jason Child#### /s/ Pedro Franceschi##Director##February 28, 2024 Pedro Franceschi#### /s/ Benjamin Sun##Director##February 28, 2024 Benjamin Sun#### /s/ Ambereen Toubassy##Director##February 28, 2024 Ambereen Toubassy#### /s/ Kevin Warsh##Director##February 28, 2024 Kevin Warsh#### Coupang, Inc.##2023 Form 10-K##93


DAL General

As a global airline based in the United States, we connect customers across our expansive global network with a commitment to industry-leading customer service, safety and innovation. In 2023, we served over 190 million customers.


DAL Competitive Advantages and Brand Strength

The competitive advantages that support our trusted consumer brand include our people and culture, operational reliability, global network, customer loyalty and financial foundation. In 2023, we continued to differentiate Delta from the industry by strengthening our competitive advantages.


DAL People and Culture

The Delta people and culture are our strongest competitive advantage. Our more than 100,000 employees provide world-class travel experiences for our customers and best-in-class service, delivering customer satisfaction and brand preference. We believe that Delta's brand transcends the industry, powered by our people's outstanding work and passion for serving our customers. Delta is the world's No. 11 Most Admired Company as ranked by FORTUNE and is ranked No. 13 in the U.S. on Glassdoor's Best Places to Work list.


DAL People and Culture

Our industry-leading profit sharing program directly aligns our employees' interests with the company's long-term success and for 2023, we are rewarding them with $1.4 billion in profit sharing payments. The company also maintains a Shared Rewards program to incentivize operational performance, and our employees earned $53 million under this program in 2023.


DAL Operational Reliability

We remain committed to industry-leading reliability and are consistently among the industry's best performers, delivering the best on-time arrival among our network carrier peers in 2023. In recognition of our commitment to operational performance and minimizing passenger disruption, we were honored for the third consecutive year with the Cirium Platinum Award for global operational excellence in January 2024, and named the most on-time airline in North America. The Wall Street Journal named us the top airline of 2023 among the nine major U.S. airlines in its annual airline scorecard for the third consecutive year, leading the industry in on-time arrivals and involuntary denied boardings.


DAL Global Network

We and our alliance partners collectively serve over 130 countries and territories and over 700 destinations around the world. At the end of 2023, we offered more than 4,000 daily flights to more than 280 destinations on six continents.


DAL Global Network

Our domestic network is centered around core hubs in Atlanta, Minneapolis-St. Paul, Detroit and Salt Lake City. Core hubs have strong local passenger share, a high penetration of customers loyal to Delta, a competitive cost position and strong margins. Core hub positions complement coastal hub positions in Boston, Los Angeles, New York-LaGuardia, New York-JFK and Seattle. Coastal hubs provide a strong presence in large revenue markets and enable growth in premium products and international service.


DAL Global Network

In 2023, we focused on restoring our core hubs while solidifying positions in our coastal hubs. We expect to leverage our coastal gateways and strategic relationships with international airline partners to further grow our international service.


DAL Business

Internationally, we operate significant hubs in, or have market presence in the key cities of, Amsterdam, Bogota, Lima, London-Heathrow, Mexico City, Paris-Charles de Gaulle, Santiago (Chile), Sao Paulo, Seoul-Incheon and Tokyo. Through innovative alliances with Aeroméxico, LATAM Airlines Group S.A. ("LATAM"), Air France-KLM, China Eastern, Korean Air and Virgin Atlantic, we seek to bring more choice to customers worldwide. Our strategic relationships with these international airlines are an important part of our business as they improve our access to markets around the world and enable us to provide customers a more seamless global travel experience across our alliance network. The most significant of these arrangements are commercial joint ventures or cooperation agreements that include joint sales and marketing coordination, co-location of airport facilities and other commercial cooperation arrangements. In some cases, we have reinforced strategic alliances through equity investments where we have opportunity to create deep relationships and maximize commercial cooperation.


DAL Business

Our global network is supported by a fleet of 1,273 aircraft as of December 31, 2023 that are varied in size and capabilities, giving us flexibility to adjust aircraft to the network. We are continuing to refresh our fleet by acquiring new and more fuel-efficient aircraft with increased premium seating and cargo capacity to replace retiring aircraft. Simultaneously, we continue on our multi-year journey of fleet simplification by replacing retiring aircraft with deliveries of next-generation aircraft. In 2023, we took delivery of 43 aircraft, including new A321neos, A220-300s and A330-900s. Our new aircraft delivered since 2019 are on average 28% more fuel efficient per seat mile than aircraft retired since 2019. 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.


DAL Customer Loyalty

With operational excellence, best-in-class service and commitment to our customers, we have continued to earn our customers' trust and preference by delivering the "Delta Difference." We are elevating the customer experience by deploying our newest aircraft, accelerating generational airport investments in key markets, including new facilities that opened at New York-LaGuardia, Los Angeles and Salt Lake City, and investing in our digital transformation. We believe our continued investment in customer service and experience, operations, product, airports and technology has shaped customer perception of our brand leading to improvements in our domestic net promoter scores and increased customer loyalty compared to pre-pandemic levels. In 2023, various outlets recognized Delta as a trusted consumer brand, including: •Named the number one airline by corporate travel customers in the annual Business Travel News Airline Survey for the 13th year in a row and the number one U.S. airline by Condé Nast Traveler readers. •Ranked No. 12 in TIME magazine's World's Best Companies of 2023 based on revenue growth, employee satisfaction and the company's sustainability profile. •Earned the No. 1 spot on The Points Guy's list of best U.S. Airlines for the fifth year in a row, and USA Today readers selected Delta as the Best Airline of 2023.


DAL Customer Loyalty

Our award-winning SkyMiles program, discussed in further detail below, is designed to attract lifetime members and to grow customer loyalty by offering our customers a wide variety of benefits when traveling with us and our partners, and personalizing our engagement with them. We aim to increase the value of our program for customers and to deepen customer engagement with Delta through a growing ecosystem of partnerships with premier brands, extending the value of our SkyMiles currency beyond flight and introducing new technology initiatives. We believe there is opportunity to continue this trend and expect the increased value we provide customers to deliver high-margin revenue and resilient cash flows.


DAL Financial Foundation

In 2023, we made significant progress restoring our financial foundation with strong profitability and $2 billion of free cash flow for the year. Our financial results are discussed in more detail in "Item 7. Management's Discussion and Analysis," which includes definitions and reconciliations of non-GAAP financial measures, including free cash flow, under the "Supplemental Information" section.


DAL Financial Foundation

Restoring the strength of our balance sheet and reducing debt is a key financial priority. During 2023, we repaid approximately $4.1 billion in debt and finance lease obligations and the company remains committed to regaining investment grade metrics.


DAL Business

Over the last decade we have fundamentally transformed our business by investing in our people, our product and our reliability to alter the commodity-like nature of air travel and improve our financial foundation. We have diversified our business by growing high-margin revenue streams that leverage our competitive advantages, including: •Our continued focus on our premium products (including Delta One®, First Class, Delta Premium Select and Delta Comfort+®) and customer segmentation, which has reduced our reliance on the most price sensitive customer segment. •Our partnership with American Express, which provides us a co-brand revenue stream tied to broader consumer spending. •Our Maintenance, Repair and Overhaul ("MRO") operation, where we believe that we remain well-positioned for growth through contractual agreements with jet engine manufacturers, including three next generation engine platforms. •Our other complementary portfolio businesses, such as our cargo business and our travel-adjacent services, which include trip insurance, car and hotel rentals.


DAL Business

Our premium yield growth has significantly outpaced main cabin, with record paid load factors in premium cabin in 2023, as demand for premium products continues to grow. In 2023, we grew our mix of premium seats, including the continued expansion of Delta Premium Select. The sale of premium products is facilitated through various distribution channels, with 62% of tickets sold through direct channels in 2023. These include digital channels, such as the Fly Delta app, which surpassed one billion visits in 2023, delta.com and our reservations specialists. Indirect distribution channels include online travel agencies and traditional "brick and mortar" agencies. We make fare and product information widely available across those channels in an effort to ensure customers receive the best information and service options, further supporting the growth of premium products.


DAL SkyMiles Program

Our SkyMiles program provides members with the ability to earn mileage credits ("miles") when traveling on Delta, Delta Connection and our partner airlines. Miles may also be earned by using certain services offered by program partners, such as credit card, retail, ridesharing, car rental and hotel companies. To facilitate transactions with participating companies, we sell miles to non-airline businesses and other airlines.


DAL SkyMiles Program

Miles may be used toward award redemptions such as flights and upgrades on Delta, our regional carriers and other participating airlines as well as donations to specific charities and more. In 2023, 10% of revenue miles flown on Delta were from award travel, as program members redeemed miles in the loyalty program for approximately 30 million award tickets. Our most significant and valuable contract to sell miles relates to our co-brand credit card relationship with American Express. In 2023, remuneration from American Express totaled $6.8 billion, which we expect to increase by 10% in 2024 and grow to $10 billion over the long-term.


DAL Innovative Investments in Technology

Our objective is to make technology a strategic differentiator. We continue to invest in technological improvements that enhance the customer experience, support our operations and empower our people. These investments include innovations to customer facing applications and improvements to infrastructure and technology architecture to unify and improve access to data sources. We believe this digital transformation enhances interactions with our customers and allows our people to deliver more personalized service, further enhancing the customer experience, strengthening our brand and driving revenue and efficiency.


Through the development of innovative new technologies, we can better serve customers and give our employees the best tools. For our customers, we are making investments in the digital platforms on the ground and in the air. We continue to evolve the Fly Delta app into a digital travel concierge for our customers to offer convenient services on the day of travel and deliver thoughtful notifications to make their travel journeys more seamless. On the ground, we are investing to create a smoother, less stressful and increasingly contactless travel experience. Onboard the aircraft, we continue to invest in in-flight entertainment and announced fast and free Wi-Fi for all customers through a free SkyMiles account on most domestic mainline flights, with plans for full availability on international and regional aircraft. We also introduced Delta Sync, which will enable the creation of more personalized experiences over the next several years and further elevate the consumer experience across the travel journey, including partnerships with leading brands. For our employees, we are investing in applications that allow our people to have more meaningful interactions with our customers.


DAL Commercial Arrangements with Other Airlines

Joint Venture/Cooperation Agreements. We have implemented four separate joint venture or joint cooperation agreements with foreign carriers as described below. We have sought to reinforce a number of the agreements through equity investments in those carriers. See Note 4 of the Notes to the Consolidated Financial Statements for additional information about our equity investments.


Each of our joint venture or cooperation arrangements provides for joint commercial cooperation with the relevant partner within the geographic scope of the arrangement, including the sharing of revenues and/or profits and losses generated by the parties on the joint venture routes, as well as joint marketing and sales, coordinated pricing and revenue management, network and schedule planning and other coordinated activities with respect to the parties' operations on joint venture routes. Our implemented commercial joint ventures/cooperation agreements consist of the following: •A combined joint venture with Air France, KLM and Virgin Atlantic with respect to transatlantic traffic flows. In addition to the joint venture, we own a non-controlling 49% equity stake in Virgin Atlantic Limited, the parent company of Virgin Atlantic Airways and a 3% ownership stake in the parent company of Air France and KLM. •A joint cooperation agreement with Aeroméxico with respect to trans-border traffic flows between the U.S. and Mexico. In addition to the joint cooperation agreement, we currently own an approximately 20% equity stake in Grupo Aeroméxico, S.A.B. de C.V., the parent company of Aeroméxico. •A joint venture agreement with LATAM with respect to traffic flows between North and South America, allowing our passengers to access more than 300 destinations between the United States/Canada and South America (Brazil, Chile, Colombia, Paraguay, Peru and Uruguay). We currently own an approximately 10% equity stake in LATAM. •A joint venture with Korean Air with respect to traffic flows between the United States and certain countries in Asia. In addition to the joint venture, we own just under 15% of the outstanding common stock of Hanjin-KAL, the largest shareholder of Korean Air.


Each of our joint venture or joint cooperation agreements described above has been approved and granted antitrust immunity from the U.S. Department of Transportation ("DOT"). The grant of antitrust immunity for our joint cooperation agreement with Aeroméxico is subject to a pending renewal application with the DOT, which was tentatively dismissed pursuant to an Order to Show Cause issued by the DOT on January 26, 2024. The existing immunity remains in effect pending final adjudication of the renewal application, the timing and outcome of which cannot be predicted at this time.


Enhanced Commercial Agreements with China Eastern. We own a 2% equity interest in China Eastern, with whom we have a strategic joint marketing and commercial cooperation arrangement covering traffic flows between China and the U.S., which includes reciprocal codesharing, loyalty program participation, airport lounge access and joint sales cooperation.


SkyTeam. We are a member of the SkyTeam global airline alliance. The other members of SkyTeam are Aerolíneas Argentinas, Aeroméxico, Air Europa (Spain), Air France, China Airlines, China Eastern, Czech Airlines, Garuda Indonesia, ITA Airways (Italy), Kenya Airways, KLM, Korean Air, Middle East Airlines, Saudia, TAROM (Romania), Vietnam Airlines, Virgin Atlantic and Xiamen Airlines (China). Through alliance arrangements with other SkyTeam carriers, we are able to link our route network with those of the other member airlines, providing opportunities to increase connecting traffic while offering enhanced customer service through reciprocal codesharing and loyalty program participation, airport lounge access and cargo operations.


Other International Carriers. We also have marketing arrangements with other airlines to enhance our global network. These arrangements may include codesharing, reciprocal loyalty program benefits, shared or reciprocal access to passenger lounges, joint promotions, common use of airport gates and ticket counters, office co-location and other activities.


DAL Regional Carriers

We have air service agreements with domestic regional air carriers that feed traffic to our network by serving passengers primarily in small and medium-sized cities in the domestic market. These arrangements enable us to better match capacity with demand in these markets.


DAL Regional Carriers

Through our regional carrier program, Delta Connection®, we have contractual arrangements with regional carriers to operate aircraft using our "DL" designator code. We currently have contractual arrangements with: •Endeavor Air, Inc., a wholly owned subsidiary of ours ("Endeavor"). •Republic Airways, Inc. •SkyWest Airlines, Inc. ("SkyWest Airlines").


DAL Regional Carriers

Our contractual agreements with regional carriers are primarily capacity purchase arrangements, under which we control the scheduling, pricing, reservations, ticketing and seat inventories for the regional carriers' flights operating under our "DL" designator code. We are entitled to all ticket, cargo, mail, in-flight and ancillary revenues associated with the flights under these capacity purchase arrangements. We pay those airlines an amount, as defined in the applicable agreement, which is based on a determination of their cost of operating those flights and other factors intended to approximate market rates for those services. These capacity purchase agreements are long-term agreements, usually with initial terms of at least ten years, which grant us the option to extend the initial term. Certain of these agreements provide us the right to terminate the entire agreement, or in some cases remove some of the aircraft from the scope of the agreement, for convenience at certain future dates.


DAL Regional Carriers

SkyWest Airlines operates some flights for us under a revenue proration agreement. This proration agreement establishes a fixed dollar or percentage division of revenues for tickets sold to passengers traveling on connecting flight itineraries.


DAL Cargo

Through our global network, our cargo operations are able to connect the world’s major freight gateways. We generate cargo revenues in domestic and international markets through the use of cargo space on regularly scheduled passenger aircraft. We are a member of SkyTeam Cargo, an international airline cargo alliance with eight other airlines that offer a network spanning six continents, through which we provide global solutions to our customers by connecting our network with those partners.


DAL Cargo

In 2023, cargo revenues decreased year over year, mostly resulting from lower yield due to decreased market demand and increased industry capacity.


DAL Other Complementary Businesses

We have various other businesses arising from our airline operations, including the following: •In addition to providing maintenance and engineering support for our fleet of 1,273 mainline and regional aircraft, our MRO operation, known as Delta TechOps, serves aviation and airline customers from around the world. With agreements to service multiple next-generation aircraft engines, Delta TechOps is positioned as a leading global service provider for state-of-the-art, more sustainable engines. •Our vacation wholesale subsidiary, Delta Vacations, provides vacation packages to third-party consumers. Revenue allocated to Delta Vacations excludes flight revenue associated with vacation packages.


DAL Other Complementary Businesses

In 2023, the aggregate revenue from our MRO operation and Delta Vacations was approximately $840 million.


DAL Environmental Sustainability

In 2023, we outlined our roadmap to a more sustainable future of travel that details our strategy for achieving net-zero greenhouse gas emissions from our airline operations by 2050. As part of this roadmap, we announced short-, medium- and long-term milestones which will help us measure and report progress towards our ultimate net-zero goal. In 2023, we made progress toward achievement of our goals across three key areas: What We Fly •Fleet renewal: We continue to make our existing fleet more efficient as older aircraft are retired. Additions to our fleet since 2019, including 43 new aircraft delivered in 2023, are on average 28% more fuel efficient per seat mile than aircraft retired since 2019. We also completed the retirement of the CRJ-200 fleet in 2023, our least fuel-efficient aircraft type, contributing to a fleet-wide fuel efficiency improvement of 5.5% compared to 2019. •Pursuing future aviation technologies: Our sustainability strategy aims to introduce revolutionary aircraft into our fleet. In 2023, we joined a coalition alongside Boeing and NASA to support the Sustainable Flight Demonstrator program. We will serve as an adviser on a new aircraft design with a Transonic Truss-Braced Wing, which will be the first ever experimental aircraft focused on sustainability. We sold two retired MD-90 aircraft to Boeing which will become the test planes for the program. This innovative project supplements previously announced partnerships with Airbus on their hydrogen-powered aircraft research as well as our investment in Joby Aviation, which aims to pioneer home-to-airport transportation through electric, vertical takeoff and landing (eVTOL) technology. •Fleet modification: Following the completed installation of split-scimitar winglets on the Boeing 737-900ER fleet, and outfitting all Boeing 737-800 and 737-900ER aircraft with lighter-weight, radial landing gear tires in 2022, we began installing split-scimitar winglets on the 737-800 fleet in 2023. When complete, this enhancement is expected to drive approximately three million gallons of fuel savings annually. Additionally, we completed modifications and certification test flights for a novel drag reduction system on the 737-800 fleet with Aero Design Labs, accelerating the certification of this innovation.


DAL How We Fly

•Aircraft operations: Teams across Delta have worked together to make an impact through enhanced landing procedures, optimizations to flight routing and speed, and weight reduction initiatives. These cross-divisional efforts coordinated through our Carbon Council have saved over 20 million gallons of jet fuel in 2022 and 2023. •Waste reduction: Our Waste Council was established in 2023 and led the evaluation of test sites across our operation aiming to capture more recyclable materials by changing processes and leveraging catering kitchens. We also launched our paperless gates initiative in 2023, allowing gate agents to bypass the automatic printing of pre-departure and departure documents on all flights. The effort eliminates printer malfunctions, cuts paper and printer maintenance costs and saves an estimated 70 million pages per year – the equivalent to 4,000 trees. •Ground operations: In 2023, we purchased more than 500 new electric ground support equipment ("GSE") for utilization across our network, inclusive of baggage tractors, belt loaders, and aircraft tow tractors. The equipment necessary to turn an aircraft (core GSE) at our hubs in Salt Lake City and Boston is nearly entirely powered with electricity.


DAL The Fuel We Use

•Continued investment in sustainable aviation fuel ("SAF"): With approximately 90% of our carbon emissions coming from jet fuel, finding lower emissions fuel alternatives is critical to making progress toward net zero. SAF, which can be channeled to airports through existing fuel infrastructure, is central to reducing the lifecycle emissions from aviation fuel and is safe to use in current aircraft engines. Our Global Sustainability and Fuel teams have been working over the past several years to catalyze investment and stimulate SAF production by signing offtake agreements with various SAF producers. Under these agreements, we have contracted to purchase SAF when it is available, subject to certain conditions. In 2023, we used over three million gallons of SAF onboard our aircraft, nearly doubling our 2022 SAF utilization.


DAL Business

•Building coalitions for the future: We continue to advocate for policy incentives to scale the SAF market. For example, we are a founding member of Americans for Clean Aviation Fuels (ACAF), a diverse coalition of the largest industrial sectors in America from farmers to fuel producers and aviation to agribusiness. This coalition is focused on promoting the economic benefits of building a robust market for SAF and clean aviation fuels. We are also a founding member of the Minnesota SAF Hub, a first-of-its-kind partnership among corporations seeking to collaborate on scaling SAF production.


DAL Business

The global aviation industry is viewed as a "hard-to-abate" sector, meaning it is innately difficult to decarbonize. Achieving our long-term goals will require substantial expansion of the SAF market, the adoption of new technologies, engagement from both internal and external stakeholders, as well as partnerships across industries to increase production of alternative fuels and help drive down costs.


DAL Human Capital and Commitment to Diversity, Equity and Inclusion

We believe that the Delta people and culture are our strongest competitive advantage, and the high-quality service that our employees provide sets us apart from other airlines. As of December 31, 2023, we had approximately 103,000 full-time employee equivalents, of which approximately 100,000 were based in the U.S.


Our principal human capital management objectives are to attract, retain and develop people who understand and are committed to delivering the "Delta Difference" that is core to our brand. To support these objectives, we have put in place programs that seek to: •Reward our people through highly competitive total compensation designed to share Delta’s success with our employees who make it possible and promote teamwork and collaboration across the business. •Achieve high performance by fostering our people’s holistic wellbeing including physical, emotional, social and financial wellbeing. •Drive employees’ professional and community engagement. •Prepare our employees for key roles and future leadership positions through a variety of training and development programs. •Enhance our culture through efforts aimed at making our workplace more engaging, equitable and inclusive.


The health and safety of our employees is foundational to achieving these objectives. Delta's Safety Management System is central to promoting a positive safety culture, proactively managing safety risk, and making investments to ensure a safe experience for our employees and customers.


Our commitment to diversity, equity and inclusion is critical to effective human capital management at Delta. As a global airline, we are in the business of bringing people together, and we believe our business should reflect the diversity of our customer base. To achieve this goal, we seek diverse talent internally and externally in an effort to achieve broader representation throughout our organization. We also promote inclusion through education, training and development opportunities as well as by leveraging insights from our ten employee resource groups, which we refer to as business resource groups, totaling membership of more than 30,000 as of December 31, 2023.


We continued to invest in our leadership’s equity learning and understanding in 2023, with nearly 80% of officers participating in our voluntary two-day racial equity workshop by the end of 2023. In 2023, we also introduced a new diversity, equity and inclusion education program, building on foundational learnings through a multitude of different training offerings.


In addition, we are reviewing and revising systems, practices and policies in support of our commitment to diversity, equity and inclusion and with a focus on achieving equitable outcomes. Two key areas on which we are focused are (1) reinforcement of our diverse talent pipeline by, among other things, requiring hiring candidate slates and interview panels to reflect diversity, and taking a proactive approach to build internal and external career pathways to certain roles by removing college degree requirements and introducing a skills-first talent approach, and (2) closing diversity gaps in senior leadership positions by increasing the representation of women, Black and Latin/Hispanic groups in those roles.


DAL Business

We also believe that listening, engaging and connecting with employees furthers our human capital management objectives. We have historically done so primarily through our open-door policy, digital communication across all levels of the company, in-person events with senior management and company-wide and division-specific surveys to evaluate employee satisfaction. Members of senior management participate in regular company-wide town hall discussions with our employees and our senior executive leadership team regularly shares memos with all employees regarding our ongoing commitment to our people and our culture. We have also continued to conduct periodic employee surveys to seek feedback on engagement levels in general, our wellbeing programs, diversity, equity and inclusion efforts and our culture of safety.


DAL Collective Bargaining

As of December 31, 2023, approximately 20% of our full-time equivalent employees were represented by unions. ####Domestic airline employees represented by collective bargaining agreements by group#### Employee Group##Approximate Number of Employees Represented####Union##Date on which Collective Bargaining Agreement Becomes Amendable Delta Pilots(1)##16,960####ALPA##December 31, 2026 Delta Flight Superintendents (Dispatchers)##490####PAFCA##November 1, 2024 Endeavor Pilots##1,530####ALPA##January 1, 2029 Endeavor Flight Attendants##1,600####AFA##March 31, 2027


DAL Collective Bargaining

(1) Delta’s pilots ratified a new four-year Pilot Working Agreement in March 2023, effective January 1, 2023.


DAL Collective Bargaining

In addition to the domestic airline employee groups discussed above, approximately 200 refinery employees of our wholly owned subsidiary, Monroe Energy, LLC ("Monroe") are represented by the United Steel Workers under an agreement that expires on February 28, 2026. This agreement is governed by the National Labor Relations Act ("NLRA"), which generally allows either party to engage in self-help upon the expiration of the agreement. Certain of our employees outside the U.S. are represented by unions, work councils or other local representative groups.


DAL Collective Bargaining

Labor unions periodically engage in organizing efforts to represent various groups of our employees, including at our operating subsidiaries, that are not represented for collective bargaining purposes.


DAL Fuel

Our results of operations are significantly impacted by changes in the price and availability of aircraft fuel. We purchase most of our aircraft fuel under contracts that establish the price based on various market indices and therefore do not provide material protection against price increases or assure the availability of our fuel supplies. We also purchase aircraft fuel on the spot market, from offshore sources and under contracts that permit the refiners to set the price. We are currently able to obtain adequate supplies of aircraft fuel, including fuel produced by Monroe or procured through the exchange of gasoline, diesel and other refined petroleum products ("non-jet fuel products") the refinery produces, and crude oil for Monroe's operations.


DAL Fuel

The following table shows our aircraft fuel consumption and costs: Fuel consumption and expense by year############## Year##Gallons Consumed(1)  (in millions)####Cost(1)(2) (in millions)####Average Price Per Gallon(1)(2)##Percentage of Total Operating Expense(1)(2)## 2023##3,926##$##11,069##$##2.82##21##% 2022##3,412##$##11,482##$##3.36##24##% 2021##2,778##$##5,633##$##2.02##20##%


DAL Fuel

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


DAL Fuel

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


DAL Monroe Energy

Our Monroe subsidiaries operate the Trainer refinery and related logistics assets located near Philadelphia, Pennsylvania. The facilities include pipelines and terminal assets that allow the refinery to supply jet fuel to our airline operations throughout the Northeastern U.S., including our New York hubs at LaGuardia and JFK. These companies are distinct from us, operating under their own management teams and with their own boards. We own Monroe as part of our strategy to mitigate the cost of the refining margin reflected in the price of jet fuel, as well as to maintain sufficiency of supply to our New York operations.


DAL Monroe Energy

Refinery Operations. The facility is capable of refining approximately 200,000 barrels of crude oil per day and sources domestic and foreign crude oil supply from a variety of providers. During 2023, Monroe successfully performed a planned plant-wide maintenance turnaround ("turnaround"), which addressed all required inspections, allowed Monroe to clean and repair all of the equipment, as well as enable the installation of a new Fluidized Catalyst Cracking Unit Reactor.


DAL Monroe Energy

Strategic Agreements. Monroe has agreements in place to exchange the non-jet fuel products the refinery produces with third parties for jet fuel consumed in our airline operations.


DAL Monroe Energy

Environmental Sustainability. Delta is evaluating operational pathways for integrating Monroe into Delta's net zero future. Monroe’s sustainability ambitions include being one of the most energy efficient refineries in the country with the lowest energy intensity and greenhouse gas ("GHG") emissions on an absolute and per barrel basis. For example, Monroe is implementing a plan to replace steam driven turbines that currently power pumps at the facility with more efficient and reliable electric motors, which will reduce the amount of steam required from the facility’s natural gas-fired boilers. Monroe is also recovering and utilizing methane, a potent GHG, instead of flaring it into the atmosphere. Finally, in support of Delta’s 10% SAF goal, Monroe is evaluating the possibility of producing SAF and other renewable fuels at the Trainer refinery, although additional analyses must be conducted to determine economic and operational viability of various SAF production pathways. Monroe continues to evaluate the production of renewables, and in 2023 successfully produced a test quantity of renewable diesel at the facility.


DAL Fuel Hedging Program

Our derivative contracts to hedge the financial risk from changing fuel prices are related to Monroe’s inventory. We may utilize different contract and commodity types in this program and frequently test their economic effectiveness against our financial targets. We closely monitor the hedge portfolio and rebalance the portfolio based on market conditions, which may result in locking in gains or losses on hedge contracts prior to their settlement dates.


DAL Competition

The airline industry is highly competitive, marked by significant competition with respect to routes, fares, schedules (both timing and frequency), operational reliability, services, products, customer service and loyalty programs. The industry has evolved through mergers, new entries, both domestically and internationally, and changes in international alliances. Consolidation in the airline industry, the presence of subsidized government-sponsored international carriers, changes in international alliances and the creation of immunized joint ventures have altered, and will continue to alter, the competitive landscape in the industry, resulting in the formation of airlines and alliances with significant financial resources, extensive global networks and competitive cost structures.


DAL Domestic

Our domestic operations are subject to significant competition from traditional network carriers, including American Airlines and United Airlines, national point-to-point carriers, including Alaska Airlines, JetBlue Airways and Southwest Airlines, and other discount or ultra-low-cost carriers, including Allegiant Air, Avelo Airlines, Breeze Airways, Frontier Airlines and Spirit Airlines. Some of these carriers have business models primarily focused on maintaining low costs, with the intention of providing service at lower fares to destinations served by Delta. In particular, we face significant competition at our domestic hubs and key airports either directly at those airports or at the hubs of other airlines that are located in close proximity. We also face competition in small- to medium-sized markets from regional jet operations of other carriers.


DAL International

Our international operations are subject to competition from both foreign and domestic carriers, including from point-to-point carriers on certain international routes. Through alliance and other marketing and codesharing agreements with foreign carriers, U.S. carriers have increased their ability to sell international transportation, such as services to and beyond traditional European, Asian and Latin American gateway cities. Similarly, foreign carriers have obtained increased access to interior U.S. passenger traffic beyond traditional U.S. gateway cities through these relationships.


DAL International

In particular, several joint ventures among U.S. and foreign carriers, including several of our joint ventures as well as those of our competitors, have received grants of antitrust immunity allowing the participating carriers to coordinate networks, schedules, pricing, sales and inventory. In addition, alliances formed by domestic and foreign carriers, including SkyTeam, the Star Alliance (among United Airlines, Lufthansa German Airlines, Air Canada and others) and the oneworld alliance (among American Airlines, British Airways, Qantas and others) have enhanced competition in international markets.


DAL Regulatory Matters

The DOT and the Federal Aviation Administration (the "FAA") exercise regulatory authority over air transportation in the U.S. The DOT has authority to issue certificates of public convenience and necessity required for airlines to provide air transportation. An air carrier that the DOT finds fit, willing and able to perform the proposed service is given authority to operate domestic and international air transportation (including the carriage of passengers and cargo), as applicable. Since the passage of the Airline Industry Deregulation Act in 1978, airlines have generally been free to launch or terminate service to U.S airports without restriction, except with respect to certain slot-controlled and schedule-facilitated airports, as well as certain constraints related to service to small communities governed by the "Essential Air Services" program.


DAL Regulatory Matters

The DOT has jurisdiction over certain economic and consumer protection matters, such as unfair or deceptive practices and methods of competition, advertising, denied boarding compensation, baggage liability and disabled passenger transportation. The DOT also has authority to review certain joint venture agreements between domestic and international carriers. The DOT engages in regulation of economic matters such as transactions involving allocation of "slots" or similar regulatory mechanisms which limit the rights of carriers to conduct operations at airports where such mechanisms are in place. The FAA has primary responsibility for matters relating to the safety of air carrier flight operations, including airline operating certificates, control of navigable air space, flight personnel, aircraft certification and maintenance and other matters affecting air safety.


DAL Regulatory Matters

Authority to operate international routes and international codesharing arrangements is regulated by the DOT and by the governments of the foreign countries involved. International certificate authorities are also subject to the approval of the U.S. President for conformance with national defense and foreign policy objectives.


DAL Regulatory Matters

The Transportation Security Administration ("TSA") and the U.S. Customs and Border Protection, each a division of the Department of Homeland Security, are responsible for certain civil aviation security matters, including passenger and baggage screening at U.S. airports and international passenger prescreening prior to entry into or departure from the U.S.


DAL Regulatory Matters

Airlines are also subject to various other federal, state, local and foreign laws and regulations. For example, the U.S. Department of Justice has jurisdiction over some airline competition matters. The U.S. Postal Service has authority over certain aspects of the transportation of mail. Labor relations in the airline industry, as discussed below, are generally governed by the Railway Labor Act with oversight by the National Mediation Board ("NMB"). Environmental matters are regulated by various federal, state, local and foreign governmental entities. Privacy of passenger and employee data is regulated by domestic and foreign laws and regulations.


DAL Fares and Rates

Airlines set ticket prices in all domestic and most international city-pairs with minimal governmental regulation, and the industry is characterized by significant price competition. Certain international fares and rates are subject to the jurisdiction of the DOT and the governments of the foreign countries involved. Many of our tickets are sold by travel agents, and fares are subject to commissions, overrides and discounts paid to travel agents, brokers and wholesalers.


DAL Route Authority

Our flight operations are authorized by certificates of public convenience and necessity and also by exemptions and limited-entry frequency awards issued by the DOT. The requisite approvals of other governments for international operations are controlled by bilateral agreements (and a multilateral agreement in the case of the U.S. and the European Union ("EU")) with, or permits or approvals issued by, foreign countries. Because international air transportation is governed by bilateral or other agreements between the U.S. and the foreign country or countries involved, changes in U.S. or foreign government aviation policies could result in the alteration or termination of such agreements, diminish the value of our international route authorities or otherwise affect our international operations. Bilateral agreements between the U.S. and various foreign countries that we serve are subject to renegotiation from time to time. The U.S. government has negotiated "Open Skies" agreements with many countries, which allow unrestricted access between the U.S. and these foreign markets.


DAL Route Authority

Certain of our international route authorities are subject to periodic renewal requirements. We request extension of these authorities when and as appropriate. While the DOT usually renews temporary authorities on routes where the authorized carrier is providing a reasonable level of service, there is no assurance this practice will continue in general or with respect to a specific renewal. Dormant route authorities may not be renewed in some cases, especially where another U.S. carrier indicates a willingness to provide service.


DAL Airport Access

Operations at three major domestic airports and certain foreign airports that we serve are regulated by governmental entities through allocations of "slots" or similar regulatory mechanisms. Each slot represents the authorization to land at or take off from the particular airport during a specified time period.


DAL Airport Access

In the U.S., the FAA currently regulates the allocation of slots, slot exemptions, operating authorizations or similar capacity allocation mechanisms at Reagan National in Washington, D.C. and LaGuardia and JFK in the New York City area. Our operations at these airports generally require the allocation of slots or analogous regulatory authorizations. Similarly, our operations at London's Heathrow airport, Tokyo's Haneda airport and other international airports are regulated by local slot coordinators pursuant to the International Air Transport Association's Worldwide Scheduling Guidelines and applicable local law. We currently have sufficient slots or analogous authorizations to operate our existing flights, and we have generally been able to obtain the rights to expand our operations and to change our schedules. There is no assurance, however, that we will be able to do so in the future because, among other reasons, such allocations are subject to changes in governmental policies.


DAL Airline Labor Regulation

In the U.S., airlines and labor unions are governed by the Railway Labor Act. Under the Railway Labor Act, a labor union seeking to represent an unrepresented craft or class of employees is required to file with the NMB an application alleging a representation dispute, along with authorization cards signed by at least 50% of the employees in that craft or class. The NMB then investigates the dispute and, if it finds the labor union has obtained a sufficient number of authorization cards, conducts an election to determine whether to certify the labor union as the collective bargaining representative of that craft or class. A labor union will be certified as the representative of the employees in a craft or class if more than 50% of votes cast are for representation. A certified labor union would then commence negotiations toward a collective bargaining agreement with the employer.


DAL Airline Labor Regulation

Under the Railway Labor Act, a collective bargaining agreement between an airline and a labor union does not expire, but instead becomes amendable as of a stated date. Either party may request that the NMB appoint a federal mediator to participate in the negotiations for a new or amended agreement. If no agreement is reached in mediation, the NMB may determine, at any time, that an impasse exists and offer binding arbitration. If either party rejects binding arbitration, a 30-day "cooling off" period begins. At the end of this 30-day period, the parties may engage in "self-help," unless the U.S. President appoints a Presidential Emergency Board ("PEB") to investigate and report on the dispute. The appointment of a PEB maintains the "status quo" for an additional 60 days. If the parties do not reach agreement during this period, the parties may then engage in self-help. Self-help includes, among other things, a strike by the union or the imposition of proposed changes to the collective bargaining agreement by the airline. The U.S. Congress and the President have the authority to prevent self-help by enacting legislation that, among other things, imposes a settlement on the parties.


DAL Environmental Regulation

Environmental Compliance Obligations. Our operations are subject to numerous international, federal, state and local laws and regulations governing protection of the environment, including regulation of greenhouse gases and other air emissions, noise reduction, water discharges, aircraft drinking water, storage and use of petroleum products and other regulated substances, and the management and disposal of hazardous waste, substances and materials.


DAL Environmental Regulation

We are also subject to certain environmental laws and contractual obligations governing the management and release of regulated substances, which may require the investigation and remediation of affected sites. Soil and/or ground water impacts have been identified at certain of our current or former leaseholds at several domestic airports. To address these impacts, we have a program in place to investigate and, if appropriate, remediate these sites. Although the ultimate outcome of these matters cannot be predicted with certainty, we believe that the resolution of these matters will not have a material adverse effect on our Consolidated Financial Statements.


DAL Environmental Regulation

In 2022, the U.S. Environmental Protection Agency (the "EPA") proposed regulations to define certain per- and polyfluoroalkyl substances ("PFAS") as "hazardous substances" under the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), and the EPA has proposed to regulate certain PFAS as "hazardous constituents" under the Resource Conservation and Recovery Act ("RCRA"). The EPA is also proposing to regulate PFAS under the Safe Drinking Water Act. PFAS are used in a wide variety of consumer and industrial products, including the firefighting foams used to extinguish fuel-based fires at airports and refineries. Numerous states have adopted regulations governing PFAS as well, and some have adopted legislation prohibiting the manufacture, sale, distribution and/or use of firefighting foam containing intentionally added PFAS. The EPA’s proposed rule under CERCLA, once finalized, could subject airports, airlines, and refineries, among others, to potential liability for cleanup of historical PFAS contamination associated with use of PFAS-containing firefighting foam, and some state laws require transition to alternative fire suppression systems. To address these possibilities, Delta is developing plans to transition its aircraft maintenance hangars to systems that do not contain intentionally added PFAS. The ultimate impact and associated cost to Delta of these legislative and regulatory developments cannot be predicted at this time.


DAL Environmental Regulation

GHG Emissions. Aviation industry GHG emissions, particularly carbon emissions, and their impact on climate change have become a focus in the international community and within the U.S. In 2016, the International Civil Aviation Organization ("ICAO") formally adopted a global, market-based emissions offset program known as the Carbon Offsetting and Reduction Scheme for International Aviation ("CORSIA"). This program establishes a goal for the aviation industry to achieve carbon-neutral growth in international aviation beginning in 2021. Any growth above the baseline would need to be addressed using either eligible carbon offsets or a lower carbon fuel. ICAO set the baseline for establishing airlines’ obligations under CORSIA for 2021 to 2023 based on 2019 travel, and in 2022 set a new, more stringent CORSIA baseline of 85% of 2019, which will apply from 2024 through 2035.


DAL Environmental Regulation

The pilot phase of the CORSIA program ran from 2021 through 2023, and is being followed by a first phase of the program beginning in 2024 and a second phase beginning in 2027. Countries can voluntarily participate in the pilot and first phase, and the United States agreed to participate in these voluntary phases. Participation in the second phase is mandatory for certain countries, including the United States. The U.S. government has not yet enacted legislation to mandate that U.S. operators participate in CORSIA. Nonetheless, we have voluntarily submitted verified emissions reports on our annual international emissions. While airlines had no offsetting obligations during the pilot phase of CORSIA as a result of the impact of the COVID-19 pandemic on international travel, we expect that international airline emissions will likely exceed the new baseline during the next phase (2024 – 2026). Because certain CORSIA program details remain to be developed and could potentially be affected by political developments in participating countries or the results of the initial phases of the program, the impact of CORSIA cannot be predicted at this time. However, CORSIA is expected to increase operating costs for airlines that operate internationally.


DAL Environmental Regulation

Additionally, the EU requires its member states to implement regulations to include aviation in its Emissions Trading Scheme ("ETS"). Under these regulations, any airline with flights originating or landing in the European Economic Area ("EEA") is subject to the ETS and, beginning in 2012, was required to purchase emissions allowances if the airline exceeds the number of free allowances allocated to it under the ETS. The scope of the ETS was narrowed so that it currently applies only to flights within the EEA through 2023 to align with the pilot phase of CORSIA. In 2023, the EU adopted new legislation extending this narrow scope of the EU ETS until 2027 but requires a review of CORSIA’s effectiveness in 2026, which could potentially lead to expansion of the EU ETS to include all flights departing the EU and EEA. As a result of the United Kingdom’s ("UK") withdrawal from the EU, UK flights are no longer part of the EU ETS and are instead regulated under a separate UK ETS scheme. UK ETS is applicable to UK domestic flights and flights from the UK to EEA countries.


DAL Business

In 2017, ICAO also adopted aircraft certification standards to reduce carbon dioxide ("CO2") emissions from new aircraft. The new aircraft certification standards applied to new fleet types in 2020 and will apply to in-production aircraft no later than 2028. These standards will not apply to existing in-service aircraft. In 2021, the EPA finalized GHG emission standards for new aircraft engines designed to implement the ICAO standards on the same timeframe contemplated by ICAO, and these standards have been upheld in response to legal challenges. Like the ICAO standards, the final EPA standards would not apply to engines on in-service aircraft.