Delta Air Lines (DAL) 8-K Consolidated Statements of Operations

DELTA AIR LINES, INC.

Consolidated Statements of Operations

(Unaudited)

	Year Ended December 31,
(in millions)		2017			2016
Operating Revenue:
Passenger		$	36,947		$	35,814
Cargo		744			684
Other		3,447			2,952
Total operating revenue		41,138			39,450
Operating Expense:
Salaries and related costs		10,058			9,394
Aircraft fuel and related taxes		6,756			5,985
Regional carriers expense, excluding fuel		3,466			3,447
Depreciation and amortization		2,222			1,886
Contracted services		2,108			1,918
Passenger commissions and other selling expenses		1,827			1,751
Aircraft maintenance materials and outside repairs		1,591			1,434
Landing fees and other rents		1,501			1,472
Ancillary businesses and refinery expense		1,495			1,182
Passenger service		1,123			964
Profit sharing		1,065			1,115
Aircraft rent		351			285
Other		1,609			1,621
Total operating expense		35,172			32,454
Operating Income		5,966			6,996
Non-Operating Expense:
Interest expense, net		(396		)	(388		)
Unrealized gain/(loss) on investments		—			—
Miscellaneous, net		(70		)	(255		)
Total non-operating expense, net		(466		)	(643		)
Income Before Income Taxes		5,500			6,353
Income Tax Provision		(2,295		)	(2,158		)
Net Income		$	3,205		$	4,195
Diluted Earnings Per Share		$	4.43		$	5.55

The Consolidated Statements of Operations above reflect the adoption of the new standards related to revenue recognition and retirement benefits, as well as other classification changes described in this Form 8-K. These recast results were derived from audited financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2017.

1

The following tables adjust our previously reported consolidated financial statements for the adoption of Accounting Standard Update ("ASU") No. 2014-09, "Revenue from Contracts with Customers (Topic 606)" and ASU No. 2017-07, "Compensation—Retirement Benefits (Topic 715)" on a quarterly basis for 2017 and 2016.

	Three Months Ended
(Unaudited)	March 31, 2017						June 30, 2017						September 30, 2017						December 31, 2017
(in millions, except per share data and metrics)	Previously Reported			As Adjusted			Previously Reported			As Adjusted			Previously Reported			As Adjusted			Previously Reported			As Adjusted
GAAP
Income statement:
Passenger revenue	$	7,688		$	8,178		$	9,231		$	9,768		$	9,399		$	9,979		$	8,501		$	9,022
Cargo revenue	160			163			183			187			187			191			200			203
Other revenue	1,300			760			1,377			792			1,474			891			1,544			1,004
Operating expense	8,095			8,102			8,763			8,765			9,221			9,238			9,052			9,067
Non-operating expense	(138		)	(150		)	(137		)	(151		)	(34		)	(47		)	(104		)	(118		)
Net income	603			561			1,224			1,186			1,178			1,159			572			299
Diluted earnings per share	$	0.82		$	0.77		$	1.68		$	1.62		$	1.64		$	1.61		$	0.80		$	0.42
Operating statistics:
Pre-tax margin	10.0		%	9.3		%	17.5		%	17.0		%	16.3		%	16.1		%	10.6		%	10.2		%
Passenger mile yield		16.03	¢		17.05	¢		16.03	¢		16.97	¢		15.41	¢		16.36	¢		16.61	¢		17.63	¢
PRASM		13.28	¢		14.13	¢		13.94	¢		14.75	¢		13.40	¢		14.22	¢		14.15	¢		15.02	¢
TRASM		15.81	¢		15.73	¢		16.29	¢		16.23	¢		15.76	¢		15.76	¢		17.06	¢		17.03	¢
CASM		13.99	¢		14.00	¢		13.23	¢		13.23	¢		13.14	¢		13.17	¢		15.07	¢		15.10	¢
Balance sheet:
Deferred income taxes, net																			$	935		$	1,354
Air traffic liability																			4,888			4,364
Frequent flyer deferred revenue (current and noncurrent)																			4,118			6,200
Other liabilities (current and noncurrent)																			3,969			4,210
Retained earnings																			9,636			8,256
ADJUSTED
Income statement:
Operating expense, adjusted	$	8,179		$	8,186		$	8,815		$	8,817		$	9,295		$	9,312		$	9,101		$	9,116
Net income, adjusted	560			518			1,201			1,163			1,127			1,108			681			652
Diluted earnings per share, adjusted	$	0.77		$	0.71		$	1.64		$	1.59		$	1.57		$	1.54		$	0.96		$	0.92
Operating statistics:
Pre-tax margin, adjusted	9.3		%	8.6		%	17.3		%	16.8		%	15.8		%	15.6		%	10.2		%	9.8		%
TRASM, excluding refinery		15.70	¢		15.62	¢		16.19	¢		16.13	¢		15.58	¢		15.58	¢		16.65	¢		16.62	¢
CASM-Ex, excluding profit sharing		10.66	¢		10.67	¢		9.73	¢		9.73	¢		9.60	¢		9.63	¢		10.77	¢		10.80	¢

Recast results reflect the adoption of the new standards related to revenue recognition and retirement benefits, as well as other classification changes described in this Form 8-K. These recast results were derived from unaudited financial statements included in the Quarterly Reports on Form 10-Q during the year ended December 31, 2017.

2

	Three Months Ended
(Unaudited)	March 31, 2016						June 30, 2016						September 30, 2016						December 31, 2016
(in millions, except per share data and metrics)	Previously Reported			As Adjusted			Previously Reported			As Adjusted			Previously Reported			As Adjusted			Previously Reported			As Adjusted
GAAP
Income statement:
Passenger revenue	$	7,762		$	8,280		$	8,970		$	9,506		$	9,071		$	9,551		$	7,974		$	8,477
Cargo revenue	162			165			165			169			167			172			174			178
Other revenue	1,327			781			1,312			731			1,245			661			1,310			779
Operating expense	7,711			7,673			8,024			7,980			8,514			8,415			8,438			8,386
Non-operating expense	(106		)	(187		)	(73		)	(154		)	(69		)	(149		)	(68		)	(153		)
Net income	946			903			1,546			1,497			1,259			1,209			622			586
Diluted earnings per share	$	1.21		$	1.16		$	2.03		$	1.96		$	1.69		$	1.63		$	0.84		$	0.80
Operating statistics:
Pre-tax margin	15.5		%	14.8		%	22.5		%	21.8		%	18.1		%	17.5		%	10.1		%	9.5		%
Passenger mile yield		16.26	¢		17.35	¢		15.90	¢		16.85	¢		15.38	¢		16.20	¢		15.95	¢		16.96	¢
PRASM		13.35	¢		14.24	¢		13.59	¢		14.41	¢		13.14	¢		13.84	¢		13.58	¢		14.44	¢
TRASM		15.91	¢		15.87	¢		15.83	¢		15.77	¢		15.19	¢		15.05	¢		16.11	¢		16.07	¢
CASM		13.26	¢		13.20	¢		12.16	¢		12.09	¢		12.33	¢		12.19	¢		14.37	¢		14.28	¢
Balance sheet:
Deferred income taxes, net																			$	3,064		$	3,653
Air traffic liability																			4,626			4,080
Frequent flyer deferred revenue (current and noncurrent)																			3,926			5,803
Other liabilities (current and noncurrent)																			3,785			4,053
Retained earnings																			7,903			6,894
ADJUSTED
Income statement:
Operating expense, adjusted	$	7,556		$	7,518		$	8,641		$	8,597		$	8,491		$	8,392		$	8,449		$	8,397
Operating expense, adjusted, normalized	7,686			7,648			8,748			8,704			8,634			8,535			8,069			8,017
Net income, adjusted	1,026			983			1,124			1,075			1,263			1,213			604			568
Diluted earnings per share, adjusted	$	1.32		$	1.26		$	1.47		$	1.41		$	1.70		$	1.63		$	0.82		$	0.78
Operating statistics:
Pre-tax margin, adjusted	17.0		%	16.3		%	16.2		%	15.5		%	18.2		%	17.6		%	9.9		%	9.3		%
Pre-tax margin, adjusted, normalized	15.6		%	14.8		%	15.1		%	14.4		%	16.8		%	16.2		%	13.9		%	13.3		%
TRASM, excluding refinery		15.77	¢		15.73	¢		15.76	¢		15.70	¢		15.17	¢		15.03	¢		15.95	¢		15.91	¢
CASM-Ex, excluding profit sharing		9.86	¢		9.80	¢		9.05	¢		8.98	¢		9.11	¢		8.97	¢		10.92	¢		10.83	¢
CASM-Ex, excluding profit sharing, normalized		10.07	¢		10.01	¢		9.21	¢		9.14	¢		9.32	¢		9.18	¢		10.27	¢		10.18	¢

Recast results reflect the adoption of the new standards related to revenue recognition and retirement benefits, as well as other classification changes described in this Form 8-K. These recast results were derived from unaudited financial statements included in the Quarterly Reports on Form 10-Q during the year ended December 31, 2016.

3

DELTA AIR LINES, INC.

Consolidated Statements of Operations

(Unaudited)

	Three Months Ended
(in millions)		March 31, 2017			June 30, 2017			September 30, 2017			December 31, 2017
Operating Revenue:
Passenger		$	8,178		$	9,768		$	9,979		$	9,022
Cargo		163			187			191			203
Other		760			792			891			1,004
Total operating revenue		9,101			10,747			11,061			10,229
Operating Expense:
Salaries and related costs		2,386			2,521			2,619			2,532
Aircraft fuel and related taxes		1,482			1,687			1,785			1,802
Regional carriers expense, excluding fuel		864			838			887			877
Depreciation and amortization		537			531			571			583
Contracted services		505			525			543			535
Passenger commissions and other selling expenses		404			467			499			457
Aircraft maintenance materials and outside repairs		432			392			390			377
Landing fees and other rents		361			373			392			375
Ancillary businesses and refinery expense		292			296			387			520
Passenger service		234			284			331			274
Profit sharing		151			338			314			262
Aircraft rent		84			86			89			92
Other		370			427			431			381
Total operating expense		8,102			8,765			9,238			9,067
Operating Income		999			1,982			1,823			1,162
Non-Operating Expense:
Interest expense, net		(94		)	(103		)	(100		)	(99		)
Unrealized gain/(loss) on investments		—			—			—			—
Miscellaneous, net		(56		)	(48		)	53			(19		)
Total non-operating expense, net		(150		)	(151		)	(47		)	(118		)
Income Before Income Taxes		849			1,831			1,776			1,044
Income Tax Provision		(288		)	(645		)	(617		)	(745		)
Net Income		$	561		$	1,186		$	1,159		$	299
Diluted Earnings Per Share		$	0.77		$	1.62		$	1.61		$	0.42

The Consolidated Statements of Operations above reflect the adoption of the new standards related to revenue recognition and retirement benefits, as well as other classification changes described in this Form 8-K. These recast results were derived from unaudited financial statements included in the Quarterly Reports on Form 10-Q during the year ended December 31, 2017.

4

DELTA AIR LINES, INC.

Consolidated Statements of Operations

(Unaudited)

	Three Months Ended
(in millions)		March 31, 2016			June 30, 2016			September 30, 2016			December 31, 2016
Operating Revenue:
Passenger		$	8,280		$	9,506		$	9,551		$	8,477
Cargo		165			169			172			178
Other		781			731			661			779
Total operating revenue		9,226			10,406			10,384			9,434
Operating Expense:
Salaries and related costs		2,154			2,231			2,302			2,707
Aircraft fuel and related taxes		1,394			1,447			1,652			1,492
Regional carriers expense, excluding fuel		837			875			885			850
Depreciation and amortization		482			466			470			468
Contracted services		456			467			504			491
Passenger commissions and other selling expenses		393			448			480			430
Aircraft maintenance materials and outside repairs		362			350			361			361
Landing fees and other rents		345			370			394			363
Ancillary businesses and refinery expense		313			284			247			338
Passenger service		201			237			279			247
Profit sharing		272			324			326			193
Aircraft rent		66			66			72			81
Other		398			415			443			365
Total operating expense		7,673			7,980			8,415			8,386
Operating Income		1,553			2,426			1,969			1,048
Non-Operating Expense:
Interest expense, net		(107		)	(93		)	(95		)	(93		)
Unrealized gain/(loss) on investments		—			—			—			—
Miscellaneous, net		(80		)	(61		)	(54		)	(60		)
Total non-operating expense, net		(187		)	(154		)	(149		)	(153		)
Income Before Income Taxes		1,366			2,272			1,820			895
Income Tax Provision		(463		)	(775		)	(611		)	(309		)
Net Income		$	903		$	1,497		$	1,209		$	586
Diluted Earnings Per Share		$	1.16		$	1.96		$	1.63		$	0.80

The Consolidated Statements of Operations above reflect the adoption of the new standards related to revenue recognition and retirement benefits, as well as other classification changes described in this Form 8-K. These recast results were derived from unaudited financial statements included in the Quarterly Reports on Form 10-Q during the year ended December 31, 2016.

5

Operating Expense, adjusted. We adjust for the following items to determine operating expense, adjusted, as described below. Adjusting for these items allows investors to understand and analyze our core operational performance in the periods shown.

Mark-to-Market ("MTM") adjustments and settlements. 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. These items adjust fuel expense to show the economic impact of hedging, including cash received or paid on hedge contracts during the period.

Pilot contract impact, normalized. Delta’s new pilot contract was ratified on December 1, 2016 and was retroactive to January 1, 2016. As a result, Delta recognized $380 million in retroactive wages and other benefits in the December 2016 quarter that related to previous quarters.

The following tables present reconciliations of operating expense, adjusted as previously reported.

	Three Months Ended
(in millions)	March 31, 2017			June 30, 2017		September 30, 2017			December 31, 2017
Operating expense	$	8,095		$	8,763	$	9,221		$	9,052
MTM adjustments and settlements	84			52		74			49
Operating expense, adjusted	$	8,179		$	8,815	$	9,295		$	9,101
	Three Months Ended
(in millions)	March 31, 2016			June 30, 2016		September 30, 2016			December 31, 2016
Operating expense	$	7,711		$	8,024	$	8,514		$	8,438
MTM adjustments and settlements	(155		)	617		(23		)	11
Operating expense, adjusted	$	7,556		$	8,641	$	8,491		$	8,449
Pilot contract impact, normalized	130			107		143			(380		)
Operating expense, adjusted, including pilot contract impact, normalized	$	7,686		$	8,748	$	8,634		$	8,069

The following tables present reconciliations of operating expense, adjusted to include the impact of the adoption of the new standards.

	Three Months Ended
(in millions)	March 31, 2017			June 30, 2017		September 30, 2017			December 31, 2017
Operating expense	$	8,102		$	8,765	$	9,238		$	9,067
MTM adjustments and settlements	84			52		74			49
Operating expense, adjusted	$	8,186		$	8,817	$	9,312		$	9,116
	Three Months Ended
(in millions)	March 31, 2016			June 30, 2016		September 30, 2016			December 31, 2016
Operating expense	$	7,673		$	7,980	$	8,415		$	8,386
MTM adjustments and settlements	(155		)	617		(23		)	11
Operating expense, adjusted	$	7,518		$	8,597	$	8,392		$	8,397
Pilot contract impact, normalized	130			107		143			(380		)
Operating expense, adjusted, including pilot contract impact, normalized	7,648			8,704		8,535			8,017

6

Net Income, adjusted. We adjust for MTM adjustments and settlements, for the same reasons described above under the heading operating expense, adjusted, and the following items to determine net income, adjusted:

Investment MTM adjustments. We record our proportionate share of earnings from our equity investments in Virgin Atlantic and Aeroméxico in non-operating expense. We adjust for these MTM adjustments to allow investors to understand and analyze the company’s core financial performance in the periods shown.

Tax reform charge. As a result of the Tax Cuts and Jobs Act of 2017, Delta recognized a one-time charge of $150 million in the December 2017 quarter from the revaluation of its deferred tax assets and liabilities. We adjust for this charge to allow investors to understand and analyze the company's core financial performance in the periods shown.

The following tables present reconciliations of net income, adjusted as previously reported.

	Three Months Ended
(in millions, except per share data)	March 31, 2017			June 30, 2017			September 30, 2017			December 31, 2017
Net income	$	603		$	1,224		$	1,178		$	572
Adjusted for:
MTM adjustments and settlements	(55		)	(33		)	(47		)	(31		)
Investment MTM adjustments	12			10			(4		)	(10		)
Tax reform charge	—			—			—			150
Total adjustments	(43		)	(23		)	(51		)	109
Net income, adjusted	$	560		$	1,201		$	1,127		$	681
Net income per diluted share	$	0.82		$	1.68		$	1.64		$	0.80
Total adjustments	(0.05		)	(0.04		)	(0.07		)	0.16
Net income per diluted share, adjusted	$	0.77		$	1.64		$	1.57		$	0.96
	Three Months Ended
(in millions, except per share data)	March 31, 2016			June 30, 2016			September 30, 2016			December 31, 2016
Net income	$	946		$	1,546		$	1,259		$	622
Adjusted for:
MTM adjustments and settlements	98			(390		)	15			(7		)
Investment MTM adjustments	(18		)	(32		)	(11		)	(11		)
Total adjustments	80			(422		)	4			(18		)
Net income, adjusted	$	1,026		$	1,124		$	1,263		$	604
Net income per diluted share	$	1.21		$	2.03		$	1.69		$	0.84
Total adjustments	0.11			(0.56		)	0.01			(0.02		)
Net income per diluted share, adjusted	$	1.32		$	1.47		$	1.70		$	0.82

7

The following tables present reconciliations of net income, adjusted to include the impact of the adoption of the new standards.

	Three Months Ended
(in millions, except per share data)	March 31, 2017			June 30, 2017				September 30, 2017			December 31, 2017
Net income	$	561		$	1,186			$	1,159		$	299
Adjusted for:
MTM adjustments and settlements	(55		)	(33		)		(47		)	(31		)
Investment MTM adjustments	12			10				(4		)	(10		)
Tax reform charge	—			—				—			394
Total adjustments	(43		)	(23		)		(51		)	353
Net income, adjusted	$	518		$	1,163			$	1,108		$	652
Net income per diluted share	$	0.77		$	1.62		��	$	1.61		$	0.42
Total adjustments	(0.06		)	(0.03		)		(0.07		)	0.50
Net income per diluted share, adjusted	$	0.71		$	1.59			$	1.54		$	0.92
	Three Months Ended
(in millions, except per share data)	March 31, 2016			June 30, 2016				September 30, 2016			December 31, 2016
Net income	$	903		$	1,497			$	1,209		$	586
Adjusted for:
MTM adjustments and settlements	98			(390		)		15			(7		)
Investment MTM adjustments	(18		)	(32		)		(11		)	(11		)
Total adjustments	80			(422		)		4			(18		)
Net income, adjusted	$	983		$	1,075			$	1,213		$	568
Net income per diluted share	$	1.16		$	1.96			$	1.63		$	0.80
Total adjustments	0.10			(0.55		)		—			(0.02		)
Net income per diluted share, adjusted	$	1.26		$	1.41			$	1.63		$	0.78

8

Pre-Tax Margin, adjusted. We adjust for MTM adjustments and settlements and pilot contract impact, normalized, for the same reasons described above under the heading operating expense, adjusted, and third-party refinery sales and investment MTM adjustments to determine pre-tax margin, adjusted. Adjusting for these items allows investors to understand and analyze our core operational performance in the periods shown.

Third-party refinery sales. Delta's refinery segment provides jet fuel to the airline segment from its own production and from jet fuel obtained through agreements with third parties. Activities of the refinery segment are primarily for the benefit of the airline. However, from time to time, the refinery sells fuel by-products to third parties. These sales are recorded gross within other revenue and other operating expense.

Investment MTM adjustments. We record our proportionate share of earnings from our equity investments in Virgin Atlantic and Aeroméxico in non-operating expense.

The following tables present reconciliations of pre-tax margin, adjusted as previously reported.

	Three Months Ended
	March 31, 2017		June 30, 2017		September 30, 2017		December 31, 2017
Pre-tax margin	10.0	%	17.5	%	16.3	%	10.6	%
Adjusted for:
MTM adjustments and settlements	(0.9	)%	(0.5	)%	(0.7	)%	(0.5	)%
Third-party refinery sales	0.1	%	0.1	%	0.2	%	0.3	%
Investment MTM adjustments	0.1	%	0.2	%	—	%	(0.2	)%
Pre-tax margin, adjusted	9.3	%	17.3	%	15.8	%	10.2	%
	Three Months Ended
	March 31, 2016		June 30, 2016		September 30, 2016		December 31, 2016
Pre-tax margin	15.5	%	22.5	%	18.1	%	10.1	%
Adjusted for:
MTM adjustments and settlements	1.7	%	(5.9	)%	0.2	%	(0.1	)%
Third-party refinery sales	0.2	%	0.1	%	—	%	0.1	%
Investment MTM adjustments	(0.4	)%	(0.5	)%	(0.1	)%	(0.2	)%
Pre-tax margin, adjusted	17.0	%	16.2	%	18.2	%	9.9	%
Pilot contract impact, normalized	(1.4	)%	(1.1	)%	(1.4	)%	4.0	%
Pre-tax margin, adjusted, including pilot contract impact, normalized	15.6	%	15.1	%	16.8	%	13.9	%

9

The following tables present reconciliations of pre-tax margin, adjusted to include the impact of the adoption of the new standards.

	Three Months Ended
	March 31, 2017		June 30, 2017		September 30, 2017		December 31, 2017
Pre-tax margin	9.3	%	17.0	%	16.1	%	10.2	%
Adjusted for:
MTM adjustments and settlements	(0.9	)%	(0.5	)%	(0.7	)%	(0.5	)%
Third-party refinery sales	0.1	%	0.1	%	0.2	%	0.3	%
Investment MTM adjustments	0.1	%	0.2	%	—	%	(0.2	)%
Pre-tax margin, adjusted	8.6	%	16.8	%	15.6	%	9.8	%
	Three Months Ended
	March 31, 2016		June 30, 2016		September 30, 2016		December 31, 2016
Pre-tax margin	14.8	%	21.8	%	17.5	%	9.5	%
Adjusted for:
MTM adjustments and settlements	1.7	%	(5.9	)%	0.2	%	(0.1	)%
Third-party refinery sales	0.2	%	0.1	%	—	%	0.1	%
Investment MTM adjustments	(0.4	)%	(0.5	)%	(0.1	)%	(0.2	)%
Pre-tax margin, adjusted	16.3	%	15.5	%	17.6	%	9.3	%
Pilot contract impact, normalized	(1.5	)%	(1.1	)%	(1.4	)%	4.0	%
Pre-tax margin, adjusted, including pilot contract impact, normalized	14.8	%	14.4	%	16.2	%	13.3	%

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Total Revenue Per Available Seat Mile "TRASM", excluding refinery. We adjust TRASM for refinery sales to third parties to determine TRASM, adjusted because these revenues are not related to our airline segment. TRASM, excluding refinery therefore provides a more meaningful comparison of revenue from our airline operations to the rest of the airline industry.

The following tables present reconciliations of TRASM, excluding refinery as previously reported.

	Three Months Ended
	March 31, 2017			June 30, 2017			September 30, 2017			December 31, 2017
TRASM		15.81	¢		16.29	¢		15.76	¢		17.06	¢
Third party refinery sales	(0.11		)	(0.10		)	(0.18		)	(0.41		)
TRASM, excluding refinery		15.70	¢		16.19	¢		15.58	¢		16.65	¢
	Three Months Ended
	March 31, 2016			June 30, 2016			September 30, 2016			December 31, 2016
TRASM		15.91	¢		15.83	¢		15.19	¢		16.11	¢
Third party refinery sales	(0.14		)	(0.07		)	(0.02		)	(0.16		)
TRASM, excluding refinery		15.77	¢		15.76	¢		15.17	¢		15.95	¢

The following tables present reconciliations of TRASM, excluding refinery to include the impact of the adoption of the new standards.

	Three Months Ended
	March 31, 2017			June 30, 2017			September 30, 2017			December 31, 2017
TRASM		15.73	¢		16.23	¢		15.76	¢		17.03	¢
Third party refinery sales	(0.11		)	(0.10		)	(0.18		)	(0.41		)
TRASM, excluding refinery		15.62	¢		16.13	¢		15.58	¢		16.62	¢
	Three Months Ended
	March 31, 2016			June 30, 2016			September 30, 2016			December 31, 2016
TRASM		15.87	¢		15.77	¢		15.05	¢		16.07	¢
Third party refinery sales	(0.14		)	(0.07		)	(0.02		)	(0.16		)
TRASM, excluding refinery		15.73	¢		15.70	¢		15.03	¢		15.91	¢

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Non-Fuel Unit Cost or Cost per Available Seat Miles, Excluding Profit Sharing ("CASM-Ex"). We adjust CASM for the following items to determine CASM-Ex, excluding profit sharing 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 (including our regional carriers) allows investors to understand and analyze our non-fuel costs and year-over-year financial performance.

Other expenses. Other expenses include aircraft maintenance and staffing services we provide to third parties, our vacation wholesale operations, and refinery cost of sales to third parties. Because these businesses are not related to the generation of a seat mile, we adjust for the costs related to these sales to provide a more meaningful comparison of the costs of our airline operations to the rest of the airline industry.

Pilot contract impact, normalized. Delta’s new pilot contract was ratified on December 1, 2016 and was retroactive to January 1, 2016. As a result, Delta recognized $380 million in retroactive wages and other benefits in the December 2016 quarter that related to previous quarters.

The following tables present reconciliations of CASM-Ex as previously reported.

	Three Months Ended
	March 31, 2017			June 30, 2017			September 30, 2017			December 31, 2017
CASM		13.99	¢		13.23	¢		13.14	¢		15.07	¢
Adjusted for:
Aircraft fuel and related taxes	(2.56		)	(2.55		)	(2.54		)	(3.00		)
Other expenses	(0.51		)	(0.44		)	(0.55		)	(0.87		)
Profit sharing	(0.26		)	(0.51		)	(0.45		)	(0.43		)
CASM-Ex, excluding profit sharing		10.66	¢		9.73	¢		9.60	¢		10.77	¢
	Three Months Ended
	March 31, 2016			June 30, 2016			September 30, 2016			December 31, 2016
CASM		13.26	¢		12.16	¢		12.33	¢		14.37	¢
Adjusted for:
Aircraft fuel and related taxes	(2.40		)	(2.19		)	(2.39		)	(2.54		)
Other expenses	(0.53		)	(0.43		)	(0.36		)	(0.58		)
Profit sharing	(0.47		)	(0.49		)	(0.47		)	(0.33		)
CASM-Ex, excluding profit sharing		9.86	¢		9.05	¢		9.11	¢		10.92	¢
Pilot contract impact, normalized	0.21			0.16			0.21			(0.65		)
CASM-Ex, adjusted for pilot contract impact, normalized		10.07	¢		9.21	¢		9.32	¢		10.27	¢

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The following tables present reconciliations of CASM-Ex to include the impact of the adoption of the new standards.

	Three Months Ended
	March 31, 2017			June 30, 2017			September 30, 2017			December 31, 2017
CASM		14.00	¢		13.23	¢		13.17	¢		15.10	¢
Adjusted for:
Aircraft fuel and related taxes	(2.56		)	(2.55		)	(2.54		)	(3.00		)
Other expenses	(0.51		)	(0.44		)	(0.55		)	(0.87		)
Profit Sharing	(0.26		)	(0.51		)	(0.45		)	(0.43		)
CASM-Ex, excluding profit sharing		10.67	¢		9.73	¢		9.63	¢		10.80	¢
	Three Months Ended
	March 31, 2016			June 30, 2016			September 30, 2016			December 31, 2016
CASM		13.20	¢		12.09	¢		12.19	¢		14.28	¢
Adjusted for:
Aircraft fuel and related taxes	(2.40		)	(2.19		)	(2.39		)	(2.54		)
Other expenses	(0.53		)	(0.43		)	(0.36		)	(0.58		)
Profit sharing	(0.47		)	(0.49		)	(0.47		)	(0.33		)
CASM-Ex, excluding profit sharing		9.80	¢		8.98	¢		8.97	¢		10.83	¢
Pilot contract impact, normalized	0.21			0.16			0.21			(0.65		)
CASM-Ex, adjusted for pilot contract impact, normalized		10.01	¢		9.14	¢		9.18	¢		10.18	¢

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