REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

~~The~~To the Board of Directors and Stockholders of

Delta Air Lines, Inc.

Results of Review of Interim Financial Statements

We have reviewed the accompanying consolidated balance sheet of Delta Air Lines, Inc. (the Company) as of ~~September 30, 2019,~~March 31, 2020, the related condensed consolidated statements of operations and comprehensive (loss) income, cash flows, and ~~the consolidated statements of~~ stockholders' equity for the three-month ~~and nine-month~~ periods ended ~~September 30,~~March 31, 2020 and 2019, ~~and~~ ~~2018, the condensed consolidated statements of cash flows for the nine-month periods ended September 30, 2019 and~~ ~~2018~~ and the related notes (collectively referred to as the "condensed consolidated interim financial statements"). Based on our reviews, we are not aware of any material modifications that should be made to the condensed consolidated interim financial statements for them to be in conformity with U.S. generally accepted accounting principles.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheet of ~~Delta Air Lines, Inc.~~the Company as of December 31, ~~2018,~~2019, the related consolidated statements of operations, comprehensive income, cash flows, and stockholders' equity for the year then ended, and the related notes (not presented herein); and in our report dated February ~~15, 2019,~~12, 2020, we expressed an unqualified audit opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of December 31, ~~2018,~~2019, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

Basis for Review Results

These financial statements are the responsibility of the Company's management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the ~~company~~Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the SEC and the PCAOB. We conducted our review in accordance with the standards of the PCAOB. A review of interim financial statements consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.



	/s/ Ernst & Young LLP
Atlanta, Georgia
~~October 10, 2019~~April 22, 2020

DELTA AIR LINES, INC.

Consolidated Balance Sheets

(Unaudited)


(in millions, except share data)	March 31, 2020		December 31, 2019
ASSETS
Current Assets:
Cash and cash equivalents	$	5,967	$	2,882
Accounts receivable, net of an allowance for uncollectible accounts of $16 and $13 at March 31, 2020 and December 31, 2019, respectively	2,280		2,854
Fuel inventory	439		730
Expendable parts and supplies inventories, net of an allowance for obsolescence of $90 and $82 at March 31, 2020 and December 31, 2019, respectively	535		521
Prepaid expenses and other	1,054		1,262
Total current assets	10,275		8,249

Noncurrent Assets:
Property and equipment, net of accumulated depreciation and amortization of $17,506 and $17,027 at March 31, 2020 and December 31, 2019, respectively	31,644		31,310
Operating lease right-of-use assets	5,488		5,627
Goodwill	9,753		9,781
Identifiable intangibles, net of accumulated amortization of $875 and $873 at March 31, 2020 and December 31, 2019, respectively	6,019		5,163
Cash restricted for airport construction	455		636
Equity investments	3,684		2,568
Other noncurrent assets	1,420		1,198
Total noncurrent assets	58,463		56,283
Total assets	$	68,738	$	64,532
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current maturities of debt and finance leases	$	4,337	$	2,287
Current maturities of operating leases	768		801
Air traffic liability	5,598		5,116
Accounts payable	3,337		3,266
Accrued salaries and related benefits	1,844		3,701
Loyalty program deferred revenue	1,099		3,219
Fuel card obligation	1,100		736
Other accrued liabilities	1,309		1,078
Total current liabilities	19,392		20,204

Noncurrent Liabilities:
Debt and finance leases	12,662		8,873
Pension, postretirement and related benefits	8,285		8,452
Loyalty program deferred revenue	5,718		3,509
Noncurrent operating leases	5,204		5,294
Deferred income taxes, net	1,502		1,456
Other noncurrent liabilities	1,666		1,386
Total noncurrent liabilities	35,037		28,970

Commitments and Contingencies

Stockholders' Equity:
Common stock at $0.0001 par value; 1,500,000,000 shares authorized, 647,386,115 and 651,731,443 shares issued at March 31, 2020 and December 31, 2019, respectively	—		—
Additional paid-in capital	11,054		11,129
Retained earnings	11,423		12,454
Accumulated other comprehensive loss	(7,898)		(7,989)
Treasury stock, at cost, 9,549,909 and 8,959,730 shares at March 31, 2020 and December 31, 2019, respectively	(270)		(236)
Total stockholders' equity	14,309		15,358
Total liabilities and stockholders' equity	$	68,738	$	64,532

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

~~(Unaudited)~~

(in millions, except share data) September 30,
2019 December 31,
2018
ASSETS
Current Assets:
Cash and cash equivalents $ 1,899
$ 1,565
Accounts receivable, net of an allowance for uncollectible accounts of $14 and $12 at September 30,
2019 and December 31, 2018, respectively
2,836
2,314
Fuel inventory 568
592
Expendable parts and supplies inventories, net of an allowance for obsolescence of $94 and $102
at September 30, 2019 and December 31, 2018, respectively
504
463
Prepaid expenses and other 1,137
1,406
Total current assets 6,944
6,340

Noncurrent Assets:
Property and equipment, net of accumulated depreciation and amortization of $17,213 and $15,823
at September 30, 2019 and December 31, 2018, respectively
30,796
28,335
Operating lease right-of-use assets 5,815
5,994
Goodwill 9,781
9,781
Identifiable intangibles, net of accumulated amortization of $871 and $862 at September 30, 2019
and December 31, 2018, respectively
4,821
4,830
Cash restricted for airport construction 753
1,136
Other noncurrent assets 4,309
3,850
Total noncurrent assets 56,275
53,926
Total assets $ 63,219
$ 60,266
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current maturities of long-term debt and finance leases $ 2,196
$ 1,518
Current maturities of operating leases 844
955
Air traffic liability 5,762
4,661
Accounts payable 3,470
2,976
Accrued salaries and related benefits 3,119
3,287
Loyalty program deferred revenue 3,200
2,989
Fuel card obligation 439
1,075
Other accrued liabilities 1,181
1,117
Total current liabilities 20,211
18,578

Noncurrent Liabilities:
Long-term debt and finance leases 7,923
8,253
Pension, postretirement and related benefits 8,457
9,163
Loyalty program deferred revenue 3,496
3,652
Noncurrent operating leases 5,441
5,801
Deferred income taxes, net 1,245
163
Other noncurrent liabilities 1,378
969
Total noncurrent liabilities 27,940

28,001

Commitments and Contingencies

Stockholders' Equity:
Common stock at $0.0001 par value; 1,500,000,000 shares authorized, 655,694,564 and 688,136,306
shares issued at September 30, 2019 and December 31, 2018, respectively
—
—
Additional paid-in capital 11,177
11,671
Retained earnings 11,772
10,039
Accumulated other comprehensive loss (7,645 ) (7,825 )
Treasury stock, at cost, 8,951,710 and 8,191,831 shares at September 30, 2019 and
December 31, 2018, respectively
(236 ) (198 )
Total stockholders' equity 15,068
13,687
Total liabilities and stockholders' equity $ 63,219
$ 60,266

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

DELTA AIR LINES, INC.

Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income

(Unaudited)


	Three Months Ended March 31,
(in millions, except per share data)	2020		2019
Operating Revenue:
Passenger	$	7,569	$	9,254
Cargo	152		192
Other	871		1,026
Total operating revenue	8,592		10,472

Operating Expense:
Salaries and related costs	2,771		2,639
Aircraft fuel and related taxes	1,595		1,978
Regional carriers expense, excluding fuel	902		893
Depreciation and amortization	678		615
Contracted services	675		632
Aircraft maintenance materials and outside repairs	469		476
Landing fees and other rents	467		419
Passenger commissions and other selling expenses	358		427
Passenger service	257		271
Ancillary businesses and refinery	219		351
Aircraft rent	100		102
Profit sharing	—		220
Other	511		429
Total operating expense	9,002		9,452

Operating (Loss)/Income	(410)		1,020

Non-Operating Expense:
Interest expense, net	(79)		(83)
Gain/(loss) on investments, net	(112)		100
Miscellaneous, net	(6)		(91)
Total non-operating expense, net	(197)		(74)

(Loss)/Income Before Income Taxes	(607)		946

Income Tax Benefit/(Provision)	73		(216)

Net (Loss)/Income	$	(534)	$	730

Basic (Loss)/Earnings Per Share	$	(0.84)	$	1.10
Diluted (Loss)/Earnings Per Share	$	(0.84)	$	1.09
Cash Dividends Declared Per Share	$	0.40	$	0.35

Comprehensive (Loss)/Income	$	(443)	$	789

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

Three Months Ended September 30, Nine Months Ended September 30,
(in millions, except per share data) 2019 2018 2019 2018
Operating Revenue:
Passenger $ 11,410
$ 10,796
$ 32,032
$ 30,107
Cargo 189
226
567
651
Other 961
931
2,969
2,938
Total operating revenue 12,560
11,953
35,568
33,696

Operating Expense:
Salaries and related costs 2,884
2,753
8,275
8,004
Aircraft fuel and related taxes 2,239
2,498
6,508
6,693
Regional carriers expense, excluding fuel 900
885
2,698
2,586
Contracted services 685
562
1,974
1,646
Depreciation and amortization 631
573
1,960
1,759
Passenger commissions and other selling expenses 539
535
1,505
1,473
Aircraft maintenance materials and outside repairs 424
371
1,334
1,233
Landing fees and other rents 460
439
1,321
1,254
Profit sharing 517
399
1,256
991
Ancillary businesses and refinery 279
410
945
1,396
Passenger service 345
329
938
892
Aircraft rent 110
99
318
291
Other 476
455
1,317
1,305
Total operating expense 10,489
10,308
30,349
29,523

Operating Income 2,071
1,645
5,219
4,173

Non-Operating (Expense)/Income:

Interest expense, net (70 ) (73 ) (228 ) (244 )
Unrealized gain/(loss) on investments, net (35 ) 50
(17 ) (171 )
Miscellaneous, net (19 ) 66
(174 ) 48
Total non-operating (expense)/income, net (124 ) 43
(419 ) (367 )

Income Before Income Taxes 1,947
1,688
4,800
3,806

Income Tax Provision (452 ) (366 ) (1,131 ) (890 )

Net Income $ 1,495
$ 1,322
$ 3,669
$ 2,916

Basic Earnings Per Share $ 2.32
$ 1.93
$ 5.61
$ 4.20
Diluted Earnings Per Share $ 2.31
$ 1.92
$ 5.59
$ 4.18
Cash Dividends Declared Per Share $ 0.40
$ 0.35
$ 1.10
$ 0.96

Comprehensive Income $ 1,545
$ 1,393
$ 3,849
$ 3,002

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

DELTA AIR LINES, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

~~(Unaudited)~~


	Three Months Ended March 31,
(in millions)	2020		2019
Net Cash Provided by Operating Activities	$	358	$	1,942

Cash Flows from Investing Activities:
Property and equipment additions:
Flight equipment, including advance payments	(629)		(1,059)
Ground property and equipment, including technology	(308)		(301)
Redemption of short-term investments	—		206
Acquisition of strategic investments	(2,099)		—
Other, net	65		58
Net cash used in investing activities	(2,971)		(1,096)

Cash Flows from Financing Activities:
Payments on debt and finance lease obligations	(1,238)		(1,285)
Repurchase of common stock	(344)		(1,325)
Cash dividends	(260)		(233)
Proceeds from short-term obligations	2,882		1,750
Proceeds from long-term obligations	3,962		500
Fuel card obligation	364		(9)
Other, net	(22)		(7)
Net cash provided by/(used in) financing activities	5,344		(609)

Net Increase in Cash, Cash Equivalents and Restricted Cash Equivalents	2,731		237
Cash, cash equivalents and restricted cash equivalents at beginning of period	3,730		2,748
Cash, cash equivalents and restricted cash equivalents at end of period	$	6,461	$	2,985

Non-Cash Transactions:
Flight and ground equipment acquired under finance leases	$	184	$	3
Right-of-use assets acquired under operating leases	55		274


The following table provides a reconciliation of cash, cash equivalents and restricted cash equivalents reported within the Consolidated Balance Sheets to the total of the same such amounts shown above:
	March 31,
(in millions)	2020		2019
Current assets:
Cash and cash equivalents	$	5,967	$	1,910
Restricted cash included in prepaid expenses and other	39		57
Noncurrent assets:
Cash restricted for airport construction	455		1,018
Total cash, cash equivalents and restricted cash equivalents	$	6,461	$	2,985

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

Nine Months Ended September 30,
(in millions) 2019 2018
Net Cash Provided by Operating Activities $ 7,468
$ 5,769

Cash Flows from Investing Activities:
Property and equipment additions:
Flight equipment, including advance payments (2,774 ) (2,833 )
Ground property and equipment, including technology (1,090 ) (972 )
Purchase of short-term investments —
(145 )
Redemption of short-term investments 206
490
Purchase of equity investments (170 ) —
Other, net 32
87
Net cash used in investing activities (3,796 )
(3,373 )

Cash Flows from Financing Activities:
Payments on long-term debt and finance lease obligations (2,805 ) (2,741 )
Repurchase of common stock (1,802 ) (1,250 )
Cash dividends (721 ) (670 )
Proceeds from short-term obligations 1,750
—
Proceeds from long-term obligations 500
3,124
Fuel card obligation (636 ) (1 )
Other, net (8 ) (63 )
Net cash used in financing activities (3,722 ) (1,601 )

Net (Decrease) Increase in Cash, Cash Equivalents and Restricted Cash Equivalents (50 ) 795
Cash, cash equivalents and restricted cash equivalents at beginning of period 2,748
1,853
Cash, cash equivalents and restricted cash equivalents at end of period $ 2,698
$ 2,648

Non-Cash Transactions:
Right-of-use assets acquired under operating leases $ 459
$ 908
Operating leases converted to finance leases 189
—
Flight and ground equipment acquired under finance leases 619
69

The following table provides a reconciliation of cash, cash equivalents and restricted cash equivalents reported within the Consolidated Balance Sheets to the total of the same such amounts shown above:
September 30,
(in millions) 2019 2018
Current assets:
Cash and cash equivalents $ 1,899
$ 1,380
Restricted cash included in prepaid expenses and other 46
54
Noncurrent assets:
Cash restricted for airport construction 753
1,214
Total cash, cash equivalents and restricted cash equivalents $ 2,698
$ 2,648

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

DELTA AIR LINES, INC.

Consolidated Statements of Stockholders' Equity

(Unaudited)


	Common Stock					Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss	Treasury Stock
(in millions, except per share data)	Shares	Amount													Shares	Amount	Total
Balance at December 31, 2019	652	$	—	$	11,129	$	12,454	$	(7,989)	9	$	(236)	$	15,358
Net loss	—	—		—		(534)		—		—	—		(534)
Dividends declared	—	—		—		(257)		—		—	—		(257)
Other comprehensive income	—	—		—		—		91		—	—		91
Shares of common stock issued and compensation expense associated with equity awards (Treasury shares withheld for payment of taxes, $56.48⁽¹⁾ per share)	1	—		29		—		—		1	(34)		(5)
Stock purchased and retired	(6)	—		(104)		(240)		—		—	—		(344)
Balance at March 31, 2020	647	$	—	$	11,054	$	11,423	$	(7,898)	10	$	(270)	$	14,309

Common Stock Additional
Paid-In Capital Retained
Earnings Accumulated
Other
Comprehensive Loss Treasury Stock
(in millions, except per share data) Shares Amount Shares Amount Total
Balance at December 31, 2018 688
$ —
$ 11,671
$ 10,039
$ (7,825 ) 8
$ (198 ) $ 13,687
Net income —
—
—
730
—
—
—
730
Dividends declared —
—
—
(232 ) —
—
—
(232 )
Other comprehensive income —
—
—
—
59
—
—
59
Shares of common stock issued and compensation expense associated with equity awards (Treasury shares withheld for payment of taxes, $49.75⁽¹⁾ per share)
2
—
27
—
—
1
(35 ) (8 )
Stock purchased and retired (26 ) —
(444 ) (881 ) —
—
—
(1,325 )
Balance at March 31, 2019 664
—
11,254
9,656
(7,766 ) 9
(233 ) 12,911
Net income —
—
—
1,443
—
—
—
1,443
Dividends declared —
—
—
(229 ) —
—
—
(229 )
Other comprehensive income —
—
—
—
72
—
—
72
Shares of common stock issued and compensation expense associated with equity awards (Treasury shares withheld for payment of taxes, $55.06⁽¹⁾ per share)
—
—
31
—
—
—
(2 ) 29
Stock purchased and retired (5 ) —
(84 ) (184 ) —
—
—
(268 )
Balance at June 30, 2019 659
—
11,201
10,686
(7,694 ) 9
(235 ) 13,958
Net income —
—
—
1,495
—
—
—
1,495
Dividends declared —
—
—
(261 ) —
—
—
(261 )
Other comprehensive income —
—
—
—
49
—
—
49
Shares of common stock issued and compensation expense associated with equity awards (Treasury shares withheld for payment of taxes, $58.68⁽¹⁾ per share)
—
—
36
—
—
—
(1 ) 35
Stock purchased and retired (3 ) —
(60 ) (148 ) —
—
—
(208 )
Balance at September 30, 2019 656
$ —
$ 11,177
$ 11,772
$ (7,645 ) 9
$ (236 ) $ 15,068

⁽¹⁾


	Common Stock					Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss	Treasury Stock
(in millions, except per share data)	Shares	Amount													Shares	Amount	Total
Balance at December 31, 2018	688	$	—	$	11,671	$	10,039	$	(7,825)	8	$	(198)	$	13,687
Net income	—	—		—		730		—		—	—		730
Dividends declared	—	—		—		(232)		—		—	—		(232)
Other comprehensive income	—	—		—		—		59		—	—		59
Shares of common stock issued and compensation expense associated with equity awards (Treasury shares withheld for payment of taxes, 49.75⁽¹⁾ per share)	2	—		27		—		—		1	(35)		(8)
Stock purchased and retired	(26)	—		(444)		(881)		—		—	—		(1,325)
Balance at March 31, 2019	664	$	—	$	11,254	$	9,656	$	(7,766)	9	$	(233)	$	12,911

⁽¹⁾Weighted average price per share.

~~Weighted average price per share.~~

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

~~DELTA AIR LINES, INC.~~

~~Consolidated Statements of Stockholders' Equity~~

~~(Unaudited)~~

Common Stock Additional
Paid-In Capital Retained
Earnings Accumulated
Other
Comprehensive Loss Treasury Stock
(in millions, except per share data) Shares Amount Shares Amount Total
Balance at December 31, 2017 715
$ —
$ 12,053
$ 8,256
$ (7,621 ) 7
$ (158 ) $ 12,530
Net income —
—
—
557
—
—
—
557
Change in accounting principle and other —
—
—
(139 ) (106 ) —
—
(245 )
Dividends declared —
—
—
(216 ) —
—
—
(216 )
Other comprehensive income —
—
—
—
46
—
—
46
Shares of common stock issued and compensation expense associated with equity awards (Treasury shares withheld for payment of taxes, $55.08⁽¹⁾ per share)
1
—
10
—
—
1
(36 ) (26 )
Stock options exercised 1
—
1
—
—
—
—
1
Stock purchased and retired (6 ) —
(97 ) (228 ) —
—
—
(325 )
Balance at March 31, 2018 711
—
11,967
8,230
(7,681 ) 8
(194 ) 12,322
Net income —
—
—
1,036
—
—
—
1,036
Change in accounting principle and other —
—
—
(13 ) —
—
—
(13 )
Dividends declared —
—
—
(213 ) —
—
—
(213 )
Other comprehensive income —
—
—
—
75
—
—
75
Shares of common stock issued and compensation expense associated with equity awards (Treasury shares withheld for payment of taxes, $52.99⁽¹⁾ per share)
—
—
29
—
—
—
(2 ) 27
Stock purchased and retired (12 ) —
(189 ) (411 ) —
—
—
(600 )
Balance at June 30, 2018 699
—
11,807
8,629
(7,606 ) 8
(196 ) 12,634
Net income —
—
—
1,322
—
—
—
1,322
Dividends declared —
—
—
(242 ) —
—
—
(242 )
Other comprehensive income —
—
—
—
71
—
—
71
Shares of common stock issued and compensation expense associated with equity awards (Treasury shares withheld for payment of taxes, $52.59⁽¹⁾ per share)
—
—
32
—
—
—
(1 ) 31
Stock purchased and retired (5 ) —
(99 ) (226 ) —
—
—
(325 )
Balance at September 30, 2018 694
$ —
$ 11,740
$ 9,483
$ (7,535 ) 8
$ (197 ) $ 13,491


⁽¹⁾	~~Weighted average price per share.~~

~~The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.~~

DELTA AIR LINES, INC.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

NOTE 1.1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited Condensed Consolidated Financial Statements include the accounts of Delta Air Lines, Inc. and our wholly owned subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP") for interim financial information. Consistent with these requirements, this Form 10-Q does not include all the information required by GAAP for complete financial statements. As a result, this Form 10-Q should be read in conjunction with the Consolidated Financial Statements and accompanying Notes in our Form 10-K for the year ended December 31, ~~2018.~~2019.

Management believes the accompanying unaudited Condensed Consolidated Financial Statements reflect all adjustments, including normal recurring items, considered necessary for a fair statement of results for the interim periods presented.

Due to severe impacts from the global COVID-19 (coronavirus) pandemic, seasonal variations in the demand for air travel, the volatility of aircraft fuel prices and other factors, operating results for the three ~~and nine~~ months ended ~~September 30, 2019~~March 31, 2020 are not necessarily indicative of operating results for the entire year.

We reclassified certain prior period amounts to conform to the current period presentation. Unless otherwise noted, all amounts disclosed are stated before consideration of income taxes.

Recent Accounting Standards

~~Comprehensive Income~~Credit Losses. . In ~~February 2018,~~2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. ~~2018-02, "Income Statement—Reporting Comprehensive Income~~2016-13, "Financial Instruments-Credit Losses (Topic ~~220).~~326): Measurement of Credit Losses on Financial Instruments." Under this ASU, an entity is required to utilize an "expected credit loss model" on certain financial instruments, including trade and financing receivables. This ~~standard provides~~model requires consideration of a broader range of reasonable and supportable information and requires an ~~option~~entity to ~~reclassify stranded tax effects within~~ ~~accumulated other comprehensive income/(loss) ("AOCI") to retained earnings due to~~estimate expected credit losses over the ~~U.S. federal corporate income tax rate change in~~lifetime of the ~~Tax Cuts and Jobs Act of 2017. This standard is effective for interim and annual reporting periods beginning after December 15, 2018.~~asset. We adopted this standard effective January 1, 2020 and due to the COVID-19 pandemic, we recorded reserves against certain of our outstanding financial instruments that were not material individually or in the aggregate.

NOTE 2. IMPACT OF THE COVID-19 PANDEMIC

The unprecedented and rapid spread of COVID-19 and the related travel restrictions and social distancing measures implemented throughout the world have significantly reduced demand for air travel. After initially impacting our service to China beginning in January, the spread of the virus and the resulting global pandemic next affected the majority of our international network and ultimately our domestic network. Beginning in March, large public events were cancelled, governmental authorities began imposing restrictions on non-essential activities, businesses suspended travel and popular leisure destinations temporarily closed to visitors. Certain countries that are key markets for our business have imposed bans on international travelers for specified periods or indefinitely.

As a result, demand for travel declined at an accelerated pace, which has had an unprecedented and materially adverse impact on our revenues and financial position. The length and severity of the reduction in demand due to the pandemic is uncertain; accordingly, we expect the adverse impact to grow in the June 2020 quarter. While we are planning for a modest demand recovery beginning in the September 2020 quarter, the exact timing and pace of the recovery is uncertain given the significant impact of the pandemic on the overall U.S. and global economy. Our forecasted expense management and liquidity measures may be modified as we clarify the demand recovery timing.

See Note 3, "Revenue Recognition," for discussion of the recognition of passenger revenue, our air traffic liability and ticket breakage assumptions.

In response to these developments, we have implemented measures to focus on the safety of our customers and employees, while at the same time seeking to mitigate the impact on our financial position and operations. These measures include, but are not limited to, the following:

Taking Care of our Customers and Employees. The safety of our customers and employees continues to be our primary focus. As the COVID-19 pandemic has developed, we have taken numerous steps to help customers and employees practice social distancing on the ground and in the air in keeping with current health-expert recommendations:

•Adopting new cleaning procedures on all flights, including disinfectant electrostatic spraying on all aircraft overnight and sanitizing high-touch areas like tray tables, entertainment screens, armrests and seat-back pockets before boarding.

•Taking steps to help employees and customers practice social distancing, including blocking middle seats, pausing automatic upgrades, modifying our boarding process and moving to essential meal service only.

•Extending 2020 Medallion Status an additional year, rolling Medallion Qualification Miles into 2021 and extending Delta SkyMiles American Express Card benefits and Delta Sky Club memberships.

•Giving customers flexibility to plan, re-book and travel including extending expiration on travel credits through September 2022.

•Offering pay protection to employees who have tested positive for COVID-19, must quarantine due to exposure or travel-related requirements or have self-identified as being at high-risk for illness from COVID-19 according to the Centers for Disease Control and Prevention ("CDC") guidelines and do not have the ability to telecommute.

•Implementing significant workforce social distancing and protection measures, including reworking call center spaces to provide appropriate social distancing, increasing cleaning of our facilities using methods and products similar to what we are using on our aircraft and having virtually all employees who can telecommute do so.

Capacity Reductions. Following a strong start to 2020 in January and February, we experienced a precipitous decrease in demand in March as COVID-19 spread throughout the world. To align capacity with expected demand, beginning in the second half of March, we have significantly reduced our system capacity to a level that maintains essential services. For the June 2020 quarter, system capacity is expected to be down approximately 85 percent compared to the June 2019 quarter, with international capacity to be reduced by approximately 90 percent and domestic flying to be reduced by approximately 80 percent. As a result of reduced demand expectations and lower capacity, we are temporarily parking approximately 50 percent of our fleet.

Expense Management. With the reduction in revenue, we have, and will continue to implement cost saving initiatives, including:

•Reducing capacity as described above to align with expected demand, which has resulted in temporarily parking approximately 400 aircraft as of March 31, 2020, with the ~~election not~~expectation to ~~reclassify~~have over 650 aircraft parked by the end of the June quarter. As a result, we have made the decision to accelerate the retirement of our MD-88 fleet from December 2020 to the end of July 2020.

•Consolidating our footprint at our airport facilities, including temporarily closing most Delta Sky Clubs.

•Reducing employee-related costs, including:

◦Voluntary unpaid leaves of 30 days to 12 months offered to most employees. Approximately 35,000 employees have volunteered to take leaves beginning in the June 2020 quarter.

◦Salary reductions of 50% for our officers and 25% for our director level employees.

◦A 25% reduction in work hours for all other management and most front-line employee work groups.

◦Instituting a company-wide hiring freeze.

•Delaying non-essential maintenance projects and reducing or suspending other discretionary spending.

Balance Sheet, Cash Flow and Liquidity. We have taken the following actions to increase liquidity and strengthen our financial position. As a result of these actions, our cash and cash equivalents balance as of March 31, 2020 was $6.0 billion.

•Reducing planned capital expenditures by approximately $3.5 billion, including working with original equipment manufacturers ("OEM") to optimize the timing of our future aircraft deliveries, delaying aircraft modifications and postponing certain information technology initiatives and replacement of ground equipment.

•Drawing $3.0 billion from our previously undrawn revolving credit facilities.

•Entering into a $2.7 billion secured term loan facility during the March 2020 quarter with an accordion feature that allowed us to increase the facility to $3.0 billion during April 2020.

•Entering into $150 million of loans secured by certain of our widebody aircraft. In addition, during April 2020, we have entered into an additional $1.2 billion of ~~stranded tax effects, primarily~~sale-leaseback transactions for certain aircraft and are pursuing other financing initiatives.

•Suspending future share repurchases and dividends.

•Delaying $500 million of planned voluntary pension funding.

We continue to evaluate future financing opportunities by leveraging our unencumbered assets which, as of March 31, 2020, have a value of at least $15 billion, and utilizing funding from the CARES Act, discussed below. In response to the impact that the demand environment has had on our financial condition, our credit rating has been downgraded by Standard & Poor's to BB in late March 2020 and by Fitch to BB+ in early April 2020.

Our primary credit facility has various financial and other covenants that require us to maintain a minimum fixed charge coverage ratio and a minimum asset coverage ratio. In the event that we are unable to maintain compliance with such covenants, we expect to obtain an amendment or waiver from our lenders, refinance the indebtedness subject to covenants or take other mitigating actions prior to a potential breach.

See Note 7, "Debt," for more information on our debt issuances during the March 2020 quarter.

Valuation of Goodwill and Indefinite-Lived Intangibles

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. Our December 2019 quarter quantitative impairment tests of goodwill and intangibles indicated that there was no indication of impairment as the fair value exceeded our carrying value:


	Carrying Value at					Fair Value Excess at 2019 Testing Date
(in millions)	March 31, 2020		December 31, 2019
Goodwill⁽¹⁾	$	9,753	$	9,781	234%
International routes and slots	2,583		2,583		15% to 29%
Airline alliances⁽²⁾	1,863		1,005		67% to 576%
Delta tradename	850		850		185%
Domestic slots	622		622		61% to 181%
Total	$	15,671	$	14,841

⁽¹⁾ The reduction in goodwill during the March 2020 quarter relates to the combination of Delta Private Jets with Wheels Up. See Note 5, "Investments," for more information on this transaction.

⁽²⁾ As part of our strategic alliance with and investment in LATAM, we have recorded an alliance-related indefinite-lived intangible asset of $1.2 billion, which was not reflected in the 2019 quantitative impairment assessment.

Despite the significant excess fair value identified in our 2019 impairment assessment, we determined that the reduced cash flow projections and the significant decline in Delta's market capitalization as a result of the COVID-19 pandemic indicate that an impairment loss may have been incurred. Therefore, we qualitatively assessed whether it was more likely than not that the goodwill and indefinite-lived intangible assets were impaired as of March 31, 2020. We reviewed our previous forecasts and assumptions based on our current projections that are subject to various risks and uncertainties, including: (1) forecasted revenues, expenses and cash flows, including the duration and extent of impact to our business and our alliance partners from the COVID-19 pandemic, (2) current discount rates, (3) the reduction in Delta's market capitalization, (4) observable market transactions, (5) changes to the regulatory environment and (6) the nature and amount of government support that will be provided.

Based on our interim impairment assessment as of March 31, 2020, we have determined that our goodwill and indefinite-lived intangible assets are not impaired. However, we are unable to predict how long these conditions will persist, what additional measures may be introduced by governments or private parties or what effect any such additional measures may have on air travel and our business. Any measure that encourages potential travelers to stay in their homes, engage in social distancing or avoid larger gatherings of people is highly likely to be harmful to the air travel industry in general, and consequently our business.

Valuation of Long-Lived Assets

Our flight equipment and other long-lived assets, which are classified as property and equipment, net on the Consolidated Balance Sheet ("balance sheet"), have a recorded value of $31.6 billion at March 31, 2020. We review flight equipment and other long-lived assets used in operations for impairment losses when events and circumstances indicate the assets may be impaired.

As part of our capacity reductions related to the negative effect on our ~~pension plans,~~business from ~~AOCI~~the COVID-19 pandemic, we have removed approximately 400 aircraft from active service and plan to ~~retained earnings.~~park another approximately 250 aircraft during the June 2020 quarter. These aircraft are being temporarily parked, with the exception of the MD-88 fleet discussed above for which an impairment charge of $22 million was recorded, and we have not yet decided to accelerate the retirement of any other fleet.

To determine whether impairments exist for active and temporarily parked aircraft, we group assets at the fleet-type level or at the contract level for aircraft operated by regional carriers (i.e., the lowest level for which there are identifiable cash flows) and then estimate future cash flows based on projections of capacity, passenger mile yield, fuel and labor costs and other relevant factors. Given the substantial reduction in our active aircraft and diminished projections of future cash flows in the near term, we evaluated the remainder of our fleet and determined that no fleet (other than the MD-88) was impaired as the future cash flows from operation of the fleet through the respective retirement dates exceeded the carrying value. As we obtain greater clarity about the duration and extent of reduced demand and potentially execute further capacity adjustments, we will continue to evaluate our current fleet compared to network requirements and may decide to permanently retire additional aircraft.

See Note 5, "Investments," for more information on the valuation of our equity investments.

CARES Act

On March 27, 2020, President Trump signed the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") into law. The CARES Act is a relief package intended to assist many aspects of the American economy, including providing the airline industry with up to $25 billion in grants to be used for employee wages, salaries and benefits.

In April 2020, we were granted $5.4 billion in emergency relief through the payroll support program of the CARES Act to be paid in installments through July 2020. The relief payments are conditioned on our agreement to refrain from conducting involuntary employee layoffs or furloughs through September 30, 2020. Other conditions include prohibitions on share repurchases and dividends through September 30, 2021, continuing essential air service as directed by the U.S. Department of Transportation and certain limitations on executive compensation. The relief payments include $3.8 billion in grants and $1.6 billion in an unsecured 10-year low interest loan. The loan includes annual interest rates of 1.00% for the first five years (through April 2025) and the Secured Overnight Financing Rate ("SOFR") plus 2.00% in the final five years. In return, we have agreed to issue to the U.S. Department of the Treasury over 6.5 million warrants to acquire Delta common stock. These warrants include an exercise price of $24.39 per share and have a five-year term.

On April 20, 2020, we received the first installment of $2.7 billion under the payroll support program.

The CARES Act provides for up to $25 billion in secured loans to the airline industry. We expect to be eligible for approximately $4.6 billion under the loan program and are currently evaluating our level of participation.

Finally, the CARES Act also provides for deferred payment of the employer portion of social security taxes through the end of 2020, with 50% of the deferred amount due December 31, 2021 and the remaining 50% due December 31, 2022. This is expected to provide us with approximately $200 million of additional liquidity during the current year.

NOTE 23. REVENUE RECOGNITION

Passenger Revenue

Passenger revenue is primarily composed of passenger ticket sales, loyalty travel awards and travel-related services performed in conjunction with a passenger’s flight.


	Three Months Ended March 31,
(in millions)	2020		2019
Ticket	$	6,511	$	7,988
Loyalty travel awards	543		692
Travel-related services	515		574
Total passenger revenue	$	7,569	$	9,254

Three Months Ended September 30, Nine Months Ended September 30,
(in millions) 2019 2018 2019 2018
Ticket $ 10,029
$ 9,553
$ 27,986
$ 26,514
Loyalty travel awards 732
678
2,174
1,976
Travel-related services 649
565
1,872
1,617
Total passenger revenue $ 11,410
$ 10,796
$ 32,032
$ 30,107

The air traffic liability primarily includes sales of passenger tickets to be flown in the future, as well as credits which can be applied as payment toward the cost of a ticket. The credits are typically issued as a result of ticket cancellations prior to their expiration dates. As of March 31, 2020, passenger tickets sold and credits issued were generally valid for one year from the date of original ticket issuance. In April 2020, we announced changes to expiration dates, as discussed below.

We recognized approximately ~~$3.7~~$2.8 billion in passenger revenue during the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020 that was recorded in our air traffic liability balance at December 31, ~~2018. We expect~~2019.

The air traffic liability typically increases during the ~~remaining balance~~winter and spring as advanced ticket sales grow prior to the summer peak travel season and decreases during the summer and fall months. However, the current reduction in demand for air travel due to the COVID-19 pandemic has resulted in an unprecedented low level of advance bookings and the associated cash received. At the same time, we have experienced significant cancellations beginning in the second half of March, which has led to issuance of refunds to customers, while the remainder have been rebooked on future flights or received credits in lieu of cash refunds. The total value of refunds, excluding taxes and related fees, issued to customers during the March 2020 quarter was approximately $850 million.Due to the uncertainty around the return of demand for air travel, we are unable to estimate the amount of the December 31, ~~2018~~2019 air traffic liability tothat will be recognized byin earnings compared to amounts that will be refunded to customers or issued as a credit for future travel through the end of ~~2019.~~2020.

In April 2020, we announced that credits issued for cancelled travel in March through September 2020 will have an extended expiration date through September 2022. This change is expected to shift a portion of our air traffic liability to noncurrent. We will also consider this change in estimating the future breakage rate, which represents the value of tickets that will expire unused and is recognized as revenue at the scheduled flight date.

Other Revenue


	Three Months Ended March 31,
(in millions)	2020		2019
Loyalty program	$	474	$	474
Ancillary businesses and refinery	223		369
Miscellaneous	174		183
Total other revenue	$	871	$	1,026

Three Months Ended September 30, Nine Months Ended September 30,
(in millions) 2019 2018 2019 2018
Loyalty program $ 485
$ 369
$ 1,443
$ 1,075
Ancillary businesses and refinery 291
433
990
1,475
Miscellaneous 185
129
536
388
Total other revenue $ 961
$ 931
$ 2,969
$ 2,938

Loyalty ~~Program~~

Program. Our SkyMiles loyalty program generates customer loyalty by rewarding customers with incentives to travel on Delta. This program allows customers to earn mileage credits ("miles") by flying on Delta, Delta Connection and other airlines that participate in the loyalty program. When traveling, customers earn redeemable ~~mileage credits~~miles based on the passenger's loyalty program status and ticket price. Customers can also earn ~~mileage credits~~miles through participating companies such as credit card companies, hotels, car rental agencies and ridesharing companies. ~~To facilitate transactions with participating companies, we sell mileage credits to non-airline businesses, customers and other airlines. Mileage credits~~Miles are redeemable by customers in future periods for air travel on Delta and other participating airlines, membership in our Sky Club and other program awards. To facilitate transactions with participating companies, we sell miles to non-airline businesses, customers and other airlines. Our most significant contract to sell miles relates to our co-brand credit card relationship with American Express. During the ~~nine~~three months ended ~~September 30,~~March 31, 2020 and 2019, ~~and 2018,~~ total cash sales from marketing agreements related to our loyalty program were ~~$3.1 billion~~$992 million and ~~$2.6 billion,~~$980 million, respectively, which are allocated to travel and other performance obligations.

Our most significant contract to sell mileage credits relates to our co-brand credit card relationship with American Express. Our agreements with American Express provide for joint marketing, grant certain benefits to Delta-American Express co-branded credit card holders ("cardholders") and American Express Membership Rewards program participants, and allow American Express to market its services or products using our customer database. Cardholders earn mileage credits for making purchases using co-branded cards, and certain cardholders may also check their first bag for free, are granted discounted access to Delta Sky Club lounges and receive priority boarding and other benefits while traveling on Delta. Additionally, participants in the American Express Membership Rewards program may exchange their points for mileage credits under the loyalty program. We sell mileage credits at agreed-upon rates to American Express which are then provided to their customers under the co-brand credit card program and the Membership Rewards program.

We account for marketing agreements, including those with American Express, consistent with the accounting method that allocates the consideration received 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 considering a discounted cash flow analysis using multiple inputs and assumptions, including: (1) the expected number of miles awarded and number of miles redeemed, (2) equivalent ticket value ("ETV") for the award travel obligation, (3) published rates on our website for baggage fees, discounted access to Delta Sky Club lounges and other benefits while traveling on Delta and (4) brand value.

Effective January 1, 2019, we amended our co-brand agreement with American Express, and we also amended other agreements with American Express during the current year. The new agreements increase the value we receive and extend the terms to 2029. The products and services delivered are consistent with previous agreements, and we continue to use the accounting method that allocates the consideration received based on the relative selling prices of those products and services.

We defer the amount for award travel obligation as part of loyalty program deferred revenue and recognize loyalty travel awards in passenger revenue as the mileage credits are used for travel. 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 access Delta Sky Club lounges 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 over time as miles are delivered.

Current Activity of the Loyalty Program. ~~Mileage credits~~Miles are combined in one homogeneous pool and are not separately identifiable. As such, 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 liability and includes miles earned through travel and miles sold to participating companies, which are primarily through marketing agreements.


(in millions)	2020		2019
Balance at January 1	$	6,728	$	6,641
Miles earned	660		720
Travel miles redeemed	(543)		(692)
Non-travel miles redeemed	(28)		(45)
Balance at March 31	$	6,817	$	6,624

(in millions) 2019 2018
Balance at January 1 $ 6,641
$ 6,321
Mileage credits earned 2,352
2,322
Travel mileage credits redeemed (2,175 ) (1,976 )
Non-travel mileage credits redeemed (122 ) (125 )
Balance at September 30 $ 6,696
$ 6,542

The timing of ~~mileage~~mile redemptions can vary widely; however, the majority of new miles ~~are~~have historically been redeemed within two years. The loyalty program deferred revenue classified as a current liability represents our current estimate of revenue expected to be recognized in the next 12 months based on projected redemptions, while the balance classified as a noncurrent liability represents our current estimate of revenue expected to be recognized beyond 12 months. As a result of the COVID-19 pandemic, a larger portion of mile redemptions is projected to occur beyond 12 months and is therefore reflected as a noncurrent liability as of March 31, 2020. We will continue to monitor redemptions as the situation evolves.

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. The majority of the revenues of the refinery, consisting of fuel sales to the airline, have been eliminated in the Condensed Consolidated Financial Statements. The remaining operating revenue for the refinery segment is included in the domestic region. Our passenger and operating revenue by geographic region is summarized in the following tables:


	Passenger Revenue
	Three Months Ended March 31,
(in millions)	2020		2019
Domestic	$	5,601	$	6,741
Atlantic	818		1,074
Latin America	765		861
Pacific	385		578
Total	$	7,569	$	9,254

Passenger Revenue
Three Months Ended September 30, Nine Months Ended September 30,
(in millions) 2019 2018 2019 2018
Domestic $ 7,971
$ 7,395
$ 22,755
$ 21,093
Atlantic 2,060
1,996
5,042
4,837
Latin America 683
675
2,298
2,228
Pacific 696
730
1,937
1,949
Total $ 11,410
$ 10,796
$ 32,032
$ 30,107


⁽¹⁾	~~Endeavor Air, Inc. is a wholly owned subsidiary of Delta.~~


⁽²⁾	~~In the September 2019 quarter we and Compass Airlines, Inc., agreed not to renew our contract and to end our relationship by the end of 2020.~~


⁽³⁾	In the September 2019 quarter we and GoJet Airlines, LLC, agreed not to renew our CRJ-700 contract and to end those operations by the end of 2020. The seven CRJ-900 are under contract through 2022 and subject to further negotiation.

Financial Condition and Liquidity

As a result of the COVID-19 pandemic, we have taken, and are continuing to take, certain actions to increase liquidity and strengthen our financial position which include:

•Drawing $3.0 billion from our previously undrawn revolving credit facilities.

•Entering into a $2.7 billion secured term loan facility during the March 2020 quarter with an accordion feature that allowed us to increase the facility to $3.0 billion during April 2020.

•Entering into $150 million of loans secured by certain of our widebody aircraft. In addition, during April 2020, we have entered into an additional $1.2 billion of sale-leaseback transactions for certain aircraft and are pursuing other financing initiatives.

•Suspending future share repurchases and dividends.

•Delaying $500 million of planned voluntary pension funding.

•Receiving assistance under the CARES Act, which will be available beginning in the June 2020 quarter. In April 2020 we were granted $5.4 billion in emergency relief payments under the payroll support program and are evaluating participation in the loan program. On April 20, 2020, we received the first installment of $2.7 billion under the payroll support program. The CARES Act also provides for deferred payment of the employer portion of social security taxes through the end of 2020, with 50% of the deferred amount due December 31, 2021 and the remaining 50% due December 31, 2022. This is expected to provide us with approximately $200 million of additional liquidity during the current year.

We expect to meet our cash needs for the next twelve months with cash ~~flows from operations, cash~~ and cash equivalents, financing arrangements, government assistance from the CARES Act, restricted cash equivalents and ~~financing arrangements.~~cash flows from operations. As of ~~September 30, 2019~~,March 31, 2020, we had ~~$5.0~~$6.0 billion in unrestricted liquidity, consisting of ~~$1.9~~$6.0 billion in cash and cash equivalents and ~~$3.1 billion~~$21 million in available revolving credit facilities. Additionally, we have at least $15 billion of unencumbered assets available for potential financing arrangements if needed. During the ~~nine~~three months ended ~~September 30, 2019,~~March 31, 2020, we used existing cash, cash received from financings and cash generated from operations to fund capital expenditures of ~~$3.9 billion~~$937 million and return ~~$2.5 billion~~$604 million to ~~shareholders.~~shareholders prior to the materialization of the pandemic impact. Beginning in the second half of March 2020, capital expenditures have been limited to only those critical to our operation. In addition, share repurchases and dividends have been suspended indefinitely.

Sources of Liquidity

Operating Activities

~~We generated~~Operating activities in the three months ended March 31, 2020 provided $358 million compared to providing $1.9 billion in the three months ended March 31, 2019. Due to the impact of COVID-19 on our ticket purchases, we expect to experience negative cash flows from operations ~~of $7.5 billion~~through the June 2020 quarter and ~~$5.8 billion in the nine months ended September 30, 2019 and 2018, respectively. We expect to continue generating cash flows from operations during the remainder of 2019.~~possibly beyond.

Our operating cash flow is impacted by the following factors:

Seasonality of Advance Ticket Sales. We sell tickets for air travel in advance of the customer's travel date. When we receive a cash payment at the time of sale, we record the cash received on advance sales as deferred revenue in air traffic liability. The air traffic liability typically increases during the winter and spring as advanced ticket sales grow prior to the summer peak travel season and decreases during the summer and fall months. However, the current reduction in demand for air travel due to the COVID-19 pandemic has resulted in an unprecedented low level of advance bookings and the associated cash received. At the same time, we have experienced significant cancellations beginning in the second half of March, which has led to issuance of refunds to customers, while the remainder have been rebooked on future flights or received credits in lieu of cash refunds. The total value of refunds, excluding taxes and related fees, issued to customers during the March 2020 quarter was approximately $850 million. The outlook for the remainder of the year is unclear, but we are currently planning for a modest demand recovery beginning in the September 2020 quarter.

Fuel. Fuel expense represented approximately ~~21%~~18% of our total operating expenses for the ~~nine~~three months ended ~~September 30, 2019.~~March 31, 2020. The market price for jet fuel is volatile, which can impact the comparability of our periodic cash flows from operations. We expect fuel consumption to decline consistent with the capacity reductions we are making in response to the pandemic.

Pension Contributions. We have no minimum funding requirements in 2020. As part of our liquidity initiatives, we are delaying $500 million of voluntary pension funding that we were previously planning for 2020. We had no minimum funding requirements in 2019. However, during 2019, we voluntarily contributed ~~$500 million~~$1 billion to ~~our qualified defined benefit pension plans during the June 2019 quarter. During the March 2018 quarter we also voluntarily contributed $500 million to our qualified defined benefit pension~~these plans.

Profit Sharing. Our broad-based employee profit sharing program provides that for each year in which we have an annual pre-tax profit, as defined by the terms of the program, we will pay a specified portion of that profit to employees. In determining the amount of profit sharing, the program defines profit as pre-tax profit adjusted for profit sharing and certain other items. During the ~~nine~~three months ended ~~September 30, 2019,~~March 31, 2020, we ~~accrued $1.3 billion in~~did not accrue profit sharing expense based on the year-to-date performance and current expectations for ~~2019 profit.~~a pre-tax loss in 2020 due to the pandemic.

We paid ~~$1.3~~$1.6 billion in profit sharing in February ~~2019~~2020 related to our ~~2018~~2019 pre-tax profit in recognition of our employees' contributions toward meeting our financial goals. ~~The 2019 profit sharing payment will be made in February 2020.~~

Investing Activities

Capital Expenditures. Our capital expenditures were ~~$3.9 billion~~$937 million and ~~$3.8~~$1.4 billion for the ~~nine~~three months ended ~~September 30,~~March 31, 2020 and 2019, ~~and 2018,~~ respectively. Our capital expenditures during the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020 were primarily related to the purchases of aircraft, fleet modifications and technology ~~enhancements.~~enhancements that happened prior to the COVID-19 pandemic.

We have committed to future aircraft purchases and have obtained, but are under no obligation to use, long-term financing commitments for a substantial portion of the purchase price of certain ~~aircraft.~~aircraft; however we are working with the OEMs to optimize the timing of our future aircraft deliveries. In order to preserve liquidity throughout the COVID-19 pandemic, we will be deferring substantially all of our previously planned 2020 capital expenditures. Our expected ~~2019~~2020 investments of~~$4.5~~total $1.2 billion, ~~will be primarily for aircraft, including deliveries and advance deposit payments, as well as aircraft modifications, the majority~~ of which ~~relate~~$937 million was in the March quarter and substantially all occurred before the steps taken to ~~cabin enhancements throughout~~mitigate the impact of the COVID-19 pandemic. Planned investments for the remainder of the year are limited to those critical to our ~~fleet.~~operation.

In October 2019, the Office of the U.S. Trade Representative announced a 10% tariff on new aircraft imported from ~~Europe.~~Europe, which was subsequently increased to 15% in February 2020. We are ~~evaluating~~continuing to evaluate the impact of this announcement on our future Airbus deliveries.

Equity Investments. ~~We have acquired 10% of the outstanding shares of Hanjin-KAL, the largest shareholder of Korean Air, during~~In 2019, ~~for $170 million.~~

~~In the September 2019 quarter~~ we announced our plan to enter into a strategic alliance with LATAM ~~Airlines Group S.A. Subject~~as well as acquire up to ~~regulatory approval, specifically requirements under the Hart-Scott-Rodino Antitrust Improvement Act, we plan to commence~~a 20% interest through a tender ~~offer for the acquisition of up to~~offer. In January 2020, we acquired 20% of the ~~common~~ shares of LATAM ~~at a price~~for $1.9 billion, or $16 per ~~share of $16, to be funded with newly issued debt and available cash.~~share. In addition, to support the establishment of the strategic alliance, we will invest $350 million, ~~$150~~$200 million of which was disbursed in ~~the September 2019 quarter.~~2019. As part of our planned strategic alliance with LATAM, we have also agreed to acquire four A350 aircraft from LATAM and ~~plan to assume~~assumed ten of LATAM's A350 purchase commitments ~~from~~with Airbus ~~with~~for deliveries through 2025.

This alliance is expected to generate new growth opportunities, building upon Delta's and LATAM's global footprint and joint ~~ventures, including Delta's existing partnership with Aeroméxico.~~ ventures.

We ~~plan to sell~~sold our GOL ownership stake in 2019 and ~~wind~~are winding down our commercial agreements with GOL to facilitate the formation of our strategic alliance with LATAM. Additionally, GOL has a $300 million five-year term loan facility with third parties maturing in August 2020, which we have guaranteed. Based on market value at March 31, 2020, approximately 50% of our guaranty is secured by GOL's ownership interest in Smiles, GOL's publicly traded loyalty program. Because GOL remains in compliance with the terms of its loan facility, we have not recorded a liability for the term loan on our balance sheet as of March 31, 2020. However, as the COVID-19 pandemic continues to impact the global economy, there is an increased risk related to GOL's ability to repay this term loan, which may require our performance under this guarantee. Therefore, we have recorded an immaterial reserve in other accrued liabilities related to the decline in value of our security interest in GOL's Smiles shares.

Over a three week period, concluding March 9, 2020, we acquired through open market transactions an additional 5% of the outstanding shares of Hanjin-KAL, the largest shareholder of Korean Air, for $158 million.

Los Angeles International Airport ("LAX") Construction. We executed a modified lease agreement during 2016 with the City of Los Angeles ("the City"), which owns and operates LAX, and announced plans to modernize, upgrade and connect Terminals 2 and 3 at LAX. Under the lease agreement, we have relocated certain airlines and other tenants ~~located in~~from Terminals 2 and 3 to Terminals 5 and 6 and undertaken various initial projects to enable operations from Terminals 2 and 3 during the project. We are now designing and constructing the redevelopment of Terminal 3 and enhancement of Terminal 2, which also includes rebuilding the ticketing and arrival halls and security checkpoint, construction of core infrastructure to support the City's planned airport people mover, ramp improvements and construction of a secure connector to the north side of the Tom Bradley International Terminal. Construction is expected to be completed by 2024.

Under the lease agreement and subsequent project component approvals by the City's Board of Airport Commissioners, the City has appropriated to date approximately $1.6 billion to purchase completed project assets. The lease allows for a maximum reimbursement by the City of $1.8 billion. Costs we incur in excess of such a maximum will not be reimbursed by the City.

A substantial majority of the project costs will be funded through the Regional Airports Improvement Corporation ("RAIC"), a California public benefit corporation, using an $800 million revolving credit facility provided by a group of lenders. The credit facility was executed during 2017 and amended in 2019, and we have guaranteed the obligations of the RAIC under the credit facility. Loans made under the credit facility ~~will be~~are being repaid with the proceeds from the City’s purchase of completed project assets. Using funding provided by cash flows from operations and/or the credit facility, we expect to spend approximately $200 million on this project during ~~2019,~~2020, of which ~~$134~~$28 million was incurred in the ~~nine~~three months ended ~~September 30, 2019.~~March 31, 2020.

New York-LaGuardia Redevelopment. As part of the terminal redevelopment project at LaGuardia Airport, we are partnering with the Port Authority of New York and New Jersey ~~(the “Port~~(“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 terminal will feature a new, larger Delta Sky Club, wider concourses, more gate seating and 30 percent more concessions space than the existing terminals. The facility will also offer direct access between the parking garage and terminal and improved roadways and drop-off/pick-up areas. The design of the new terminal will integrate sustainable technologies and improvements in energy efficiency. Construction will be phased to limit passenger inconvenience and is expected to be completed by 2026.

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 will (1) fund (through debt issuance and existing cash) and undertake the design, management and construction of the terminal and certain off-premises supporting facilities, (2) receive a Port Authority contribution of ~~$600~~$481 million to facilitate construction of the terminal and other supporting infrastructure, (3) be responsible for all operations and maintenance during the term of the lease and (4) have preferential rights to all gates in the terminal, subject to Port Authority requirements with respect to accommodation of designated carriers.

In 2019, we opened Concourse G, the first of the four new concourses housing seven of the 37 new gates. Not only does this deliver the first direct impact to the Delta passenger experience, it also represents the first major phasing milestone. This new concourse allowed us to vacate portions of the existing terminals which have been demolished and made ready for the next phase of construction. The next major milestone will be the opening of the headhouse and Concourse E, which is scheduled for 2022.

In 2020, the Port Authority and Delta agreed to certain deletions and modifications to the scope of the project impacting the terminal canopy, expansion of a parking garage and a pedestrian bridge to that garage, representing an anticipated $186 million reduction in scope. Accordingly, the Port Authority's original contribution of $600 million was reduced to $481 million to reflect its share of the modified scope. We currently expect our net project cost to be approximately ~~$3.3~~$3.5 billion, and we bear the risks of project construction, including any potential cost over-runs. Using primarily funding provided by ~~cash flows from operations and/or~~existing financing arrangements, we expect to spend approximately ~~$560~~$675 million on this project during ~~2019,~~2020, of which ~~$430~~$100 million was incurred in the ~~nine~~three months ended ~~September 30, 2019.~~March 31, 2020.

Financing Activities

Debt and Finance Leases. In ~~February 2019,~~the March 2020 quarter, we completed the following debt issuances:

•In March 2020, we entered into a $1$2.7 billion 364-day secured term loan ~~issued~~facility ("the facility"). Borrowings under the facility are secured by ~~two~~certain aircraft. The facility also contains an accordion feature under which the aggregate commitment can be increased to $4.0 billion upon our request, provided that the new lenders ~~which was subsequently repaid by~~agree to the ~~end~~existing terms of the ~~June 2019 quarter. We used the net proceeds of the term~~facility. The facility contains covenants similar to our other existing borrowings. In April 2020, this loan was increased to ~~accelerate planned 2019 repurchases under our share repurchase program.~~$3.0 billion.

~~In the March 2019 quarter, we~~•We completed a ~~$500 million~~$1.0 billion offering of Pass Through Certificates, Series ~~2019-1~~2020-1 ("~~2019-1~~2020-1 EETC") ~~through~~utilizing a pass through ~~trust.~~trust during March 2020. The ~~net~~ proceeds of ~~the offering are being~~this issuance were used ~~for general corporate purposes, including~~ to ~~refinance debt~~pay unsecured notes maturing during ~~2019.~~the quarter.

•In March 2020, we drew $3.0 billion from our previously undrawn revolving credit facilities.

The principal amount of debt and finance leases was ~~$10.0~~$16.8 billion at March 31, 2020. We continue to evaluate future financing opportunities, including leveraging our at least $15 billion of unencumbered assets. In response to the impact that the demand environment has had on our financial condition, our credit rating has been downgraded by Standard & Poor's to BB in late March 2020 and by Fitch to BB+ in early April 2020.

CARES Act. On March 27, 2020, President Trump signed the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") into law. The CARES Act is a relief package intended to assist many aspects of the American economy, including providing the airline industry with up to $25 billion in grants to be used for employee wages, salaries and benefits.

In April 2020, we were granted $5.4 billion in emergency relief through the payroll support program of the CARES Act to be paid in installments through July 2020. The relief payments are conditioned on our agreement to refrain from conducting involuntary employee layoffs or furloughs through September 30, ~~2019.~~2020. Other conditions include prohibitions on share repurchases and dividends through September 30, 2021, continuing essential air service as directed by the U.S. Department of Transportation and certain limitations on executive compensation. The relief payments include $3.8 billion in grants and $1.6 billion in an unsecured 10-year low interest loan. The loan includes annual interest rates of 1.00% for the first five years (through April 2025) and the Secured Overnight Financing Rate ("SOFR") plus 2.00% in the final five years. In return, we have agreed to issue to the U.S. Department of the Treasury over 6.5 million warrants to acquire Delta common stock. These warrants include an exercise price of $24.39 per share and have a five-year term.

On April 20, 2020, we received the first installment of $2.7 billion under the payroll support program.

Capital Return to Shareholders. During the ~~nine~~three months ended ~~September 30, 2019,~~March 31, 2020, we repurchased and retired 346 million shares of our common stock at a cost of ~~$1.8 billion.~~$344 million.

In the ~~September 2019~~March 2020 quarter, prior to the declaration of the COVID-19 pandemic, the Board of Directors approved and we paid a quarterly dividend of $0.4025 per share, for total cash dividends of $260 million. In ~~addition,~~early March 2020, we suspended both our share repurchase program and future dividends due to the impact of the pandemic.

Undrawn Lines of Credit

During the March 2020 quarter, we drew $3.0 billion on ~~October 9, 2019, the Board of Directors approved~~our revolving credit facilities and ~~we will pay a quarterly dividend of $0.4025 per share to shareholders of record~~had $21 million undrawn as of ~~November 13, 2019.~~

~~Undrawn Lines of Credit~~

~~We have $3.1 billion available in undrawn revolving lines of credit.~~March 31, 2020. These credit facilities include covenants customary for financing of this type. If we are not in compliance with these covenants, we ~~may~~may be required to repay amounts borrowed under the credit ~~facilities or we may not be able to draw on them.~~facilities.

Covenants

We were in compliance with the covenants in our ~~financings~~financing agreements at ~~September 30, 2019.~~March 31, 2020.

Critical Accounting Policies and Estimates

~~Except as set forth below, for~~For information regarding our Critical Accounting Policies and Estimates, see the "Critical Accounting Policies and Estimates" section of "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Form ~~10-K.~~

~~Loyalty Program~~

Our SkyMiles loyalty program generates customer loyalty by rewarding customers with incentives to travel on Delta. This program allows customers to earn mileage credits by flying on Delta, Delta Connection10-K and other airlines that participate in the loyalty program. When traveling, customers earn redeemable mileage credits based on the passenger's loyalty program status and ticket price. Customers can also earn mileage credits through participating companies such as credit card companies, hotels, car rental agencies and ridesharing companies. To facilitate transactions with participating companies, we sell mileage credits to non-airline businesses, customers and other airlines. Mileage credits are redeemable by customers in future periods for air travel on Delta and other participating airlines, membership in our Sky Club and other program awards.

Our most significant contract to sell mileage credits relates to our co-brand credit card relationship with American Express. Our agreements with American Express provide for joint marketing, grant certain benefits to Delta-American Express co-branded credit card holders and American Express Membership Rewards program participants, and allow American Express to market its services or products using our customer database. Cardholders earn mileage credits for making purchases using co-branded cards, and certain cardholders may also check their first bag for free, are granted discounted access to Delta Sky Club lounges and receive priority boarding and other benefits while traveling on Delta. Additionally, participants in the American Express Membership Rewards program may exchange their points for mileage credits under the loyalty program. We sell mileage credits at agreed-upon rates to American Express which are then provided to their customers under the co-brand credit card program and the Membership Rewards program.

We account for marketing agreements, including those with American Express, consistent with the accounting method that allocates the consideration received 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 estimateNote 2, "Impact of the ~~selling prices by considering a discounted cash flow analysis using multiple inputs~~COVID-19 Pandemic," for discussion about the valuation of goodwill, indefinite-lived intangible assets and assumptions, including: (1) the expected number of miles awarded and number of miles redeemed, (2) ETV for the award travel obligation, (3) published rates on our website for baggage fees, discounted access to Delta Sky Club lounges and other benefits while traveling on Delta and (4) brand value.long-lived assets.

Recent Accounting Standards

~~Comprehensive Income~~Credit Losses. . In ~~February 2018,~~2016, the ~~FASB~~Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-13, "Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments." Under this ASU, ~~No. 2018-02, "Income Statement—Reporting Comprehensive Income (Topic 220)."~~an entity is required to utilize an "expected credit loss model" on certain financial instruments, including trade and financing receivables. This ~~standard provides~~model requires consideration of a broader range of reasonable and supportable information and requires an ~~option~~entity to ~~reclassify stranded tax effects within AOCI to retained earnings due to~~estimate expected credit losses over the ~~U.S. federal corporate income tax rate change in~~lifetime of the ~~Tax Cuts and Jobs Act of 2017. This standard is effective for interim and annual reporting periods beginning after December 15, 2018.~~asset. We adopted this standard effective January 1, ~~2019 with~~2020 and due to the ~~election~~COVID-19 pandemic, we recorded reserves against certain of our outstanding financial instruments that were not ~~to reclassify $1.2 billion of stranded tax effects, primarily related to our pension plans, from AOCI to retained earnings.~~material individually or in the aggregate.

Supplemental Information

We sometimes use information ("non-GAAP financial measures") that is derived from the Condensed Consolidated Financial Statements but that is not presented in accordance with GAAP. Under the U.S. Securities and Exchange Commission rules, non-GAAP financial measures may be considered in addition to results prepared in accordance with GAAP but should not be considered a substitute for or superior to GAAP results. The reconciliations presented below of the non-GAAP measures used in this 10-Q may not calculate exactly due to rounding.

Pre-tax (loss)/income, adjusted

The following table shows a reconciliation of pre-tax (loss)/income (a GAAP measure) to pre-tax (loss)/income, adjusted (a non-GAAP financial measure). We adjust pre-tax (loss)/income for the following items to determine pre-tax (loss)/income, adjusted for the reasons described below.

•

~~MTM adjustments and settlements.~~

•MTM adjustments and settlements on hedges. Mark-to-market ("MTM") adjustments are defined as fair value changes recorded in periods other than the settlement period. Such fair value changes are not necessarily indicative of the actual settlement value of the underlying hedge in the contract settlement period. Settlements represent cash received or paid on hedge contracts settled during the applicable period.

•Equity investment MTM adjustments. We record our proportionate share of earnings/loss from our equity investments in Virgin Atlantic and Grupo Aeroméxico in non-operating expense. We adjust for our equity method investees' hedge portfolio MTM adjustments to allow investors to better understand and analyze our core operational performance in the periods shown.

•MTM adjustments on investments. Unrealized gains/losses on our equity investments in GOL, China Eastern, Air France-KLM and Hanjin-KAL, the largest shareholder of Korean Air, which are accounted for at fair value in non-operating expense, are driven by changes in stock prices and foreign currency. Adjusting for these gains/losses allows investors to better understand and analyze our core operational performance in the periods shown.

•Delta Private Jets adjustment. Because we combined Delta Private Jets with Wheels Up in January 2020, we have excluded the impact of Delta Private Jets from 2019 results for comparability.


	Three Months Ended March 31,
(in millions)	2020		2019
Pre-tax (loss)/income	$	(607)	$	946
Adjusted for:
MTM adjustments and settlements on hedges	(7)		8
Equity investment MTM adjustments	69		(21)
MTM adjustments on investments	123		(100)
Delta Private Jets adjustment	—		(1)
Pre-tax (loss)/income, adjusted	$	(422)	$	831

MTM adjustments are defined as fair value changes recorded in periods other than the settlement period. Such fair value changes are not necessarily indicative of the actual settlement value of the underlying hedge in the contract settlement period. Settlements represent cash received or paid on hedge contracts settled during the period.


•	~~Equity investment MTM adjustments.~~ We record our proportionate share of earnings/loss from our equity investments in Virgin Atlantic and Aeroméxico in non-operating expense. We adjust for our equity method investees' hedge portfolio MTM adjustments to allow investors to better understand and analyze our core operational performance in the periods shown.


•	~~Unrealized gain/loss on investments.~~ We record the unrealized gains/losses on our equity investments in GOL, China Eastern, Air France-KLM and Korean, which are accounted for at fair value in non-operating expense. Adjusting for these gains/losses allows investors to better understand and analyze our core operational performance in the periods shown.


•	~~DGS sale adjustment.~~ ~~Because we sold DGS in December 2018, we have excluded the impact of DGS from 2018 results for comparability.~~

Three Months Ended September 30,
(in millions) 2019 2018
Pre-tax income $ 1,947
$ 1,688
Adjusted for:
MTM adjustments and settlements (25 ) (16 )
Equity investment MTM adjustments 10
(7 )
Unrealized gain/loss on investments 35
(50 )
DGS sale adjustment —
(9 )
Pre-tax income, adjusted $ 1,967
$ 1,606

TRASM, adjusted

The following table shows a reconciliation of TRASM (a GAAP measure) to TRASM, adjusted (a non-GAAP financial measure). We adjust TRASM for the following items to determine TRASM, adjusted for the reasons described below.


•	~~Third-party refinery sales.~~ We adjust TRASM for refinery sales to third parties to determine TRASM, adjusted because these revenues are not related to our airline segment. TRASM, adjusted therefore provides a more meaningful comparison of revenue from our airline operations to the rest of the airline industry.


•	~~DGS sale adjustment.~~ ~~We adjust for the DGS sale for the same reason described above under the heading pre-tax income, adjusted.~~

Three Months Ended September 30, Nine Months Ended September 30,
2019 2018 2019 2018
TRASM
16.58 ¢
16.40 ¢
16.94 ¢
16.78 ¢
Adjusted for:
Third-party refinery sales (0.01 ) (0.15 ) (0.05 ) (0.27 )
DGS sale adjustment —
(0.09 ) —
(0.09 )
TRASM, adjusted
16.57 ¢
16.17 ¢
16.90 ¢
16.42 ¢
•Third-party refinery sales. We adjust TRASM for refinery sales to third parties to determine TRASM, adjusted because these revenues are not related to our airline segment. TRASM, adjusted therefore provides a more meaningful comparison of revenue from our airline operations to the rest of the airline industry.

•Delta Private Jets adjustment. Because we combined Delta Private Jets with Wheels Up in January 2020, we have excluded the impact of Delta Private Jets from 2019 results for comparability.


	Three Months Ended March 31,
	2020		2019
TRASM	14.59	¢	16.78	¢
Adjusted for:
Third-party refinery sales	—		(0.08)
Delta Private Jets adjustment	—		(0.07)
TRASM, adjusted	14.59	¢	16.63	¢

CASM-Ex

The following table shows a reconciliation of CASM (a GAAP measure) to CASM-Ex (a non-GAAP financial measure). We adjust CASM for the following items to determine CASM-Ex for the reasons described below.

•

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

•Third-party refinery sales. We adjust CASM for refinery sales to third parties to determine CASM-Ex because these revenues are not related to our airline segment. CASM-Ex therefore provides a more meaningful comparison of revenue from our airline operations to the rest of the airline industry.

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

•Delta Private Jets adjustment. Because we combined Delta Private Jets with Wheels Up in January 2020, we have excluded the impact of Delta Private Jets from 2019 results for comparability.


	Three Months Ended March 31,
	2020		2019
CASM	15.30	¢	15.14	¢
Adjusted for:
Aircraft fuel and related taxes	(2.72)		(3.17)
Third-party refinery sales	—		(0.08)
Profit sharing	—		(0.35)
Delta Private Jets adjustment	—		(0.05)
CASM-Ex	12.58	¢	11.49	¢

•

~~Ancillary businesses and refinery.~~ We adjust for expenses related to aircraft maintenance we provide to third parties, our vacation wholesale operations, our private jet operations, as well as refinery cost of sales to third parties. Results from 2018 also include staffing services performed by DGS. Because these businesses are not related to the generation of a seat mile, we adjust for the costs related to these areas to provide a more meaningful comparison of the costs of our airline operations to the rest of the airline industry.


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

Three Months Ended September 30, Nine Months Ended September 30,
2019 2018 2019 2018
CASM
13.85 ¢
14.14 ¢
14.46 ¢
14.70 ¢
Adjusted for:
Aircraft fuel and related taxes (2.96 ) (3.43 ) (3.10 ) (3.33 )
Ancillary businesses and refinery (0.37 ) (0.56 ) (0.45 ) (0.70 )
Profit sharing (0.68 ) (0.54 ) (0.60 ) (0.49 )
CASM-Ex
9.84 ¢
9.61 ¢
10.31 ¢
10.18 ¢

Free Cash Flow

We present free cash flow because management believes this metric is helpful to investors to evaluate the company's ability to generate cash that is available for use for debt service or general corporate initiatives. Adjustments include:

•

•Net redemptions of short-term investments. Net redemptions of short-term investments represent the net purchase and sale activity of investments and marketable securities in the period, including gains and losses. We adjust for this activity to provide investors a better understanding of the company's free cash flow generated by our operations.

•Strategic investments. Cash flows related to our investments in LATAM and Hanjin-KAL, the largest shareholder of Korean Air, are included in our GAAP investing activities. We adjust free cash flow for this activity because it provides a more meaningful comparison to the airline industry.

•Net cash flows related to certain airport construction projects and other. Cash flows related to certain airport construction projects are included in our GAAP operating activities and capital expenditures. We have adjusted for these items, which were primarily funded by cash restricted for airport construction, to provide investors a better understanding of the company's free cash flow and capital expenditures that are core to our operational performance in the periods shown.


	Three Months Ended March 31,
(in millions)	2020		2019
Net cash provided by operating activities	$	358	$	1,942
Net cash used in investing activities	(2,971)		(1,096)
Adjusted for:
Net redemptions of short-term investments	—		(206)
Strategic investments	2,099		—
Net cash flows related to certain airport construction projects and other	353		111
Total free cash flow	$	(161)	$	751

Net redemptions of short-term investments represent the net purchase and sale activity of investments and marketable securities in the period, including gains and losses. We adjust for this activity to provide investors a better understanding of the company's free cash flow generated by our operations.


•	~~Strategic investments.~~ Cash flows related to our investment in Hanjin-KAL, the largest shareholder of Korean Air, are included in our GAAP investing activities. We adjust free cash flow for this activity because it provides a more meaningful comparison to the airline industry.

•

~~Net cash flows related to certain airport construction projects and other.~~ Cash flows related to certain airport construction projects are included in our GAAP operating activities and capital expenditures. We have adjusted for these items, which were primarily funded by cash restricted for airport construction, to provide investors a better understanding of the company's free cash flow and capital expenditures that are core to our operational performance in the periods shown.

Three Months Ended September 30,
(in millions) 2019 2018
Net cash provided by operating activities $ 2,245
$ 1,500
Net cash used in investing activities (1,125 ) (903 )
Adjustments:
     Net redemptions of short-term investments —
(42 )
     Strategic investments 81
—
     Net cash flows related to certain airport construction projects and other 229
100
Total free cash flow $ 1,430
$ 655

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes in market risk from the information provided in "Item 7A. Quantitative and Qualitative Disclosures About Market Risk" in our Form 10-K.

ITEM 4. CONTROLS AND PROCEDURES

Our management, including our Chief Executive Officer and Chief Financial Officer, performed an evaluation of our disclosure controls and procedures, which have been designed to permit us to effectively identify and timely disclose important information. Our management, including our Chief Executive Officer and Chief Financial Officer, concluded that the controls and procedures were effective as of ~~September 30, 2019~~March 31, 2020 to ensure that material information was accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

During the three months ended ~~September 30, 2019,~~March 31, 2020, we did not make any changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

"Item 3. Legal Proceedings" of our Form 10-K includes a discussion of our legal proceedings. There have been no material changes from the legal proceedings described in our Form 10-K.

ITEM 1A. RISK FACTORS

“Item 1A. Risk Factors” of our Form 10-K includes a discussion of our risk factors. ~~There~~The information presented below updates, and should be read in conjunction with, the risk factors and information disclosed in our Form 10-K. Except as presented below, there have been no material changes from the risk factors described in our Form 10-K.

The rapid spread of the COVID-19 virus and measures implemented to combat it are having, and are likely to continue to have, a material adverse effect on our business. Moreover, the longer the pandemic persists, the more material the ultimate effects are likely to be. It is likely that there will be future negative effects that we cannot presently predict, including near term effects.

The rapid spread of COVID-19, as well as the escalating measures governments and private organizations have implemented in order to stem the spread of this pandemic, are having a material adverse effect on the demand for worldwide air travel, and consequently upon our business. Among other effects of the COVID-19 pandemic affecting air travel and our business:

•In the United States, which is our primary market, the government has placed significant restrictions on travel between the United States and specific countries, issued a mandate for U.S. citizens to avoid all international travel and has issued a travel advisory for residents of New York, New Jersey and Connecticut due to extensive community transmission of COVID-19 in the area;

•Many foreign governments have placed restrictions on citizens of other countries, including citizens of the U.S., flying into their countries;

•State or local governments have issued health-related curfews or “shelter in place” orders which dissuade or restrict air travel;

•Employers in both the public and private sectors have issued instructions to employees to work from home and/or otherwise dissuading or restricting air travel;

•Business conventions and conferences, significant sporting events, concerts and similar entertainment have been, and are continuing to be, cancelled, reducing the demand for both business air travel (which drives our most profitable ticket sales) and leisure air travel;

•Popular tourist destinations have been, and are continuing to be, closed, or operations are being curtailed, reducing the demand for leisure air travel;

•Travelers are discouraged from air travel to destinations where COVID-19 is particularly virulent;

•Travelers have indicated they are wary of airports and commercial aircraft, where they may view the risk of contagion as increased (and contagion or virus-related deaths linked or alleged to be linked to travel on our aircraft, whether accurate or not, may injure our reputation);

•Travelers may be dissuaded from flying due to possible enhanced COVID-19-related screening measures which are being implemented across multiple markets we serve; and

•Travelers may be dissuaded from flying due to the concern that additional travel restrictions implemented between their departure and return may affect their ability to return to their homes.

These effects related to the COVID-19 pandemic are negatively impacting air travel in general, which in turn are negatively affecting our revenues and results of operations. Moreover, additional currently unknown restrictions or other events dissuading air travel may occur in the future as a result of the pandemic (including possibly in the near term), lengthening the negative effects of the COVID-19 pandemic on our business.

Our operations could be negatively affected further if our employees are quarantined or sickened as a result of exposure to COVID-19, or if they are subject to governmental COVID-19 curfews or “shelter in place” health orders. Measures restricting the ability of our airport or inflight employees to come to work may cause a further deterioration in our service or operations, all of which could negatively affect our business.

In response to the crisis, we are taking certain steps to mitigate the effects on our business, which themselves may have negative consequences with respect to our business and operations. For example, we have significantly reduced our flight capacity. However, the cost savings achievable with temporary capacity reductions cannot be achieved immediately and will not completely eliminate the costs related to unused capacity.

Furthermore, we have waived air travel booking change fees to a broad extent and extended the ability to rebook that travel for up to two years in order to encourage travelers to book air travel (or not cancel already booked travel) despite the inherent uncertainty caused by the COVID-19 pandemic. Despite these efforts, we are experiencing significant ticket cancellations. Cancellations, the waiver of change fees and other refunds have negatively affected our revenues and liquidity, and we expect such negative effects to continue.

Other cost-saving measures that we are implementing or may consider, such as deferral of nonessential maintenance, capital expenditure reductions, hiring freezes, facility closures, deferral of pension funding and compensation reductions, are unlikely to entirely make-up for the loss in cash as result of decreased ticket sales and could also negatively affect our service to customers, revenues and results of operations. The pandemic is also having a material adverse effect on third parties whose services we utilize, including regional carriers in the Delta Connection program and providers of ground services at some airports, which may also negatively affect our service to customers.

We are unable to predict how long these conditions will persist, what additional measures may be introduced by governments or private parties or what effect any such additional measures may have on air travel and our business. Furthermore, not only is the duration of the pandemic and future correlative combative measures at present unknown, the overall situation is extremely fluid, and it is impossible to predict the timing of future material changes in the situation. It therefore is impossible to predict whether any such unknown future developments will occur in the near, medium or long terms, and depending on the duration of the pandemic, such negative developments may occur over the entirety of the event.

At this time we are also not able to predict whether the COVID-19 pandemic will result in permanent changes to our customers' behavior, with such changes including but not limited to a permanent reduction in business travel as a result of increased usage of "virtual" and "teleconferencing" products and more broadly a general reluctance to travel by consumers, each of which could have a material impact on our business.

All of the foregoing have had a material adverse effect on our business, results of operations and financial condition.

We have a significant amount of fixed obligations and have incurred significant new debt in a short period in response to the COVID-19 pandemic. Insufficient liquidity may have a material adverse effect on our financial condition and business.

We have a significant amount of existing fixed obligations, including aircraft lease and debt financings, leases of airport property and other facilities, and other material cash obligations. In response to the travel restrictions imposed as a result of the COVID-19 pandemic, decreased demand and other effects the outbreak of COVID-19 has had and is expected to have on our business, we have incurred and continue to seek significant amounts of additional liquidity in the short-term, through the issuance of additional debt securities as well as through bilateral and syndicated secured and/or unsecured credit facilities. In addition, we have substantial noncancelable commitments for capital expenditures, including for the acquisition of new aircraft and related spare engines.

Although our cash flows from operations and our available capital, including the proceeds from financing transactions, have been sufficient to meet these obligations and commitments to date, our future liquidity could be negatively affected by the risk factors discussed in this form 10-Q, in “Item 1A., Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2019 and other filings we may make from time to time with the SEC. We had $6.0 billion in unrestricted liquidity as of March 31, 2020 and have raised an additional $1.6 billion through April 21, 2020. In addition, we are receiving cash from the U.S. government under the payroll support program of the CARES Act, including $2.7 billion on April 20, 2020. If our liquidity is materially diminished, we might not be able to timely pay our leases and debts or comply with certain operating and financial covenants under our financing and credit card processing agreements or with other material provisions of our contractual obligations. In particular, under our credit card processing agreements, counterparties may require that we maintain a reserve equal to a portion of advanced ticket sales that have been processed by that financial institution, but for which we have not yet provided the air transportation. Such financial institutions may require additional cash or other collateral reserves to be established or additional withholding of payments related to receivables collected if we do not maintain certain minimum levels of liquidity.

Agreements governing our debt, including credit agreements, include financial and other covenants. Failure to comply with these covenants could result in events of default.

Our primary credit facility has various financial and other covenants that require us to maintain a minimum fixed charge coverage ratio and a minimum asset coverage ratio. Based on the reduction in demand that we are currently experiencing as a result of the COVID-19 pandemic and given the limited visibility to the future recovery of demand, there is a range of possible outcomes where our earnings could be reduced enough to result in a breach of the minimum fixed charge coverage ratio within the next year. If we anticipate a potential breach, we expect to seek an amendment or waiver from our lenders. There is no assurance that our efforts to obtain such an amendment or waiver would be successful.

We have other facilities, some of which are secured and also contain collateral coverage ratios. A decline in the value of our assets supporting these facilities from factors that are not under our control could affect one or more of the ratios. In addition, the credit facilities contain other negative covenants customary for such financings. These covenants are subject to important exceptions and qualifications. If we fail to comply with these covenants and are unable to remedy or obtain a waiver or amendment, an event of default would result.

The credit facilities also contain other events of default customary for such financings. If an event of default were to occur, the lenders could, among other things, declare outstanding amounts due and payable and where applicable, repossess collateral, which may include aircraft or other valuable assets. In addition, an event of default or declaration of acceleration under any of the credit facilities could also result in an event of default under other of our financing agreements. The acceleration of significant amounts of debt could require us to renegotiate, repay or refinance the obligations under the credit facilities or other financing arrangements.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table presents information with respect to purchases of common stock we made during the ~~September 2019~~March 2020 quarter. The total number of shares purchased includes shares repurchased pursuant to our $5 billion share repurchase program, which was publicly announced on May 11, 2017 and will terminate no later than December 31, 2020. Some purchases made in the ~~September 2019~~March 2020 quarter were made pursuant to a trading plan meeting the requirements of Rule 10b5-1 under the Securities Exchange Act of 1934. In March 2020, we suspended our share repurchase program due to the impact of the COVID-19 pandemic.

In addition, the table includes shares withheld from employees to satisfy certain tax obligations due in connection with grants of stock under the Delta Air Lines, Inc. Performance Compensation Plan (the "Plan"). The Plan provides for the withholding of shares to satisfy tax obligations. It does not specify a maximum number of shares that can be withheld for this purpose. The shares of common stock withheld to satisfy tax withholding obligations may be deemed to be "issuer purchases" of shares that are required to be disclosed pursuant to this Item.


Period	Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value (in millions) of Shares That May Yet be Purchased Under the Plan or Programs
January 2020	2,780,349	$	58.59	2,780,349		$	930
February 2020	3,165,706	$	56.86	3,165,706		$	760
March 2020	738,722	$	46.99	738,722		$	730
Total	6,684,777			6,684,777

Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
Approximate Dollar Value (in millions) of Shares That May
Yet be Purchased Under the
Plan or Programs
July 2019 1,011,174
$ 61.10
1,011,174
$ 1,440
August 2019 1,382,096
$ 58.45
1,382,096
$ 1,360
September 2019 1,126,813
$ 58.49
1,126,813
$ 1,295
Total 3,520,083
3,520,083

ITEM 6. EXHIBITS

(a) Exhibits


~~10.1~~	Framework Agreement, dated as of September 26, 2019, by and between LATAM Airlines Group S.A. and Delta Air Lines, Inc.*


15	~~Letter from Ernst & Young LLP regarding unaudited interim financial information~~


~~31.1~~	~~Certification by Delta's Chief Executive Officer with respect to Delta's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2019~~


~~31.2~~	~~Certification by Delta's Executive Vice President and Chief Financial Officer with respect to Delta's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2019~~


32	Certification pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code by Delta's Chief Executive Officer and Executive Vice President and Chief Financial Officer with respect to Delta's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2019


~~101.INS~~	~~XBRL Instance Document - The instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document.~~


~~101.SCH~~	~~XBRL Taxonomy Extension Schema Document~~


~~101.CAL~~	~~XBRL Taxonomy Extension Calculation Linkbase Document~~


~~101.DEF~~	~~XBRL Taxonomy Extension Definition Linkbase Document~~


~~101.LAB~~	~~XBRL Taxonomy Extension Labels Linkbase Document~~


~~101.PRE~~	~~XBRL Taxonomy Extension Presentation Linkbase Document~~


~~104~~	~~The cover page from this Quarterly Report on Form 10-Q for the quarter ended September 30, 2019, formatted in Inline XBRL~~

~~____________~~

* Portions10.1 364-Day Term Loan Credit Agreement, dated as of March 17, 2020, among Delta Air Lines, Inc ., each of the Lenders party thereto, JP Morgan Chase Bank, N.A., as administrative and JP Morgan Chase Bank, N.A., as Sole Lea d Arranger and Bookrunner

10.2 Model Award Agreement for the Delta Air Lines, In c. 2020 Long-Term Incentive Plan

10.3 Description of Certain Benefits of Members of the Board of Directors and Executive Officers

15 Letter from Ernst & Young LLP regarding unaudited interim financial information

31.1 Certification by Delta's Chief Executive Officer with respect to Delta's Quarterly Report on Form 10-Q for the quarterly period ended March 3 1 , 20 20

31.2 Certification by Delta's Executive Vice President and Chief Financial Officer with respect to Delta's Quarterly Report on Form 10-Q for the quarterly period ended March 3 1 , 20 20

32 Certification pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code by Delta's Chief Executive Officer and Executive Vice President and Chief Financial Officer with respect to Delta's Quarterly Report on Form 10-Q for the quarterly period ended M arch 3 1 , 20 20

101.INS Inline XBRL Instance Document - The instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document.

101.SCH Inline XBRL Taxonomy Extension Schema Document

101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB Inline XBRL Taxonomy Extension Labels Linkbase Document

101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document

104 The cover page from this ~~exhibit have been omitted as confidential information.~~Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, formatted in Inline XBRL

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		Delta Air Lines, Inc.
		(Registrant)

		~~Delta Air Lines, Inc.~~
	~~(Registrant)~~

	/s/ William C. Carroll
		William C. Carroll
		Senior Vice President - Finance and Controller
		(Principal Accounting Officer)
~~October 10, 2019~~April 22, 2020



~~Delaware~~	~~58-0218548~~
~~(State or other jurisdiction of incorporation or organization)~~	~~(I.R.S. Employer Identification No.)~~



Delaware			58-0218548
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

Post Office Box 20706
Atlanta,	,	Georgia		30320-6001
(Address of principal executive offices)			(Zip Code)



~~Table of Contents~~

	Page
Forward Looking Statements		1
Report of Independent Registered Public Accounting Firm		2

Part I. Financial Information
Item 1. Financial Statements		3
Consolidated Balance Sheets		3
Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income		4
Condensed Consolidated Statements of Cash Flows		5
Consolidated Statements of Stockholders' Equity		6
Notes to the Condensed Consolidated Financial Statements		87
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations		2324
Item 3. Quantitative and Qualitative Disclosures About Market Risk		43
Item 4. Controls and Procedures		43

Part II. Other Information
Item 1. Legal Proceedings		43
Item 1A. Risk Factors		43
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		4446
Item 6. Exhibits		4547

Signature		4648


(in millions)	Volume		Final Maturity Date	Prepaid Expenses and Other		Other Noncurrent Assets		Other Accrued Liabilities		Other Noncurrent Liabilities		Hedge Derivatives, net
Designated as hedges
Interest rate contracts (fair value hedges)	150	U.S. dollars	April 2028	$	2	$	23	$	—	$	—	$	25
Not designated as hedges
Foreign currency exchange contracts	238	Euros	December 2020	11		—		—		—		11
Foreign currency exchange contracts	177,045	South Korean won	April 2023	1		2		—		—		3
Fuel hedge contracts	219	gallons - crude oil and refined products	April 2021	98		—		(90)		—		8
Total derivative contracts						$	112	$	25	$	(90)	$	—	$	47


(in millions)	Volume		Final Maturity Date	Prepaid Expenses and Other		Other Noncurrent Assets		Other Accrued Liabilities		Other Noncurrent Liabilities		Hedge Derivatives, net
Designated as hedges
Interest rate contracts (fair value hedges)	1,872	U.S. dollars	April 2028	$	12	$	53	$	(4)	$	—	$	61
Not designated as hedges
Foreign currency exchange contracts	397	Euros	December 2020	9		—		—		—		9
Foreign currency exchange contracts	177,045	South Korean won	April 2023	1		—		—		(4)		(3)
Fuel hedge contracts	243	gallons - crude oil and refined products	July 2020	16		—		(15)		—		1
Total derivative contracts						$	38	$	53	$	(19)	$	(4)	$	68



☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



Or
☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



(in millions, except share data)	September 30, 2019			December 31, 2018
ASSETS
Current Assets:
Cash and cash equivalents	$	1,899		$	1,565
Accounts receivable, net of an allowance for uncollectible accounts of $14 and $12 at September 30, 2019 and December 31, 2018, respectively	2,836			2,314
Fuel inventory	568			592
Expendable parts and supplies inventories, net of an allowance for obsolescence of $94 and $102 at September 30, 2019 and December 31, 2018, respectively	504			463
Prepaid expenses and other	1,137			1,406
Total current assets	6,944			6,340

Noncurrent Assets:
Property and equipment, net of accumulated depreciation and amortization of $17,213 and $15,823 at September 30, 2019 and December 31, 2018, respectively	30,796			28,335
Operating lease right-of-use assets	5,815			5,994
Goodwill	9,781			9,781
Identifiable intangibles, net of accumulated amortization of $871 and $862 at September 30, 2019 and December 31, 2018, respectively	4,821			4,830
Cash restricted for airport construction	753			1,136
Other noncurrent assets	4,309			3,850
Total noncurrent assets	56,275			53,926
Total assets	$	63,219		$	60,266
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current maturities of long-term debt and finance leases	$	2,196		$	1,518
Current maturities of operating leases	844			955
Air traffic liability	5,762			4,661
Accounts payable	3,470			2,976
Accrued salaries and related benefits	3,119			3,287
Loyalty program deferred revenue	3,200			2,989
Fuel card obligation	439			1,075
Other accrued liabilities	1,181			1,117
Total current liabilities	20,211			18,578

Noncurrent Liabilities:
Long-term debt and finance leases	7,923			8,253
Pension, postretirement and related benefits	8,457			9,163
Loyalty program deferred revenue	3,496			3,652
Noncurrent operating leases	5,441			5,801
Deferred income taxes, net	1,245			163
Other noncurrent liabilities	1,378			969
Total noncurrent liabilities	27,940			28,001

Commitments and Contingencies

Stockholders' Equity:
Common stock at $0.0001 par value; 1,500,000,000 shares authorized, 655,694,564 and 688,136,306 shares issued at September 30, 2019 and December 31, 2018, respectively	—			—
Additional paid-in capital	11,177			11,671
Retained earnings	11,772			10,039
Accumulated other comprehensive loss	(7,645		)	(7,825		)
Treasury stock, at cost, 8,951,710 and 8,191,831 shares at September 30, 2019 and December 31, 2018, respectively	(236		)	(198		)
Total stockholders' equity	15,068			13,687
Total liabilities and stockholders' equity	$	63,219		$	60,266

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.



	Three Months Ended September 30,						Nine Months Ended September 30,
(in millions, except per share data)	2019			2018			2019			2018
Operating Revenue:
Passenger	$	11,410		$	10,796		$	32,032		$	30,107
Cargo	189			226			567			651
Other	961			931			2,969			2,938
Total operating revenue	12,560			11,953			35,568			33,696

Operating Expense:
Salaries and related costs	2,884			2,753			8,275			8,004
Aircraft fuel and related taxes	2,239			2,498			6,508			6,693
Regional carriers expense, excluding fuel	900			885			2,698			2,586
Contracted services	685			562			1,974			1,646
Depreciation and amortization	631			573			1,960			1,759
Passenger commissions and other selling expenses	539			535			1,505			1,473
Aircraft maintenance materials and outside repairs	424			371			1,334			1,233
Landing fees and other rents	460			439			1,321			1,254
Profit sharing	517			399			1,256			991
Ancillary businesses and refinery	279			410			945			1,396
Passenger service	345			329			938			892
Aircraft rent	110			99			318			291
Other	476			455			1,317			1,305
Total operating expense	10,489			10,308			30,349			29,523

Operating Income	2,071			1,645			5,219			4,173

Non-Operating (Expense)/Income:
Interest expense, net	(70		)	(73		)	(228		)	(244		)
Unrealized gain/(loss) on investments, net	(35		)	50			(17		)	(171		)
Miscellaneous, net	(19		)	66			(174		)	48
Total non-operating (expense)/income, net	(124		)	43			(419		)	(367		)

Income Before Income Taxes	1,947			1,688			4,800			3,806

Income Tax Provision	(452		)	(366		)	(1,131		)	(890		)

Net Income	$	1,495		$	1,322		$	3,669		$	2,916

Basic Earnings Per Share	$	2.32		$	1.93		$	5.61		$	4.20
Diluted Earnings Per Share	$	2.31		$	1.92		$	5.59		$	4.18
Cash Dividends Declared Per Share	$	0.40		$	0.35		$	1.10		$	0.96

Comprehensive Income	$	1,545		$	1,393		$	3,849		$	3,002

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.


	Operating Revenue
	Three Months Ended March 31,
(in millions)	2020		2019
Domestic	$	6,267	$	7,516
Atlantic	994		1,287
Latin America	863		969
Pacific	468		700
Total	$	8,592	$	10,472


(in millions)	March 31, 2020		Level 1		Level 2
Cash equivalents	$	4,669	$	4,669	$	—
Restricted cash equivalents	494		494		—
Long-term investments	1,367		908		459
Hedge derivatives, net
Fuel hedge contracts	8		(5)		13
Interest rate contracts	25		—		25
Foreign currency exchange contracts	14		—		14


•	~~Interest Rate Contracts.~~ ~~Our interest rate derivatives are swap contracts, which are valued based on data readily observable in public markets.~~


•	~~Foreign Currency Exchange Contracts.~~ ~~Our foreign currency derivatives consist of forward contracts and are valued based on data readily observable in public markets.~~


	Ownership Interest						Carrying Value
(in millions)	March 31, 2020		December 31, 2019		March 31, 2020		December 31, 2019
Hanjin-KAL	15	%	10	%	$	538	$	205
Air France-KLM	9	%	9	%	211		418
China Eastern	3	%	3	%	159		258
Wheels Up	27	%	—	%	234		—
Other investments					225		218
Total fair value investments					$	1,367	$	1,099


•	~~AirCo~~. We have a non-controlling 49% equity stake in AirCo which is recorded at $123 million as of September 30, 2019. AirCo is a subsidiary of Argenbright Holdings, LLC that provides aviation-related services, ground support equipment maintenance and security.



Table of Contents


•	~~Air France-KLM.~~ ~~We own 9% of the outstanding shares of Air France-KLM, which are recorded at $393 million as of September 30, 2019.~~


•	~~GOL.~~ We own 9% of the outstanding capital stock of GOL Linhas Aéreas Inteligentes, the parent company of VRG Linhas Aéreas (operating as GOL), through ownership of its preferred shares. Our ownership stake is recorded at $256 million as of September 30, 2019.


•	~~China Eastern.~~ ~~We own a 3% equity interest in China Eastern, which is recorded at $226 million as of September 30, 2019.~~


•	~~Korean.~~ ~~We have acquired 10% of the outstanding shares of Hanjin-KAL, the largest shareholder of Korean Air, during 2019. This investment is recorded at $134 million as of September 30, 2019.~~


•	~~Alclear Holdings, LLC ("CLEAR").~~ ~~We own a 7% equity interest in CLEAR.~~


•	~~Republic Airways.~~ ~~We own a 17% equity interest in Republic Airways Holdings Inc.~~


	Carrying Amount of Hedge Instruments						Cumulative Amount of Fair Value Hedge Adjustments¹
(in millions)	March 31, 2020		December 31, 2019		March 31, 2020		December 31, 2019
Current maturities of debt and finance leases	$	22	$	(19)	$	22	$	8
Debt and finance leases	$	(47)	$	(1,783)	$	102	$	53



	Gain (Loss) Reclassified from AOCI to Earnings					Gain (Loss) Recognized in Other Comprehensive Income
(in millions)	2019		2018			2019		2018
Three Months Ended September 30,
Foreign currency exchange contracts ⁽¹⁾	$	—	$	(1	)	$	—	$	4
Nine Months Ended September 30,
Foreign currency exchange contracts ⁽¹⁾	$	—	$	(4	)	$	—	$	4


⁽¹⁾	~~Earnings on our designated foreign currency exchange contracts are recorded in passenger revenue in the income statement.~~


	Location of Gain (Loss) Recognized in Income	Amount of Gain (Loss) Recognized in Income
(in millions)		2020		2019
Three Months Ended March 31,
Foreign currency exchange contracts	Gain/(loss) on investments, net	$	19	$	11
Fuel hedge contracts	Aircraft fuel and related taxes	216		(54)
Total		$	235	$	(43)


	Maturity					Interest Rate(s) Per Annum at							March 31,	December 31,
(in millions)	Dates					March 31, 2020							2020	2019
Unsecured notes	2020	to	2029	2.60%	to	4.38%	$	4,550	$	5,550
2020 Secured Term Loan Facility⁽¹⁾	2021					2.75%	to		2.96%		2,700	—
Financing arrangements secured by aircraft:
Certificates⁽²⁾	2020	to	2028	2.00%	to	8.02%	2,611		1,669
Notes⁽¹⁾⁽²⁾	2020	to	2025	1.37%	to	6.03%	1,243		1,193
NYTDC Special Facilities Revenue Bonds, Series 2018⁽²⁾	2022	to	2036	4.00%	to	5.00%	1,383		1,383
Other financings^(1)(2)(3)	2021	to	2030	1.99%	to	8.75%	256		196
2018 Unsecured Revolving Credit Facility⁽¹⁾	2021	to	2023	2.45%							2,650	—
Other revolving credit facilities⁽¹⁾	2020	to	2021	2.37%	to	3.21%	292		—
Total secured and unsecured debt							15,685		9,991
Unamortized premium and debt issue cost, net and other							155		115
Total debt							15,840		10,106
Less: current maturities							(4,090)		(2,054)
Total long-term debt							$	11,750	$	8,052



	Maturity			Interest Rate(s)⁽¹⁾ Per Annum at			September 30,			December 31,
(in millions)	Dates			September 30, 2019			2019			2018
Unsecured notes	2020	to	2028	2.60%	to	4.38%	$	4,050		$	4,050
Financing arrangements secured by aircraft:
Certificates⁽²⁾	2019	to	2027	3.20%	to	8.02%	1,999			1,837
Notes⁽²⁾	2019	to	2025	2.62%	to	6.37%	1,246			1,787
NYTDC Special Facilities Revenue Bonds, Series 2018⁽²⁾	2022	to	2036	4.00%	to	5.00%	1,383			1,383
Other financings⁽²⁾⁽³⁾	2021	to	2030	3.02%	to	8.75%	196			251
2018 Unsecured Revolving Credit Facility	2021	to	2023	undrawn	variable		—			—
Other revolving credit facilities	2020	to	2021	undrawn	variable		—			—
Total secured and unsecured debt							8,874			9,308
Unamortized premium and debt issue cost, net and other							151			60
Total debt							9,025			9,368
Less: current maturities							(1,953		)	(1,409		)
Total long-term debt							$	7,072		$	7,959


⁽¹⁾⁽³⁾Primarily includes unsecured bonds and debt secured by certain accounts receivable and real estate.	Certain aircraft and other financings are comprised of variable rate debt. All variable rates are equal to LIBOR (generally subject to a floor) or another index rate, in each case plus a specified margin.


⁽³⁾	~~Primarily includes unsecured bonds and debt secured by certain accounts receivable and real estate.~~



(in millions)	Total Principal		Fixed Interest Rate	Issuance Date	Final Maturity Date
2019-1 Class AA Certificates	$	425	3.204%	March 2019	April 2024
2019-1 Class A Certificates	75		3.404%	March 2019	April 2024
Total	$	500


	Pension Benefits						Other Postretirement and Postemployment Benefits
(in millions)	2020		2019		2020		2019
Three Months Ended March 31,
Service cost	$	—	$	—	$	24	$	21
Interest cost	175		208		28		34
Expected return on plan assets	(343)		(297)		(11)		(12)
Amortization of prior service credit	—		—		(2)		(2)
Recognized net actuarial loss	75		73		10		9

Net periodic (benefit) cost	$	(93)	$	(16)	$	49	$	50



(in millions)	Total
Three months ending December 31, 2019	$	390
2020	2,900
2021	3,680
2022	3,330
2023	1,640
Thereafter	1,940
Total	$	13,880


(in millions)	Total
Nine months ending December 31, 2020	$	2,560
2021	4,560
2022	3,060
2023	1,860
2024	1,000
Thereafter	1,700
Total	$	14,740



Aircraft Type			Purchase Commitments
A220-100			2014
A220-300			50
A321-200			3327
A321-200neo			100
A330-900neo⁽¹⁾			3132
A350-900			1626
CRJ-900			84
Total			~~258~~253


(in millions)	Pension and Other Benefit Liabilities⁽²⁾		Other		Total
Balance at January 1, 2020 (net of tax effect of $1,549)	$	(8,095)	$	106	$	(7,989)
Changes in value (net of tax effect of $3)	—		21		21
Reclassifications into earnings (net of tax effect of $21)⁽¹⁾	70		—		70
Balance at March 31, 2020 (net of tax effect of $1,531)	$	(8,025)	$	127	$	(7,898)