DAL Loyalty Program

We account for marketing agreements, including those with American Express, by allocating the consideration to the individual products and services delivered. We allocate the value based on the relative selling prices of those products and services, which generally consist of award travel, priority boarding, baggage fee waivers, lounge access and the use of our brand. We determine our best estimate of the selling prices by using a discounted cash flow analysis using multiple inputs and assumptions, including (1) the expected number of miles awarded and number of miles redeemed, (2) ETV for the award travel obligation adjusted for mileage breakage, (3) published rates on our website for baggage fees, discounted access to Delta Sky Club lounges and other benefits while traveling on Delta, (4) brand value (using estimated royalties generated from the use of our brand) and (5) volume discounts provided to certain partners.


DAL Loyalty Program

We defer the amount allocated to award travel as part of loyalty program deferred revenue and recognize loyalty travel awards in passenger revenue as the miles are redeemed and transportation is provided. Revenue allocated to services performed in conjunction with a passenger’s flight, such as baggage fee waivers, is recognized as travel-related services in passenger revenue when the related service is performed. Revenue allocated to Delta Sky Club lounge access is recognized as miscellaneous in other revenue as access is provided. Revenue allocated to the remaining performance obligations, primarily brand value, is recorded as loyalty program in other revenue as miles are delivered.


DAL Notes to the Consolidated Financial Statements

Current Activity of the Loyalty Program. Miles are combined in one homogeneous pool and are not separately identifiable. Therefore, the revenue is comprised of miles that were part of the loyalty program deferred revenue balance at the beginning of the period as well as miles that were issued during the period.


The table below presents the activity of the current and noncurrent loyalty program deferred revenue, and includes miles earned through travel and miles sold to participating companies, which are primarily through marketing agreements. Loyalty program activity############ (in millions)####2023####2022####2021 Balance at January 1##$##7,882##$##7,559##$##7,182 Miles earned####4,173####3,419####2,238 Travel miles redeemed####(3,462)####(2,898)####(1,786) Non-travel miles redeemed####(173)####(198)####(75) Balance at December 31##$##8,420##$##7,882##$##7,559


The timing of mile redemptions can vary widely; however, the majority of new miles have historically been redeemed within two years of being earned. The loyalty program deferred revenue classified as a current liability represents our estimate of revenue expected to be recognized in the next twelve months based on projected redemptions, while the balance classified as a noncurrent liability represents our estimate of revenue expected to be recognized beyond twelve months.


DAL Cargo Revenue

Cargo revenue is recognized when we provide the transportation.


DAL Other Revenue

########Year Ended December 31,#### (in millions)####2023####2022####2021 Refinery##$##3,379##$##4,977##$##3,229 Loyalty program####3,093####2,597####1,770 Ancillary businesses####840####846####793 Miscellaneous####1,104####894####556 Total other revenue##$##8,416##$##9,314##$##6,348


DAL Other Revenue

Refinery. This represents refinery sales to third parties. See Note 14, "Segments," for more information on revenue recognition within our refinery segment.


DAL Other Revenue

Loyalty Program. This relates to revenues from brand usage by third parties and other performance obligations embedded in miles sold, which are included within the total cash sales from marketing agreements, discussed above. This also includes the redemption of miles for non-travel awards.


DAL Other Revenue

Ancillary Businesses. This includes aircraft maintenance services we provide to third parties and our vacation wholesale operations.


DAL Other Revenue

Miscellaneous. This is primarily composed of lounge access, including access provided to certain American Express cardholders, and codeshare revenues.


DAL Revenue by Geographic Region

Operating revenue for the airline segment is recognized in a specific geographic region based on the origin, flight path and destination of each flight segment. A significant portion of the refinery segment's revenues typically consists of fuel sales to support the airline, which is eliminated in the Consolidated Financial Statements. The remaining operating revenue for the refinery segment is included in the domestic region. Our passenger and operating revenue by geographic region are summarized in the following table: Revenue by geographic region######################## ########Passenger Revenue############Operating Revenue#### ########Year Ended December 31,############Year Ended December 31,#### (in millions)####2023####2022####2021####2023####2022####2021 Domestic##$##33,968##$##30,197##$##18,468##$##40,845##$##38,478##$##24,320 Atlantic####9,057####6,093####1,777####10,458####7,429####2,537 Latin America####3,798####2,889####1,873####4,292####3,334####2,284 Pacific####2,086####1,039####401####2,453####1,341####758 Total##$##48,909##$##40,218##$##22,519##$##58,048##$##50,582##$##29,899


DAL Accounts Receivable

Accounts receivable primarily consist of amounts due from credit card companies from the sale of passenger tickets, ancillary businesses, refinery sales and other companies for the purchase of miles under the loyalty program. We provide an allowance for uncollectible accounts using an expected credit loss model which represents our estimate of expected credit losses over the lifetime of the asset.


DAL Passenger Taxes and Fees

We are required to charge certain taxes and fees on our passenger tickets, including U.S. federal transportation taxes, federal security charges, airport passenger facility charges and foreign arrival and departure taxes. These taxes and fees are assessments on the customer for which we act as a collection agent and these amounts are not included in passenger revenue. We record a liability when the amounts are collected and reduce the liability when payments are made to the applicable government agency or operating carrier (i.e., for codeshare-related fees).


DAL NOTE 3. FAIR VALUE MEASUREMENTS

Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. Fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or liability. Each fair value measurement is classified into one of the following levels based on the information used in the valuation: •Level 1. Observable inputs such as quoted prices in active markets. •Level 2. Inputs, other than quoted prices in active markets, that are observable either directly or indirectly. •Level 3. Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.


DAL NOTE 3. FAIR VALUE MEASUREMENTS

Assets and liabilities measured at fair value are based on the valuation techniques identified in the tables below. The valuation techniques are as follows:


DAL NOTE 3. FAIR VALUE MEASUREMENTS

(a)Market Approach. Prices and other relevant information generated by observable transactions involving identical or comparable assets or liabilities.


DAL NOTE 3. FAIR VALUE MEASUREMENTS

(b)Income Approach. Techniques to convert future amounts to a single present value amount based on market expectations (including present value techniques and option-pricing models).


DAL Assets (Liabilities) Measured at Fair Value on a Recurring Basis(1)

##########December 31, 2023###### (in millions)####Total####Level 1####Level 2####Level 3 Cash equivalents##$##1,545##$##1,545##$##—##$##— Restricted cash equivalents####653####653####—####— Short-term investments################ U.S. Government securities####859####204####655####— Corporate obligations####218####—####218####— Other fixed income securities####50####—####50####— Long-term investments and related####2,867####2,614####134####119 Hedge derivatives, net################ Fuel hedge contracts####5####—####5####— ##########December 31, 2022###### (in millions)####Total####Level 1####Level 2####Level 3 Cash equivalents##$##2,021##$##2,021##$##—##$##— Restricted cash equivalents####206####206####—####— Short-term investments################ U.S. Government securities####1,587####122####1,465####— Corporate obligations####1,614####—####1,614####— Other fixed income securities####67####—####67####— Long-term investments####1,450####1,305####38####107 Hedge derivatives, net################ Fuel hedge contracts####(47)####—####(47)####—


(1)See Note 9, "Employee Benefit Plans," for fair value of benefit plan assets.


Cash Equivalents and Restricted Cash Equivalents. Cash equivalents generally consist of money market funds. Restricted cash equivalents are recorded in prepaid expenses and other and other noncurrent assets on our balance sheets and generally consist of money market funds, time deposits, commercial paper and negotiable certificates of deposit, which primarily relate to proceeds from debt issued to finance, among other things, a portion of the construction costs for our new terminal facilities at New York's LaGuardia Airport as well as certain self-insurance obligations and airport commitments. The fair value of these cash equivalents is based on a market approach using prices generated by market transactions involving identical or comparable assets.


Short-Term Investments. The fair values of our short-term investments are based on a market approach using industry standard valuation techniques that incorporate observable inputs such as quoted market prices, interest rates, benchmark curves, credit ratings of the security and other observable information.


As of December 31, 2023, the estimated fair value of our short-term investments was $1.1 billion. These investments are expected to mature in one year or less.


Long-Term Investments and Related. Our long-term investments measured at fair value primarily consist of equity investments, which are valued based on market prices or other observable transactions and inputs, and are recorded in equity investments on our balance sheets. Our equity investments in private companies are classified as Level 3 in the fair value hierarchy as their equity is not traded on a public exchange and our valuations incorporate certain unobservable inputs, including non-public equity issuances. As of December 31, 2023 and December 31, 2022, our equity investment in Wheels Up was classified as Level 1 in the fair value hierarchy. In the September 2023 quarter, our Wheels Up investment was classified as Level 3 after we determined the quoted price of its publicly-traded shares did not represent fair value due to the short time between closing of Wheels Up's credit facility and our quarterly reporting date. Given the amount of time that elapsed by December 31, 2023, we returned to valuing our equity investment in Wheels Up using the closing price of its shares at year end as traded on the New York Stock Exchange. Fair value measurement using unobservable inputs is inherently uncertain, and a change in significant inputs could result in different fair values. During the year ended December 31, 2023 there were no material gains or losses related to investments classified as Level 3 as a result of fair value adjustments. See Note 4, "Investments," for further information on our long-term investments.


Hedge Derivatives. A portion of our derivative contracts may be negotiated over-the-counter with counterparties without going through a public exchange. Accordingly, our fair value assessments give consideration to the risk of counterparty default (as well as our own credit risk). Such contracts would be classified as Level 2 within the fair value hierarchy. The remainder of our hedge contracts may be comprised of futures contracts, which are traded on a public exchange. These contracts would be classified within Level 1 of the fair value hierarchy. •Fuel Hedge Contracts. Our derivative contracts to hedge the financial risk from changing fuel prices are related to Monroe’s inventory. Our fuel hedge portfolio may consist of a combination of options, swaps or futures. Option and swap contracts are valued under income approaches using option pricing models and discounted cash flow models, respectively, based on data either readily observable in public markets, derived from public markets or provided by counterparties who regularly trade in public markets. Futures contracts and options on futures contracts are traded on a public exchange and valued based on quoted market prices. We recognized losses of $6 million, $394 million and $146 million on our fuel hedge contracts in aircraft fuel and related taxes on our income statement for the years ended December 31, 2023, 2022 and 2021, respectively. The losses recognized during 2023 were composed of $58 million of settlements on contracts and $52 million of mark-to-market adjustments. Expense from the settlement of closed contracts is offset by higher operating profits at Monroe from higher pricing. See Note 14, "Segments," for further information on our Monroe refinery segment.


DAL NOTE 4. INVESTMENTS

We have developed strategic relationships with a number of airlines and airline services companies through joint ventures and other forms of cooperation and support, including equity investments. Our equity investments reinforce our commitment to these relationships and generally enhance our ability to offer input to the investee on strategic issues and direction, in some cases through representation on the board of directors of the investee.


DAL NOTE 4. INVESTMENTS

Fair Value Investments. Changes in the valuation of investments accounted for at fair value are recorded in gain/(loss) on investments, net in our income statement within non-operating expense and are driven by changes in stock prices, foreign currency fluctuations and other valuation techniques for investments in companies without publicly-traded shares.


DAL NOTE 4. INVESTMENTS

Equity Method Investments. We record our share of our equity method investees' financial results in our income statement as described in the table below. ########Equity investments ownership interest and carrying value############ ##Accounting Treatment######Ownership Interest##########Carrying Value## (in millions)####December 31, 2023######December 31, 2022######December 31, 2023####December 31, 2022 Air France-KLM##Fair Value##3##%####3##%##$##110##$##97 China Eastern##Fair Value##2##%####2##%####134####189 CLEAR##Fair Value##6##%####5##%####171####227 Grupo Aeroméxico##Equity Method(1)##20##%####20##%####421####412 Hanjin-KAL##Fair Value(2)##15##%####15##%####561####296 LATAM##Fair Value##10##%####10##%####658####403 Unifi Aviation##Equity Method(3)##49##%####49##%####162####165 Wheels Up##Fair Value(4)##38##%####21##%####903####54 Other investments##Various##############337####285 Equity investments##############$##3,457##$##2,128


DAL NOTE 4. INVESTMENTS

(1)Results are included in miscellaneous, net in our income statement under non-operating expense.


DAL NOTE 4. INVESTMENTS

(2)At December 31, 2023, we held 14.8% of the outstanding shares (including common and preferred), and 14.9% of the common shares, of Hanjin KAL.


DAL NOTE 4. INVESTMENTS

(3)Results are included in contracted services in our income statement as this entity is integral to the operations of our business by providing services at many of our airport locations.


DAL NOTE 4. INVESTMENTS

(4)See below for additional information about our ownership interest and voting rights.


Wheels Up. During 2023, we announced an expanded strategic partnership with Wheels Up, which included an agreement for a new credit facility to Wheels Up. This new credit facility is comprised of a $390 million term loan, of which we contributed $150 million and several other lenders contributed the remaining $240 million, and a $100 million liquidity facility that we made available to Wheels Up in the event the company's liquidity falls below $100 million. In connection with the credit facility, the term loan investors received newly issued shares of Wheels Up's common stock representing 95% of Wheels Up's outstanding equity on a fully diluted basis as of the closing of the initial extension of credit.


Our $150 million cash contribution was reflected as an investing outflow in our cash flows statement and allocated on a relative fair value basis to a loan receivable within other noncurrent assets and an equity investment on our balance sheet. Combined with our previous ownership stake, this new investment provides us with a 38% equity interest in Wheels Up. Delta's voting rights with respect to its Wheels Up equity interest are capped at 29.9%.


As a result of the transaction, we concluded that Wheels Up is a variable interest entity ("VIE"). A VIE requires consolidation by the entity’s primary beneficiary. We determined that we are not the primary beneficiary after assessing the decision-making process for the significant activities of Wheels Up, concluding that Wheels Up's Board of Directors continues to possess the decision-making authority over the significant activities, and we do not control Wheels Up's Board. Based on this assessment, Wheels Up is not consolidated in our financial statements.


We continue to account for our Wheels Up equity interest under the fair value option, as originally elected as part of our initial acquisition of Wheels Up shares in 2020. During 2023, we recorded a $786 million mark-to-market gain on our investment in Wheels Up based on the closing price of its shares as traded on the New York Stock Exchange. As of December 31, 2023, Wheels Up's public float was under 5% of the total outstanding shares which contributed to significant volatility in the value of our Wheels Up equity investment since the announcement of Wheels Up's credit facility in September 2023. The Wheels Up shares issued to Delta and the other term loan lenders were unregistered as of December 31, 2023 and are subject to a contractual transfer restriction until the first anniversary of the credit facility (September 2024). Following the expiration of this restriction, our equity investment in Wheels Up will be subject to certain, more limited transfer restrictions. We also account for our loan receivable at fair value, as the fair value option is applied to all of an investor's financial interests in the same entity. None of the $100 million liquidity facility has been drawn as of December 31, 2023.


DAL Other Investments

This category includes various investments that are accounted for at fair value or under the equity method, depending on our ownership interest and the level of influence conveyed by our investment. Among others, this category includes our equity method investments in Virgin Atlantic and JFK IAT Member LLC.


DAL Other Investments

Virgin Atlantic. The carrying value of our investment in Virgin Atlantic remains zero as of December 31, 2023. We maintain our 49% equity interest and continue to track our share of Virgin Atlantic's losses under the equity method of accounting. These previously unrecognized losses are only recorded to the extent we make additional investments in Virgin Atlantic (i.e., additional shareholder support). As of December 31, 2023, we have approximately $400 million of unrecognized equity method losses related to our 49% interest in Virgin Atlantic.


DAL Other Investments

JFK IAT Member LLC is discussed further in Note 8, "Airport Redevelopment."


DAL Goodwill and Indefinite-Lived Intangible Assets

Our goodwill and identifiable intangible assets relate to the airline segment. We apply a fair value-based impairment test to the carrying value of goodwill and indefinite-lived intangible assets on an annual basis (as of October 1) and, if certain events or circumstances indicate that an impairment loss may have been incurred, on an interim basis. We assess the value of our goodwill and indefinite-lived assets under either a qualitative or quantitative approach. Under a qualitative approach, we consider various market factors, including certain of the key assumptions listed below. We analyze these factors to determine if events and circumstances have affected the fair value of goodwill and indefinite-lived intangible assets. If we determine that it is more likely than not that the asset may be impaired, we use the quantitative approach to assess the asset's fair value and the amount of the impairment. Under a quantitative approach, we calculate the fair value of the asset incorporating the key assumptions listed below into our calculation.


We value goodwill and indefinite-lived intangible assets primarily using market and income approach valuation techniques. These measurements include the following key assumptions (1) forecasted revenues, expenses and cash flows, (2) current discount rates, (3) observable market transactions and (4) anticipated changes to the regulatory environment (e.g., changes in slot access and/or availability, additional Open Skies agreements or changes to antitrust approvals). These assumptions are consistent with those that hypothetical market participants would use. Because we are required to make estimates and assumptions when evaluating goodwill and indefinite-lived intangible assets for impairment, actual transaction amounts may differ materially from these estimates. We recognize an impairment charge if the asset's carrying value exceeds its estimated fair value.


Changes in certain events and circumstances could result in impairment or a change from indefinite-lived to definite-lived. Factors which could cause impairment include, but are not limited to (1) negative trends in our market capitalization, (2) reduced profitability resulting from lower passenger mile yields or higher input costs (primarily related to fuel and employees), (3) lower passenger demand as a result of weakened U.S. and global economies or other factors, (4) interruption to our operations due to a prolonged employee strike, terrorist attack or other reasons, (5) changes to the regulatory environment (e.g., changes in slot access and/or availability, additional Open Skies agreements or changes to antitrust approvals), (6) competitive changes by other airlines and (7) strategic changes to our operations leading to diminished utilization of the intangible assets.


Identifiable Intangible Assets. Indefinite-lived assets are not amortized and consist of routes, slots, the Delta tradename and assets related to alliances and collaborative arrangements. Definite-lived intangible assets consist primarily of marketing and maintenance service agreements and are amortized on a straight-line basis or under the undiscounted cash flows method over the estimated economic life of the respective agreements. Costs incurred to renew or extend the term of an intangible asset are expensed as incurred.


During the December 2023 quarter, we performed a quantitative valuation of our goodwill and indefinite-lived intangible assets as the most recent quantitative analysis was several years ago. These quantitative impairment tests of goodwill and intangibles concluded that there was no indication of impairment as the fair values exceeded our carrying values. Goodwill and indefinite-lived intangible assets by category######## ######Carrying Value at## (in millions)####December 31, 2023####December 31, 2022 Goodwill##$##9,753##$##9,753 International routes and slots####2,583####2,583 Airline alliances####1,863####1,863 Delta tradename####850####850 Domestic slots####622####622 Total##$##15,671##$##15,671


International Routes and Slots. This primarily relates to Pacific route authorities and slots at capacity-constrained airports in Asia, and slots at London-Heathrow airport.


Airline Alliances. This primarily relates to our commercial agreements with LATAM and our SkyTeam partners.


Domestic Slots. This primarily relates to our slots at New York-LaGuardia and Washington-Reagan National airports.


DAL Definite-Lived Intangible Assets

Definite-lived intangible assets by category################ ######December 31, 2023########December 31, 2022## (in millions)####Gross Carrying Value####Accumulated Amortization####Gross Carrying Value####Accumulated Amortization Marketing agreements##$##730##$##(708)##$##730##$##(704) Maintenance contracts####192####(150)####192####(145) Other####54####(53)####54####(53) Total##$##976##$##(911)##$##976##$##(902)


DAL Definite-Lived Intangible Assets

Amortization expense was $9 million, $9 million and $10 million for the years ended December 31, 2023, 2022 and 2021, respectively. Based on our definite-lived intangible assets at December 31, 2023, we estimate that we will incur approximately $8 million of amortization expense annually from 2024 through 2028.


DAL NOTE 6. DEBT

The following table summarizes our debt as of the dates indicated below: Summary of outstanding debt by category###################### ######Maturity Dates######Interest Rate(s) Per Annum at December 31, 2023########December 31,## (in millions)##################2023####2022 Unsecured Payroll Support Program Loans##2030####to##2031####1.00%####$##3,496##$##3,496 Unsecured notes##2024####to##2029##2.90%##to##7.38%####2,590####2,997 Financing arrangements secured by SkyMiles assets:###################### SkyMiles Notes(1)##2024####to##2028##4.50%##and##4.75%####4,518####5,144 SkyMiles Term Loan(1)(2)##2024####to##2027####9.17%######1,772####2,820 NYTDC Special Facilities Revenue Bonds(1)##2024####to##2045##4.00%##to##6.00%####3,656####2,838 Financing arrangements secured by aircraft:###################### Certificates(1)##2024####to##2028##2.00%##to##8.00%####1,591####1,802


DAL Notes(1)(2)##2024####to##2033##6.72%##to##7.65%####165####813

####Financing arrangements secured by slots, gates and/or routes:################## 2020 Senior Secured Notes######2025######7.00%######838####1,542 2018 Revolving Credit Facility(2)##2026####to##2028####Undrawn######—####— Other financings(1)(2)##2024####to##2030##2.51%##to##5.00%####67####67 Other revolving credit facilities(2)##2024####to##2026####Undrawn######—####— Total secured and unsecured debt##################18,693####21,519 ####Unamortized (discount)/premium and debt issuance cost, net and other##############(83)####(138) Total debt##################18,610####21,381 Less: current maturities##################(2,625)####(2,055) Total long-term debt################$##15,985##$##19,326


(1)Due in installments.


(2)Certain financings are comprised of variable rate debt. All variable rates are equal to SOFR (generally subject to a floor) or another index rate plus a specified margin.


DAL Early Settlement of Outstanding Notes

During 2023, we repurchased a principal amount of $1.4 billion of various secured and unsecured notes and a portion of the SkyMiles Term Loan on the open market and made early principal repayments of $585 million on various notes secured by aircraft. Collectively, these payments resulted in a $63 million loss on extinguishment of debt, which is recorded in non-operating expense in our income statement.


DAL Availability Under Revolving Facilities

As of December 31, 2023, we had approximately $2.9 billion undrawn and available under our revolving credit facilities. In addition, we had $450 million of outstanding letters of credit as of December 31, 2023 that did not affect the availability under our revolvers.


New York Transportation Development Corporation ("NYTDC") Special Facilities Revenue Bonds, Series 2023


In the December 2023 quarter, the NYTDC issued Special Facilities Revenue Bonds ("Series 2023 Bonds") in the aggregate principal amount of $878 million. We entered into loan agreements with the NYTDC to use the proceeds from the Series 2023 Bonds to finance a portion of the costs of the construction project that is currently in process at LaGuardia Airport. The proceeds from the Series 2023 Bonds are recorded in other noncurrent assets on our balance sheets. See Note 8, "Airport Redevelopment," for further information on our LaGuardia Airport project.


We are required to pay debt service on the Series 2023 Bonds through payments under loan agreements with NYTDC, and we have guaranteed the Series 2023 Bonds.


DAL 2018 Revolving Credit Facility

In the December 2023 quarter, we entered into an amended and restated credit agreement (the "A&R Credit Facility") which amends and restates the previous 2018 revolving credit facility. The A&R Credit Facility was undrawn at the time we entered into it and at December 31, 2023. The A&R Credit Facility contains a $1.325 billion three-year revolving facility, a $1.325 billion five-year revolving facility and a $360 million three-year standby letter of credit facility. Up to $250 million of each of the three-year and the five-year facilities can also be used for the issuance of letters of credit. The A&R Credit Facility contains an accordion feature under which the aggregate commitments can be increased up to $3.65 billion subject to certain conditions.


DAL 2018 Revolving Credit Facility

The A&R Credit Facility is secured by a first lien on collateral consistent with the existing credit agreement, which includes our Pacific route authorities and certain related assets. We also have the option of pledging additional collateral. The A&R Credit Facility provides for the release of the lien on the collateral if we receive and maintain an investment grade rating with stable outlook from at least two of the three rating agencies (such date on which the collateral release conditions are met, the "Collateral Release Date").


DAL Fair Value of Debt

Market risk associated with our fixed- and variable-rate debt relates to the potential reduction in fair value and negative impact to future earnings, respectively, from an increase in interest rates. The fair value of debt, shown below, is principally based on reported market values, recently completed market transactions and estimates based on interest rates, maturities, credit risk and underlying collateral. Debt is primarily classified as Level 2 within the fair value hierarchy. Fair value of outstanding debt######## (in millions)####December 31, 2023####December 31, 2022 Net carrying amount##$##18,610##$##21,381 Fair value##$##18,400##$##20,700


DAL Covenants

Our debt agreements contain various affirmative, negative and financial covenants. For example, our credit facilities and our SkyMiles financing agreements, contain, among other things, a minimum liquidity covenant. The minimum liquidity covenant requires us to maintain at least $2.0 billion of liquidity (defined as cash, cash equivalents, short-term investments and aggregate principal amount committed and available to be drawn under our revolving credit facilities). Certain of our debt agreements also include collateral coverage ratios and limit our ability to (1) incur liens under certain circumstances, (2) dispose of collateral and (3) engage in mergers and consolidations or transfer all or substantially all of our assets. On or after the Collateral Release Date, collateral and liquidity covenants in the A&R Credit Facility will be replaced to include, among other things, (1) restrictions on our ability to place liens on, or to sell or otherwise dispose of, a designated pool of assets and (2) minimum fixed charge coverage ratio and minimum asset coverage ratio covenants. Our SkyMiles financing agreements include a debt service coverage ratio and also restrict our ability to, among other things, (1) modify the terms of the SkyMiles program, or otherwise change the policies and procedures of the SkyMiles program, in a manner that would reasonably be expected to materially impair repayment of the SkyMiles Debt, (2) sell pre-paid miles in excess of $550 million in the aggregate and (3) terminate or materially modify the intercompany arrangements governing the relationship between Delta and SkyMiles IP Ltd. with respect to the SkyMiles program.


DAL Covenants

Each of these restrictions, however, is subject to certain exceptions and qualifications that are set forth in these debt agreements. We were in compliance with the covenants in our debt agreements at December 31, 2023.


DAL Future Maturities

The following table summarizes scheduled maturities of our debt for the years succeeding December 31, 2023: ####Future debt maturities######## (in millions)####Total Debt####Amortization of Debt (Discount)/Premium and Debt Issuance Cost, net and other#### 2024##$##2,633##$##(49)#### 2025####2,006####(32)#### 2026####2,610####(6)#### 2027####2,315####—#### 2028####1,884####—#### Thereafter####7,245####4#### Total##$##18,693##$##(83)##$##18,610


DAL NOTE 7. LEASES

We lease property and equipment under finance and operating leases. For leases with terms greater than 12 months, we record the related asset and obligation at the present value of the fixed minimum lease payments over the term. Many of our leases include rental escalation clauses, renewal options and/or termination options that are factored into our determination of lease payments when appropriate. We do not separate lease and nonlease components of contracts, except for regional aircraft and information technology ("IT") assets as discussed below.


DAL NOTE 7. LEASES

We use the rate implicit in the lease to discount lease payments to present value, when readily determinable. As the rate implicit in the lease is rarely readily determinable, we use our incremental borrowing rate, which is based on the estimated interest rate for collateralized borrowing over a similar term of the lease at commencement date.


DAL NOTE 7. LEASES

Some of our aircraft lease agreements include provisions for residual value guarantees. These guarantees represent an immaterial portion of our lease liability.


DAL Aircraft

As of December 31, 2023, including aircraft operated by our regional carriers, we leased 225 aircraft, of which 111 were under finance leases and 114 were operating leases. Our aircraft leases had remaining lease terms of five months to 12 years.


DAL Aircraft

In addition, we have regional aircraft leases that are embedded within our capacity purchase agreements and included in the ROU asset and lease liability. We allocated the consideration in each capacity purchase agreement to the lease and nonlease components based on their relative standalone fair values. Lease components of these agreements consist of 116 aircraft as of December 31, 2023 and nonlease components primarily consist of flight operations, in-flight and maintenance services. We determined our best estimate of the standalone fair value of the individual components by considering observable information including rates paid by our wholly owned subsidiary, Endeavor Air, Inc., and rates published by independent valuation firms. See Note 10, "Commitments and Contingencies," for additional information about our capacity purchase agreements.


DAL Airport Facilities

Our facility leases are primarily for space at approximately 300 airports around the world that we serve. These leases reflect our use of airport terminals, office space, cargo warehouses and maintenance facilities. We generally lease space from government agencies that control the use of the airport, and as a result, these leases are classified as operating leases. The remaining lease terms vary from one month to 29 years. At the majority of the U.S. airports, the lease rates depend on airport operating costs or use of the facilities and are reset at least annually. Because of the variable nature of the rates, these leases are not recorded on our balance sheets as a ROU asset and lease liability.


DAL Airport Facilities

Some airport facilities have fixed payment schedules, the most significant of which are New York-LaGuardia and New York-JFK. For those airport leases, we have recorded a ROU asset and lease liability representing the fixed component of the lease payments. See Note 8, "Airport Redevelopment," for more information on our significant airport redevelopment projects.


DAL Other Ground Property and Equipment

We lease certain IT assets (including servers, mainframes, etc.), ground support equipment (including tugs, tractors, fuel trucks and de-icers), and various other equipment. The remaining lease terms range from one month to six years. Certain leased assets are embedded within various ground and IT service agreements. For ground service contracts, we have elected to include both the lease and nonlease components in the lease asset and lease liability balances on our balance sheets. For IT service contracts, we have elected to separate the lease and nonlease components and only the lease components are included in the lease asset and lease liability balances on our balance sheets. The amounts of these lease and nonlease components are not significant.


DAL Lease Position

The table below presents the lease-related assets and liabilities recorded on the balance sheets. ##Lease asset and liability balance sheet position by category############## ############December 31,#### (in millions)####Classification on the Balance Sheet####2023######2022## Assets################ Operating lease assets####Operating lease right-of-use assets##$##7,004####$##7,036## Finance lease assets####Property and equipment, net####1,338######1,487## Total lease assets######$##8,342####$##8,523## Liabilities################ Current################ Operating####Current maturities of operating leases##$##759####$##714## Finance####Current maturities of debt and finance leases####358######304## Noncurrent################ Operating####Noncurrent operating leases####6,468######6,866## Finance####Debt and finance leases####1,086######1,345## Total lease liabilities######$##8,671####$##9,229## Weighted-average remaining lease term################ Operating leases########13 years######13 years## Finance leases########4 years######5 years## Weighted-average discount rate################ Operating leases########3.73##%####4.30##% Finance leases########3.12##%####3.05##%


DAL Lease Costs

The table below presents certain information related to the lease costs for finance and operating leases. Lease cost by category############ ########Year Ended December 31,#### (in millions)####2023####2022####2021 Finance lease cost############ Amortization of leased assets##$##109##$##120##$##131 Interest of lease liabilities####42####45####55 Operating lease cost(1)####981####949####863 Short-term lease cost(1)####258####281####245 Variable lease cost(1)####2,230####1,859####1,599 Total lease cost##$##3,620##$##3,254##$##2,893


DAL Lease Costs

(1)Expenses are primarily classified within aircraft rent, landing fees and other rents and regional carrier expense on our income statement.


DAL Other Information

The table below presents supplemental cash flow information related to leases. Supplemental lease-related cash flow information############ ########Year Ended December 31,#### (in millions)####2023####2022####2021 Cash paid for amounts included in the measurement of lease liabilities############ Operating cash flows for operating leases##$##1,230##$##809##$##999 Operating cash flows for finance leases####71####49####46 Financing cash flows for finance leases####264####363####336


DAL Undiscounted Cash Flows

The table below reconciles the undiscounted cash flows for each of the first five years and total of the remaining years to the finance lease liabilities and operating lease liabilities recorded on the balance sheets. ####Future lease cash flows and reconciliation to the balance sheet#### (in millions)####Operating Leases####Finance Leases 2024##$##1,021##$##395 2025####990####257 2026####899####192 2027####860####391 2028####772####164 Thereafter####4,705####157 Total minimum lease payments####9,247####1,556 Less: amount of lease payments representing interest####(2,020)####(112) Present value of future minimum lease payments####7,227####1,444 Less: current obligations under leases####(759)####(358) Long-term lease obligations##$##6,468##$##1,086


DAL Undiscounted Cash Flows

As of December 31, 2023, we had additional leases that had not yet commenced of $151 million. These leases will commence in 2024 with lease terms of 4 to 19 years.


DAL New York-JFK Airport

We are enhancing and expanding our facilities at Terminal 4 of JFK to strengthen our competitive position and offer a premium travel experience for customers in New York City. Terminal 4 is operated by JFK International Air Terminal LLC ("IAT"), a private party, under its lease with the Port Authority of New York and New Jersey ("Port Authority"). We have a long-term agreement with IAT to sublease space in Terminal 4 through 2043 ("Sublease").


DAL New York-JFK Airport

In 2021, the Port Authority approved plans to renovate and expand Terminal 4 in order to facilitate Delta's relocation from Terminal 2 and consolidation of its operations into Terminal 4. The project is adding 10 new gates and other complementary facilities, including an additional Delta Sky Club and a new Delta premium lounge. The project is estimated to cost approximately $1.6 billion and will be funded primarily with bonds issued in 2022 by the NYTDC for which our landlord, IAT, is the obligor. The majority of project costs are being used to expand or modify Delta's leased premises. Construction started in late 2021 and in 2023 we substantially completed a majority of Delta's portion of the project and consolidated all operations to Terminal 4. Based on our assessment of the project, we concluded that we do not control the underlying assets being constructed, and therefore, we do not have the project asset or related obligation recorded on our balance sheets.


Equity Investment. We have an equity method investment in JFK IAT Member LLC, which owns IAT. The Sublease requires us to pay certain fixed management fees. We determined the investment is a variable interest entity and assessed whether we have a controlling financial interest in IAT. Our rights under the Sublease, with respect to management of Terminal 4, are consistent with rights granted to an anchor tenant under a standard airport lease. Accordingly, we do not consolidate this entity in our Consolidated Financial Statements. See Note 4, "Investments" for additional information on our equity investments.


DAL Los Angeles International Airport ("LAX")

As part of the terminal redevelopment project at LAX, we are modernizing, upgrading, and providing post-security connection to Terminals 2 and 3. We announced this project and executed a modified lease agreement during 2016 with the City of Los Angeles (the "City"), which owns and operates LAX. This project includes a new centralized ticketing and arrival hall, a new security checkpoint, core infrastructure to support the City's planned airport people mover, ramp improvements and a post-security connector to the north side of the Tom Bradley International Terminal.


The project is expected to cost approximately $2.4 billion. A substantial majority of the project costs are being funded through the Regional Airports Improvement Corporation ("RAIC"), a California public benefit corporation, using a revolving credit facility provided by a group of lenders. The credit facility was executed in 2017 and we have guaranteed the obligations of the RAIC under the credit facility. During 2023, the revolving credit facility agreement was amended and the revolver capacity was reduced to $626 million. Loans made under the credit facility are being repaid with the proceeds from the City’s purchase of completed project assets. Under the lease agreement and subsequent project component approvals by the City's Board of Airport Commissioners, the City has appropriated to date approximately $1.8 billion to purchase completed project assets, representing the maximum allowable reimbursement by the City. Costs incurred in excess of the $1.8 billion maximum will not be reimbursed by the City. We currently expect our net project costs to be approximately $600 million, of which approximately $350 million has been reflected as investing activities and approximately $200 million as operating activities in our cash flows statement since the project started in 2017.


In 2020, we enhanced the project’s scope to include a more customer-friendly design of Terminal 3, an expanded Delta Sky Club and baggage system upgrades designed to increase the terminals’ operational efficiency going forward. In 2023, we substantially completed all construction for this project.


Based on our assessment of the project, we concluded that we do not control the underlying assets being constructed, and therefore, we do not have the project asset or related obligation recorded on our balance sheets, except for certain assets recorded as leasehold improvements within property and equipment, net on our balance sheets.


We have recorded approximately $200 million as a ROU asset on our balance sheets related to certain costs incurred in excess of RAIC funding, though we have not recognized a ROU asset and lease liability on our balance sheets for the variable lease payments in our agreement with the City. See Note 7, "Leases" for more information on our ROU assets and lease liabilities.


DAL New York-LaGuardia Airport

As part of the terminal redevelopment project at LaGuardia Airport, we are partnering with the Port Authority to replace Terminals C and D with a new state-of-the-art terminal facility consisting of 37 gates across four concourses connected to a central headhouse. The completed terminal redevelopment features a new, larger Delta Sky Club, wider concourses, more gate seating and nearly double the amount of concessions space than the prior terminals. The completed facility also offers direct access between the parking garage and terminal and improved roadways and drop-off/pick-up areas. Construction is underway and is being phased to limit passenger inconvenience.


DAL New York-LaGuardia Airport

We have opened Concourse E, Concourse G, the headhouse (including the Delta Sky Club), the terminal roadways and portions of Concourse D and Concourse F. Due to an acceleration effort that commenced in 2020, substantial completion is expected by the end of 2024.


In connection with the redevelopment, during 2017, we entered into an amended and restated terminal lease with the Port Authority with a term through 2050. Pursuant to the lease agreement, as amended to date, we (1) are funding (through debt issuance and existing cash) and undertaking the design, management and construction of the terminal and certain off-premises supporting facilities, (2) are receiving a Port Authority contribution of approximately $500 million to facilitate construction of the terminal and other supporting infrastructure, (3) will be responsible for all operations and maintenance during the term of the lease and (4) will have preferential rights to all gates in the terminal subject to Port Authority requirements with respect to accommodation of designated carriers.


The project is expected to cost $4.3 billion and the total amount spent to date is approximately $3.7 billion. We currently expect our net project cost to be approximately $3.8 billion and we bear the risks of project construction, including any potential cost over-runs. We entered into loan agreements to fund a portion of the construction, which are recorded on our balance sheets as debt with the proceeds reflected as restricted cash. Using funding primarily provided by these arrangements, we spent approximately $500 million, $650 million and $950 million during 2023, 2022 and 2021, respectively. Based on our assessment of the project, we concluded that we do not control the underlying assets being constructed. Costs incurred by Delta are accounted for as leasehold improvements recorded in property and equipment, net on our balance sheets. See Note 6, "Debt," for additional information on the debt (NYTDC Special Facilities Revenue Bonds) related to this redevelopment project.


DAL NOTE 9. EMPLOYEE BENEFIT PLANS

We sponsor defined benefit and defined contribution pension plans, healthcare plans and disability and survivorship plans for eligible employees and retirees and their eligible family members.


DAL NOTE 9. EMPLOYEE BENEFIT PLANS

Defined Benefit Pension Plans. We sponsor defined benefit pension plans for eligible employees and retirees. These plans are generally closed to new entrants and frozen for future benefit accruals. Our funding obligations for qualified defined benefit plans are governed by the Employee Retirement Income Security Act and any applicable legislation. Under the Pension Protection Act of 2006, we elected alternative funding rules so that the unfunded liability for a frozen defined benefit plan may be amortized over a fixed 17-year period and is calculated using an 8.85% discount rate until the 17-year period expires for all frozen defined benefit plans by the end of 2024. Upon expiration, under legislation passed in 2021, any required funding would be amortized over a rolling 15-year period and calculated using a discount rate of no less than 4.75% through 2030. We have no minimum funding requirements for these plans in 2024 and do not plan to make voluntary contributions during 2024.


DAL NOTE 9. EMPLOYEE BENEFIT PLANS

During 2023, we established a market based cash balance defined benefit pension plan for eligible pilots that is funded by company contributions in excess of IRS limits in the 401(k) plan. Prior to 2023, these contributions were reflected in our cost associated with the defined contribution pension plans shown below. The company funds the plan with cash contributions as benefits are earned and invests those assets. The participants’ benefit is the sum of the contributions made on their behalf plus any positive return on the invested contributions.


DAL NOTE 9. EMPLOYEE BENEFIT PLANS

Defined Contribution Pension Plans. We sponsor several defined contribution plans. These plans generally cover different employee groups and employer contributions vary by plan. The costs associated with our defined contribution pension plans were approximately $1.2 billion, $1.0 billion and $875 million for the years ended December 31, 2023, 2022 and 2021, respectively.


DAL NOTE 9. EMPLOYEE BENEFIT PLANS

Postretirement Healthcare Plans. We sponsor healthcare plans that provide benefits to eligible retirees and their dependents who are under age 65. We have generally eliminated company-paid post age 65 healthcare coverage, except for (1) subsidies available to a limited group of retirees and their dependents, (2) a group of retirees who retired prior to 1987 and (3) retiree medical accounts which provide a fixed dollar amount to eligible employees who retired under the 2012 voluntary workforce reduction programs or under the 2020 voluntary early retirement and separation programs ("voluntary programs").


DAL NOTE 9. EMPLOYEE BENEFIT PLANS

Postemployment Plans. We provide certain other welfare benefits to eligible former or inactive employees after employment but before retirement, primarily as part of the disability and survivorship plans. Substantially all employees are eligible for benefits under these plans in the event of death and/or disability.


DAL NOTE 9. EMPLOYEE BENEFIT PLANS

Benefits under our postretirement and post employment plans are funded from current assets and employee contributions.


DAL Benefit Obligations, Fair Value of Plan Assets and Funded Status

######Pension Benefits########Other Postretirement and Postemployment Benefits## ######December 31,########December 31,## (in millions)####2023####2022####2023####2022 Benefit obligation at beginning of period##$##15,811##$##21,073##$##3,664##$##4,605 Service cost####95####—####71####70 Interest cost####855####611####200####128 Actuarial loss/(gain)####351####(4,599)####24####(710) Benefits paid, including lump sums and annuities####(1,201)####(1,274)####(485)####(447) Plan amendments####—####—####11####— Participant contributions####—####—####18####18 Benefit obligation at end of period(1)##$##15,911##$##15,811##$##3,503##$##3,664 Fair value of plan assets at beginning of period##$##15,721##$##19,502##$##71##$##357 Actual gain/(loss) on plan assets####1,142####(2,517)####3####(73) Employer contributions####104####10####426####216 Participant contributions####—####—####18####18 Benefits paid, including lump sums and annuities####(1,201)####(1,274)####(485)####(447) Fair value of plan assets at end of period##$##15,766##$##15,721##$##33##$##71 Funded status at end of period##$##(145)##$##(90)##$##(3,470)##$##(3,593)


(1) At the end of each year presented, our accumulated benefit obligations for our pension plans are equal to the benefit obligations shown above.


During 2023, net actuarial losses increased our benefit obligation primarily due to the decrease in discount rates while net actuarial gains decreased our benefit obligation primarily due to the increase in discount rates during 2022. These gains and losses are recorded in AOCI and reflected in the table below. Amounts are generally amortized from AOCI over the expected future lifetime of plan participants.


DAL Balance Sheet Position

######Pension Benefits########Other Postretirement and Postemployment Benefits## ######December 31,########December 31,## (in millions)####2023####2022####2023####2022 Prepaid pension assets##$##22##$##27##$##—##$##— Current liabilities####(9)####(9)####(404)####(369) Noncurrent liabilities####(158)####(108)####(3,066)####(3,224) Funded status at end of period##$##(145)##$##(90)##$##(3,470)##$##(3,593) Net actuarial (loss)/gain##$##(6,474)##$##(6,444)##$##(162)##$##(155) Prior service credit####—####—####1####18 Total accumulated other comprehensive loss, pre-tax##$##(6,474)##$##(6,444)##$##(161)##$##(137)


DAL Balance Sheet Position

Certain pension plans have benefit obligations in excess of plan assets. These plans have aggregate projected benefit obligations of $8.6 billion and aggregate fair value of plan assets of $8.4 billion at December 31, 2023.


DAL Net Periodic Cost/(Benefit)

########Pension Benefits############Other Postretirement and Postemployment Benefits#### ########Year Ended December 31,############Year Ended December 31,#### (in millions)####2023####2022####2021####2023####2022####2021 Service cost##$##95##$##—##$##—##$##71##$##70##$##86 Interest cost####855####611####582####200####128####117 Expected return on plan assets####(1,060)####(1,319)####(1,522)####(1)####(17)####(34) Amortization of prior service credit####—####—####—####(5)####(5)####(6) Recognized net actuarial loss####240####255####354####14####56####55 Settlements####—####—####2####—####—####— Net periodic cost/(benefit)##$##130##$##(453)##$##(584)##$##279##$##232##$##218


DAL Net Periodic Cost/(Benefit)

Service cost is recorded in salaries and related costs in the income statement, while all other components are recorded within pension and related (expense)/benefit under non-operating expense. Service cost listed under Pension Benefits relates solely to the new market based cash balance defined benefit pension plan discussed above.


DAL Assumptions

We used the following actuarial assumptions to determine our benefit obligations and our net periodic cost/(benefit) for the periods presented: ######December 31,#### Benefit Obligations(1)##2023######2022## Weighted average discount rate##5.31##%####5.62##% ######Year Ended December 31,###### Net Periodic Cost/(Benefit)(1)##2023####2022####2021## Weighted average discount rate##5.59##%##2.96##%##2.61##% Weighted average expected long-term rate of return on plan assets##7.00##%##7.00##%##8.98##% Assumed healthcare cost trend rate for the next year(2)##6.25##%##6.50##%##6.25##%


DAL Assumptions

(1)Future employee compensation levels do not impact our frozen defined benefit pension plans or other postretirement plans and impact only a small portion of our other postemployment obligation.


DAL Assumptions

(2)Healthcare cost trend rate is assumed to decline gradually to 5.00% by 2029 and remain unchanged thereafter.


DAL Assumptions

Expected Long-Term Rate of Return. Our expected long-term rate of return on plan assets is based primarily on plan-specific investment studies using historical market return and volatility data. Modest excess return expectations versus some public market indices are incorporated into the return projections based on the actively managed structure of the investment programs and their records of achieving such returns historically. We also expect to receive a premium for investing in less liquid private markets. We review our rate of return on plan assets assumptions annually. Our annual investment performance for one particular year does not, by itself, significantly influence our evaluation. The investment strategy for our defined benefit pension plan assets is to earn a long-term return that meets or exceeds our annualized return target while taking an acceptable level of risk and maintaining sufficient liquidity to pay current benefits and other cash obligations of the plan. This is achieved by investing in a globally diversified mix of public and private equity, fixed income, real assets, hedge funds and other assets and instruments. Our weighted average expected long-term rate of return on assets for net periodic cost/(benefit) for the year ended December 31, 2023 was 7.00%.


DAL Assumptions

Life Expectancy. Changes in life expectancy may significantly impact our benefit obligations and future net periodic cost/(benefit). Each year we review information published by the Society of Actuaries and other publicly available information to develop our best estimate of life expectancy for purposes of measuring pension and other postretirement and postemployment benefit obligations.


DAL Benefit Payments

Benefit payments in the table below are based on the same assumptions used to measure the related benefit obligations. Actual benefit payments may vary significantly from these estimates. Benefits earned under our pension plans are expected to be paid from funded benefit plan trusts, while our other postretirement and postemployment benefits are funded from current assets.


DAL Benefit Payments

The following table summarizes the benefit payments that are expected to be paid in the years ending December 31: Expected future benefit payments######## (in millions)####Pension Benefits####Other Postretirement and Postemployment Benefits 2024##$##1,310##$##450 2025####1,350####440 2026####1,350####440 2027####1,360####440 2028####1,360####450 2029-2033####6,670####2,190


DAL Plan Assets

We have adopted and implemented investment policies for our defined benefit pension plans that incorporate strategic asset allocation mixes intended to best meet the plans' long-term obligations, while maintaining an appropriate level of risk and liquidity. These asset portfolios employ a diversified mix of investments, which are reviewed periodically. Active management strategies are utilized where feasible in an effort to realize investment returns in excess of market indices. Derivatives in the plans are primarily used to manage risk and gain asset class exposure while still maintaining liquidity. As part of these strategies, the plans are required to hold cash collateral associated with certain derivatives. Our investment strategies target a mix of 20-40% growth-seeking assets, 25-35% income-generating assets and 35-45% risk-diversifying assets. Risk diversifying assets include hedge funds implementing long-short, market neutral and relative value strategies that invest primarily in publicly-traded equity, fixed income, foreign currency and commodity securities and are used to improve the impact of active management on the plans.


DAL Plan Assets

Benefit Plan Assets Measured at Fair Value on a Recurring Basis


DAL Plan Assets

Benefit plan assets relate to our defined benefit pension plans and certain of our postemployment benefit plans. These investments are presented net of the related benefit obligation in either other noncurrent assets or pension, postretirement and related benefits on the balance sheets depending on the funded status of each plan. See Note 3, "Fair Value Measurements," for a description of the levels within the fair value hierarchy and associated valuation techniques used to measure fair value. The following table shows our benefit plan assets by asset class. ######Benefit plan assets measured at fair value on a recurring basis################## ########December 31, 2023############December 31, 2022#### (in millions)####Level 1####Level 2####Total####Level 1####Level 2####Total Fixed income and fixed income-related instruments##$##300##$##1,858##$##2,158##$##77##$##1,366##$##1,443 Cash equivalents####471####685####1,156####629####265####894 Equities and equity-related instruments####647####122####769####420####25####445 Delta common stock####419####—####419####343####—####343 Real assets####11####236####247####17####170####187 Benefit plan assets##$##1,848##$##2,901##$##4,749##$##1,486##$##1,826##$##3,312 Investments measured at net asset value ("NAV")(1)############11,417############12,329 Total benefit plan assets##########$##16,166##########$##15,641


DAL Plan Assets

(1) Investments that were measured at NAV per share (or its equivalent) as a practical expedient have not been classified in the fair value hierarchy.


Fixed Income and Fixed Income-Related Instruments. These investments include corporate bonds, government bonds, collateralized mortgage obligations and other asset-backed securities, and are generally valued at the bid price or the average of the bid and ask price. Prices are based on pricing models, quoted prices of securities with similar characteristics or broker quotes. Fixed income-related instruments include investments in securities traded on exchanges, including listed futures and options, which are valued at the last reported sale prices on the last business day of the year, or if not available, the last reported bid prices. Over-the-counter securities are valued at the bid prices or the average of the bid and ask prices on the last business day of the year from published sources or, if not available, from other sources considered reliable, generally broker quotes.


Cash Equivalents. These investments primarily consist of high-quality, short-term obligations that are a part of institutional money market mutual funds that are valued using current market quotations or an appropriate substitute that reflects current market conditions.


Equities and Equity-Related Instruments. These investments include common stock and equity-related instruments. Common stock is valued at the closing price reported on the active market on which the individual securities are traded. Equity-related instruments include investments in securities traded on exchanges, including listed futures and options, which are valued at the last reported sale prices on the last business day of the year or, if not available, the last reported bid prices. Over-the-counter securities are valued at the bid prices or the average of the bid and ask prices on the last business day of the year from published sources or, if not available, from other sources considered reliable, generally broker quotes.


Delta Common Stock. The Delta common stock investment is managed by an independent fiduciary.


Real Assets. These investments include commodities such as precious metals and precious metals-related instruments, some of which are valued at the closing price reported on the active market on which the individual instruments are traded, while others are priced based on pricing models, quoted prices of securities with similar characteristics or broker quotes.


The following table summarizes investments measured at fair value based on NAV per share as a practical expedient: Benefit plan investment assets measured at NAV################ ######December 31, 2023########December 31, 2022## (in millions)####Fair Value##Redemption Frequency##Redemption Notice Period####Fair Value##Redemption Frequency##Redemption Notice Period Hedge funds and hedge fund-related strategies##$##6,175##(1)##7-180 Days##$##6,730##(1)##2-180 Days Commingled funds, private equity and private equity-related instruments (4)####2,379##(1) (2)##0-45 Days####2,266##(1) (2)##2-45 Days Fixed income and fixed income-related instruments(4)####1,147##(1)##1-180 Days####1,003##(1)##1-180 Days Real assets (4)####893##(2)##N/A####819##(2)##N/A Other####823##(3)##2-10 Days####1,511##(3)##2-10 Days Total investments measured at NAV##$##11,417######$##12,329####


(1)Various. Includes funds with monthly or more frequent, quarterly and/or custom redemption frequencies as well as funds with a redemption window following the anniversary of the initial investment.


(2)Includes private funds that are closed-ended structures in which the plans' investments are generally not eligible for redemption.


(3)Includes funds with monthly or more frequent redemptions.


(4)Unfunded commitments were $1.3 billion for commingled funds, private equity and private equity-related instruments, $296 million for fixed income and fixed income-related instruments and $584 million for real assets at December 31, 2023.


On an annual basis we assess the potential for adjustments to the fair value of all investments. This primarily applies to private equity, private equity-related strategies and real assets. Due to a lag in the availability of data for certain of these investments, we solicit valuation updates from the investment fund managers and use their information and corroborating data from public markets to determine any needed fair value adjustments.


Hedge Funds and Hedge Fund-Related Strategies. These investments are primarily made through shares of limited partnerships or similar structures for which a liquid secondary market does not exist.


Commingled Funds, Private Equity and Private Equity-Related Instruments. These investments include commingled funds invested in common stock, as well as private equity and private equity-related instruments. Commingled funds are valued based on quoted market prices of the underlying assets owned by the fund. Private equity and private equity-related instruments are typically valued quarterly by the fund managers using valuation models where one or more of the significant inputs into the model cannot be observed and which require the development of assumptions.


Fixed Income and Fixed Income-Related Instruments. These investments include private fixed income instruments that are typically valued monthly or quarterly by the fund managers or third-party valuation agents using valuation models where one or more of significant inputs into the model cannot be observed and which require the development of assumptions.


Real Assets. These investments include real estate, energy transition, timberland, agriculture and infrastructure. The valuation of real assets requires significant judgment due to the absence of quoted market prices as well as the inherent lack of liquidity and the long-term nature of these assets. Real assets are typically valued quarterly by the fund managers using valuation models where one or more of the significant inputs into the model cannot be observed and which require the development of assumptions.


Other. Primarily includes globally-diversified, risk-managed commingled funds consisting mainly of equity, fixed income and commodity exposures.


DAL Other

We also sponsor defined benefit pension plans for eligible employees in certain foreign countries. These plans did not have a material impact on our Consolidated Financial Statements in any period presented.


DAL Profit Sharing Program

Our broad-based employee profit sharing program provides that, for each year in which we have an annual pre-tax profit, as defined by the terms of the program, we will pay a specified portion of that profit to employees. In determining the amount of profit sharing, the program defines profit as pre-tax profit adjusted for profit sharing and certain other items.


DAL Profit Sharing Program

For the years ended December 31, 2023 and 2022, we recorded profit sharing expense of $1.4 billion and $563 million under the program, respectively. For the year ended December 31, 2021, we recorded a special profit sharing expense of $108 million, based on the adjusted pre-tax profit earned during the second half of the year, to recognize the extraordinary efforts of our employees through the pandemic.


DAL Aircraft Purchase Commitments

Our future aircraft purchase commitments totaled approximately $17.5 billion at December 31, 2023: Aircraft purchase commitments(1)#### (in millions)####Total 2024##$##3,530 2025####4,230 2026####3,490 2027####3,870 2028####1,650 Thereafter####760 Total##$##17,530


DAL Aircraft Purchase Commitments

(1)The timing of these commitments is based on our contractual agreements with the aircraft manufacturers and remains uncertain due to supply chain, manufacturing and regulatory constraints.


Our future aircraft purchase commitments included the following aircraft at December 31, 2023: Aircraft purchase commitments by fleet type## Fleet Type##Purchase Commitments A220-300##77 A321-200neo##107 A330-900neo##12 A350-900##16 B-737-10##100 Total##312


DAL Aircraft Orders

During 2023, we agreed to acquire one A330-900 with delivery expected to occur in 2025 and exercised purchase rights for 26 A220-300 aircraft with delivery expected to start in 2027.


DAL Aircraft Orders

In January 2024, we entered into a purchase agreement with Airbus for 20 A350-1000 aircraft, with an option to purchase an additional 20 widebody aircraft. Deliveries of these aircraft are scheduled to begin in 2026.


DAL Contract Carrier Agreements

We have contract carrier agreements with regional carriers expiring through 2034. These agreements are structured as either capacity purchase or revenue proration agreements.


DAL Contract Carrier Agreements

Capacity Purchase Agreements. Our regional carriers primarily operate for us under capacity purchase agreements. Under these agreements, the regional carriers operate some or all of their aircraft using our flight designator codes, and we control the scheduling, pricing, reservations, ticketing and seat inventories of those aircraft and retain the revenues associated with those flights. 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.


DAL Contract Carrier Agreements

The following table shows our minimum obligations under our existing capacity purchase agreements with third-party regional carriers, excluding contract carrier payments accounted for as leases of aircraft, which are described in Note 7, "Leases." The obligations set forth in the table contemplate minimum levels of flying by the regional carriers under the respective agreements and also reflect assumptions regarding certain costs associated with the minimum levels of flying such as the cost of fuel, labor, maintenance, insurance, catering, property tax and landing fees. Accordingly, our actual payments under these agreements could differ materially from the minimum fixed obligations set forth in the table below. Contract carrier minimum obligations#### (in millions)####Amount 2024##$##1,600 2025####1,540 2026####1,560 2027####1,520 2028####1,260 Thereafter####1,360 Total##$##8,840


DAL Contract Carrier Agreements

Revenue Proration Agreement. As of December 31, 2023, a portion of our contract carrier arrangement with SkyWest Airlines, Inc. was structured as a revenue proration agreement. This revenue proration agreement establishes a fixed dollar or percentage division of revenues for tickets sold to passengers traveling on connecting flight itineraries.


DAL Legal Contingencies

We are involved in various legal proceedings related to employment practices, environmental issues, commercial disputes, antitrust and other regulatory matters concerning our business. We record liabilities for losses from legal proceedings when we determine that it is probable that the outcome in a legal proceeding will be unfavorable and the amount of loss can be reasonably estimated. Although the outcome of the legal proceedings in which we are involved cannot be predicted with certainty, we believe that the resolution of current matters will not have a material adverse effect on our Consolidated Financial Statements.


DAL Credit Card Processing Agreements

Our VISA/MasterCard and American Express credit card processing agreements provide that no cash reserve ("Reserve") is required, and no withholding of payment related to receivables collected will occur, except in certain circumstances, including when we do not maintain a required level of liquidity as outlined in the merchant processing agreements. In circumstances in which the credit card processor can establish a Reserve or withhold payments, the amount of the Reserve or payments that may be withheld would be equal to the potential liability of the credit card processor for tickets purchased with VISA/MasterCard or American Express credit cards, as applicable, that had not yet been used for travel. We did not have a Reserve or an amount withheld as of December 31, 2023 or 2022.


DAL General Indemnifications

We are the lessee under many commercial real estate leases. It is common in these transactions for us, as the lessee, to agree to indemnify the lessor and the lessor's related parties for tort, environmental and other liabilities that arise out of or relate to our use or occupancy of the leased premises. This type of indemnity would typically make us responsible to indemnified parties for liabilities arising out of the conduct of, among others, contractors, licensees and invitees at, or in connection with, the use or occupancy of the leased premises. This indemnity often extends to related liabilities arising from the negligence of the indemnified parties, but usually excludes any liabilities caused by either their sole or gross negligence or their willful misconduct.


DAL General Indemnifications

Our aircraft and other equipment lease and financing agreements typically contain provisions requiring us, as the lessee or obligor, to indemnify the other parties to those agreements, including certain of those parties' related persons, against virtually any liabilities that might arise from the use or operation of the aircraft or other equipment.


DAL General Indemnifications

We believe that our insurance would cover most of our exposure to liabilities and related indemnities associated with the commercial real estate leases and aircraft and other equipment lease and financing agreements described above. While our insurance does not typically cover environmental liabilities, we have insurance policies in place as required by applicable environmental laws.


DAL General Indemnifications

Some of our aircraft and other financing transactions include provisions that require us to make payments to preserve an expected economic return to the lenders if that economic return is diminished due to specified changes in law or regulations. In some of these financing transactions, we also bear the risk of changes in tax laws that would subject payments to non-U.S. lenders to withholding taxes.


DAL General Indemnifications

We cannot reasonably estimate our potential future payments under the indemnities and related provisions described above because we cannot predict (1) when and under what circumstances these provisions may be triggered and (2) the amount that would be payable if the provisions were triggered because the amounts would be based on facts and circumstances existing at such time.


DAL Employees Under Collective Bargaining Agreements

As of December 31, 2023, we had approximately 103,000 full-time equivalent employees, approximately 20% of whom 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##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


Delta pilots ratified a new four-year Pilot Working Agreement effective January 1, 2023. The agreement includes numerous work rule changes and pay rate increases during the four-year term, including an initial pay rate increase of 18%. The agreement also includes a provision for a one-time payment made upon ratification in the March 2023 quarter of $735 million. Additionally, we recorded adjustments to other benefit-related items of approximately $130 million. These items are recorded within pilot agreement and related expenses in our income statement.


In addition to the domestic airline employee groups discussed above, approximately 200 refinery employees of our wholly owned subsidiary 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, 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 Other

We have certain contracts for goods and services that require us to pay a penalty, acquire inventory specific to us or purchase contract-specific equipment, as defined by each respective contract, if we terminate the contract without cause prior to its expiration date. Because these obligations are contingent on our termination of the contract without cause prior to its expiration date, no obligation would exist unless such a termination occurs.


DAL Income Tax Provision

Components of income tax provision############ ########Year Ended December 31,#### (in millions)####2023####2022####2021 Current tax provision:############ Federal##$##—##$##—##$##— State and local####(8)####(1)####(1) International####(11)####(4)####(3) Deferred tax (provision) benefit:############ Federal####(896)####(525)####(130) State and local####(84)####(66)####16 Income tax provision##$##(999)##$##(596)##$##(118)


The following table presents the principal reasons for the difference between the effective tax rate and the U.S. federal statutory income tax rate: Reconciliation of statutory federal income tax rate to the effective income tax rate############ ######Year Ended December 31,###### ##2023####2022####2021## U.S. federal statutory income tax rate##21.0##%##21.0##%##21.0##% State taxes, net of federal benefit##2.0####3.0####(4.4)## Permanent differences##0.7####1.0####4.9## Valuation allowance##(5.0)####7.3####9.1## Other##(0.9)####(1.1)####(0.8)## Effective income tax rate##17.8##%##31.2##%##29.8##%


DAL Deferred Taxes

Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting and income tax purposes. Significant components of deferred income tax assets and liabilities######## ######December 31,## (in millions)####2023####2022 Deferred tax assets:######## Net operating loss carryforwards##$##1,217##$##1,395 Capital loss carryforward####8####50 Pension, postretirement and other benefits####1,488####1,467 Investments####806####1,106 Deferred revenue####2,110####2,334 Lease liabilities####2,193####2,376 Other####709####682 Valuation allowance####(877)####(1,176) Total deferred tax assets##$##7,654##$##8,234 Deferred tax liabilities:######## Depreciation##$##5,570##$##5,110 Operating lease assets####1,533####1,624 Intangible assets####1,143####1,121 Other####73####78 Total deferred tax liabilities##$##8,319##$##7,933 Balance Sheet Position:######## Other noncurrent assets##$##243##$##325 Deferred income taxes, net####(908)####(24) Net deferred tax (liabilities) assets##$##(665)##$##301


DAL Valuation Allowance

We periodically assess whether it is more likely than not that we will generate sufficient taxable income to realize our deferred income tax assets. We establish valuation allowances if it is more likely than not that we will be unable to realize our deferred income tax assets. In making this determination, we consider available positive and negative evidence and make certain assumptions. We consider, among other things, projected future taxable income, scheduled reversals of deferred tax liabilities, the overall business environment, our historical financial results and tax planning strategies.


At December 31, 2023 our net deferred tax liability balance was $665 million, including an $877 million valuation allowance primarily related to certain net realized and unrealized capital losses and certain state net operating losses.


As of December 31, 2023, we had approximately $4.5 billion of U.S. federal pre-tax net operating loss carryforwards which we are expecting to utilize by the end of 2025. Approximately $800 million of these net operating loss carryforwards were generated prior to 2018 and will not begin to expire until 2029, while the remaining net operating loss carryforwards do not expire. Therefore, we have not recorded a valuation allowance on our deferred tax assets other than the certain net realized and unrealized capital losses and certain state net operating losses that have short expiration periods.


The following table presents the balance of our valuation allowance on our deferred income tax assets and the associated activity: ####Valuation allowance activity#### (in millions)####2023####2022 Balance at January 1##$##1,176##$##833 Tax provision####(299)####155 Equity investment activity####—####188 Balance at December 31##$##877##$##1,176


DAL Other

The amount of, and changes to, our uncertain tax positions were not material in any of the years presented. We are currently under audit by the IRS for the 2023 and 2022 tax years.


DAL Equity

We are authorized to issue 2.0 billion shares of capital stock, of which up to 1.5 billion may be shares of common stock, par value $0.0001 per share, and up to 500 million may be shares of preferred stock.


DAL Equity

Preferred Stock. We may issue preferred stock in one or more series. The Board of Directors is authorized (1) to fix the descriptions, powers (including voting powers), preferences, rights, qualifications, limitations and restrictions with respect to any series of preferred stock and (2) to specify the number of shares of any series of preferred stock. We have not issued any preferred stock.


DAL Equity

Treasury Stock. We generally withhold shares of Delta common stock to cover employees' portion of required tax withholdings when employee equity awards are issued or vest. These shares are valued at cost, which equals the market price of the common stock on the date of issuance or vesting. The weighted average cost per share held in treasury was $30.37 and $29.73 as of December 31, 2023 and 2022, respectively.


DAL Equity

Warrants. During 2020 and 2021, in connection with the Coronavirus Aid, Relief, and Economic Security Act of 2020 (the "CARES Act") payroll support program ("PSP") and extensions, we issued warrants to the U.S Department of the Treasury to acquire more than 11.1 million shares of Delta common stock. The number of warrants outstanding slightly increased and the exercise price of the warrants slightly decreased since December 31, 2022 due to dividend payments during 2023. Key terms under each program as of December 31, 2023 are as follows: ####Summary of payroll support program warrants#### (in millions)##Number of Warrants####Exercise Price##Expiration Year Payroll Support Program (PSP1)##6.8##$##24.25##2025 Payroll Support Program Extension (PSP2)##2.4####39.54##2026 Payroll Support Program 3 (PSP3)##1.9####47.57##2026 Total##11.1######


Government Grant Recognition. Under the initial payroll support program under the CARES Act and PSP extensions we received support payments of grants, which included $4.5 billion of grants during the year ended December 31, 2021. The grants received from PSP2 and PSP3 were recognized in government grant recognition in our income statement during 2021 over the period that the funds were intended to compensate.


DAL Equity Compensation

Our broad-based equity and cash compensation plan provides for grants of restricted stock, restricted stock units, stock options, performance awards, including cash incentive awards and other equity-based awards (the "Plan"). Shares of common stock issued under the Plan may be made available from authorized, but unissued, common stock or common stock we acquire. If any shares of our common stock are covered by an award that expires, is canceled, forfeited or otherwise terminates without delivery of shares (including shares surrendered or withheld for payment of taxes related to an award), such shares will again be available for issuance under the Plan except for (1) any shares tendered in payment of an option, (2) shares withheld to satisfy any tax withholding obligation with respect to the exercise of an option or stock appreciation right ("SAR") or (3) shares covered by a stock-settled SAR or other awards that were not issued upon the settlement of the award. The Plan authorizes the issuance of up to 163 million shares of common stock. As of December 31, 2023, there were 13 million shares available for future grants.


DAL Equity Compensation

We make long-term incentive awards annually to eligible employees under the Plan. Generally, awards vest over time, subject to the employee's continued employment. Equity compensation expense, including awards payable in common stock or cash, is recognized in salaries and related costs over the employee's requisite service period (generally, the vesting period of the award) and totaled $180 million, $150 million and $149 million for the years ended December 31, 2023, 2022 and 2021, respectively. We record expense on a straight-line basis for awards with installment vesting. As of December 31, 2023, unrecognized costs related to unvested shares and stock options totaled $103 million. We expect substantially all unvested awards to vest and recognize forfeitures as they occur.


DAL Equity Compensation

Restricted Stock. Restricted stock is common stock that may not be sold or otherwise transferred for a period of time and is subject to forfeiture in certain circumstances. The fair value of restricted stock awards is based on the closing price of the common stock on the grant date. As of December 31, 2023, there were 4.2 million unvested restricted stock awards. Restricted stock activity under the Plan for the years ended December 31, 2023, 2022 and 2021 is as follows: (in millions, except weighted avg grant price) Outstanding at January 1 Granted Vested Forfeited Outstanding at December 31 Delta Air Lines, Inc. | 2023 Form 10-K 93


Stock Options. Stock options are granted with an exercise price equal to the closing price of Delta common stock on the grant date and generally have a 10-year term. We determine the fair value of stock options at the grant date using an option pricing model. As of December 31, 2023, there were 6.2 million outstanding stock option awards with a weighted average exercise price of $50.42 of which 5.9 million were exercisable. Stock option activity under the Plan for the years ended December 31, 2023, 2022 and 2021 is as follows: (in millions, except weighted avg grant price) Outstanding at January 1 Granted Exercised(1) Forfeited(1) Outstanding at December 31


(1)2023 exercise and forfeiture and 2022 forfeiture activity in the table above rounds to zero.


Performance Awards. Performance awards are dollar-denominated long-term incentive opportunities which, for grants prior to 2021, were payable in Delta stock to executive officers on the payment date and in cash to all other participants. Beginning with the 2021 grants, performance awards are payable in cash to all participants. Potential performance award payments range from 0%-200% of a target level and are contingent upon our achieving certain financial and operational goals over a three-year performance period. As of December 31, 2023, there were no performance awards payable in Delta stock to executive officers. Based on the closing stock price at each respective year end and contingent on achieving the specified performance conditions, the maximum shares that could be issued were 0.7 million and 1.5 million for the years ended December 31, 2022 and 2021, respectively.


Performance-Based Restricted Stock Units. Performance-based restricted stock units are long-term incentive opportunities that provide executive officers with the right to receive shares of Delta stock based on our achievement of certain performance conditions at the end of a three-year period. Potential payouts range from 0%-300% of a target level. Based on the closing stock price at year end and contingent on achieving the specified performance conditions, the maximum shares that could be issued were 3.3 million and 1.3 million for the years ended December 31, 2023 and 2022, respectively. There were no outstanding performance-based restricted stock units for the year ended December 31, 2021.


DAL NOTE 13. ACCUMULATED OTHER COMPREHENSIVE LOSS

Components of accumulated other comprehensive loss################ (in millions)####Pension and Other Benefits Liabilities(2)####Other####Tax Effect####Total Balance at January 1, 2021##$##(10,843)##$##41##$##1,764##$##(9,038) Changes in value####2,077####—####(484)####1,593 Reclassifications into earnings(1)####411####—####(96)####315 Balance at December 31, 2021####(8,355)####41####1,184####(7,130) Changes in value####1,419####—####(330)####1,089 Reclassifications into earnings(1)####312####—####(72)####240 Balance at December 31, 2022####(6,624)####41####782####(5,801) Changes in value####(303)####(1)####71####(233) Reclassifications into earnings(1)####246####—####(57)####189 Balance at December 31, 2023##$##(6,681)##$##40##$##796##$##(5,845)


(1)Amounts reclassified from AOCI for pension and other benefits liabilities are recorded in pension and related (expense)/benefit in non-operating expense in the income statement.


(2)Includes approximately $755 million of deferred income tax expense as a result of tax law changes and prior valuation allowance releases through continuing operations, that will not be recognized in net income until pension and other benefit obligations are fully extinguished.


DAL NOTE 14. SEGMENTS

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker and is used in resource allocation and performance assessments. Our chief operating decision maker is considered to be our executive leadership team. Our executive leadership team regularly reviews discrete information for our two operating segments, which are determined by the products and services provided: our airline segment and our refinery segment.


DAL Airline Segment

Our airline segment is managed as a single business unit that provides scheduled air transportation for passengers and cargo throughout the U.S. and around the world and includes our loyalty program, as well as other ancillary businesses. This allows us to benefit from an integrated revenue pricing and route network. Our flight equipment forms one fleet, which is deployed through a single route scheduling system. When making resource allocation decisions, our chief operating decision maker evaluates flight profitability data, which considers fleet type and route economics, but gives no weight to the financial impact of the resource allocation decision on a geographic region or mainline/regional carrier basis. Our objective in making resource allocation decisions is to optimize our consolidated financial results.


DAL Refinery Segment

Our Monroe subsidiary operates the Trainer oil refinery and related assets located near Philadelphia, Pennsylvania, as part of our strategy to mitigate the cost of the refining margin reflected in the price of jet fuel. Monroe's operations 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.


DAL Refinery Segment

Our refinery segment operates for the benefit of the airline segment by providing jet fuel to the airline segment from its own production and through jet fuel obtained through agreements with third parties. The refinery's production consists of jet fuel, as well as non-jet fuel products. We use several counterparties to exchange the non-jet fuel products produced by the refinery for jet fuel consumed in our airline operations. The gross fair value of the products exchanged under these agreements during the years ended December 31, 2023, 2022 and 2021 was $2.4 billion, $3.5 billion and $2.3 billion, respectively.


DAL Refinery Segment

A refinery is subject to annual Environmental Protection Agency ("EPA") requirements to blend renewable fuels into the gasoline and on-road diesel fuel it produces. A refinery may meet its obligation by blending the necessary volumes of renewable fuels, by purchasing Renewable Identification Numbers ("RINs") in the open market or through a combination of blending and purchasing RINs. Because Monroe is able to blend only a small amount of renewable fuels, it must purchase the majority of its RINs requirement in the secondary market. Renewable fuel compliance costs are accrued in accounts payable each period as the RINs obligation is generated. Purchased RINs are carried at the lower of cost and net realizable value and are recorded in prepaid expenses and other. During 2023, we acquired RINs assets to satisfy substantially all of our 2023 RINs obligation. The RINs asset and obligation are retired when used to satisfy EPA requirements. During 2023, we retired approximately $700 million of our 2021 and 2022 RINs assets to settle our 2021 and 2022 obligations prior to the compliance deadlines.


DAL Segment Reporting

Segment results are prepared based on our internal accounting methods described below, with reconciliations to consolidated amounts in accordance with GAAP. Our segments are not designed to measure operating income or loss directly related to the products and services included in each segment on a stand-alone basis. Financial information by segment################## (in millions)####Airline####Refinery####Intersegment Sales/Other######Consolidated Year Ended December 31, 2023################## Operating revenue##$##54,669##$##7,572##$##(4,193)##(1)##$##58,048 Depreciation and amortization####2,341####94####(94)##(2)####2,341 Operating income(2)####5,136####385##########5,521 Interest expense, net####834####17####(17)######834 Total assets, end of period####71,529####2,174####(59)######73,644 Capital expenditures####5,088####235##########5,323 Year Ended December 31, 2022################## Operating revenue##$##45,605##$##10,706##$##(5,729)##(1)##$##50,582 Depreciation and amortization####2,107####93####(93)##(2)####2,107 Operating income(2)####2,884####777##########3,661 Interest expense, net####1,029####12####(12)######1,029 Total assets, end of period####69,355####3,039####(106)######72,288 Capital expenditures####6,217####149##########6,366 Year Ended December 31, 2021################## Operating revenue##$##26,670##$##6,054##$##(2,825)##(1)##$##29,899 Depreciation and amortization####1,998####95####(95)##(2)####1,998 Operating income/(loss)(2)####1,888####(2)##########1,886 Interest expense, net####1,279####7####(7)######1,279 Total assets, end of period####70,417####2,099####(57)######72,459 Capital expenditures####3,188####59##########3,247


DAL Segment Reporting

(1)See table below for detail of the intersegment operating revenue amounts.


DAL Segment Reporting

(2)Refinery segment operating results, including depreciation and amortization, are included within aircraft fuel and related taxes in our income statement. ######Operating Revenue Intersegment Sales/Other###### ########Year Ended December 31,#### (in millions)####2023####2022####2021 Sales to airline segment(1)##$##(1,535)##$##(1,976)##$##(492) Exchanged products(2)####(2,354)####(3,475)####(2,293) Sales of refined products####(304)####(278)####(40) Total Operating Revenue Intersegment Sales/Other##$##(4,193)##$##(5,729)##$##(2,825)


DAL Segment Reporting

(1)Represents transfers, valued on a market price basis, from the refinery to the airline segment for use in airline operations. We determine market price for jet fuel from the refinery by reference to the market index for the primary delivery location, which is New York Harbor.


DAL Segment Reporting

(2)Represents value of products delivered under our exchange agreements, as discussed above, determined on a market price basis.


DAL NOTE 15. EARNINGS PER SHARE

We calculate basic earnings per share by dividing net income by the weighted average number of common shares outstanding, excluding restricted shares. We calculate diluted earnings per share by dividing net income by the weighted average number of common shares outstanding plus the dilutive effect of outstanding share-based instruments, including stock options, restricted stock awards and warrants. Antidilutive common stock equivalents excluded from the diluted earnings per share calculation are not material. The following table shows our computation: Basic and diluted earnings per share############ ########Year Ended December 31,#### (in millions, except per share data)####2023####2022####2021 Net income##$##4,609##$##1,318##$##280 Basic weighted average shares outstanding####639####638####636 Dilutive effect of share-based instruments####4####3####5 Diluted weighted average shares outstanding####643####641####641 Basic earnings per share##$##7.21##$##2.07##$##0.44 Diluted earnings per share##$##7.17##$##2.06##$##0.44


DAL Delta Air Lines, Inc. | 2023 Form 10-K 97

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE


None.