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þ
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Or
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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58-0218548
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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Post Office Box 20706
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Atlanta, Georgia
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30320-6001
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(Address of principal executive offices)
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(Zip Code)
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Registrant's telephone number, including area code: (404) 715-2600
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Title of each class
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Name of each exchange on which registered
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Common Stock, par value $0.0001 per share
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New York Stock Exchange
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Large accelerated filer
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þ
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Accelerated filer
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o
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Non-accelerated filer
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o
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Smaller reporting company
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o
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(Do not check if a smaller reporting company)
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Table of Contents
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Page
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PART I
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PART II
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Financial Highlights - 2016 Compared to 2015
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Results of Operations - 2016 Compared to 2015
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Results of Operations - 2015 Compared to 2014
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Page
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PART III
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PART IV
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•
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A transatlantic joint venture with Air France and KLM, both of which are subsidiaries of the same holding company, and Alitalia, which generally covers routes between North America and Europe.
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•
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A transatlantic joint venture with Virgin Atlantic Airways with respect to operations on non-stop routes between the United Kingdom and North America. In addition to the joint venture, we own a non-controlling 49% equity stake in Virgin Atlantic Limited, the parent company of Virgin Atlantic Airways.
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•
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A transpacific joint venture with Virgin Australia Airlines and its affiliated carriers with respect to operations on transpacific routes between North America and Australia/New Zealand.
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•
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ExpressJet Airlines, Inc. and SkyWest Airlines, Inc., both subsidiaries of SkyWest, Inc.;
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•
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Republic Airline, Inc. ("Republic"), a subsidiary of Republic Airways Holdings, Inc.;
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•
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Compass Airlines, LLC ("Compass") and GoJet Airlines, LLC, both subsidiaries of Trans States Holdings, Inc. ("Trans States"); and
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•
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Endeavor Air, Inc., which is a wholly owned subsidiary of ours.
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Year
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Gallons Consumed(1)
(in millions)
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Cost(1)(2) (in millions)
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Average Price Per Gallon(1)(2)
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Percentage of Total Operating Expense(1)(2)
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||||||
2016
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4,016
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$
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5,985
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$
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1.49
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18.3
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%
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2015
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3,988
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$
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7,579
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$
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1.90
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23.0
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%
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2014
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3,893
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$
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13,512
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$
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3.47
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35.4
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%
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(1)
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Includes the operations of our regional carriers operating under capacity purchase agreements.
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(2)
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Includes the impact of fuel hedge activity and refinery segment results.
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•
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In addition to providing maintenance and engineering support for our fleet of over 900 aircraft, our MRO operation, known as Delta TechOps, serves aviation and airline customers from around the world.
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•
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Delta Global Services provides services to us and to third parties, including staffing services, aviation solutions, professional security and training services.
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•
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Our vacation wholesale business, Delta Vacations, provides vacation packages to third-party consumers.
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•
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Our private jet operations, Delta Private Jets, provides aircraft charters, aircraft management and programs allowing members to purchase flight time by the hour.
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Employee Group
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Approximate Number of Active Employees Represented
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Union
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Date on which Collective Bargaining Agreement Becomes Amendable
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Delta Pilots
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12,863
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ALPA
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December 31, 2019
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Delta Flight Superintendents (Dispatchers)
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415
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PAFCA
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March 31, 2018
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Endeavor Air Pilots
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1,527
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ALPA
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January 1, 2020
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Endeavor Air Flight Attendants
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1,132
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AFA
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December 31, 2018
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Endeavor Air Dispatchers
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47
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PAFCA
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December 31, 2018
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Current Fleet(1)
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Commitments
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|||||
Aircraft Type
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Owned
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Capital Lease
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Operating Lease
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Total
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Average Age
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Purchase
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Lease
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Options
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B-717-200
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3
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13
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75
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91
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15.3
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—
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—
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—
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B-737-700
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10
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—
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—
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10
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7.9
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—
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—
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—
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B-737-800
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73
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—
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—
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73
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15.9
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—
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4
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—
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B-737-900ER
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41
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—
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28
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69
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1.8
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51
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—
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—
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B-747-400
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3
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4
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—
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7
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25.4
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—
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—
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—
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B-757-200
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79
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18
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4
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101
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19.6
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—
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—
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—
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B-757-300
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16
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—
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—
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16
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13.8
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—
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—
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—
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B-767-300
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6
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—
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—
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6
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23.4
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—
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—
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—
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B-767-300ER
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54
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4
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—
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58
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20.8
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—
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—
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—
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B-767-400ER
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21
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—
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—
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21
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15.8
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—
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—
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—
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B-777-200ER
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8
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—
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—
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8
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16.9
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—
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—
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—
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B-777-200LR
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10
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—
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—
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10
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7.8
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—
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—
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—
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A319-100
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55
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—
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2
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57
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14.9
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—
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—
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—
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A320-200
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58
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4
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7
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69
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21.8
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—
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—
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—
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A321-200
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7
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—
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8
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15
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0.4
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67
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—
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—
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A330-200
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11
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—
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—
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11
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11.8
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—
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—
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—
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A330-300
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26
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—
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3
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29
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8.5
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2
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—
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—
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A330-900neo
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—
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—
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—
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—
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—
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25
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—
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—
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A350-900
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—
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—
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—
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—
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—
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25
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—
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—
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CS100(2)
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—
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—
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—
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—
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—
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75
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—
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50
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MD-88
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93
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23
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—
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116
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26.4
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—
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—
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—
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MD-90
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65
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—
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—
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65
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19.9
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—
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—
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—
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Total
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639
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66
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127
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832
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17.0
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245
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4
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50
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(1)
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Excludes certain aircraft we own or lease, which are operated by regional carriers on our behalf shown in the table below.
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(2)
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During the June 2016 quarter, we reached an agreement with Bombardier to acquire 75 CS100 aircraft with deliveries beginning in 2018 and continuing through 2022. We have flexibility under the purchase agreement with respect to deferral, acceleration, conversion and a limited number of cancellation rights. The agreement also includes options to purchase 50 additional aircraft.
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Fleet Type
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||||
Carrier
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CRJ-200
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CRJ-700
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CRJ-900
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Embraer 170
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Embraer 175
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Total
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Endeavor Air, Inc.(1)
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53
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—
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81
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—
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—
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134
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ExpressJet Airlines, Inc.
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36
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35
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28
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—
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—
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99
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SkyWest Airlines, Inc.
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60
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27
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36
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—
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12
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135
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Compass Airlines, LLC
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—
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—
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—
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6
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36
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42
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Shuttle America(2)
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—
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—
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—
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14
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16
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30
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GoJet Airlines, LLC
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—
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22
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7
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—
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—
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29
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Total
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149
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84
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152
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20
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64
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469
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(1)
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Endeavor Air, Inc. is a wholly owned subsidiary of Delta.
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(2)
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Shuttle America merged into Republic Airline, Inc. effective January 31, 2017.
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Delivery in Calendar Years Ending
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||||
Aircraft Purchase Commitments
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2017
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2018
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2019
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After 2019
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Total
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B-737-900ER
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20
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18
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13
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—
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51
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A321-200
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17
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23
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27
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—
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67
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A330-300
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2
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—
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—
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—
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2
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A330-900neo
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—
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—
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4
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21
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25
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A350-900
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5
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6
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7
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7
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25
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CS100
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—
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15
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25
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35
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75
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Total
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44
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62
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76
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63
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245
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Common Stock
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Cash Dividends Declared (per share)
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||||||||||
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High
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Low
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||||||||||
Fiscal 2016
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|||||||||
Fourth Quarter
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$
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52.76
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$
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37.91
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$
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0.2025
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Third Quarter
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$
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41.35
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$
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34.08
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$
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0.2025
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Second Quarter
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$
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49.80
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$
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32.60
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|
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$
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0.135
|
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First Quarter
|
|
$
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50.50
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|
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$
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40.03
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|
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$
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0.135
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Fiscal 2015
|
|
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||||||||
Fourth Quarter
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$
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52.77
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$
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43.35
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$
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0.135
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Third Quarter
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$
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48.30
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|
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$
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34.61
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|
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$
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0.135
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Second Quarter
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|
$
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47.98
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|
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$
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38.97
|
|
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$
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0.09
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|
First Quarter
|
|
$
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51.06
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|
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$
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42.60
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|
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$
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0.09
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Period
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Total Number of Shares Purchased
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Average Price Paid Per Share
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Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
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Approximate Dollar Value (in millions) of Shares That May Yet Be Purchased Under the Plan or Programs
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|||||||
October 2016
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7,540
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$
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40.40
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7,540
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|
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$
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1,650
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November 2016
|
1,132,079
|
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$
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46.05
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|
1,132,079
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|
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$
|
1,600
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December 2016
|
4,987,902
|
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$
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49.83
|
|
4,987,902
|
|
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$
|
1,350
|
|
Total
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6,127,521
|
|
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6,127,521
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|
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|
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Year Ended December 31,
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||||||||||||||
(in millions, except share data)
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2016
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2015
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2014
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2013
|
2012
|
||||||||||
Operating revenue
|
$
|
39,639
|
|
$
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40,704
|
|
$
|
40,362
|
|
$
|
37,773
|
|
$
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36,670
|
|
Operating expense
|
32,687
|
|
32,902
|
|
38,156
|
|
34,373
|
|
34,495
|
|
|||||
Operating income
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6,952
|
|
7,802
|
|
2,206
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|
3,400
|
|
2,175
|
|
|||||
Non-operating expense, net
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(316
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)
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(645
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)
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(1,134
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)
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(873
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)
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(1,150
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)
|
|||||
Income before income taxes
|
6,636
|
|
7,157
|
|
1,072
|
|
2,527
|
|
1,025
|
|
|||||
Income tax (provision) benefit
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(2,263
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)
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(2,631
|
)
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(413
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)
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8,013
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(16
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)
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|||||
Net income
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$
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4,373
|
|
$
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4,526
|
|
$
|
659
|
|
$
|
10,540
|
|
$
|
1,009
|
|
|
|
|
|
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|
||||||||||
Basic earnings per share
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$
|
5.82
|
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$
|
5.68
|
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$
|
0.79
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$
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12.41
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|
$
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1.20
|
|
Diluted earnings per share
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$
|
5.79
|
|
$
|
5.63
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$
|
0.78
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$
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12.29
|
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$
|
1.19
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|
Cash dividends declared per share
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$
|
0.68
|
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$
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0.45
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|
$
|
0.30
|
|
$
|
0.12
|
|
$
|
—
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|
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Year Ended December 31,
|
||||||||||||||
(in millions)
|
2016
|
2015
|
2014
|
2013
|
2012
|
||||||||||
MTM adjustments and settlements
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$
|
450
|
|
$
|
1,301
|
|
$
|
(2,346
|
)
|
$
|
276
|
|
$
|
27
|
|
Restructuring and other
|
—
|
|
(35
|
)
|
(716
|
)
|
(424
|
)
|
(452
|
)
|
|||||
Loss on extinguishment of debt
|
—
|
|
—
|
|
(268
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)
|
—
|
|
(118
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)
|
|||||
Virgin Atlantic MTM adjustments
|
115
|
|
26
|
|
(134
|
)
|
—
|
|
—
|
|
|||||
Release of tax valuation allowance and intraperiod income tax allocation
|
—
|
|
—
|
|
—
|
|
7,989
|
|
—
|
|
|||||
Total income (loss)
|
$
|
565
|
|
$
|
1,292
|
|
$
|
(3,464
|
)
|
$
|
7,841
|
|
$
|
(543
|
)
|
|
December 31,
|
||||||||||||||
(in millions)
|
2016
|
2015
|
2014
|
2013
|
2012
|
||||||||||
Total assets
|
$
|
51,261
|
|
$
|
53,134
|
|
$
|
54,005
|
|
$
|
52,104
|
|
$
|
43,933
|
|
Long-term debt and capital leases (including current maturities)
|
$
|
7,332
|
|
$
|
8,329
|
|
$
|
9,661
|
|
$
|
11,194
|
|
$
|
12,555
|
|
Stockholders' equity (deficit)
|
$
|
12,287
|
|
$
|
10,850
|
|
$
|
8,813
|
|
$
|
11,643
|
|
$
|
(2,131
|
)
|
|
Year Ended December 31,
|
||||||||||||||
Consolidated(1)
|
2016
|
2015
|
2014
|
2013
|
2012
|
||||||||||
Revenue passenger miles (in millions)
|
213,098
|
|
209,625
|
|
202,925
|
|
194,988
|
|
192,974
|
|
|||||
Available seat miles (in millions)
|
251,867
|
|
246,764
|
|
239,676
|
|
232,740
|
|
230,415
|
|
|||||
Passenger mile yield
|
|
15.85
|
¢
|
|
16.59
|
¢
|
|
17.22
|
¢
|
|
16.89
|
¢
|
|
16.46
|
¢
|
Passenger revenue per available seat mile
|
|
13.41
|
¢
|
|
14.10
|
¢
|
|
14.58
|
¢
|
|
14.15
|
¢
|
|
13.78
|
¢
|
Operating cost per available seat mile
|
|
12.98
|
¢
|
|
13.33
|
¢
|
|
15.92
|
¢
|
|
14.77
|
¢
|
|
14.97
|
¢
|
Passenger load factor
|
84.6
|
%
|
84.9
|
%
|
84.7
|
%
|
83.8
|
%
|
83.8
|
%
|
|||||
Fuel gallons consumed (in millions)
|
4,016
|
|
3,988
|
|
3,893
|
|
3,828
|
|
3,769
|
|
|||||
Average price per fuel gallon(2)
|
$
|
1.49
|
|
$
|
1.90
|
|
$
|
3.47
|
|
$
|
3.00
|
|
$
|
3.25
|
|
Full-time equivalent employees, end of period
|
83,756
|
|
82,949
|
|
79,655
|
|
77,755
|
|
73,561
|
|
(1)
|
Includes the operations of our regional carriers under capacity purchase agreements. Full-time equivalent employees exclude employees of regional carriers that we do not own.
|
(2)
|
Includes the impact of fuel hedge activity and refinery segment results.
|
|
Year Ended December 31,
|
Increase
(Decrease)
|
% Increase
(Decrease)
|
||||||||
(in millions)
|
2016
|
2015
|
|||||||||
Passenger:
|
|
|
|
|
|||||||
Mainline
|
$
|
28,105
|
|
$
|
28,898
|
|
$
|
(793
|
)
|
(2.7
|
)%
|
Regional carriers
|
5,672
|
|
5,884
|
|
(212
|
)
|
(3.6
|
)%
|
|||
Total passenger revenue
|
33,777
|
|
34,782
|
|
(1,005
|
)
|
(2.9
|
)%
|
|||
Cargo
|
668
|
|
813
|
|
(145
|
)
|
(17.8
|
)%
|
|||
Other
|
5,194
|
|
5,109
|
|
85
|
|
1.7
|
%
|
|||
Total operating revenue
|
$
|
39,639
|
|
$
|
40,704
|
|
$
|
(1,065
|
)
|
(2.6
|
)%
|
|
|
Increase (Decrease)
vs. Year Ended December 31, 2015
|
||||||||||||||
(in millions)
|
Year Ended December 31, 2016
|
Passenger Revenue
|
RPMs (Traffic)
|
ASMs (Capacity)
|
Passenger Mile Yield
|
PRASM
|
Load Factor
|
|||||||||
Mainline
|
$
|
17,932
|
|
—
|
%
|
4.3
|
%
|
5.2
|
%
|
(4.1
|
)%
|
(5.0
|
)%
|
(0.8
|
)
|
pts
|
Regional carriers
|
5,672
|
|
(3.6
|
)%
|
0.6
|
%
|
1.0
|
%
|
(4.2
|
)%
|
(4.6
|
)%
|
(0.3
|
)
|
pts
|
|
Domestic
|
23,604
|
|
(0.9
|
)%
|
3.6
|
%
|
4.5
|
%
|
(4.4
|
)%
|
(5.2
|
)%
|
(0.6
|
)
|
pts
|
|
Atlantic
|
5,185
|
|
(6.5
|
)%
|
(1.7
|
)%
|
0.3
|
%
|
(4.9
|
)%
|
(6.8
|
)%
|
(1.7
|
)
|
pts
|
|
Pacific
|
2,616
|
|
(12.8
|
)%
|
(4.6
|
)%
|
(6.6
|
)%
|
(8.6
|
)%
|
(6.7
|
)%
|
1.8
|
|
pts
|
|
Latin America
|
2,372
|
|
(1.8
|
)%
|
3.5
|
%
|
0.8
|
%
|
(5.1
|
)%
|
(2.6
|
)%
|
2.3
|
|
pts
|
|
Total
|
$
|
33,777
|
|
(2.9
|
)%
|
1.7
|
%
|
2.1
|
%
|
(4.5
|
)%
|
(4.9
|
)%
|
(0.3
|
)
|
pts
|
|
Year Ended December 31,
|
Increase
(Decrease)
|
% Increase
(Decrease)
|
||||||||
(in millions)
|
2016
|
2015
|
|||||||||
Loyalty programs
|
$
|
1,782
|
|
$
|
1,584
|
|
$
|
198
|
|
12.5
|
%
|
Administrative fees, club and on-board sales
|
1,205
|
|
1,261
|
|
(56
|
)
|
(4.4
|
)%
|
|||
Ancillary businesses and refinery(1)
|
1,129
|
|
1,158
|
|
(29
|
)
|
(2.5
|
)%
|
|||
Baggage fees
|
881
|
|
885
|
|
(4
|
)
|
(0.5
|
)%
|
|||
Other
|
197
|
|
221
|
|
(24
|
)
|
(10.9
|
)%
|
|||
Total other revenue
|
$
|
5,194
|
|
$
|
5,109
|
|
$
|
85
|
|
1.7
|
%
|
(1)
|
Ancillary businesses and refinery include aircraft maintenance and staffing services we provide to third parties, our vacation wholesale operations and refinery sales to third parties. These revenues are not related to the generation of a seat mile.
|
|
Year Ended December 31,
|
Increase
(Decrease)
|
% Increase
(Decrease)
|
||||||||
(in millions)
|
2016
|
2015
|
|||||||||
Salaries and related costs
|
$
|
10,034
|
|
$
|
8,776
|
|
$
|
1,258
|
|
14.3
|
%
|
Aircraft fuel and related taxes
|
5,133
|
|
6,544
|
|
(1,411
|
)
|
(21.6
|
)%
|
|||
Regional carriers expense
|
4,311
|
|
4,241
|
|
70
|
|
1.7
|
%
|
|||
Contracted services
|
1,991
|
|
1,848
|
|
143
|
|
7.7
|
%
|
|||
Depreciation and amortization
|
1,902
|
|
1,835
|
|
67
|
|
3.7
|
%
|
|||
Aircraft maintenance materials and outside repairs
|
1,823
|
|
1,848
|
|
(25
|
)
|
(1.4
|
)%
|
|||
Passenger commissions and other selling expenses
|
1,710
|
|
1,672
|
|
38
|
|
2.3
|
%
|
|||
Landing fees and other rents
|
1,490
|
|
1,493
|
|
(3
|
)
|
(0.2
|
)%
|
|||
Profit sharing
|
1,115
|
|
1,490
|
|
(375
|
)
|
(25.2
|
)%
|
|||
Passenger service
|
907
|
|
872
|
|
35
|
|
4.0
|
%
|
|||
Aircraft rent
|
285
|
|
250
|
|
35
|
|
14.0
|
%
|
|||
Restructuring and other
|
—
|
|
35
|
|
(35
|
)
|
NM(1)
|
|
|||
Other
|
1,986
|
|
1,998
|
|
(12
|
)
|
(0.6
|
)%
|
|||
Total operating expense
|
$
|
32,687
|
|
$
|
32,902
|
|
$
|
(215
|
)
|
(0.7
|
)%
|
(1)
|
Due to the nature of amounts recorded within restructuring and other, a year-over-year comparison is not meaningful. For a discussion of charges recorded in restructuring and other, see Note 14 of the Notes to the Consolidated Financial Statements.
|
|
Year Ended December 31,
|
(Decrease)
|
%
(Decrease)
|
||||||||
(in millions)
|
2016
|
2015
|
|||||||||
Aircraft fuel and related taxes(1)
|
$
|
5,133
|
|
$
|
6,544
|
|
$
|
(1,411
|
)
|
|
|
Aircraft fuel and related taxes included within regional carriers expense
|
852
|
|
1,035
|
|
(183
|
)
|
|
||||
Total fuel expense
|
$
|
5,985
|
|
$
|
7,579
|
|
$
|
(1,594
|
)
|
(21.0
|
)%
|
(1)
|
Includes the impact of fuel hedging and refinery results described further in the table below.
|
|
|
|
Average Price Per Gallon
|
||||||||||||||||
|
Year Ended December 31,
|
Increase
(Decrease)
|
|
Year Ended December 31,
|
Increase (Decrease)
|
||||||||||||||
(in millions, except per gallon data)
|
2016
|
2015
|
|
2016
|
2015
|
||||||||||||||
Fuel purchase cost(1)
|
$
|
5,579
|
|
$
|
6,934
|
|
$
|
(1,355
|
)
|
|
$
|
1.39
|
|
$
|
1.74
|
|
$
|
(0.35
|
)
|
Airline segment fuel hedge losses(2)
|
281
|
|
935
|
|
(654
|
)
|
|
0.07
|
|
0.23
|
|
(0.16
|
)
|
||||||
Refinery segment impact(2)
|
125
|
|
(290
|
)
|
415
|
|
|
0.03
|
|
(0.07
|
)
|
0.10
|
|
||||||
Total fuel expense
|
$
|
5,985
|
|
$
|
7,579
|
|
$
|
(1,594
|
)
|
|
$
|
1.49
|
|
$
|
1.90
|
|
$
|
(0.41
|
)
|
MTM adjustments and settlements(3)
|
450
|
|
1,301
|
|
(851
|
)
|
|
0.11
|
|
0.33
|
|
(0.22
|
)
|
||||||
Total fuel expense, adjusted
|
$
|
6,435
|
|
$
|
8,880
|
|
$
|
(2,445
|
)
|
|
$
|
1.60
|
|
$
|
2.23
|
|
$
|
(0.63
|
)
|
(1)
|
Market price for jet fuel at airport locations, including related taxes and transportation costs.
|
(2)
|
Includes the impact of pricing arrangements between the airline and refinery segments with respect to the refinery's inventory price risk. For additional information regarding the refinery segment impact, see "Refinery Segment" below.
|
(3)
|
MTM adjustments and settlements include the effects of the derivative transactions discussed in Note 4 of the Notes to the Consolidated Financial Statements. For additional information and the reason for adjusting fuel expense, see "Supplemental Information" below.
|
|
Year Ended December 31,
|
Increase (Decrease)
|
% Increase (Decrease)
|
||||||||
(in millions)
|
2015
|
2014
|
|||||||||
Passenger:
|
|
|
|
|
|||||||
Mainline
|
$
|
28,898
|
|
$
|
28,688
|
|
$
|
210
|
|
0.7
|
%
|
Regional carriers
|
5,884
|
|
6,266
|
|
(382
|
)
|
(6.1
|
)%
|
|||
Total passenger revenue
|
34,782
|
|
34,954
|
|
(172
|
)
|
(0.5
|
)%
|
|||
Cargo
|
813
|
|
934
|
|
(121
|
)
|
(13.0
|
)%
|
|||
Other
|
5,109
|
|
4,474
|
|
635
|
|
14.2
|
%
|
|||
Total operating revenue
|
$
|
40,704
|
|
$
|
40,362
|
|
$
|
342
|
|
0.8
|
%
|
|
|
Increase (Decrease)
vs. Year Ended December 31, 2014
|
||||||||||||||
(in millions)
|
Year Ended December 31, 2015
|
Passenger Revenue
|
RPMs (Traffic)
|
ASMs (Capacity)
|
Passenger Mile Yield
|
PRASM
|
Load Factor
|
|||||||||
Mainline
|
$
|
17,933
|
|
5.4
|
%
|
6.7
|
%
|
6.1
|
%
|
(1.2
|
)%
|
(0.6
|
)%
|
0.5
|
|
pts
|
Regional carriers
|
5,884
|
|
(6.1
|
)%
|
(2.2
|
)%
|
(4.0
|
)%
|
(4.0
|
)%
|
(2.1
|
)%
|
1.5
|
|
pts
|
|
Domestic
|
23,817
|
|
2.3
|
%
|
5.1
|
%
|
4.1
|
%
|
(2.6
|
)%
|
(1.8
|
)%
|
0.8
|
|
pts
|
|
Atlantic
|
5,548
|
|
(4.8
|
)%
|
0.6
|
%
|
3.2
|
%
|
(5.3
|
)%
|
(7.7
|
)%
|
(2.1
|
)
|
pts
|
|
Pacific
|
3,002
|
|
(12.2
|
)%
|
(2.3
|
)%
|
(5.0
|
)%
|
(10.2
|
)%
|
(7.6
|
)%
|
2.3
|
|
pts
|
|
Latin America
|
2,415
|
|
(0.4
|
)%
|
5.1
|
%
|
5.7
|
%
|
(5.3
|
)%
|
(5.8
|
)%
|
(0.5
|
)
|
pts
|
|
Total consolidated
|
$
|
34,782
|
|
(0.5
|
)%
|
3.3
|
%
|
3.0
|
%
|
(3.7
|
)%
|
(3.3
|
)%
|
0.2
|
|
pts
|
|
Year Ended December 31,
|
Increase
(Decrease)
|
% Increase
(Decrease)
|
||||||||
(in millions)
|
2015
|
2014
|
|||||||||
Loyalty programs
|
$
|
1,584
|
|
$
|
1,309
|
|
$
|
275
|
|
21.0
|
%
|
Administrative fees, club and on-board sales
|
1,261
|
|
1,194
|
|
67
|
|
5.6
|
%
|
|||
Ancillary businesses and refinery(1)
|
1,158
|
|
880
|
|
278
|
|
31.6
|
%
|
|||
Baggage fees
|
885
|
|
863
|
|
22
|
|
2.5
|
%
|
|||
Other
|
221
|
|
228
|
|
(7
|
)
|
(3.1
|
)%
|
|||
Total other revenue
|
$
|
5,109
|
|
$
|
4,474
|
|
$
|
635
|
|
14.2
|
%
|
(1)
|
Ancillary businesses and refinery include aircraft maintenance and staffing services we provide to third parties, our vacation wholesale operations and refinery sales to third parties. These revenues are not related to the generation of a seat mile.
|
|
Year Ended December 31,
|
Increase
(Decrease)
|
% Increase
(Decrease)
|
||||||||
(in millions)
|
2015
|
2014
|
|||||||||
Salaries and related costs
|
$
|
8,776
|
|
$
|
8,120
|
|
$
|
656
|
|
8.1
|
%
|
Aircraft fuel and related taxes
|
6,544
|
|
11,668
|
|
(5,124
|
)
|
(43.9
|
)%
|
|||
Regional carriers expense
|
4,241
|
|
5,237
|
|
(996
|
)
|
(19.0
|
)%
|
|||
Aircraft maintenance materials and outside repairs
|
1,848
|
|
1,828
|
|
20
|
|
1.1
|
%
|
|||
Contracted services
|
1,848
|
|
1,749
|
|
99
|
|
5.7
|
%
|
|||
Depreciation and amortization
|
1,835
|
|
1,771
|
|
64
|
|
3.6
|
%
|
|||
Passenger commissions and other selling expenses
|
1,672
|
|
1,700
|
|
(28
|
)
|
(1.6
|
)%
|
|||
Landing fees and other rents
|
1,493
|
|
1,442
|
|
51
|
|
3.5
|
%
|
|||
Profit sharing
|
1,490
|
|
1,085
|
|
405
|
|
37.3
|
%
|
|||
Passenger service
|
872
|
|
810
|
|
62
|
|
7.7
|
%
|
|||
Aircraft rent
|
250
|
|
233
|
|
17
|
|
7.3
|
%
|
|||
Restructuring and other
|
35
|
|
716
|
|
(681
|
)
|
NM(1)
|
|
|||
Other
|
1,998
|
|
1,797
|
|
201
|
|
11.2
|
%
|
|||
Total operating expense
|
$
|
32,902
|
|
$
|
38,156
|
|
$
|
(5,254
|
)
|
(13.8
|
)%
|
(1)
|
Due to the nature of amounts recorded within restructuring and other, a year-over-year comparison is not meaningful. For a discussion of charges recorded in restructuring and other, see Note 14 of the Notes to the Consolidated Financial Statements.
|
|
Year Ended December 31,
|
(Decrease)
|
% (Decrease)
|
||||||||
(in millions)
|
2015
|
2014
|
|||||||||
Aircraft fuel and related taxes(1)
|
$
|
6,544
|
|
$
|
11,668
|
|
$
|
(5,124
|
)
|
|
|
Aircraft fuel and related taxes included within regional carriers expense
|
1,035
|
|
1,844
|
|
(809
|
)
|
|
||||
Total fuel expense
|
$
|
7,579
|
|
$
|
13,512
|
|
$
|
(5,933
|
)
|
(43.9
|
)%
|
(1)
|
Includes the impact of fuel hedging and refinery results described further in the table below.
|
|
|
|
Average Price Per Gallon
|
||||||||||||||||
|
Year Ended December 31,
|
Increase
(Decrease)
|
|
Year Ended December 31,
|
Increase
(Decrease)
|
||||||||||||||
(in millions, except per gallon data)
|
2015
|
2014
|
|
2015
|
2014
|
||||||||||||||
Fuel purchase cost(1)
|
$
|
6,934
|
|
$
|
11,350
|
|
$
|
(4,416
|
)
|
|
$
|
1.74
|
|
$
|
2.91
|
|
$
|
(1.17
|
)
|
Airline segment fuel hedge losses(2)
|
935
|
|
2,258
|
|
(1,323
|
)
|
|
0.23
|
|
0.58
|
|
(0.35
|
)
|
||||||
Refinery segment impact(2)
|
(290
|
)
|
(96
|
)
|
(194
|
)
|
|
(0.07
|
)
|
(0.02
|
)
|
(0.05
|
)
|
||||||
Total fuel expense
|
$
|
7,579
|
|
$
|
13,512
|
|
$
|
(5,933
|
)
|
|
$
|
1.90
|
|
$
|
3.47
|
|
$
|
(1.57
|
)
|
MTM adjustments and settlements(3)
|
1,301
|
|
(2,346
|
)
|
3,647
|
|
|
0.33
|
|
(0.60
|
)
|
0.93
|
|
||||||
Total fuel expense, adjusted
|
$
|
8,880
|
|
$
|
11,166
|
|
$
|
(2,286
|
)
|
|
$
|
2.23
|
|
$
|
2.87
|
|
$
|
(0.64
|
)
|
(1)
|
Market price for jet fuel at airport locations, including related taxes and transportation costs.
|
(2)
|
Includes the impact of pricing arrangements between the airline and refinery segments with respect to the refinery's inventory price risk. For additional information regarding the refinery segment impact, see "Refinery Segment" below.
|
(3)
|
MTM adjustments and settlements include the effects of the derivative transactions discussed in Note 4 of the Notes to the Consolidated Financial Statements. For additional information and the reason for adjusting fuel expense, see "Supplemental Information" below.
|
|
Year Ended December 31,
|
|
Favorable
|
|||||||||||||
(in millions)
|
2016
|
2015
|
2014
|
|
2016 vs. 2015
|
2015 vs. 2014
|
||||||||||
Interest expense, net
|
$
|
(388
|
)
|
$
|
(481
|
)
|
$
|
(650
|
)
|
|
$
|
93
|
|
$
|
169
|
|
Miscellaneous, net
|
72
|
|
(164
|
)
|
(484
|
)
|
|
236
|
|
320
|
|
|||||
Total non-operating expense, net
|
$
|
(316
|
)
|
$
|
(645
|
)
|
$
|
(1,134
|
)
|
|
$
|
329
|
|
$
|
489
|
|
Rating Agency
|
Current Rating
|
Outlook
|
Moody's
|
Baa3
|
Stable
|
Fitch
|
BBB-
|
Stable
|
Standard & Poor's
|
BB+
|
Positive
|
(in millions, except repurchase price)
|
Share Repurchase Authorization
|
Average Repurchase Price
|
Planned Completion Date
|
Authorization Remaining
|
|||||||
May 2013 Program
|
$
|
500
|
|
$
|
28.43
|
|
June 30, 2016
|
Completed June 2014
|
|||
May 2014 Program
|
$
|
2,000
|
|
$
|
42.86
|
|
December 31, 2016
|
Completed June 2015
|
|||
May 2015 Program
|
$
|
5,000
|
|
$
|
44.03
|
|
December 31, 2017
|
|
$
|
1,350
|
|
|
Contractual Obligations by Year(1)
|
||||||||||||||||||||
(in millions)
|
2017
|
2018
|
2019
|
2020
|
2021
|
Thereafter
|
Total
|
||||||||||||||
Long-term debt (see Note 6)
|
|
|
|
|
|
|
|
||||||||||||||
Principal amount
|
$
|
1,038
|
|
$
|
2,160
|
|
$
|
1,289
|
|
$
|
527
|
|
$
|
345
|
|
$
|
1,753
|
|
$
|
7,112
|
|
Interest payments
|
311
|
|
259
|
|
172
|
|
114
|
|
91
|
|
214
|
|
1,161
|
|
|||||||
Capital lease obligations (see Note 7)
|
|
|
|
|
|
|
|
||||||||||||||
Principal amount
|
122
|
|
70
|
|
51
|
|
39
|
|
22
|
|
20
|
|
324
|
|
|||||||
Interest payments
|
23
|
|
15
|
|
9
|
|
4
|
|
2
|
|
1
|
|
54
|
|
|||||||
Operating lease payments (see Note 7)
|
1,572
|
|
1,443
|
|
1,304
|
|
1,133
|
|
862
|
|
6,781
|
|
13,095
|
|
|||||||
Aircraft purchase commitments (see Note 9)
|
2,580
|
|
2,980
|
|
3,380
|
|
1,730
|
|
1,130
|
|
660
|
|
12,460
|
|
|||||||
Contract carrier obligations (see Note 9)
|
2,039
|
|
1,827
|
|
1,562
|
|
1,220
|
|
737
|
|
1,196
|
|
8,581
|
|
|||||||
Employee benefit obligations (see Note 8)
|
657
|
|
535
|
|
552
|
|
598
|
|
561
|
|
9,950
|
|
12,853
|
|
|||||||
Other obligations
|
1,290
|
|
410
|
|
260
|
|
200
|
|
200
|
|
1,330
|
|
3,690
|
|
|||||||
Total
|
$
|
9,632
|
|
$
|
9,699
|
|
$
|
8,579
|
|
$
|
5,565
|
|
$
|
3,950
|
|
$
|
21,905
|
|
$
|
59,330
|
|
(1)
|
For additional information, see the Notes to the Consolidated Financial Statements referenced in the table above.
|
Change in Assumption
|
Effect on 2017
Pension Expense
|
Effect on Accrued
Pension Liability at
December 31, 2016
|
||||
0.50% decrease in weighted average discount rate
|
$
|
(5
|
) million
|
$
|
1.3
|
billion
|
0.50% increase in weighted average discount rate
|
$
|
2
|
million
|
$
|
(1.2
|
) billion
|
0.50% decrease in expected long-term rate of return on assets
|
$
|
55
|
million
|
$
|
—
|
|
0.50% increase in expected long-term rate of return on assets
|
$
|
(55
|
) million
|
$
|
—
|
|
•
|
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. Adjusting for these items allows investors to better understand and analyze our core operational performance in the periods shown.
|
•
|
Restructuring and other. Because of the variability in restructuring and other, the adjustment for this item is helpful to investors to analyze our recurring core performance in the periods shown.
|
•
|
Virgin Atlantic MTM adjustments. We record our proportionate share of earnings from our equity investment in Virgin Atlantic in non-operating expense. We adjust for Virgin Atlantic's MTM adjustments to allow investors to better understand and analyze our core financial performance in the periods shown.
|
|
Year Ended December 31,
|
|||||
(in millions)
|
2016
|
2015
|
||||
Pre-tax income
|
$
|
6,636
|
|
$
|
7,157
|
|
Adjusted for:
|
|
|
||||
MTM adjustments and settlements
|
(450
|
)
|
(1,301
|
)
|
||
Restructuring and other
|
—
|
|
35
|
|
||
Virgin Atlantic MTM adjustments
|
(115
|
)
|
(26
|
)
|
||
Pre-tax income, adjusted for special items
|
$
|
6,071
|
|
$
|
5,865
|
|
•
|
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 better understand and analyze our non-fuel costs and year-over-year financial performance.
|
•
|
Restructuring and other. Because of the variability in restructuring and other, the adjustment for this item is helpful to investors to analyze our recurring core performance in the periods shown.
|
•
|
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.
|
|
Year Ended December 31,
|
|||||
|
2016
|
2015
|
||||
CASM (cents)
|
|
12.98
|
¢
|
|
13.33
|
¢
|
Adjusted for:
|
|
|
||||
Aircraft fuel and related taxes
|
(2.38
|
)
|
(3.07
|
)
|
||
Restructuring and other
|
—
|
|
(0.01
|
)
|
||
Other expenses
|
(0.47
|
)
|
(0.48
|
)
|
||
CASM-Ex, including profit sharing
|
|
10.13
|
¢
|
|
9.77
|
¢
|
|
|
Year Ended
|
||
(in millions, except % of return)
|
|
December 31, 2016
|
||
Operating income
|
|
$
|
6,952
|
|
Adjusted for:
|
|
|
||
MTM adjustments and settlements
|
|
(450
|
)
|
|
Restructuring and other
|
|
—
|
|
|
7x annual interest expense included in aircraft rent
|
|
188
|
|
|
Amortization of retirement actuarial loss
|
|
231
|
|
|
Operating income, adjusted
|
|
$
|
6,921
|
|
|
|
|
||
Adjusted book value of equity
|
|
$
|
19,954
|
|
Average adjusted net debt
|
|
6,601
|
|
|
Adjusted average invested capital(1)
|
|
$
|
26,555
|
|
|
|
|
||
ROIC
|
|
26.1
|
%
|
(1)
|
Adjusted average invested capital represents the sum of the average book value of equity at the end of the last five quarters, adjusted for pension and fuel hedge impacts within other comprehensive income. Average adjusted net debt is calculated using amounts as of the end of the last five quarters.
|
|
|
|
|
|
|
||||
(in millions)
|
|
December 31, 2016
|
|
December 31, 2009
|
|||||
Debt and capital lease obligations
|
|
$
|
7,332
|
|
|
$
|
17,198
|
|
|
Plus: unamortized discount, net and debt issuance costs
|
|
104
|
|
|
1,123
|
|
|||
Adjusted debt and capital lease obligations
|
|
7,436
|
|
|
18,321
|
|
|||
Plus: 7x last twelve months' aircraft rent
|
|
1,995
|
|
|
3,360
|
|
|||
Adjusted total debt
|
|
9,431
|
|
|
21,681
|
|
|||
Less: cash, cash equivalents and short-term investments
|
|
(3,249
|
)
|
|
(4,678
|
)
|
|||
Less: hedge margin (receivable) payable
|
|
(38
|
)
|
|
10
|
|
|||
Adjusted net debt
|
|
$
|
6,144
|
|
|
$
|
17,013
|
|
|
Page
|
|
/s/ Ernst & Young LLP
|
Atlanta, Georgia
|
|
February 13, 2017
|
|
|
|
December 31,
|
||||||
(in millions, except share data)
|
|
2016
|
|
2015
|
||||
ASSETS
|
||||||||
Current Assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
2,762
|
|
|
$
|
1,972
|
|
Short-term investments
|
|
487
|
|
|
1,465
|
|
||
Accounts receivable, net of an allowance for uncollectible accounts of $15 and $9 at December 31, 2016 and 2015, respectively
|
|
2,064
|
|
|
2,020
|
|
||
Fuel inventory
|
|
519
|
|
|
379
|
|
||
Expendable parts and supplies inventories, net of an allowance for obsolescence of $110 and $114 at December 31, 2016 and 2015, respectively
|
|
372
|
|
|
318
|
|
||
Hedge derivative asset
|
|
393
|
|
|
1,987
|
|
||
Prepaid expenses and other
|
|
854
|
|
|
915
|
|
||
Total current assets
|
|
7,451
|
|
|
9,056
|
|
||
|
|
|
|
|
||||
Property and Equipment, Net:
|
|
|
|
|
||||
Property and equipment, net of accumulated depreciation and amortization of $12,456 and $10,871 at December 31, 2016 and 2015, respectively
|
|
24,375
|
|
|
23,039
|
|
||
|
|
|
|
|
||||
Other Assets:
|
|
|
|
|
||||
Goodwill
|
|
9,794
|
|
|
9,794
|
|
||
Identifiable intangibles, net of accumulated amortization of $828 and $811 at December 31, 2016 and 2015, respectively
|
|
4,844
|
|
|
4,861
|
|
||
Deferred income taxes, net
|
|
3,064
|
|
|
4,956
|
|
||
Other noncurrent assets
|
|
1,733
|
|
|
1,428
|
|
||
Total other assets
|
|
19,435
|
|
|
21,039
|
|
||
Total assets
|
|
$
|
51,261
|
|
|
$
|
53,134
|
|
|
|
|
|
|
||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||
Current Liabilities:
|
|
|
|
|
||||
Current maturities of long-term debt and capital leases
|
|
$
|
1,131
|
|
|
$
|
1,563
|
|
Air traffic liability
|
|
4,626
|
|
|
4,503
|
|
||
Accounts payable
|
|
2,572
|
|
|
2,743
|
|
||
Accrued salaries and related benefits
|
|
2,924
|
|
|
3,195
|
|
||
Hedge derivative liability
|
|
688
|
|
|
2,581
|
|
||
Frequent flyer deferred revenue
|
|
1,648
|
|
|
1,635
|
|
||
Other accrued liabilities
|
|
1,650
|
|
|
1,306
|
|
||
Total current liabilities
|
|
15,239
|
|
|
17,526
|
|
||
|
|
|
|
|
||||
Noncurrent Liabilities:
|
|
|
|
|
||||
Long-term debt and capital leases
|
|
6,201
|
|
|
6,766
|
|
||
Pension, postretirement and related benefits
|
|
13,378
|
|
|
13,855
|
|
||
Frequent flyer deferred revenue
|
|
2,278
|
|
|
2,246
|
|
||
Other noncurrent liabilities
|
|
1,878
|
|
|
1,891
|
|
||
Total noncurrent liabilities
|
|
23,735
|
|
|
24,758
|
|
||
|
|
|
|
|
||||
Commitments and Contingencies
|
|
|
|
|
||||
|
|
|
|
|
||||
Stockholders' Equity:
|
|
|
|
|
||||
Common stock at $0.0001 par value; 1,500,000,000 shares authorized, 744,886,938 and 799,850,675 shares issued at December 31, 2016 and 2015, respectively
|
|
—
|
|
|
—
|
|
||
Additional paid-in capital
|
|
12,294
|
|
|
12,936
|
|
||
Retained earnings
|
|
7,903
|
|
|
5,562
|
|
||
Accumulated other comprehensive loss
|
|
(7,636
|
)
|
|
(7,275
|
)
|
||
Treasury stock, at cost, 14,149,229 and 21,066,684 shares at December 31, 2016 and 2015, respectively
|
|
(274
|
)
|
|
(373
|
)
|
||
Total stockholders' equity
|
|
12,287
|
|
|
10,850
|
|
||
Total liabilities and stockholders' equity
|
|
$
|
51,261
|
|
|
$
|
53,134
|
|
|
|
|
|
|
||||
The accompanying notes are an integral part of these Consolidated Financial Statements.
|
|
Year Ended December 31,
|
||||||||||
(in millions, except per share data)
|
2016
|
|
2015
|
|
2014
|
||||||
Operating Revenue:
|
|
|
|
|
|
||||||
Passenger:
|
|
|
|
|
|
||||||
Mainline
|
$
|
28,105
|
|
|
$
|
28,898
|
|
|
$
|
28,688
|
|
Regional carriers
|
5,672
|
|
|
5,884
|
|
|
6,266
|
|
|||
Total passenger revenue
|
33,777
|
|
|
34,782
|
|
|
34,954
|
|
|||
Cargo
|
668
|
|
|
813
|
|
|
934
|
|
|||
Other
|
5,194
|
|
|
5,109
|
|
|
4,474
|
|
|||
Total operating revenue
|
39,639
|
|
|
40,704
|
|
|
40,362
|
|
|||
|
|
|
|
|
|
||||||
Operating Expense:
|
|
|
|
|
|
||||||
Salaries and related costs
|
10,034
|
|
|
8,776
|
|
|
8,120
|
|
|||
Aircraft fuel and related taxes
|
5,133
|
|
|
6,544
|
|
|
11,668
|
|
|||
Regional carriers expense
|
4,311
|
|
|
4,241
|
|
|
5,237
|
|
|||
Contracted services
|
1,991
|
|
|
1,848
|
|
|
1,749
|
|
|||
Depreciation and amortization
|
1,902
|
|
|
1,835
|
|
|
1,771
|
|
|||
Aircraft maintenance materials and outside repairs
|
1,823
|
|
|
1,848
|
|
|
1,828
|
|
|||
Passenger commissions and other selling expenses
|
1,710
|
|
|
1,672
|
|
|
1,700
|
|
|||
Landing fees and other rents
|
1,490
|
|
|
1,493
|
|
|
1,442
|
|
|||
Profit sharing
|
1,115
|
|
|
1,490
|
|
|
1,085
|
|
|||
Passenger service
|
907
|
|
|
872
|
|
|
810
|
|
|||
Aircraft rent
|
285
|
|
|
250
|
|
|
233
|
|
|||
Restructuring and other
|
—
|
|
|
35
|
|
|
716
|
|
|||
Other
|
1,986
|
|
|
1,998
|
|
|
1,797
|
|
|||
Total operating expense
|
32,687
|
|
|
32,902
|
|
|
38,156
|
|
|||
|
|
|
|
|
|
||||||
Operating Income
|
6,952
|
|
|
7,802
|
|
|
2,206
|
|
|||
|
|
|
|
|
|
||||||
Non-Operating Expense:
|
|
|
|
|
|
||||||
Interest expense, net
|
(388
|
)
|
|
(481
|
)
|
|
(650
|
)
|
|||
Miscellaneous, net
|
72
|
|
|
(164
|
)
|
|
(484
|
)
|
|||
Total non-operating expense, net
|
(316
|
)
|
|
(645
|
)
|
|
(1,134
|
)
|
|||
|
|
|
|
|
|
||||||
Income Before Income Taxes
|
6,636
|
|
|
7,157
|
|
|
1,072
|
|
|||
|
|
|
|
|
|
||||||
Income Tax Provision
|
(2,263
|
)
|
|
(2,631
|
)
|
|
(413
|
)
|
|||
|
|
|
|
|
|
||||||
Net Income
|
$
|
4,373
|
|
|
$
|
4,526
|
|
|
$
|
659
|
|
|
|
|
|
|
|
||||||
Basic Earnings Per Share
|
$
|
5.82
|
|
|
$
|
5.68
|
|
|
$
|
0.79
|
|
Diluted Earnings Per Share
|
$
|
5.79
|
|
|
$
|
5.63
|
|
|
$
|
0.78
|
|
Cash Dividends Declared Per Share
|
$
|
0.68
|
|
|
$
|
0.45
|
|
|
$
|
0.30
|
|
|
|
|
|
|
|
||||||
The accompanying notes are an integral part of these Consolidated Financial Statements.
|
|
Year Ended December 31,
|
||||||||||
(in millions)
|
2016
|
|
2015
|
|
2014
|
||||||
Net Income
|
$
|
4,373
|
|
|
$
|
4,526
|
|
|
$
|
659
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
||||||
Net change in foreign currency and interest rate derivatives
|
(43
|
)
|
|
(82
|
)
|
|
3
|
|
|||
Net change in pension and other benefits
|
(360
|
)
|
|
163
|
|
|
(2,194
|
)
|
|||
Net change in investments
|
42
|
|
|
(45
|
)
|
|
10
|
|
|||
Total Other Comprehensive (Loss) Income
|
(361
|
)
|
|
36
|
|
|
(2,181
|
)
|
|||
Comprehensive Income (Loss)
|
$
|
4,012
|
|
|
$
|
4,562
|
|
|
$
|
(1,522
|
)
|
|
Year Ended December 31,
|
||||||||||
(in millions)
|
2016
|
|
2015
|
|
2014
|
||||||
Cash Flows From Operating Activities:
|
|
|
|
|
|
||||||
Net income
|
$
|
4,373
|
|
|
$
|
4,526
|
|
|
$
|
659
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
1,902
|
|
|
1,835
|
|
|
1,771
|
|
|||
Hedge derivative contracts
|
(342
|
)
|
|
(1,366
|
)
|
|
2,186
|
|
|||
Deferred income taxes
|
2,223
|
|
|
2,581
|
|
|
414
|
|
|||
Pension, postretirement and postemployment payments greater than expense
|
(717
|
)
|
|
(1,013
|
)
|
|
(723
|
)
|
|||
Restructuring and other
|
—
|
|
|
35
|
|
|
758
|
|
|||
Extinguishment of debt
|
—
|
|
|
22
|
|
|
268
|
|
|||
Equity investment (earnings) loss
|
(160
|
)
|
|
(35
|
)
|
|
106
|
|
|||
Changes in certain assets and liabilities:
|
|
|
|
|
|
||||||
Receivables
|
(147
|
)
|
|
(56
|
)
|
|
(302
|
)
|
|||
Restricted cash and cash equivalents
|
(11
|
)
|
|
7
|
|
|
62
|
|
|||
Fuel inventory
|
(140
|
)
|
|
155
|
|
|
172
|
|
|||
Hedge margin
|
81
|
|
|
806
|
|
|
(922
|
)
|
|||
Prepaid expenses and other current assets
|
(26
|
)
|
|
(102
|
)
|
|
58
|
|
|||
Air traffic liability
|
123
|
|
|
207
|
|
|
174
|
|
|||
Frequent flyer deferred revenue
|
45
|
|
|
(301
|
)
|
|
(238
|
)
|
|||
Profit sharing
|
(383
|
)
|
|
734
|
|
|
264
|
|
|||
Accounts payable and accrued liabilities
|
285
|
|
|
(201
|
)
|
|
(36
|
)
|
|||
Other, net
|
99
|
|
|
93
|
|
|
276
|
|
|||
Net cash provided by operating activities
|
7,205
|
|
|
7,927
|
|
|
4,947
|
|
|||
|
|
|
|
|
|
||||||
Cash Flows From Investing Activities:
|
|
|
|
|
|
||||||
Property and equipment additions:
|
|
|
|
|
|
||||||
Flight equipment, including advance payments
|
(2,617
|
)
|
|
(2,223
|
)
|
|
(1,662
|
)
|
|||
Ground property and equipment, including technology
|
(774
|
)
|
|
(722
|
)
|
|
(587
|
)
|
|||
Purchase of equity investments
|
—
|
|
|
(500
|
)
|
|
—
|
|
|||
Purchase of short-term investments
|
(1,707
|
)
|
|
(998
|
)
|
|
(1,795
|
)
|
|||
Redemption of short-term investments
|
2,686
|
|
|
739
|
|
|
1,533
|
|
|||
Acquisition of London-Heathrow slots
|
—
|
|
|
(276
|
)
|
|
—
|
|
|||
Proceeds for sales of E190 aircraft
|
226
|
|
|
—
|
|
|
—
|
|
|||
Other, net
|
31
|
|
|
25
|
|
|
48
|
|
|||
Net cash used in investing activities
|
(2,155
|
)
|
|
(3,955
|
)
|
|
(2,463
|
)
|
|||
|
|
|
|
|
|
||||||
Cash Flows From Financing Activities:
|
|
|
|
|
|
||||||
Payments on long-term debt and capital lease obligations
|
(1,709
|
)
|
|
(2,558
|
)
|
|
(2,928
|
)
|
|||
Repurchase of common stock
|
(2,601
|
)
|
|
(2,200
|
)
|
|
(1,100
|
)
|
|||
Cash dividends
|
(509
|
)
|
|
(359
|
)
|
|
(251
|
)
|
|||
Fuel card obligation
|
211
|
|
|
(340
|
)
|
|
(41
|
)
|
|||
Payments on hedge derivative contracts
|
(451
|
)
|
|
(71
|
)
|
|
—
|
|
|||
Proceeds from hedge derivative contracts
|
291
|
|
|
429
|
|
|
—
|
|
|||
Proceeds from long-term obligations
|
450
|
|
|
1,038
|
|
|
1,020
|
|
|||
Other, net
|
58
|
|
|
(27
|
)
|
|
60
|
|
|||
Net cash used in financing activities
|
(4,260
|
)
|
|
(4,088
|
)
|
|
(3,240
|
)
|
|||
|
|
|
|
|
|
||||||
Net Increase (Decrease) in Cash and Cash Equivalents
|
790
|
|
|
(116
|
)
|
|
(756
|
)
|
|||
Cash and cash equivalents at beginning of period
|
1,972
|
|
|
2,088
|
|
|
2,844
|
|
|||
Cash and cash equivalents at end of period
|
$
|
2,762
|
|
|
$
|
1,972
|
|
|
$
|
2,088
|
|
|
|
|
|
|
|
||||||
Supplemental Disclosure of Cash Paid for Interest
|
$
|
385
|
|
|
$
|
452
|
|
|
$
|
560
|
|
Non-Cash Transactions:
|
|
|
|
|
|
||||||
Treasury stock contributed to our qualified defined benefit pension plans
|
$
|
350
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Flight equipment under capital leases
|
$
|
86
|
|
|
$
|
111
|
|
|
$
|
28
|
|
|
|
|
|
|
|
||||||
The accompanying notes are an integral part of these Consolidated Financial Statements.
|
|
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 January 1, 2014
|
869
|
|
$
|
—
|
|
$
|
13,982
|
|
$
|
3,049
|
|
$
|
(5,130
|
)
|
18
|
|
$
|
(258
|
)
|
$
|
11,643
|
|
Net income
|
—
|
|
—
|
|
—
|
|
659
|
|
—
|
|
—
|
|
—
|
|
659
|
|
||||||
Dividends declared
|
—
|
|
—
|
|
—
|
|
(252
|
)
|
—
|
|
—
|
|
—
|
|
(252
|
)
|
||||||
Other comprehensive loss
|
—
|
|
—
|
|
—
|
|
—
|
|
(2,181
|
)
|
—
|
|
—
|
|
(2,181
|
)
|
||||||
Shares of common stock issued and compensation expense associated with equity awards (Treasury shares withheld for payment of taxes, $31.46(1) per share)
|
3
|
|
—
|
|
81
|
|
—
|
|
—
|
|
2
|
|
(55
|
)
|
26
|
|
||||||
Stock options exercised
|
2
|
|
—
|
|
18
|
|
—
|
|
—
|
|
—
|
|
—
|
|
18
|
|
||||||
Stock purchased and retired
|
(29
|
)
|
—
|
|
(460
|
)
|
(640
|
)
|
—
|
|
—
|
|
—
|
|
(1,100
|
)
|
||||||
Balance at December 31, 2014
|
845
|
|
—
|
|
13,621
|
|
2,816
|
|
(7,311
|
)
|
20
|
|
(313
|
)
|
8,813
|
|
||||||
Net income
|
—
|
|
—
|
|
—
|
|
4,526
|
|
—
|
|
—
|
|
—
|
|
4,526
|
|
||||||
Dividends declared
|
—
|
|
—
|
|
—
|
|
(359
|
)
|
—
|
|
—
|
|
—
|
|
(359
|
)
|
||||||
Other comprehensive income
|
—
|
|
—
|
|
—
|
|
—
|
|
36
|
|
—
|
|
—
|
|
36
|
|
||||||
Shares of common stock issued and compensation expense associated with equity awards (Treasury shares withheld for payment of taxes, $46.83(1) per share)
|
1
|
|
—
|
|
76
|
|
—
|
|
—
|
|
1
|
|
(60
|
)
|
16
|
|
||||||
Stock options exercised
|
2
|
|
—
|
|
18
|
|
—
|
|
—
|
|
—
|
|
—
|
|
18
|
|
||||||
Stock purchased and retired
|
(48
|
)
|
—
|
|
(779
|
)
|
(1,421
|
)
|
—
|
|
—
|
|
—
|
|
(2,200
|
)
|
||||||
Balance at December 31, 2015
|
800
|
|
—
|
|
12,936
|
|
5,562
|
|
(7,275
|
)
|
21
|
|
(373
|
)
|
10,850
|
|
||||||
Net income
|
—
|
|
—
|
|
—
|
|
4,373
|
|
—
|
|
—
|
|
—
|
|
4,373
|
|
||||||
Change in accounting principle
|
—
|
|
—
|
|
—
|
|
95
|
|
—
|
|
—
|
|
—
|
|
95
|
|
||||||
Dividends declared
|
—
|
|
—
|
|
—
|
|
(509
|
)
|
—
|
|
—
|
|
—
|
|
(509
|
)
|
||||||
Other comprehensive loss
|
—
|
|
—
|
|
—
|
|
—
|
|
(361
|
)
|
—
|
|
—
|
|
(361
|
)
|
||||||
Shares of common stock issued and compensation expense associated with equity awards (Treasury shares withheld for payment of taxes, $44.27(1) per share)
|
2
|
|
—
|
|
105
|
|
—
|
|
—
|
|
1
|
|
(40
|
)
|
65
|
|
||||||
Stock options exercised
|
3
|
|
—
|
|
32
|
|
—
|
|
—
|
|
—
|
|
—
|
|
32
|
|
||||||
Treasury stock, net, contributed to our qualified defined benefit pension plans
|
—
|
|
—
|
|
204
|
|
—
|
|
—
|
|
(8
|
)
|
139
|
|
343
|
|
||||||
Stock purchased and retired
|
(60
|
)
|
—
|
|
(983
|
)
|
(1,618
|
)
|
—
|
|
—
|
|
—
|
|
(2,601
|
)
|
||||||
Balance at December 31, 2016
|
745
|
|
$
|
—
|
|
$
|
12,294
|
|
$
|
7,903
|
|
$
|
(7,636
|
)
|
14
|
|
$
|
(274
|
)
|
$
|
12,287
|
|
(1)
|
Weighted average price per share
|
Derivative Type
|
Hedged Risk
|
Classification of Gains and Losses
|
Fuel hedge contracts
|
Fluctuations in jet fuel prices
|
Aircraft fuel and related taxes
|
Interest rate contracts
|
Increases in interest rates
|
Interest expense, net
|
Foreign currency exchange contracts
|
Fluctuations in foreign currency exchange rates
|
Passenger revenue
|
|
Impact of Unrealized Gains and Losses
|
|
Accounting Designation
|
Effective Portion
|
Ineffective Portion
|
Not designated as hedges
|
Change in fair value of hedge is recorded in earnings
|
|
Designated as cash flow hedges
|
Market adjustments are recorded in AOCI
|
Excess, if any, over effective portion of hedge is recorded in non-operating expense
|
Designated as fair value hedges
|
Market adjustments are recorded in long-term debt and capital leases
|
Excess, if any, over effective portion of hedge is recorded in non-operating expense
|
|
|
December 31,
|
|||||
(in millions, except for estimated useful life)
|
Estimated Useful Life
|
2016
|
2015
|
||||
Flight equipment
|
20-32 years
|
$
|
28,135
|
|
$
|
26,057
|
|
Ground property and equipment
|
3-40 years
|
6,581
|
|
5,862
|
|
||
Flight and ground equipment under capital leases
|
Shorter of lease term or estimated useful life
|
1,056
|
|
1,112
|
|
||
Advance payments for equipment
|
|
1,059
|
|
879
|
|
||
Less: accumulated depreciation and amortization(1)
|
|
(12,456
|
)
|
(10,871
|
)
|
||
Total property and equipment, net
|
|
$
|
24,375
|
|
$
|
23,039
|
|
(1)
|
Includes accumulated amortization for flight and ground equipment under capital leases in the amount of $757 million and $782 million at December 31, 2016 and 2015, respectively.
|
•
|
Level 1. Observable inputs such as quoted prices in active markets;
|
•
|
Level 2. Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and
|
•
|
Level 3. Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
|
(a)
|
Market approach. Prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities; and
|
(b)
|
Income approach. Techniques to convert future amounts to a single present value amount based on market expectations (including present value techniques and option-pricing models).
|
|
December 31, 2016
|
Valuation
Technique
|
||||||||
(in millions)
|
Total
|
Level 1
|
Level 2
|
|||||||
Cash equivalents
|
$
|
2,279
|
|
$
|
2,279
|
|
$
|
—
|
|
(a)
|
Short-term investments
|
|
|
|
|
||||||
U.S. government and agency securities
|
112
|
|
86
|
|
26
|
|
(a)
|
|||
Asset- and mortgage-backed securities
|
68
|
|
—
|
|
68
|
|
(a)
|
|||
Corporate obligations
|
295
|
|
—
|
|
295
|
|
(a)
|
|||
Other fixed income securities
|
12
|
|
—
|
|
12
|
|
(a)
|
|||
Restricted cash equivalents and investments
|
61
|
|
61
|
|
—
|
|
(a)
|
|||
Long-term investments
|
139
|
|
115
|
|
24
|
|
(a)
|
|||
Hedge derivatives, net
|
|
|
|
|
||||||
Fuel hedge contracts
|
(324
|
)
|
(26
|
)
|
(298
|
)
|
(a)(b)
|
|||
Interest rate contract
|
6
|
|
—
|
|
6
|
|
(a)(b)
|
|||
Foreign currency exchange contracts
|
27
|
|
—
|
|
27
|
|
(a)
|
|
December 31, 2015
|
Valuation
Technique
|
||||||||
(in millions)
|
Total
|
Level 1
|
Level 2
|
|||||||
Cash equivalents
|
$
|
1,543
|
|
$
|
1,543
|
|
$
|
—
|
|
(a)
|
Short-term investments
|
|
|
|
|
|
|
||||
U.S. government securities
|
151
|
|
74
|
|
77
|
|
(a)
|
|||
Asset- and mortgage-backed securities
|
380
|
|
—
|
|
380
|
|
(a)
|
|||
Corporate obligations
|
896
|
|
—
|
|
896
|
|
(a)
|
|||
Other fixed income securities
|
38
|
|
—
|
|
38
|
|
(a)
|
|||
Restricted cash equivalents and investments
|
49
|
|
49
|
|
—
|
|
(a)
|
|||
Long-term investments
|
155
|
|
130
|
|
25
|
|
(a)
|
|||
Hedge derivatives, net
|
|
|
|
|
||||||
Fuel hedge contracts
|
(672
|
)
|
65
|
|
(737
|
)
|
(a)(b)
|
|||
Interest rate contract
|
(3
|
)
|
—
|
|
(3
|
)
|
(a)(b)
|
|||
Foreign currency exchange contracts
|
94
|
|
—
|
|
94
|
|
(a)
|
(1)
|
See Note 8, "Employee Benefit Plans," for fair value of benefit plan assets.
|
•
|
Fuel Contracts. Our fuel hedge portfolio consists of options, swaps and futures. The hedge contracts include crude oil, diesel fuel and jet fuel, as these commodities are highly correlated with the price of jet fuel that we consume. Option contracts are valued under an income approach using option pricing models based on data either readily observable in public markets, derived from public markets or provided by counterparties who regularly trade in public markets. Volatilities used in these valuations ranged from 18% to 41% depending on the maturity dates, underlying commodities and strike prices of the option contracts. Swap contracts are valued under an income approach using a discounted cash flow model based on data either readily observable or provided by counterparties who regularly trade in public markets. Discount rates used in these valuations vary with the maturity dates of the respective contracts and are based on the London interbank offered rate ("LIBOR"). Futures contracts and options on futures contracts are traded on a public exchange and valued based on quoted market prices.
|
•
|
Interest Rate Contract. Our interest rate derivative is a swap contract, which is valued based on data readily observable in public markets.
|
•
|
Foreign Currency Exchange Contracts. Our foreign currency derivatives consist of Japanese yen and Canadian dollar forward contracts and are valued based on data readily observable in public markets.
|
(in millions)
|
Available-
For-Sale
|
||||
Due in one year or less
|
$
|
160
|
|
||
Due after one year through three years
|
239
|
|
|||
Due after three years through five years
|
65
|
|
|||
Due after five years
|
23
|
|
|||
Total
|
$
|
487
|
|
•
|
Aeroméxico. We own 4.2% of the outstanding shares of Grupo Aeroméxico, and we have derivative contracts that may be settled for shares of Grupo Aeroméxico, including one obtained in the September 2016 quarter. Our total derivative contract holdings represent 12.8% of Grupo Aeroméxico's shares. During 2015, we announced our intention to create an antitrust immunized commercial joint venture with Aeroméxico and to acquire additional shares of the capital stock of Grupo Aeroméxico through a cash tender offer, both subject to regulatory approvals. The Mexican and U.S. regulators approved antitrust immunity for the joint venture during 2016, subject to certain conditions. Delta and Aeroméxico have accepted the conditions and are in the process of implementing the necessary actions in order to satisfy the conditions. We expect both the joint venture to be implemented and the tender offer to be completed in the first half of 2017. As a result of the tender offer, when combined with our current holdings and derivative positions, we would own up to 49% of the outstanding capital stock of Grupo Aeroméxico. The total amount to be paid for the tender offer shares and the shares underlying the derivatives is expected to be up to $765 million.
|
•
|
GOL. During 2015, we acquired preferred shares of GOL's parent company, increasing our ownership to 9.5% of GOL's outstanding capital stock. Additionally, GOL entered into a $300 million five-year term loan facility with third parties, which we have guaranteed. Our guaranty is primarily secured by GOL's ownership interest in Smiles, GOL's publicly-traded loyalty program. As GOL remains in compliance with the terms of its loan facility, we have not recorded a liability on our Consolidated Balance Sheets as of December 31, 2016. In conjunction with these transactions, we and GOL agreed to extend our existing commercial agreements.
|
•
|
China Eastern. During 2015, we acquired shares of China Eastern, which provide us with a 3.2% stake in the airline as of December 31, 2016. As the investment agreement restricts our sale or transfer of these shares for a period of three years, we will account for the investment at cost until the September 2017 quarter. Although China Eastern shares are actively traded on a public exchange, it is not practicable to estimate the fair value of the investment due to the restriction on our ability to sell or transfer the shares.
|
(in millions)
|
Volume
|
Final Maturity Date
|
Hedge Derivatives Asset
|
Other Noncurrent Assets
|
Hedge Derivatives Liability
|
Other Noncurrent Liabilities
|
Hedge Derivatives, net
|
||||||||||||
Designated as hedges
|
|
|
|
|
|
|
|
||||||||||||
Interest rate contract (fair value hedge)
|
349
|
|
U.S. dollars
|
August 2022
|
$
|
2
|
|
$
|
4
|
|
$
|
—
|
|
$
|
—
|
|
$
|
6
|
|
Foreign currency exchange contracts
|
54,853
|
|
Japanese yen
|
February 2019
|
31
|
|
3
|
|
(4
|
)
|
(3
|
)
|
27
|
|
|||||
335
|
|
Canadian dollars
|
January 2019
|
||||||||||||||||
Not designated as hedges
|
|
|
|
|
|
|
|
||||||||||||
Fuel hedge contracts (1)
|
197
|
|
gallons - crude oil, diesel and jet fuel
|
January 2018
|
360
|
|
—
|
|
(684
|
)
|
—
|
|
(324
|
)
|
|||||
Total derivative contracts
|
|
|
$
|
393
|
|
$
|
7
|
|
$
|
(688
|
)
|
$
|
(3
|
)
|
$
|
(291
|
)
|
(1)
|
As discussed above, we have early settled $455 million of our airline segment's 2016 hedge positions and entered into derivatives designed to offset and effectively neutralize our 2017 airline segment hedge positions. The dollar amounts shown above primarily represent the offsetting derivatives that were used to neutralize the 2016 and 2017 airline segment hedge portfolio.
|
(in millions)
|
Hedge Derivatives Asset
|
Other Noncurrent Assets
|
Hedge Derivatives Liability
|
Other Noncurrent Liabilities
|
Hedge Derivatives, Net
|
||||||||||
December 31, 2016
|
|
|
|
|
|
||||||||||
Net derivative contracts
|
$
|
31
|
|
$
|
6
|
|
$
|
(326
|
)
|
$
|
(2
|
)
|
$
|
(291
|
)
|
December 31, 2015
|
|
|
|
|
|
||||||||||
Net derivative contracts
|
$
|
143
|
|
$
|
21
|
|
$
|
(737
|
)
|
$
|
(8
|
)
|
$
|
(581
|
)
|
|
Effective Portion Reclassified from AOCI to Earnings
|
|
Effective Portion Recognized in Other Comprehensive (Loss) Income
|
||||||||||||||||
(in millions)
|
2016
|
2015
|
2014
|
|
2016
|
2015
|
2014
|
||||||||||||
Interest rate contracts
|
$
|
—
|
|
$
|
—
|
|
$
|
(31
|
)
|
|
$
|
—
|
|
$
|
—
|
|
$
|
38
|
|
Foreign currency exchange contracts
|
37
|
|
198
|
|
158
|
|
|
(68
|
)
|
(130
|
)
|
(34
|
)
|
||||||
Total designated
|
$
|
37
|
|
$
|
198
|
|
$
|
127
|
|
|
$
|
(68
|
)
|
$
|
(130
|
)
|
$
|
4
|
|
|
Carrying Value at December 31,
|
|||||
(in millions)
|
2016
|
2015
|
||||
International routes and slots
|
$
|
2,563
|
|
$
|
2,563
|
|
Delta tradename
|
850
|
|
850
|
|
||
SkyTeam-related assets
|
661
|
|
661
|
|
||
Domestic slots
|
622
|
|
622
|
|
||
Total
|
$
|
4,696
|
|
$
|
4,696
|
|
|
December 31, 2016
|
|
December 31, 2015
|
||||||||||
(in millions)
|
Gross
Carrying
Value
|
Accumulated
Amortization
|
|
Gross
Carrying
Value
|
Accumulated
Amortization
|
||||||||
Marketing agreements
|
$
|
730
|
|
$
|
(667
|
)
|
|
$
|
730
|
|
$
|
(658
|
)
|
Contracts
|
193
|
|
(108
|
)
|
|
193
|
|
(100
|
)
|
||||
Other
|
53
|
|
(53
|
)
|
|
53
|
|
(53
|
)
|
||||
Total
|
$
|
976
|
|
$
|
(828
|
)
|
|
$
|
976
|
|
$
|
(811
|
)
|
|
Maturity
|
Interest Rate(s) Per Annum at
|
December 31,
|
|||||||||
(in millions)
|
Dates
|
December 31, 2016
|
2016
|
2015
|
||||||||
Pacific Facilities(1):
|
|
|
|
|
|
|
|
|
||||
Pacific Term Loan B-1(2)
|
October 2018
|
3.25%
|
variable(4)
|
$
|
1,059
|
|
$
|
1,067
|
|
|||
Pacific Term Loan B-2(2)
|
April 2016
|
n/a
|
n/a
|
—
|
|
388
|
|
|||||
Pacific Revolving Credit Facility
|
2017
|
to
|
2018
|
undrawn
|
variable(4)
|
—
|
|
—
|
|
|||
2015 Credit Facilities(1):
|
|
|
|
|
|
|
|
|
||||
Term Loan Facility(2)
|
August 2022
|
3.25%
|
variable(4)
|
495
|
|
499
|
|
|||||
Revolving Credit Facility
|
August 2020
|
undrawn
|
variable(4)
|
—
|
|
—
|
|
|||||
Financing arrangements secured by aircraft:
|
|
|
|
|
|
|
|
|
||||
Certificates(3)
|
2017
|
to
|
2027
|
3.63%
|
to
|
8.03%
|
2,777
|
|
3,264
|
|
||
Notes(3)
|
2017
|
to
|
2027
|
1.54%
|
to
|
6.76%
|
2,488
|
|
2,564
|
|
||
Other financings(3)(5)
|
2017
|
to
|
2031
|
2.02%
|
to
|
8.75%
|
293
|
|
316
|
|
||
Other revolving credit facilities(1)
|
2017
|
to
|
2017
|
undrawn
|
variable(4)
|
—
|
|
—
|
|
|||
Total secured and unsecured debt
|
|
|
|
|
|
|
7,112
|
|
8,098
|
|
||
Unamortized discount and debt issue cost, net
|
|
|
|
|
|
|
(104
|
)
|
(152
|
)
|
||
Total debt
|
|
|
|
|
|
|
7,008
|
|
7,946
|
|
||
Less: current maturities
|
|
|
|
|
|
|
(1,009
|
)
|
(1,415
|
)
|
||
Total long-term debt
|
|
|
|
|
|
|
$
|
5,999
|
|
$
|
6,531
|
|
(1)
|
Guaranteed by substantially all of our domestic subsidiaries (the "Guarantors").
|
(2)
|
Borrowings must be repaid annually in an amount equal to 1% per year of the original principal amount (paid in equal quarterly installments), with the balance due on the final maturity date.
|
(3)
|
Due in installments.
|
(4)
|
Interest rate equal to LIBOR (generally subject to a floor) or another index rate, in each case plus a specified margin. Additionally, certain aircraft and other financings are comprised of variable rate debt.
|
(5)
|
Primarily includes loans secured by certain accounts receivable and real estate.
|
Minimum fixed charge coverage ratio (1)
|
1.20:1
|
Minimum unrestricted liquidity
|
|
Unrestricted cash, permitted investments and undrawn revolving credit facilities
|
$2.0 billion
|
Minimum collateral coverage ratio (2)
|
1.60:1
|
(1)
|
Defined as the ratio of (a) earnings before interest, taxes, depreciation, amortization and aircraft rent and other adjustments to net income to (b) the sum of gross cash interest expense (including the interest portion of our capitalized lease obligations) and cash aircraft rent expense, for the 12-month period ending as of the last day of each fiscal quarter.
|
(2)
|
Defined as the ratio of (a) certain of the collateral that meet specified eligibility standards to (b) the sum of the aggregate outstanding obligations and certain other obligations.
|
Minimum unrestricted liquidity
|
|
Unrestricted cash, permitted investments and undrawn revolving credit facilities
|
$2.0 billion
|
Minimum collateral coverage ratio(1)
|
1.60:1
|
(1)
|
Defined as the ratio of (a) certain of the collateral that meet specified eligibility standards to (b) the sum of the aggregate outstanding obligations under the 2015 Credit Facilities and certain other obligations.
|
(in millions)
|
|
||
Revolving Credit Facility
|
$
|
1,500
|
|
Pacific Revolving Credit Facility
|
450
|
|
|
Other revolving credit facilities
|
513
|
|
|
Total availability under revolving credit facilities
|
$
|
2,463
|
|
(in millions)
|
Total Debt
|
|
Amortization of
Debt Discount and Debt Issuance Cost, net
|
|
|
||||||
2017
|
$
|
1,038
|
|
|
$
|
(28
|
)
|
|
|
||
2018
|
2,160
|
|
|
(35
|
)
|
|
|
||||
2019
|
1,289
|
|
|
(23
|
)
|
|
|
||||
2020
|
527
|
|
|
(5
|
)
|
|
|
||||
2021
|
345
|
|
|
(5
|
)
|
|
|
||||
Thereafter
|
1,753
|
|
|
(8
|
)
|
|
|
||||
Total
|
$
|
7,112
|
|
|
$
|
(104
|
)
|
|
$
|
7,008
|
|
|
December 31,
|
|||||
(in millions)
|
2016
|
2015
|
||||
Total debt at par value
|
$
|
7,112
|
|
$
|
8,098
|
|
Unamortized discount and debt issuance cost, net
|
(104
|
)
|
(152
|
)
|
||
Net carrying amount
|
$
|
7,008
|
|
$
|
7,946
|
|
Fair value
|
$
|
7,300
|
|
$
|
8,400
|
|
(in millions)
|
Total
|
||
2017
|
$
|
145
|
|
2018
|
85
|
|
|
2019
|
60
|
|
|
2020
|
43
|
|
|
2021
|
24
|
|
|
Thereafter
|
21
|
|
|
Total minimum lease payments
|
378
|
|
|
Less: amount of lease payments representing interest
|
(54
|
)
|
|
Present value of future minimum capital lease payments
|
324
|
|
|
Less: current obligations under capital leases
|
(122
|
)
|
|
Long-term capital lease obligations
|
$
|
202
|
|
(in millions)
|
Delta Lease Payments(1)
|
Contract Carrier Aircraft Lease Payments(2)
|
Total
|
||||||
2017
|
$
|
1,302
|
|
$
|
270
|
|
$
|
1,572
|
|
2018
|
1,194
|
|
249
|
|
1,443
|
|
|||
2019
|
1,084
|
|
220
|
|
1,304
|
|
|||
2020
|
962
|
|
171
|
|
1,133
|
|
|||
2021
|
766
|
|
96
|
|
862
|
|
|||
Thereafter
|
6,533
|
|
248
|
|
6,781
|
|
|||
Total minimum lease payments
|
$
|
11,841
|
|
$
|
1,254
|
|
$
|
13,095
|
|
(1)
|
Includes payments accounted for as construction obligations.
|
(2)
|
Represents the minimum lease obligations under our contract carrier agreements with Compass Airlines, LLC, ExpressJet Airlines, Inc., GoJet Airlines, LLC, Republic Airline, Inc. (as successor by merger to Shuttle America Corporation) and SkyWest Airlines, Inc.
|
|
Pension Benefits
|
|
Other Postretirement and Postemployment Benefits
|
||||||||||
|
December 31,
|
|
December 31,
|
||||||||||
(in millions)
|
2016
|
2015
|
|
2016
|
2015
|
||||||||
Benefit obligation at beginning of period
|
$
|
20,611
|
|
$
|
21,856
|
|
|
$
|
3,336
|
|
$
|
3,487
|
|
Service cost
|
—
|
|
—
|
|
|
68
|
|
62
|
|
||||
Interest cost
|
917
|
|
884
|
|
|
147
|
|
141
|
|
||||
Actuarial loss (gain)
|
411
|
|
(1,061
|
)
|
|
115
|
|
(88
|
)
|
||||
Benefits paid, including lump sums and annuities
|
(1,071
|
)
|
(1,059
|
)
|
|
(318
|
)
|
(302
|
)
|
||||
Participant contributions
|
—
|
|
—
|
|
|
31
|
|
36
|
|
||||
Settlements
|
(9
|
)
|
(9
|
)
|
|
—
|
|
—
|
|
||||
Benefit obligation at end of period(1)
|
$
|
20,859
|
|
$
|
20,611
|
|
|
$
|
3,379
|
|
$
|
3,336
|
|
|
|
|
|
|
|
||||||||
Fair value of plan assets at beginning of period
|
$
|
9,374
|
|
$
|
9,355
|
|
|
$
|
884
|
|
$
|
982
|
|
Actual gain (loss) on plan assets
|
687
|
|
(132
|
)
|
|
51
|
|
(25
|
)
|
||||
Employer contributions
|
1,320
|
|
1,219
|
|
|
154
|
|
210
|
|
||||
Participant contributions
|
—
|
|
—
|
|
|
31
|
|
36
|
|
||||
Benefits paid, including lump sums and annuities
|
(1,071
|
)
|
(1,059
|
)
|
|
(336
|
)
|
(319
|
)
|
||||
Settlements
|
(9
|
)
|
(9
|
)
|
|
—
|
|
—
|
|
||||
Fair value of plan assets at end of period
|
$
|
10,301
|
|
$
|
9,374
|
|
|
$
|
784
|
|
$
|
884
|
|
|
|
|
|
|
|
||||||||
Funded status at end of period
|
$
|
(10,558
|
)
|
$
|
(11,237
|
)
|
|
$
|
(2,595
|
)
|
$
|
(2,452
|
)
|
(1)
|
At the end of each year presented, our accumulated benefit obligations for our pension plans are equal to the benefit obligations shown above.
|
|
Pension Benefits
|
|
Other Postretirement and Postemployment Benefits
|
||||||||||
|
December 31,
|
|
December 31,
|
||||||||||
(in millions)
|
2016
|
2015
|
|
2016
|
2015
|
||||||||
Current liabilities
|
$
|
(30
|
)
|
$
|
(27
|
)
|
|
$
|
(125
|
)
|
$
|
(139
|
)
|
Noncurrent liabilities
|
(10,528
|
)
|
(11,210
|
)
|
|
(2,470
|
)
|
(2,313
|
)
|
||||
Total liabilities
|
$
|
(10,558
|
)
|
$
|
(11,237
|
)
|
|
$
|
(2,595
|
)
|
$
|
(2,452
|
)
|
|
|
|
|
|
|
||||||||
Net actuarial loss
|
$
|
(8,515
|
)
|
$
|
(8,124
|
)
|
|
$
|
(570
|
)
|
$
|
(458
|
)
|
Prior service credit
|
—
|
|
—
|
|
|
82
|
|
109
|
|
||||
Total accumulated other comprehensive loss, pre-tax
|
$
|
(8,515
|
)
|
$
|
(8,124
|
)
|
|
$
|
(488
|
)
|
$
|
(349
|
)
|
|
Pension Benefits
|
|
Other Postretirement and
Postemployment Benefits
|
||||||||||||||||
|
Year Ended December 31,
|
|
Year Ended December 31,
|
||||||||||||||||
(in millions)
|
2016
|
2015
|
2014
|
|
2016
|
2015
|
2014
|
||||||||||||
Service cost
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
|
$
|
68
|
|
$
|
62
|
|
$
|
52
|
|
Interest cost
|
917
|
|
884
|
|
928
|
|
|
147
|
|
141
|
|
155
|
|
||||||
Expected return on plan assets
|
(902
|
)
|
(879
|
)
|
(829
|
)
|
|
(74
|
)
|
(81
|
)
|
(84
|
)
|
||||||
Amortization of prior service credit
|
—
|
|
—
|
|
—
|
|
|
(26
|
)
|
(26
|
)
|
(26
|
)
|
||||||
Recognized net actuarial loss
|
233
|
|
232
|
|
134
|
|
|
24
|
|
24
|
|
4
|
|
||||||
Settlements
|
3
|
|
3
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
||||||
Net periodic cost
|
$
|
251
|
|
$
|
240
|
|
$
|
233
|
|
|
$
|
139
|
|
$
|
120
|
|
$
|
101
|
|
Defined contribution plan costs
|
733
|
|
592
|
|
551
|
|
|
—
|
|
—
|
|
—
|
|
||||||
Total cost
|
$
|
984
|
|
$
|
832
|
|
$
|
784
|
|
|
$
|
139
|
|
$
|
120
|
|
$
|
101
|
|
|
December 31,
|
|||
Benefit Obligations(1)(2)
|
2016
|
2015
|
||
Weighted average discount rate
|
4.20
|
%
|
4.57
|
%
|
|
Year Ended December 31,
|
|||||
Net Periodic Cost(2)
|
2016
|
2015
|
2014
|
|||
Weighted average discount rate - pension benefit
|
4.57
|
%
|
4.13
|
%
|
4.99
|
%
|
Weighted average discount rate - other postretirement benefit(3)
|
4.53
|
%
|
4.13
|
%
|
4.88
|
%
|
Weighted average discount rate - other postemployment benefit
|
4.50
|
%
|
4.13
|
%
|
5.00
|
%
|
Weighted average expected long-term rate of return on plan assets
|
8.94
|
%
|
8.94
|
%
|
8.94
|
%
|
Assumed healthcare cost trend rate(4)
|
6.50
|
%
|
7.00
|
%
|
7.00
|
%
|
(1)
|
Our 2016 and 2015 benefit obligations are measured using a mortality table projected to 2022.
|
(2)
|
Future compensation levels do not impact our frozen defined benefit pension plans or other postretirement plans and impact only a small portion of our other postemployment liability.
|
(3)
|
Our assumptions reflect various remeasurements of certain portions of our obligations and represent the weighted average of the assumptions used for each measurement date.
|
(4)
|
Assumed healthcare cost trend rate at December 31, 2016 is assumed to decline gradually to 5.00% by 2023 and remain level thereafter.
|
(in millions)
|
1% Increase
|
1% Decrease
|
||||
Increase (decrease) in total service and interest cost
|
$
|
1
|
|
$
|
(1
|
)
|
Increase (decrease) in the accumulated plan benefit obligation
|
12
|
|
(29
|
)
|
(in millions)
|
Pension Benefits
|
Other Postretirement and Postemployment Benefits
|
||||
2017
|
$
|
1,154
|
|
$
|
281
|
|
2018
|
1,163
|
|
286
|
|
||
2019
|
1,184
|
|
284
|
|
||
2020
|
1,206
|
|
285
|
|
||
2021
|
1,224
|
|
287
|
|
||
2022-2026
|
6,326
|
|
1,443
|
|
|
December 31, 2016
|
|
December 31, 2015
|
|
Valuation Technique
|
||||||||||||||||
(in millions)
|
Level 1
|
Level 2
|
Total
|
|
Level 1
|
Level 2
|
Total
|
|
|||||||||||||
Equities and equity-related instruments
|
$
|
2,407
|
|
$
|
14
|
|
$
|
2,421
|
|
|
$
|
2,067
|
|
$
|
49
|
|
$
|
2,116
|
|
|
(a)
|
Cash equivalents
|
228
|
|
1,240
|
|
1,468
|
|
|
—
|
|
1,700
|
|
1,700
|
|
|
(a)
|
||||||
Fixed income and fixed income-related instruments
|
8
|
|
1,190
|
|
1,198
|
|
|
16
|
|
834
|
|
850
|
|
|
(a)(b)
|
||||||
Benefit plan assets
|
$
|
2,643
|
|
$
|
2,444
|
|
$
|
5,087
|
|
|
$
|
2,083
|
|
$
|
2,583
|
|
$
|
4,666
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Investments measured at net asset value ("NAV")(1)
|
|
|
$
|
5,724
|
|
|
|
|
$
|
5,364
|
|
|
|
||||||||
Total benefit plan assets
|
|
|
$
|
10,811
|
|
|
|
|
$
|
10,030
|
|
|
|
(1)
|
Investments that were measured at NAV per share (or its equivalent) as a practical expedient have not been classified in the fair value hierarchy.
|
|
December 31, 2016
|
|
December 31, 2015
|
||||||||||||||
(in millions)
|
Fair Value
|
Redemption Frequency
|
Redemption Notice Period
|
Unfunded Commitments
|
|
Fair Value
|
Redemption Frequency
|
Redemption Notice Period
|
Unfunded Commitments
|
||||||||
Hedge funds
|
$
|
3,308
|
|
(5)
|
4-120 Days
|
$
|
—
|
|
|
$
|
2,990
|
|
(5)
|
5-120 Days
|
$
|
—
|
|
Commingled funds, private equities and equity-related instruments
|
1,214
|
|
(1) (3) (4)
|
15-30 Days
|
525
|
|
|
1,133
|
|
(1) (3) (4)
|
15-30 Days
|
345
|
|
||||
Fixed income and fixed income-related instruments
|
270
|
|
(2)
|
5 Days
|
—
|
|
|
268
|
|
(2)
|
5 Days
|
5
|
|
||||
Real assets
|
698
|
|
(3) (4)
|
N/A
|
529
|
|
|
635
|
|
(3) (4)
|
N/A
|
188
|
|
||||
Other
|
234
|
|
(2)
|
2 Days
|
—
|
|
|
338
|
|
(1) (2)
|
2-270 Days
|
—
|
|
||||
Total investments measured at NAV
|
$
|
5,724
|
|
|
|
$
|
1,054
|
|
|
$
|
5,364
|
|
|
|
$
|
538
|
|
(1)
|
Monthly
|
(2)
|
Semi-monthly
|
(3)
|
Semi-annually
|
(4)
|
Annually
|
(5)
|
Various. Includes funds with weekly, monthly, semi-monthly, quarterly and custom redemption frequencies as well as funds with a redemption window following the anniversary of the initial investment.
|
(in millions)
|
Total
|
||
2017
|
$
|
2,580
|
|
2018
|
2,980
|
|
|
2019
|
3,380
|
|
|
2020
|
1,730
|
|
|
2021
|
1,130
|
|
|
Thereafter
|
660
|
|
|
Total
|
$
|
12,460
|
|
Aircraft Type
|
Purchase Commitments
|
|
B-737-900ER
|
51
|
|
A321-200
|
67
|
|
A330-300
|
2
|
|
A330-900neo
|
25
|
|
A350-900
|
25
|
|
CS100
|
75
|
|
Total
|
245
|
|
•
|
We reached an agreement with Bombardier to acquire 75 CS100 aircraft with deliveries beginning in 2018 and continuing through 2022. We have flexibility under the purchase agreement with respect to deferral, acceleration, conversion and a limited number of cancellation rights. The agreement also includes options to purchase 50 additional aircraft.
|
•
|
We entered into firm commitments with Airbus for the delivery of 37 additional A321-200 aircraft. Deliveries will begin in November 2017 and continue through 2019.
|
(1)
|
These amounts exclude contract carrier payments accounted for as operating leases of aircraft, which are described in Note 7.
|
Employee Group
|
Approximate Number of Active Employees Represented
|
|
Union
|
Date on which Collective Bargaining Agreement Becomes Amendable
|
|
Delta Pilots
|
12,863
|
|
|
ALPA
|
December 31, 2019
|
Delta Flight Superintendents (Dispatchers)
|
415
|
|
|
PAFCA
|
March 31, 2018
|
Endeavor Air Pilots
|
1,527
|
|
|
ALPA
|
January 1, 2020
|
Endeavor Air Flight Attendants
|
1,132
|
|
|
AFA
|
December 31, 2018
|
Endeavor Air Dispatchers
|
47
|
|
|
PAFCA
|
December 31, 2018
|
|
Year Ended December 31,
|
||||||||
(in millions)
|
2016
|
2015
|
2014
|
||||||
Current tax (provision) benefit:
|
|
|
|
|
|
|
|||
Federal
|
$
|
—
|
|
$
|
(23
|
)
|
$
|
21
|
|
State and local
|
(28
|
)
|
(25
|
)
|
(9
|
)
|
|||
International
|
(12
|
)
|
(2
|
)
|
(11
|
)
|
|||
Deferred tax (provision) benefit:
|
|
|
|
|
|
|
|||
Federal
|
(2,080
|
)
|
(2,409
|
)
|
(424
|
)
|
|||
State and local
|
(143
|
)
|
(172
|
)
|
10
|
|
|||
Income tax provision
|
$
|
(2,263
|
)
|
$
|
(2,631
|
)
|
$
|
(413
|
)
|
|
Year Ended December 31,
|
|||||
|
2016
|
2015
|
2014
|
|||
U.S. federal statutory income tax rate
|
35.0
|
%
|
35.0
|
%
|
35.0
|
%
|
State taxes, net of federal benefit
|
1.8
|
|
1.8
|
|
2.0
|
|
Decrease in valuation allowance
|
—
|
|
(0.2
|
)
|
(2.4
|
)
|
Foreign tax rate differential
|
(2.0
|
)
|
—
|
|
—
|
|
Other
|
(0.7
|
)
|
0.2
|
|
3.9
|
|
Effective income tax rate
|
34.1
|
%
|
36.8
|
%
|
38.5
|
%
|
|
December 31,
|
|||||
(in millions)
|
2016
|
2015
|
||||
Deferred tax assets:
|
|
|
||||
Net operating loss carryforwards
|
$
|
2,485
|
|
$
|
3,838
|
|
Pension, postretirement and other benefits
|
5,259
|
|
5,444
|
|
||
Fuel derivatives MTM adjustments
|
112
|
|
282
|
|
||
Alternative minimum tax credit carryforward
|
379
|
|
379
|
|
||
Deferred revenue
|
1,544
|
|
1,522
|
|
||
Other
|
963
|
|
1,047
|
|
||
Valuation allowance
|
(40
|
)
|
(56
|
)
|
||
Total deferred tax assets
|
$
|
10,702
|
|
$
|
12,456
|
|
Deferred tax liabilities:
|
|
|
||||
Depreciation
|
$
|
5,701
|
|
$
|
5,490
|
|
Intangible assets
|
1,691
|
|
1,681
|
|
||
Other
|
246
|
|
329
|
|
||
Total deferred tax liabilities
|
$
|
7,638
|
|
$
|
7,500
|
|
|
|
|
||||
Net deferred tax assets
|
$
|
3,064
|
|
$
|
4,956
|
|
(in millions)
|
2016
|
2015
|
2014
|
||||||
Valuation allowance at beginning of period
|
$
|
56
|
|
$
|
46
|
|
$
|
177
|
|
Income tax provision
|
—
|
|
—
|
|
(9
|
)
|
|||
Other comprehensive income tax (provision) benefit
|
(16
|
)
|
24
|
|
(3
|
)
|
|||
Expirations
|
—
|
|
(4
|
)
|
(91
|
)
|
|||
Release of valuation allowance
|
—
|
|
(10
|
)
|
(28
|
)
|
|||
Valuation allowance at end of period
|
$
|
40
|
|
$
|
56
|
|
$
|
46
|
|
(in millions)
|
Pension and Other Benefits Liabilities(2)
|
Derivative Contracts
|
Investments
|
Total
|
||||||||
Balance at January 1, 2014
|
$
|
(5,323
|
)
|
$
|
219
|
|
$
|
(26
|
)
|
$
|
(5,130
|
)
|
Changes in value (net of tax effect of $1,276)
|
(2,267
|
)
|
83
|
|
10
|
|
(2,174
|
)
|
||||
Reclassification into earnings (net of tax effect of $4)(1)
|
73
|
|
(80
|
)
|
—
|
|
(7
|
)
|
||||
Balance at December 31, 2014
|
(7,517
|
)
|
222
|
|
(16
|
)
|
(7,311
|
)
|
||||
Changes in value (net of tax effect of $41)
|
10
|
|
43
|
|
(45
|
)
|
8
|
|
||||
Reclassification into earnings (net of tax effect of $16)(1)
|
153
|
|
(125
|
)
|
—
|
|
28
|
|
||||
Balance at December 31, 2015
|
(7,354
|
)
|
140
|
|
(61
|
)
|
(7,275
|
)
|
||||
Changes in value (net of tax effect of $293)
|
(482
|
)
|
(19
|
)
|
42
|
|
(459
|
)
|
||||
Reclassification into earnings (net of tax effect of $57)(1)
|
122
|
|
(24
|
)
|
—
|
|
98
|
|
||||
Balance at December 31, 2016
|
$
|
(7,714
|
)
|
$
|
97
|
|
$
|
(19
|
)
|
$
|
(7,636
|
)
|
(1)
|
Amounts reclassified from AOCI for pension and other benefits are recorded in salaries and related costs in the Consolidated Statements of Operations. Amounts reclassified from AOCI for derivative contracts designated as foreign currency cash flow hedges and interest rate cash flow hedges are recorded in passenger revenue and interest expense, net, respectively, in the Consolidated Statements of Operations.
|
(2)
|
Includes $1.9 billion of deferred income tax expense, primarily related to pension obligations, that will not be recognized in net income until the pension obligations are fully extinguished. We consider all income sources, including other comprehensive income, in determining the amount of tax benefit allocated to continuing operations.
|
(in millions)
|
Airline
|
Refinery
|
|
Intersegment Sales/Other
|
|
Consolidated
|
||||||||
Year Ended December 31, 2016
|
|
|
|
|
|
|
||||||||
Operating revenue:
|
$
|
39,406
|
|
$
|
3,843
|
|
|
|
|
$
|
39,639
|
|
||
Sales to airline segment
|
|
|
|
$
|
(695
|
)
|
(1)
|
|
||||||
Exchanged products
|
|
|
|
(2,658
|
)
|
(2)
|
|
|||||||
Sales of refined products
|
|
|
|
(257
|
)
|
(3)
|
|
|||||||
Operating income (loss)(4)
|
7,077
|
|
(125
|
)
|
|
|
|
6,952
|
|
|||||
Interest expense, net
|
386
|
|
2
|
|
|
|
|
388
|
|
|||||
Depreciation and amortization
|
1,862
|
|
40
|
|
|
|
|
1,902
|
|
|||||
Total assets, end of period
|
49,930
|
|
1,331
|
|
|
|
|
51,261
|
|
|||||
Capital expenditures
|
3,270
|
|
121
|
|
|
|
|
3,391
|
|
|||||
Year Ended December 31, 2015
|
|
|
|
|
|
|
||||||||
Operating revenue:
|
$
|
40,398
|
|
$
|
4,741
|
|
|
|
|
$
|
40,704
|
|
||
Sales to airline segment
|
|
|
|
$
|
(990
|
)
|
(1)
|
|
||||||
Exchanged products
|
|
|
|
(3,108
|
)
|
(2)
|
|
|||||||
Sales of refined products
|
|
|
|
(337
|
)
|
(3)
|
|
|||||||
Operating income(4)
|
7,512
|
|
290
|
|
|
|
|
7,802
|
|
|||||
Interest expense, net
|
481
|
|
—
|
|
|
|
|
481
|
|
|||||
Depreciation and amortization
|
1,805
|
|
30
|
|
|
|
|
1,835
|
|
|||||
Total assets, end of period
|
51,785
|
|
1,349
|
|
|
|
|
53,134
|
|
|||||
Capital expenditures
|
2,853
|
|
92
|
|
|
|
|
2,945
|
|
|||||
Year Ended December 31, 2014
|
|
|
|
|
|
|
||||||||
Operating revenue:
|
$
|
40,217
|
|
$
|
6,959
|
|
|
|
|
$
|
40,362
|
|
||
Sales to airline segment
|
|
|
|
$
|
(1,313
|
)
|
(1)
|
|
||||||
Exchanged products
|
|
|
|
(5,104
|
)
|
(2)
|
|
|||||||
Sales of refined products
|
|
|
|
(397
|
)
|
(3)
|
|
|||||||
Operating income(4)
|
2,110
|
|
96
|
|
|
|
|
2,206
|
|
|||||
Interest expense, net
|
650
|
|
—
|
|
|
|
|
650
|
|
|||||
Depreciation and amortization
|
1,745
|
|
26
|
|
|
|
|
1,771
|
|
|||||
Total assets, end of period
|
52,896
|
|
1,109
|
|
|
|
|
54,005
|
|
|||||
Capital expenditures
|
2,184
|
|
65
|
|
|
|
|
2,249
|
|
(1)
|
Represents transfers, valued on a market price basis, from the refinery to the airline segment for use in airline operations. We determine market price by reference to the market index for the primary delivery location, which is New York Harbor, for jet fuel from the refinery.
|
(2)
|
Represents value of products delivered under our exchange agreements, as discussed above, determined on a market price basis.
|
(3)
|
These sales were at or near cost; accordingly, the margin on these sales is de minimis.
|
(4)
|
Includes the impact of pricing arrangements between the airline and refinery segments with respect to the refinery's inventory price risk.
|
|
Year Ended December 31,
|
||||||||
(in millions)
|
2016
|
2015
|
2014
|
||||||
Fleet and other
|
$
|
—
|
|
$
|
35
|
|
$
|
758
|
|
Severance and related costs
|
—
|
|
—
|
|
71
|
|
|||
Settlements
|
—
|
|
—
|
|
(113
|
)
|
|||
Total restructuring and other
|
$
|
—
|
|
$
|
35
|
|
$
|
716
|
|
|
Severance and Related Costs
|
|
Lease Restructuring
|
||||||||||||||||
(in millions)
|
2016
|
2015
|
2014
|
|
2016
|
2015
|
2014
|
||||||||||||
Liability at beginning of period
|
$
|
52
|
|
$
|
42
|
|
$
|
—
|
|
|
$
|
415
|
|
$
|
462
|
|
$
|
168
|
|
Additional costs and expenses
|
11
|
|
51
|
|
71
|
|
|
1
|
|
41
|
|
349
|
|
||||||
Payments
|
(59
|
)
|
(41
|
)
|
(29
|
)
|
|
(85
|
)
|
(86
|
)
|
(55
|
)
|
||||||
Other
|
—
|
|
—
|
|
—
|
|
|
(2
|
)
|
(2
|
)
|
—
|
|
||||||
Liability at end of period
|
$
|
4
|
|
$
|
52
|
|
$
|
42
|
|
|
$
|
329
|
|
$
|
415
|
|
$
|
462
|
|
|
Year Ended December 31,
|
||||||||
(in millions, except per share data)
|
2016
|
2015
|
2014
|
||||||
Net income
|
$
|
4,373
|
|
$
|
4,526
|
|
$
|
659
|
|
|
|
|
|
||||||
Basic weighted average shares outstanding
|
751
|
|
797
|
|
836
|
|
|||
Dilutive effect of share-based awards
|
4
|
|
7
|
|
9
|
|
|||
Diluted weighted average shares outstanding
|
755
|
|
804
|
|
845
|
|
|||
|
|
|
|
||||||
Basic earnings per share
|
$
|
5.82
|
|
$
|
5.68
|
|
$
|
0.79
|
|
Diluted earnings per share
|
$
|
5.79
|
|
$
|
5.63
|
|
$
|
0.78
|
|
|
Three Months Ended,
|
|||||||||||
(in millions, except per share data)
|
March 31
|
June 30
|
September 30
|
December 31
|
||||||||
2016
|
|
|
|
|
||||||||
Operating revenue
|
$
|
9,251
|
|
$
|
10,447
|
|
$
|
10,483
|
|
$
|
9,458
|
|
Operating income
|
1,540
|
|
2,423
|
|
1,969
|
|
1,020
|
|
||||
Net income
|
946
|
|
1,546
|
|
1,259
|
|
622
|
|
||||
Basic earnings per share
|
$
|
1.22
|
|
$
|
2.04
|
|
$
|
1.70
|
|
$
|
0.85
|
|
Diluted earnings per share
|
$
|
1.21
|
|
$
|
2.03
|
|
$
|
1.69
|
|
$
|
0.84
|
|
2015
|
|
|
|
|
||||||||
Operating revenue
|
$
|
9,388
|
|
$
|
10,707
|
|
$
|
11,107
|
|
$
|
9,502
|
|
Operating income
|
1,398
|
|
2,474
|
|
2,213
|
|
1,717
|
|
||||
Net income
|
746
|
|
1,485
|
|
1,315
|
|
980
|
|
||||
Basic earnings per share
|
$
|
0.91
|
|
$
|
1.85
|
|
$
|
1.67
|
|
$
|
1.26
|
|
Diluted earnings per share
|
$
|
0.90
|
|
$
|
1.83
|
|
$
|
1.65
|
|
$
|
1.25
|
|
Atlanta, Georgia
|
/s/ Ernst & Young LLP
|
February 13, 2017
|
|
Plan Category
|
(a) No. of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights(1)
|
(b) Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights(2)
|
(c) No. of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a))(3)
|
||||
Equity compensation plans approved by securities holders
|
4,474,773
|
|
$
|
13.16
|
|
30,977,782
|
|
Equity compensation plans not approved by securities holders
|
—
|
|
—
|
|
—
|
|
|
Total
|
4,474,773
|
|
$
|
13.16
|
|
30,977,782
|
|
(1)
|
Includes a maximum of 1,699,072 shares of common stock that may be issued upon the achievement of certain performance conditions under outstanding performance share awards as of December 31, 2016.
|
(2)
|
Includes performance share awards, which do not have exercise prices. The weighted average exercise price of options is $21.22.
|
(3)
|
Reflects shares remaining available for issuance under Delta's Performance Compensation Plan. If any shares of our common stock are covered by an award under the Plan that is canceled, forfeited or otherwise terminates without delivery of shares (including shares surrendered or withheld for payment of the exercise price of an award or taxes related to an award), then such shares will again be available for issuance under the Plan except for (i) any shares tendered in payment of an option, (ii) shares withheld to satisfy any tax withholding obligation with respect to the exercise of an option or stock appreciation right ("SAR") or (iii) shares covered by a stock-settled SAR or other awards that were not issued upon the settlement of the award. Because 2,774,807 shares of restricted stock remain unvested and subject to forfeiture, these shares could again be available for issuance.
|
|
DELTA AIR LINES, INC.
|
|
|
|
|
|
|
|
By:
|
/s/ Edward H. Bastian
|
|
|
|
Edward H. Bastian
|
|
|
|
Chief Executive Officer
|
|
Signature
|
|
Title
|
|
|
|
/s/ Edward H. Bastian
|
|
Chief Executive Officer and Director
(Principal Executive Officer)
|
Edward H. Bastian
|
|
|
|
|
|
/s/ Paul A. Jacobson
|
|
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
|
Paul A. Jacobson
|
|
|
|
|
|
/s/ Craig M. Meynard
|
|
Vice President and Chief Accounting Officer (Principal Accounting Officer)
|
Craig M. Meynard
|
|
|
|
|
|
/s/ Francis S. Blake
|
|
Chairman of the Board
|
Francis S. Blake
|
|
|
|
|
|
/s/ Daniel A. Carp
|
|
Director
|
Daniel A. Carp
|
|
|
|
|
|
/s/ David G. DeWalt
|
|
Director
|
David G. DeWalt
|
|
|
|
|
|
/s/ Thomas E. Donilon
|
|
Director
|
Thomas E. Donilon
|
|
|
|
|
|
/s/ William H. Easter III
|
|
Director
|
William H. Easter III
|
|
|
|
|
|
/s/ Mickey P. Foret
|
|
Director
|
Mickey P. Foret
|
|
|
|
|
|
/s/ Shirley C. Franklin
|
|
Director
|
Shirley C. Franklin
|
|
|
|
|
|
/s/ Jeanne P. Jackson
|
|
Director
|
Jeanne P. Jackson
|
|
|
|
|
|
/s/ George N. Mattson
|
|
Director
|
George N. Mattson
|
|
|
|
|
|
/s/ Douglas R. Ralph
|
|
Director
|
Douglas R. Ralph
|
|
|
|
|
|
/s/ Sergio A.L. Rial
|
|
Director
|
Sergio A.L. Rial
|
|
|
|
|
|
/s/ Kathy N. Waller
|
|
Director
|
Kathy N. Waller
|
|
|
|
|
|
/s/ Kenneth B. Woodrow
|
|
Director
|
Kenneth B. Woodrow
|
|
3.1(a)
|
Delta's Amended and Restated Certificate of Incorporation (Filed as Exhibit 3.1 to Delta's Current Report on Form 8-K as filed on April 30, 2007).*
|
3.1 (b)
|
Amendment to Amended and Restated Certificate of Incorporation (Filed as Exhibit 3.1 to Delta's Current Report on Form 8-K as filed on June 27, 2014).*
|
3.2
|
Delta's Bylaws (Filed as Exhibit 3.1 to Delta's Current Report on Form 8-K as filed on October 31, 2016).*
|
10.1
|
Credit and Guaranty Agreement, dated as of August 24, 2015, among Delta Air Lines, Inc., as Borrower, the subsidiaries of the Borrower named as Guarantors, each of the several Lenders from time to time party thereto, JPMorgan Chase Bank, N.A., as administrative agent for the Lenders, Barclays Bank PLC, Bank of America, N.A., Wells Fargo Bank, N.A. and U.S. Bank National Association, as Co-Syndication Agents, BBVA Compass and Fifth Third Bank, as Co-Documentation Agents, J.P. Morgan Securities LLC, Barclays Bank PLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, BNP Paribas Securities Corp., Citigroup Global Markets Inc., BBVA Compass, Credit Agricole Corporate and Investment Bank, Credit Suisse AG, Cayman Islands Branch, Deutsche Bank Securities Inc., Fifth Third Bank, Goldman Sachs Lending Partners LLC, Morgan Stanley Senior Funding, Inc., Wells Fargo Securities, LLC, Natixis, New York Branch, U.S. Bank National Association and UBS Securities LLC, as Revolving Facility Joint Lead Arrangers and Revolving Facility Joint Bookrunners and Barclays Bank PLC, J.P. Morgan Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, BNP Paribas Securities Corp., Citigroup Global Markets Inc., BBVA Compass, Credit Agricole Corporate and Investment Bank, Credit Suisse AG, Cayman Islands Branch, Deutsche Bank Securities Inc., Fifth Third Bank, Goldman Sachs Lending Partners LLC, Wells Fargo Securities, LLC and U.S. Bank National Association, as Term Loan Joint Lead Arrangers and Term Loan Joint Bookrunners (Filed as Exhibit 10.1 to Delta's Quarterly Report on Form 10-Q for the quarter ended September 30, 2015).*
|
10.2
|
Credit and Guaranty Agreement, dated as of October 18, 2012, among Delta Air Lines, Inc., as Borrower, the subsidiaries of the Borrower named as Guarantors, each of the several Lenders party thereto, Barclays Bank PLC, as administrative agent, Wilmington Trust, National Association, as Collateral Trustee, Deutsche Bank Securities Inc. and UBS Securities LLC, as Co-Syndication Agents, Merrill Lynch, Pierce, Fenner & Smith Incorporated and Citigroup Global Markets Inc., as co-documentation agents, Barclays Bank PLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Citigroup Global Markets Inc., Deutsche Bank Securities Inc., and UBS Securities LLC, as joint lead arrangers, and Barclays Bank PLC, BNP Paribas Securities Corp, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., Goldman Sachs Bank USA, J.P. Morgan Securities LLC, Morgan Stanley Senior Funding, Inc. and UBS Securities LLC, as joint bookrunners (Filed as Exhibit 10.2 to Delta's Annual Report on Form 10-K for the year ended December 31, 2012).*
|
10.3
|
Anchor Tenant Agreement dated as of December 9, 2010 between JFK International Air Terminal LLC and Delta Air Lines, Inc. (Filed as Exhibit 10.4 to Delta's Annual Report on Form 10-K for the year ended December 31, 2010).*
|
10.4(a)
|
Supplemental Agreement No. 13 to Purchase Agreement Number 2022, dated August 24, 2011, between The Boeing Company and Delta relating to Boeing Model 737NG Aircraft ("Supplemental Agreement 13") (Filed as Exhibit 10.1 to Delta's Quarterly Report on Form 10-Q for the quarter ended September 30, 2011).*/**
|
10.4(b)
|
Supplemental Agreement No. 17 to Purchase Agreement Number 2022, dated December 16, 2015, between The Boeing Company and Delta relating to Boeing Model 737NG Aircraft ("Supplemental Agreement 17") (Filed as Exhibit 10.6(b) to Delta’s Annual Report on Form 10-K for the year ended December 31, 2015).*/**
|
10.5(a)
|
Letter Agreements, dated August 24, 2011, relating to Supplemental Agreement 13 (Filed as Exhibit 10.2 to Delta's Quarterly Report on Form 10-Q for the quarter ended September 30, 2011).*/**
|
10.5(b)
|
Letter Agreements, dated December 16, 2015, relating to Supplemental Agreement 17 (Filed as Exhibit 10.7(b) to Delta’s Annual Report on Form 10-K for the year ended December 31, 2015).*/**
|
10.6(a)
|
Aircraft General Terms Agreement, dated October 21, 1997, between Boeing and Delta (Filed as Exhibit 10.6 to Delta's Quarterly Report on Form 10-Q for the quarter ended December 31, 1997).*/**
|
10.6(b)
|
Letter Agreement, dated August 24, 2011, relating to Revisions to Aircraft General Terms Agreement dated October 21, 1997 and Supplemental Agreement 13 (Filed as Exhibit 10.3(b) to Delta's Quarterly Report on Form 10-Q for the quarter ended September 30, 2011).*/**
|
10.6(c)
|
Letter Agreement, dated December 16, 2015, relating to Revisions to Aircraft General Terms Agreement dated October 21, 1997 and Supplemental Agreement 17 (Filed as Exhibit 10.8(c) to Delta’s Annual Report on Form 10-K for the year ended December 31, 2015).*/**
|
10.7
|
Airbus A330-900neo Aircraft and A350-900 Aircraft Purchase Agreement dated as of November 24, 2014 between Airbus S.A.S and Delta Air Lines, Inc. (Filed as Exhibit 10.9 to Delta's Annual Report on Form 10-K for the year ended December 31, 2014).*/**
|
10.8
|
Airbus A321 Aircraft and A330 Aircraft Purchase Agreement dated as of September 3, 2013 between Airbus S.A.S and Delta Air Lines, Inc., as amended through April 29, 2016 (Filed as Exhibit 10.1 to Delta's Quarterly Report on Form 10-Q for the quarter ended June 30, 2016).*/**
|
10.9
|
Delta Air Lines, Inc. Performance Compensation Plan (Filed as Exhibit 10.1 to Delta's Quarterly Report on Form 10-Q for the quarter ended June 30, 2016).*
|
10.10
|
Delta Air Lines, Inc. Officer and Director Severance Plan, as amended and restated as of June 1, 2016 (Filed as Exhibit 10.3 to Delta's Quarterly Report on Form 10-Q for the quarter ended June 30, 2016).*
|
10.11
|
Description of Certain Benefits of Members of the Board of Directors and Executive Officers.
|
10.13(a)
|
Delta Air Lines, Inc. 2015 Long Term Incentive Program (Filed as Exhibit 10.16 to Delta's Annual Report on Form 10-K for the year ended December 31, 2014).*
|
10.13(b)
|
Model Award Agreement for the Delta Air Lines, Inc. 2015 Long Term Incentive Program (Filed as Exhibit 10.2 to Delta's Quarterly Report on Form 10-Q for the quarter ended March 31, 2015).*
|
10.14(a)
|
Delta Air Lines, Inc. 2016 Long Term Incentive Program (Filed as Exhibit 10.16 to Delta's Annual Report on Form 10- K for the year ended December 31, 2015).*
|
10.15
|
Delta Air Lines, Inc. 2017 Long-Term Incentive Program.
|
10.16
|
Delta Air Lines, Inc. 2016 Management Incentive Plan (Filed as Exhibit 10.18 to Delta's Annual Report on Form 10-K for the year ended December 31, 2015).*
|
10.17
|
Delta Air Lines, Inc. 2017 Management Incentive Plan.
|
10.18
|
Letter Agreement dated as of June 11, 2008 between counsel for and on behalf of Mickey P. Foret and Aviation Consultants, LLC, and counsel for and on behalf of Northwest Airlines, Inc. (Filed as Exhibit 10.22 to Delta's Annual Report on Form 10-K for the year ended December 31, 2008).*
|
10.19
|
Delta Air Lines, Inc. Restoration Long Term Disability Plan (Filed as Exhibit 10.24 to Delta's Annual Report on Form 10-K for the year ended December 31, 2011).*
|
10.20
|
Letter Agreement, dated February 2, 2012 between Delta Air Lines, Inc. and Richard H. Anderson (Filed as Exhibit 10.25 to Delta's Annual Report on Form 10-K for the year ended December 31, 2011).*
|
10.21
|
Terms of 2015 Restricted Stock Awards for Non-Employee Directors (Filed as Exhibit 10.1 to Delta’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015).*
|
10.22
|
Terms of 2016 Restricted Stock Awards for Non-Employee Directors (Filed as Exhibit 10.4 to Delta’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2016).*
|
12.1
|
Statement regarding computation of ratio of earnings to fixed charges for each fiscal year in the five-year period ended December 31, 2016.
|
21.1
|
Subsidiaries of the Registrant.
|
23.1
|
Consent of Ernst & Young LLP.
|
31.1
|
Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer.
|
31.2
|
Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer.
|
32
|
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act 2002.
|
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
|
*
|
Incorporated by reference.
|
**
|
Portions of this exhibit have been omitted and filed separately with the Securities and Exchange Commission pursuant to requests for confidential treatment.
|
(1)
|
The “Conversion Formula” will apply to convert from cash to Shares the payout, if any, of a Performance Award to a person who is an Executive Officer Participant at the time of such payout. First, the cash amount of the payout is calculated in the same manner as if the payout is being made in cash. Next, the cash amount is converted into a number of Shares based on the following formula: (A÷B), where:
|
(2)
|
“GAAP” means accounting principles generally accepted in the United States of America.
|
(3)
|
“Industry Group” means Alaska Air Group, Inc., American Airlines Group, Inc., JetBlue Airways Corporation, Southwest Airlines Co., and United Continental Holdings, Inc.
|
(4)
|
“Performance Period” means the period beginning on January 1, 2017 and ending on and including December 31, 2019.
|
(1)
|
“TRASM Performance” shall be measured based on the result of the following formula: (A÷B), expressed as a percentage, where:
|
(2)
|
“TRASM” for Delta shall be calculated by using Delta’s Available Seat Miles and Total Operating Revenue for the applicable periods and the following formula: (A÷B), where
|
(3)
|
The “Industry Group Average TRASM” shall be calculated by using the aggregate Available Seat Miles and aggregate Total Operating Revenue for the applicable periods and the following formula: (A÷B), where
|
(4)
|
“Available Seat Miles” means, for the subject company, the consolidated scheduled and non-scheduled total number of seats available for transporting passengers during a reporting period multiplied by the total number of miles flown during that period.
|
(5)
|
“Total Operating Revenue” means, subject to Section 4(b)(v)(B), the subject company’s total operating revenue for the applicable periods based on its regularly prepared and publicly available statements of operations prepared in accordance with GAAP; provided, with respect to Delta, Total Operating Revenue shall exclude the portion of revenue associated with refinery sales to third parties net of exchange.
|
(1)
|
The “Customer Service Performance” for Delta shall be measured based on the percentage point improvement in Delta’s average monthly Net Promoter Score (“NPS”) from the 2016 calendar year to the average monthly NPS over the Performance Period, with (A) Delta’s NPS performance attributable to domestic travel accounting for 50% of the measure and (ii) Delta’s NPS performance attributable to international travel accounting for 50% of the measure. The criteria and methodology used to determine Delta’s NPS is described in a document titled, “‘Net Promoter’: Measuring Customer Satisfaction at Delta,” which was previously reviewed by the Committee. Company management will periodically report to the Company’s Board of Directors regarding Delta’s NPS.
|
(1)
|
The “Return on Invested Capital” for Delta shall be calculated by using Delta’s Average Adjusted Total Net Operating Income and Average Invested Capital for the applicable periods and the following formula (A÷B), where:
|
(2)
|
“Average Adjusted Total Net Operating Income” means, subject to Section 4(b)(v)(B), (i) Delta’s average consolidated operating income for the applicable periods based on its regularly prepared and publicly available statements of operations prepared in accordance with GAAP, but excluding (A) items present in the line item “restructuring and other items” or such similar line item; (B) mark-to-market adjustments for hedges recorded in periods other than the settlement period; (C) other special, unusual or nonrecurring items which are disclosed in publicly available filings with the U.S. Securities and Exchange Commission (the “SEC”); and (D) implied interest in aircraft rent expense and amortized pension expense related to gains/losses that impact accumulated other comprehensive income (“AOCI”) multiplied by (ii) one minus Delta’s Effective Tax Rate for the applicable periods.
|
(3)
|
“Effective Tax Rate” means Delta’s effective income tax rate for the applicable periods as disclosed in publicly available filings with the SEC.
|
(4)
|
“Average Invested Capital” means, subject to Section 4(b)(v)(B), Delta’s total invested capital determined based on the average of thirteen calendar quarters measured from the last calendar quarter preceding the Performance Period using the following formula, (A+B), where:
|
(5)
|
“Adjusted Book Value of Equity” for Delta shall be calculated quarterly based on its regularly prepared internal financial statements (i) with an initial starting value for the quarter ending December 31, 2016 (the “Initial Value”) equal to the book value of equity determined in accordance with GAAP as of December 31, 2016, but excluding the impact of gains or losses as of December 31, 2016 associated with (1) the cumulative pension and other post-employment retirement benefits net balance recorded in AOCI; (2) the derivative contracts and associated items net balance recorded in AOCI; and (3) the deferred tax asset valuation allowance balance and (ii) using the following formula for each subsequent quarter thereafter, (A+B+C), where:
|
(6)
|
“Adjusted Gross Debt” for Delta shall be calculated quarterly based on its regularly prepared internal financial statements using the following formula (A+B), subject to Section 4(b)(v)(B), where:
|
(1)
|
“Relative TSR Performance” shall be calculated based on Delta’s TSR Percentile Ranking for the Performance Period.
|
(2)
|
“TSR Percentile Ranking” means the percentage of the S&P 500 Companies with Total Shareholder Return for the Performance Period that is less than or equal to Delta’s Total Shareholder Return. If the Company’s Total Shareholder Return is the same as another company’s Total Shareholder Return, the Company shall be treated as having the higher Total Shareholder Return. The percentile ranking shall be carried out to two decimal places.
|
(3)
|
“S&P 500 Companies” means all of the companies constituting the Standard & Poor’s 500 Index as of the first and last day of the Performance Period (excluding the Company) and which continue to be actively traded under the same ticker symbol on an established securities market through the end of the Performance Period.
|
(4)
|
“Total Shareholder Return” or “TSR” means, for Delta and each of the S&P 500 Companies, (i) the change in the average closing market price of its common stock (as quoted in the principal market on which it is traded over the 20 trading days immediately preceding the first and last day of the Performance Period), plus dividends and other distributions paid, divided by (ii) the average closing market price over the 20 trading days immediately preceding the first day of the Performance Period, all of which are adjusted for any changes in equity structure, including, without limitation, stock splits and stock dividends, and assuming that all cash dividends and cash distributions are immediately reinvested in common stock of the subject company using the closing market price on the ex-dividend date.
|
(1)
|
If there is a payout under the Company’s broad-based employee profit sharing program for ground and flight attendant employees (the “Profit Sharing Program”) for 2017, the Option shall vest and become exercisable with respect to one-third of the Shares on each of the following dates: (I) February 1, 2018 (the “First Option Installment”), (II) February 1, 2019 (the “Second Option Installment”) and (III) February 1, 2020 (the “Third Option Installment”); or
|
(2)
|
If there is no payout under the Profit Sharing Program for 2017, but there is a payout under the Profit Sharing Program for 2018, the Option shall vest and become exercisable with respect to (I) the First and Second Option Installments on February 1, 2019 and (II) the Third Option Installment on February 1, 2020; and
|
Performance Measures and Weightings
|
|||||
Employment
Level
|
% of Target MIP Award allocated to
Absolute Financial
Performance
|
% of Target
MIP Award allocated to
Relative Financial
Performance
|
% of Target
MIP Award allocated to Operational Performance |
% of Target MIP Award allocated to
Leadership Effectiveness
Performance
|
% of Target MIP Award allocated to
Individual
Performance
|
CEO
|
50%
|
25%
|
25%
|
0%
|
0%
|
President/SEVP
|
50%
|
25%
|
25%
|
0%
|
0%
|
EVP
|
50%
|
25%
|
25%
|
0%
|
0%
|
CIO and SVP – Supply Chain Management & Fleet
|
50%
|
25%
|
25%
|
0%
|
0%
|
SVP
|
50%
|
15%
|
25%
|
10%
|
0%
|
VP
|
50%
|
15%
|
25%
|
10%
|
0%
|
Managing Director
(Grade 13) |
35%
|
10%
|
15%
|
0%
|
40%
|
Director
(Grade 12) |
35%
|
10%
|
15%
|
0%
|
40%
|
General Manager (Grade 11)
|
25%
|
10%
|
15%
|
0%
|
50%
|
Grade 10
|
0%
|
0%
|
0%
|
0%
|
100%
|
Grade 8
|
0%
|
0%
|
0%
|
0%
|
100%
|
|
Threshold
|
Target
|
Maximum
|
% of Target Absolute Financial Performance Measure Paid
|
50%
|
100%
|
200%
|
Required 2017 Pre-Tax Income
|
$5,895 Million
|
$6,764 Million
|
$7,619 Million
|
|
Threshold
|
Target
|
Maximum
|
% of Target Relative Financial Performance Measure Paid
|
50%
|
100%
|
200%
|
Delta’s 2017 Annual Pre-Tax Income Margin relative to Composite Performance of Industry Composite Group for the same period
|
Composite Performance
|
+2.0 points above Composite Performance
|
+3.0 points above Composite Performance
|
|
Threshold
|
Target
|
Maximum
|
Shared Rewards Program
|
|
|
|
% of Target Payout for this Performance Measure (75% Weighting)
|
37.50%
|
75%
|
150%
|
Number of monthly Shared Rewards Program goals actually met during 2017
|
21
|
28
|
35 or more
|
Delta Connection Goals
|
|
|
|
% of Target Payout for this Performance Measure (25% Weighting)
|
12.50%
|
25%
|
50%
|
Number of Delta Connection Goals actually met during 2017
|
9
|
14
|
19 or more
|
|
Z = the number of calendar months the Participant was actively employed by Delta during 2017 in a MIP-eligible position, rounded up for any partial month.
|
|
|
|
|
|
|
Completion Factor
2017 Goal |
On-Time Arrival Performance
2017 Goal |
||
Month in 2017
|
Relative CF
|
Absolute CF
|
Relative A14
|
Absolute A14
|
January
|
1st
|
96.8%
|
1st
|
81.7%
|
February
|
1st
|
95.8%
|
1st
|
80.4%
|
March
|
1st
|
98.5%
|
1st
|
83.2%
|
April
|
1st
|
99.4%
|
1st
|
86.4%
|
May
|
1st
|
99.6%
|
1st
|
86.3%
|
June
|
1st
|
98.9%
|
1st
|
80.9%
|
July
|
1st
|
97.6%
|
1st
|
79.1%
|
August
|
1st
|
98.5%
|
1st
|
82.9%
|
September
|
1st
|
99.8%
|
1st
|
87.9%
|
October
|
1st
|
99.5%
|
1st
|
87.5%
|
November
|
1st
|
99.2%
|
1st
|
86.4%
|
December
|
1st
|
98.2%
|
1st
|
81.7%
|
Overall
|
1st
|
98.5%
|
1st
|
83.7%
|
A.
|
The primary source of reported metrics used to calculate performance will be each Delta Connection carrier’s data which flows into Delta’s data warehouse.
|
B.
|
All domestic and international Delta Connection carrier system operations subject to capacity purchase agreements and/or revenue proration agreements will be included in the performance measures, including the operations of, Compass, ExpressJet, GoJet, Endeavor Air, Shuttle America and SkyWest, but excluding any revenue proration operations with respect to which passenger reservations are not reflected on Delta’s reservations system (the “Delta Connection Program”). In the event that a carrier enters or leaves the Delta Connection Program, that carrier’s operations will be included or excluded from the performance measures as applicable.
|
C.
|
The monthly calculation for completion factor will be as follows:
|
1.
|
Add all Delta Connection scheduled system operations for the month.
|
2.
|
Add all Delta Connection system completed flights for the month (including flights canceled by one carrier and covered by another via an extra section, which also includes flights changed to Delta aircraft).
|
3.
|
Divide the result of C.2 by the result of C.1 for a combined Delta Connection system completion factor.
|
D.
|
The monthly calculation for on-time performance will be as follows:
|
1.
|
Add all Delta Connection completed system operations for the month.
|
2.
|
Add all Delta Connection system on time operations for the month. On time operations are defined as the number of flights that arrive at the scheduled destination within 15 minutes of the scheduled arrival time.
|
3.
|
Divide the result of D.2 by the result of D.1 for a combined Delta Connection system on-time performance measure.
|
E.
|
All calculations will be performed and validated by Delta Connection Operations.
|
F.
|
The comparator group for the relative measure shall include the regional portfolios for Alaska Air Group, Inc., United Continental Holdings, Inc. and American Airlines Group, Inc. and the data is compiled by a third party selected by the Company.
|
|
Year Ended December 31,
|
||||||||||||||
(in millions, except for ratio data)
|
2016
|
2015
|
2014
|
2013
|
2012
|
||||||||||
Earnings before income taxes
|
$
|
6,636
|
|
$
|
7,157
|
|
$
|
1,072
|
|
$
|
2,527
|
|
$
|
1,025
|
|
Add (deduct):
|
|
|
|
|
|
||||||||||
Fixed charges from below
|
528
|
|
584
|
|
737
|
|
947
|
|
1,116
|
|
|||||
Capitalized interest
|
(53
|
)
|
(36
|
)
|
(33
|
)
|
(29
|
)
|
(21
|
)
|
|||||
Earnings as adjusted
|
$
|
7,111
|
|
$
|
7,705
|
|
$
|
1,776
|
|
$
|
3,445
|
|
$
|
2,120
|
|
|
|
|
|
|
|
||||||||||
Fixed charges:
|
|
|
|
|
|
||||||||||
Interest expense, including capitalized amounts and amortization of debt costs
|
$
|
472
|
|
$
|
534
|
|
$
|
691
|
|
$
|
891
|
|
$
|
1,044
|
|
Portion of rental expense representative of the interest factor
|
56
|
|
50
|
|
46
|
|
56
|
|
72
|
|
|||||
Fixed charges
|
$
|
528
|
|
$
|
584
|
|
$
|
737
|
|
$
|
947
|
|
$
|
1,116
|
|
|
|
|
|
|
|
||||||||||
Ratio of earnings to fixed charges
|
13.47
|
13.19
|
2.41
|
|
3.64
|
|
1.90
|
|
|
Year Ended December 31,
|
||||||||||||||
(in millions)
|
2016
|
2015
|
2014
|
2013
|
2012
|
||||||||||
MTM adjustments and settlements
|
$
|
450
|
|
$
|
1,301
|
|
$
|
(2,346
|
)
|
$
|
276
|
|
$
|
27
|
|
Restructuring and other
|
—
|
|
(35
|
)
|
(716
|
)
|
(424
|
)
|
(452
|
)
|
|||||
Loss on extinguishment of debt
|
—
|
|
—
|
|
(268
|
)
|
—
|
|
(118
|
)
|
|||||
Virgin Atlantic MTM adjustments
|
115
|
|
26
|
|
(134
|
)
|
—
|
|
—
|
|
|||||
Total income (loss)
|
$
|
565
|
|
$
|
1,292
|
|
$
|
(3,464
|
)
|
$
|
(148
|
)
|
$
|
(543
|
)
|
|
|
|
NAME OF SUBSIDIARY
|
JURISDICTION OF INCORPORATION OR
ORGANIZATION
|
|
Aero Assurance Ltd.
|
Vermont
|
|
DAL Global Services, LLC
|
Delaware
|
|
Delta Material Services, LLC
|
Delaware
|
|
Delta Private Jets, Inc.
|
Kentucky
|
|
Endeavor Air, Inc.
|
Georgia
|
|
Epsilon Trading, LLC
|
Delaware
|
|
MIPC, LLC
|
Delaware
|
|
MLT Vacations, Inc. (d/b/a Delta Vacations)
|
Minnesota
|
|
Monroe Energy, LLC
|
Delaware
|
|
New Sky, Ltd.
|
Bermuda
|
(1)
|
Registration Statement No. 333-142424 on Form S-8 pertaining to Delta Air Lines, Inc. 2007 Performance Compensation Plan,
|
(2)
|
Registration Statement No. 333-149308 on Form S-8 pertaining to Delta Air Lines, Inc. 2007 Performance Compensation Plan,
|
(3)
|
Registration Statement No. 333-154818 on Form S-8 pertaining to Delta Air Lines, Inc. 2007 Performance Compensation Plan, and
|
(4)
|
Registration Statement No. 333-151060 on Form S-8 pertaining to Northwest Airlines Corporation 2007 Stock Incentive Plan;
|
|
/s/ Ernst & Young LLP
|
Atlanta, Georgia
|
|
February 13, 2017
|
|
1.
|
I have reviewed this annual report on Form 10-K of Delta Air Lines, Inc. (“Delta”) for the annual period ended December 31, 2016;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of Delta as of, and for, the periods presented in this report;
|
4.
|
Delta's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for Delta and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to Delta, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of Delta's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in Delta's internal control over financial reporting that occurred during Delta's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, Delta's internal control over financial reporting; and
|
5.
|
Delta's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to Delta's auditors and the Audit Committee of Delta's Board of Directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect Delta's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in Delta's internal control over financial reporting.
|
February 13, 2017
|
/s/ Edward H. Bastian
|
|
Edward H. Bastian
|
|
Chief Executive Officer
|
1.
|
I have reviewed this annual report on Form 10-K of Delta Air Lines, Inc. (“Delta”) for the annual period ended December 31, 2016;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of Delta as of, and for, the periods presented in this report;
|
4.
|
Delta's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for Delta and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to Delta, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of Delta's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in Delta's internal control over financial reporting that occurred during Delta's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, Delta's internal control over financial reporting; and
|
5.
|
Delta's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to Delta's auditors and the Audit Committee of Delta's Board of Directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect Delta's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in Delta's internal control over financial reporting.
|
February 13, 2017
|
/s/ Paul A. Jacobson
|
|
Paul A. Jacobson
|
|
Executive Vice President and Chief Financial Officer
|
1.
|
such Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and
|
2.
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Delta.
|
|
/s/ Edward H. Bastian
|
|
Edward H. Bastian
|
|
Chief Executive Officer
|
|
|
|
/s/ Paul A. Jacobson
|
|
Paul A. Jacobson
|
|
Executive Vice President and Chief Financial Officer
|
|
|