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þ
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QUARTERLY 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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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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/s/ Ernst & Young LLP
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Atlanta, Georgia
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April 12, 2017
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(in millions, except share data)
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March 31,
2017 |
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December 31,
2016 |
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ASSETS
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|||||||
Current Assets:
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|
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||||
Cash and cash equivalents
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$
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1,907
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$
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2,762
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Short-term investments
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743
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487
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Accounts receivable, net of an allowance for uncollectible accounts of $11 and $15 at March 31, 2017
and December 31, 2016, respectively
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2,307
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2,064
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Fuel inventory
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487
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519
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Expendable parts and supplies inventories, net of an allowance for obsolescence of $114 and $110
at March 31, 2017 and December 31, 2016, respectively
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368
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372
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Prepaid expenses and other
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1,068
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1,247
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Total current assets
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6,880
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7,451
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Property and Equipment, Net:
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Property and equipment, net of accumulated depreciation and amortization of $12,932 and $12,456
at March 31, 2017 and December 31, 2016, respectively
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24,817
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24,375
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Other Assets:
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|
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||||
Goodwill
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9,794
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9,794
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Identifiable intangibles, net of accumulated amortization of $833 and $828 at March 31, 2017
and December 31, 2016, respectively
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4,855
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4,844
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Deferred income taxes, net
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2,750
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3,064
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Other noncurrent assets
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2,363
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1,733
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|
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Total other assets
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19,762
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19,435
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Total assets
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$
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51,459
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$
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51,261
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LIABILITIES AND STOCKHOLDERS' EQUITY
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|||||||
Current Liabilities:
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|
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||||
Current maturities of long-term debt and capital leases
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$
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1,040
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|
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$
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1,131
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Air traffic liability
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6,410
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4,626
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Accounts payable
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2,353
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2,572
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Accrued salaries and related benefits
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1,835
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2,924
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Frequent flyer deferred revenue
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1,696
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1,648
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Other accrued liabilities
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2,619
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2,338
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Total current liabilities
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15,953
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15,239
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Noncurrent Liabilities:
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Long-term debt and capital leases
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8,187
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6,201
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Pension, postretirement and related benefits
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10,291
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13,378
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Frequent flyer deferred revenue
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2,261
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2,278
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Other noncurrent liabilities
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1,822
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1,878
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Total noncurrent liabilities
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22,561
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23,735
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Commitments and Contingencies
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Stockholders' Equity:
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Common stock at $0.0001 par value; 1,500,000,000 shares authorized, 742,894,980 and 744,886,938
shares issued at March 31, 2017 and December 31, 2016, respectively
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—
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—
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Additional paid-in capital
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12,443
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12,294
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Retained earnings
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8,226
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7,903
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Accumulated other comprehensive loss
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(7,571
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)
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(7,636
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)
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Treasury stock, at cost, 7,364,567 and 14,149,229 shares at March 31, 2017 and December 31, 2016,
respectively
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(153
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)
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(274
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)
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Total stockholders' equity
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12,945
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12,287
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Total liabilities and stockholders' equity
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$
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51,459
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$
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51,261
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The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
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Three Months Ended March 31,
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(in millions, except per share data)
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2017
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2016
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Operating Revenue:
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Passenger:
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Mainline
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$
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6,404
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$
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6,444
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Regional carriers
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1,284
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1,318
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Total passenger revenue
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7,688
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7,762
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Cargo
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160
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162
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Other
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1,300
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1,327
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Total operating revenue
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9,148
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9,251
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Operating Expense:
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Salaries and related costs
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2,473
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2,311
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Aircraft fuel and related taxes
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1,240
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1,227
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Regional carriers expense
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1,110
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1,006
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Depreciation and amortization
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540
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486
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Contracted services
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523
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476
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Aircraft maintenance materials and outside repairs
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518
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449
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Passenger commissions and other selling expenses
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404
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388
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Landing fees and other rents
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365
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348
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Passenger service
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220
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|
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189
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Profit sharing
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151
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272
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Aircraft rent
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84
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66
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Other
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467
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493
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Total operating expense
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8,095
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7,711
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Operating Income
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1,053
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1,540
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Non-Operating Expense:
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Interest expense, net
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(94
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)
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(107
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)
|
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Miscellaneous, net
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(44
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)
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1
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Total non-operating expense, net
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(138
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)
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(106
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)
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Income Before Income Taxes
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915
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1,434
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Income Tax Provision
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(312
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)
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(488
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)
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Net Income
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$
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603
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$
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946
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Basic Earnings Per Share
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$
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0.83
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$
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1.22
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Diluted Earnings Per Share
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$
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0.82
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|
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$
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1.21
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Cash Dividends Declared Per Share
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$
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0.20
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$
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0.14
|
|
|
|
|
|
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Comprehensive Income
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$
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668
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|
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$
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942
|
|
|
|
|
|
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The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
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Three Months Ended March 31,
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||||||
(in millions)
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2017
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2016
|
||||
Net Cash (Used In) Provided by Operating Activities
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$
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(801
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)
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$
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1,011
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Cash Flows from Investing Activities:
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|
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Property and equipment additions:
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|
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Flight equipment, including advance payments
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(595
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)
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(764
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)
|
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Ground property and equipment, including technology
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(207
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)
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(107
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)
|
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Purchase of equity investments
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(622
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)
|
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—
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Purchase of short-term investments
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(463
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)
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(488
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)
|
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Redemption of short-term investments
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207
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|
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753
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|
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Other, net
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(54
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)
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|
5
|
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Net cash used in investing activities
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(1,734
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)
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(601
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)
|
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|
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|
||||
Cash Flows from Financing Activities:
|
|
|
|
||||
Payments on long-term debt and capital lease obligations
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(288
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)
|
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(459
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)
|
||
Repurchase of common stock
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(200
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)
|
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(775
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)
|
||
Cash dividends
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(149
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)
|
|
(107
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)
|
||
Fuel card obligation
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334
|
|
|
141
|
|
||
Proceeds from short-term obligations
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—
|
|
|
68
|
|
||
Proceeds from long-term obligations
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2,004
|
|
|
450
|
|
||
Other, net
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(21
|
)
|
|
8
|
|
||
Net cash provided by (used in) financing activities
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1,680
|
|
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(674
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)
|
||
|
|
|
|
||||
Net Decrease in Cash and Cash Equivalents
|
(855
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)
|
|
(264
|
)
|
||
Cash and cash equivalents at beginning of period
|
2,762
|
|
|
1,972
|
|
||
Cash and cash equivalents at end of period
|
$
|
1,907
|
|
|
$
|
1,708
|
|
|
|
|
|
||||
Non-Cash Transactions:
|
|
|
|
||||
Treasury stock contributed to our qualified defined benefit pension plans
|
$
|
350
|
|
|
$
|
350
|
|
Flight and ground equipment acquired under capital leases
|
186
|
|
|
27
|
|
||
|
|
|
|
||||
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
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(in millions)
|
March 31,
2017 |
Level 1
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Level 2
|
||||||
Cash equivalents
|
$
|
1,424
|
|
$
|
1,424
|
|
$
|
—
|
|
Short-term investments
|
|
|
|
||||||
U.S. government and agency securities
|
95
|
|
85
|
|
10
|
|
|||
Asset- and mortgage-backed securities
|
159
|
|
—
|
|
159
|
|
|||
Corporate obligations
|
418
|
|
—
|
|
418
|
|
|||
Other fixed income securities
|
71
|
|
—
|
|
71
|
|
|||
Restricted cash equivalents and investments
|
60
|
|
60
|
|
—
|
|
|||
Long-term investments
|
142
|
|
117
|
|
25
|
|
|||
Hedge derivatives, net
|
|
|
|
||||||
Fuel hedge contracts
|
(238
|
)
|
(18
|
)
|
(220
|
)
|
|||
Interest rate contract
|
(5
|
)
|
—
|
|
(5
|
)
|
|||
Foreign currency exchange contracts
|
1
|
|
—
|
|
1
|
|
(in millions)
|
December 31,
2016 |
Level 1
|
Level 2
|
||||||
Cash equivalents
|
$
|
2,279
|
|
$
|
2,279
|
|
$
|
—
|
|
Short-term investments
|
|
|
|
|
|||||
U.S. government and agency securities
|
112
|
|
86
|
|
26
|
|
|||
Asset- and mortgage-backed securities
|
68
|
|
—
|
|
68
|
|
|||
Corporate obligations
|
295
|
|
—
|
|
295
|
|
|||
Other fixed income securities
|
12
|
|
—
|
|
12
|
|
|||
Restricted cash equivalents and investments
|
61
|
|
61
|
|
—
|
|
|||
Long-term investments
|
139
|
|
115
|
|
24
|
|
|||
Hedge derivatives, net
|
|
|
|
||||||
Fuel hedge contracts
|
(324
|
)
|
(26
|
)
|
(298
|
)
|
|||
Interest rate contract
|
6
|
|
—
|
|
6
|
|
|||
Foreign currency exchange contracts
|
27
|
|
—
|
|
27
|
|
•
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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 17% to 36% 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.
|
•
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Interest Rate Contract. Our interest rate derivative is a swap contract, which is valued based on data readily observable in public markets.
|
•
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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.
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(in millions)
|
Available-For-Sale
|
||||
Due in one year or less
|
$
|
216
|
|
||
Due after one year through three years
|
434
|
|
|||
Due after three years through five years
|
72
|
|
|||
Due after five years
|
21
|
|
|||
Total
|
$
|
743
|
|
•
|
Aeroméxico. During the March 2017 quarter, we completed a $622 million tender offer for additional capital stock of Grupo Aeroméxico increasing our ownership percentage to 36% of the outstanding shares. Resulting from this increase in our ownership, we now account for the investment under the equity method of accounting and recognize our portion of their results in other non-operating expense in our Condensed Consolidated Statements of Operations and Comprehensive Income.
|
•
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GOL. Through our investment in preferred shares of GOL's parent company, we own 9% of GOL's outstanding capital stock. Driven by an improved outlook for the Brazilian economy and the financial performance of the company, GOL's stock price has nearly doubled since December 31, 2016 and is approximately equivalent to the cost of our investment.
|
•
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China Eastern. We have a 3% equity interest in China Eastern. As our investment agreement with China Eastern restricts our sale or transfer of these shares for a period of three years, we will continue to 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. As of March 31, 2017, China Eastern's stock trades above the cost of our equity investment.
|
(in millions)
|
Volume
|
Final Maturity Date
|
Prepaid Expenses and Other
|
Other Noncurrent Assets
|
Other Accrued Liabilities
|
Other Noncurrent Liabilities
|
Hedge Derivatives, net
|
||||||||||||
Designated as hedges
|
|
|
|
|
|
|
|
|
|||||||||||
Interest rate contract (fair value hedge)
|
332
|
|
U.S. dollars
|
August 2022
|
$
|
1
|
|
$
|
—
|
|
$
|
—
|
|
$
|
(6
|
)
|
$
|
(5
|
)
|
Foreign currency exchange contracts
|
51,027
|
|
Japanese yen
|
November 2019
|
18
|
|
1
|
|
(12
|
)
|
(6
|
)
|
1
|
|
|||||
394
|
|
Canadian dollars
|
|||||||||||||||||
Not designated as hedges
|
|
|
|
|
|
|
|
|
|||||||||||
Fuel hedge contracts (1)
|
191
|
|
gallons - crude oil, diesel and jet fuel
|
January 2018
|
210
|
|
—
|
|
(448
|
)
|
—
|
|
(238
|
)
|
|||||
Total derivative contracts
|
|
|
$
|
229
|
|
$
|
1
|
|
$
|
(460
|
)
|
$
|
(12
|
)
|
$
|
(242
|
)
|
(1)
|
As discussed above, during 2016, we entered into hedges 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 2017 airline segment hedge portfolio.
|
(in millions)
|
Volume
|
Final Maturity Date
|
Prepaid Expenses and Other
|
Other Noncurrent Assets
|
Other Accrued Liabilities
|
Other Noncurrent Liabilities
|
Hedge Derivatives, net
|
||||||||||||
Designated as hedges
|
|
|
|
|
|
|
|
|
|||||||||||
Interest rate 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 early settled $455 million of our airline segment's 2016 hedge positions and entered into hedges 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)
|
Prepaid Expenses and Other
|
Other Noncurrent Assets
|
Other Accrued Liabilities
|
Other Noncurrent Liabilities
|
Hedge Derivatives, net
|
||||||||||
March 31, 2017
|
|
|
|
|
|
||||||||||
Net derivative contracts
|
$
|
15
|
|
$
|
1
|
|
$
|
(246
|
)
|
$
|
(12
|
)
|
$
|
(242
|
)
|
December 31, 2016
|
|
|
|
|
|
||||||||||
Net derivative contracts
|
$
|
31
|
|
$
|
6
|
|
$
|
(326
|
)
|
$
|
(2
|
)
|
$
|
(291
|
)
|
|
Effective Portion Reclassified from AOCI to Earnings
|
|
Effective Portion Recognized in Other Comprehensive Income
|
||||||||||
(in millions)
|
2017
|
2016
|
|
2017
|
2016
|
||||||||
Three Months Ended March 31,
|
|
|
|
|
|
||||||||
Foreign currency exchange contracts
|
$
|
7
|
|
$
|
24
|
|
|
$
|
(25
|
)
|
$
|
(82
|
)
|
(in millions)
|
March 31,
2017 |
December 31,
2016 |
||||
Total debt at par value
|
$
|
8,887
|
|
$
|
7,112
|
|
Unamortized discount and debt issue cost, net
|
(117
|
)
|
(104
|
)
|
||
Net carrying amount
|
$
|
8,770
|
|
$
|
7,008
|
|
|
|
|
||||
Fair value
|
$
|
9,100
|
|
$
|
7,300
|
|
|
Pension Benefits
|
Other Postretirement and Postemployment Benefits
|
||||||||||
(in millions)
|
2017
|
2016
|
2017
|
2016
|
||||||||
Three Months Ended March 31,
|
|
|
|
|
||||||||
Service cost
|
$
|
—
|
|
$
|
—
|
|
$
|
22
|
|
$
|
17
|
|
Interest cost
|
213
|
|
229
|
|
35
|
|
37
|
|
||||
Expected return on plan assets
|
(286
|
)
|
(226
|
)
|
(17
|
)
|
(18
|
)
|
||||
Amortization of prior service credit
|
—
|
|
—
|
|
(7
|
)
|
(7
|
)
|
||||
Recognized net actuarial loss
|
66
|
|
59
|
|
8
|
|
6
|
|
||||
Net (benefit) cost
|
$
|
(7
|
)
|
$
|
62
|
|
$
|
41
|
|
$
|
35
|
|
(in millions)
|
Total
|
||
Nine months ending December 31, 2017
|
$
|
2,130
|
|
2018
|
3,140
|
|
|
2019
|
3,550
|
|
|
2020
|
1,740
|
|
|
2021
|
1,130
|
|
|
Thereafter
|
660
|
|
|
Total
|
$
|
12,350
|
|
Aircraft Type
|
|
Purchase Commitments
|
|
B-737-900ER
|
|
55
|
|
A321-200
|
|
64
|
|
A330-300
|
|
1
|
|
A330-900neo
|
|
25
|
|
A350-900
|
|
25
|
|
CS100
|
|
75
|
|
Total
|
|
245
|
|
(in millions)
|
Pension and Other Benefits Liabilities(2)
|
Derivative Contracts
|
Investments
|
Total
|
||||||||
Balance at January 1, 2017 (net of tax effect of $1,458)
|
$
|
(7,714
|
)
|
$
|
97
|
|
$
|
(19
|
)
|
$
|
(7,636
|
)
|
Changes in value (net of tax effect of $5)
|
—
|
|
(12
|
)
|
48
|
|
36
|
|
||||
Reclassifications into earnings (net of tax effect of $17)(1)
|
41
|
|
(4
|
)
|
(8
|
)
|
29
|
|
||||
Balance at March 31, 2017 (net of tax effect of $1,446)
|
$
|
(7,673
|
)
|
$
|
81
|
|
$
|
21
|
|
$
|
(7,571
|
)
|
(in millions)
|
Pension and Other Benefits Liabilities(2)
|
Derivative Contracts
|
Investments
|
Total
|
||||||||
Balance at January 1, 2016 (net of tax effect of $1,222)
|
$
|
(7,354
|
)
|
$
|
140
|
|
$
|
(61
|
)
|
$
|
(7,275
|
)
|
Changes in value (net of tax effect of $20)
|
—
|
|
(36
|
)
|
11
|
|
(25
|
)
|
||||
Reclassifications into earnings (net of tax effect of $12)(1)
|
36
|
|
(15
|
)
|
—
|
|
21
|
|
||||
Balance at March 31, 2016 (net of tax effect of $1,230)
|
$
|
(7,318
|
)
|
$
|
89
|
|
$
|
(50
|
)
|
$
|
(7,279
|
)
|
(1)
|
Amounts reclassified from AOCI for pension and other benefits liabilities and derivative contracts designated as foreign currency cash flow hedges are recorded in salaries and related costs and in passenger revenue, respectively, in the Condensed Consolidated Statements of Operations and Comprehensive Income. The reclassification into earnings for investments relates to our investment in Grupo Aeroméxico during the March 2017 quarter with the conversion to accounting under the equity method. The reclassification of the unrealized gain was recorded to non-operating expense in our Condensed Consolidated Statements of Operations and Comprehensive Income.
|
(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
|
||||||||
Three Months Ended March 31, 2017
|
|
|
|
|
|
|
||||||||
Operating revenue:
|
$
|
9,087
|
|
$
|
1,128
|
|
|
|
|
$
|
9,148
|
|
||
Sales to airline segment
|
|
|
|
$
|
(190
|
)
|
(1)
|
|
||||||
Exchanged products
|
|
|
|
(733
|
)
|
(2)
|
|
|||||||
Sales of refined products
|
|
|
|
(144
|
)
|
(3)
|
|
|||||||
Operating income(4)
|
1,009
|
|
44
|
|
|
—
|
|
|
1,053
|
|
||||
Interest expense, net
|
94
|
|
—
|
|
|
—
|
|
|
94
|
|
||||
Depreciation and amortization
|
530
|
|
10
|
|
|
—
|
|
|
540
|
|
||||
Total assets, end of period
|
50,139
|
|
1,320
|
|
|
—
|
|
|
51,459
|
|
||||
Capital expenditures
|
776
|
|
26
|
|
|
—
|
|
|
802
|
|
||||
|
|
|
|
|
|
|
||||||||
Three Months Ended March 31, 2016
|
|
|
|
|
|
|
||||||||
Operating revenue:
|
$
|
9,172
|
|
$
|
765
|
|
|
|
|
$
|
9,251
|
|
||
Sales to airline segment
|
|
|
|
$
|
(144
|
)
|
(1)
|
|
||||||
Exchanged products
|
|
|
|
(526
|
)
|
(2)
|
|
|||||||
Sales of refined products
|
|
|
|
(16
|
)
|
(3)
|
|
|||||||
Operating income (loss)(4)
|
1,568
|
|
(28
|
)
|
|
—
|
|
|
1,540
|
|
||||
Interest expense, net
|
107
|
|
—
|
|
|
—
|
|
|
107
|
|
||||
Depreciation and amortization
|
477
|
|
9
|
|
|
—
|
|
|
486
|
|
||||
Total assets, end of period
|
52,093
|
|
1,249
|
|
|
—
|
|
|
53,342
|
|
||||
Capital expenditures
|
858
|
|
13
|
|
|
—
|
|
|
871
|
|
(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.
|
(in millions)
|
Lease Restructuring
|
||
Liability as of January 1, 2017
|
$
|
329
|
|
Payments
|
(21
|
)
|
|
Additional expenses and other
|
(5
|
)
|
|
Liability as of March 31, 2017
|
$
|
303
|
|
|
Three Months Ended March 31,
|
|||||
(in millions, except per share data)
|
2017
|
2016
|
||||
Net income
|
$
|
603
|
|
$
|
946
|
|
|
|
|
||||
Basic weighted average shares outstanding
|
728
|
|
774
|
|
||
Dilutive effect of share-based awards
|
3
|
|
6
|
|
||
Diluted weighted average shares outstanding
|
731
|
|
780
|
|
||
|
|
|
||||
Basic earnings per share
|
$
|
0.83
|
|
$
|
1.22
|
|
Diluted earnings per share
|
$
|
0.82
|
|
$
|
1.21
|
|
|
Three Months Ended March 31,
|
Increase (Decrease)
|
% Increase (Decrease)
|
||||||||
(in millions)
|
2017
|
2016
|
|||||||||
Passenger:
|
|
|
|
|
|||||||
Mainline
|
$
|
6,404
|
|
$
|
6,444
|
|
$
|
(40
|
)
|
(0.6
|
)%
|
Regional carriers
|
1,284
|
|
1,318
|
|
(34
|
)
|
(2.6
|
)%
|
|||
Total passenger revenue
|
7,688
|
|
7,762
|
|
(74
|
)
|
(1.0
|
)%
|
|||
Cargo
|
160
|
|
162
|
|
(2
|
)
|
(1.2
|
)%
|
|||
Other
|
1,300
|
|
1,327
|
|
(27
|
)
|
(2.0
|
)%
|
|||
Total operating revenue
|
$
|
9,148
|
|
$
|
9,251
|
|
$
|
(103
|
)
|
(1.1
|
)%
|
|
|
Increase (Decrease)
vs. Three Months Ended March 31, 2016
|
||||||||||||||
(in millions)
|
Three Months Ended March 31, 2017
|
Passenger Revenue
|
RPMs (Traffic)
|
ASMs (Capacity)
|
Passenger Mile Yield
|
PRASM
|
Load Factor
|
|||||||||
Mainline
|
$
|
4,252
|
|
1.0
|
%
|
2.9
|
%
|
2.1
|
%
|
(1.8
|
)%
|
(1.1
|
)%
|
0.6
|
|
pts
|
Regional carriers
|
1,284
|
|
(2.6
|
)%
|
(1.3
|
)%
|
(0.8
|
)%
|
(1.3
|
)%
|
(1.8
|
)%
|
(0.4
|
)
|
pts
|
|
Domestic
|
5,536
|
|
0.1
|
%
|
2.2
|
%
|
1.6
|
%
|
(2.0
|
)%
|
(1.4
|
)%
|
0.5
|
|
pts
|
|
Atlantic
|
882
|
|
(4.0
|
)%
|
(1.0
|
)%
|
(3.6
|
)%
|
(3.0
|
)%
|
(0.5
|
)%
|
2.0
|
|
pts
|
|
Pacific
|
550
|
|
(13.7
|
)%
|
(11.7
|
)%
|
(10.1
|
)%
|
(2.2
|
)%
|
(3.9
|
)%
|
(1.6
|
)
|
pts
|
|
Latin America
|
720
|
|
6.4
|
%
|
5.3
|
%
|
1.9
|
%
|
1.0
|
%
|
4.4
|
%
|
2.8
|
|
pts
|
|
Total
|
$
|
7,688
|
|
(1.0
|
)%
|
0.5
|
%
|
(0.5
|
)%
|
(1.4
|
)%
|
(0.5
|
)%
|
0.8
|
|
pts
|
|
Three Months Ended March 31,
|
Increase
(Decrease)
|
% Increase
(Decrease)
|
||||||||
(in millions)
|
2017
|
2016
|
|||||||||
Loyalty programs
|
$
|
465
|
|
$
|
425
|
|
$
|
40
|
|
9.4
|
%
|
Administrative fees, club and on-board sales
|
315
|
|
313
|
|
2
|
|
0.6
|
%
|
|||
Ancillary businesses and refinery
|
272
|
|
301
|
|
(29
|
)
|
(9.6
|
)%
|
|||
Baggage fees
|
204
|
|
206
|
|
(2
|
)
|
(1.0
|
)%
|
|||
Other
|
44
|
|
82
|
|
(38
|
)
|
(46.3
|
)%
|
|||
Total other revenue
|
$
|
1,300
|
|
$
|
1,327
|
|
$
|
(27
|
)
|
(2.0
|
)%
|
|
Three Months Ended March 31,
|
Increase (Decrease)
|
% Increase (Decrease)
|
||||||||
(in millions)
|
2017
|
2016
|
|||||||||
Salaries and related costs
|
$
|
2,473
|
|
$
|
2,311
|
|
$
|
162
|
|
7.0
|
%
|
Aircraft fuel and related taxes
|
1,240
|
|
1,227
|
|
13
|
|
1.1
|
%
|
|||
Regional carriers expense
|
1,110
|
|
1,006
|
|
104
|
|
10.3
|
%
|
|||
Depreciation and amortization
|
540
|
|
486
|
|
54
|
|
11.1
|
%
|
|||
Contracted services
|
523
|
|
476
|
|
47
|
|
9.9
|
%
|
|||
Aircraft maintenance materials and outside repairs
|
518
|
|
449
|
|
69
|
|
15.4
|
%
|
|||
Passenger commissions and other selling expenses
|
404
|
|
388
|
|
16
|
|
4.1
|
%
|
|||
Landing fees and other rents
|
365
|
|
348
|
|
17
|
|
4.9
|
%
|
|||
Passenger service
|
220
|
|
189
|
|
31
|
|
16.4
|
%
|
|||
Profit sharing
|
151
|
|
272
|
|
(121
|
)
|
(44.5
|
)%
|
|||
Aircraft rent
|
84
|
|
66
|
|
18
|
|
27.3
|
%
|
|||
Other
|
467
|
|
493
|
|
(26
|
)
|
(5.3
|
)%
|
|||
Total operating expense
|
$
|
8,095
|
|
$
|
7,711
|
|
$
|
384
|
|
5.0
|
%
|
|
Three Months Ended March 31,
|
Increase (Decrease)
|
% Increase (Decrease)
|
||||||||
(in millions)
|
2017
|
2016
|
|||||||||
Aircraft fuel and related taxes(1)
|
$
|
1,240
|
|
$
|
1,227
|
|
$
|
13
|
|
|
|
Aircraft fuel and related taxes included within regional carriers expense
|
242
|
|
167
|
|
75
|
|
|
||||
Total fuel expense
|
$
|
1,482
|
|
$
|
1,394
|
|
$
|
88
|
|
6.3
|
%
|
(1)
|
Includes the impact of fuel hedging and refinery results described further in the table below.
|
|
|
Average Price Per Gallon
|
||||||||||||||||
|
Three Months Ended March 31,
|
Change
|
Three Months Ended March 31,
|
Change
|
||||||||||||||
(in millions, except per gallon data)
|
2017
|
2016
|
2017
|
2016
|
||||||||||||||
Fuel purchase cost(1)
|
$
|
1,531
|
|
$
|
1,093
|
|
$
|
438
|
|
$
|
1.68
|
|
$
|
1.18
|
|
$
|
0.50
|
|
Airline segment fuel hedge impact(2)
|
(5
|
)
|
273
|
|
(278
|
)
|
(0.01
|
)
|
0.29
|
|
(0.30
|
)
|
||||||
Refinery segment impact(2)
|
(44
|
)
|
28
|
|
(72
|
)
|
(0.05
|
)
|
0.03
|
|
(0.08
|
)
|
||||||
Total fuel expense
|
$
|
1,482
|
|
$
|
1,394
|
|
$
|
88
|
|
$
|
1.62
|
|
$
|
1.50
|
|
$
|
0.12
|
|
MTM adjustments and settlements(3)
|
84
|
|
(155
|
)
|
239
|
|
0.09
|
|
(0.17
|
)
|
0.26
|
|
||||||
Total fuel expense, adjusted
|
$
|
1,566
|
|
$
|
1,239
|
|
$
|
327
|
|
$
|
1.71
|
|
$
|
1.33
|
|
$
|
0.38
|
|
(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 Condensed Consolidated Financial Statements. For additional information and the reason for adjusting fuel expense for MTM adjustments and settlements, see "Supplemental Information" below.
|
Non-Operating Results
|
Three Months Ended March 31,
|
|
|||||||
(in millions)
|
2017
|
2016
|
Favorable/(Unfavorable)
|
||||||
Interest expense, net
|
$
|
(94
|
)
|
$
|
(107
|
)
|
$
|
13
|
|
Miscellaneous, net
|
(44
|
)
|
1
|
|
(45
|
)
|
|||
Total non-operating expense, net
|
$
|
(138
|
)
|
$
|
(106
|
)
|
$
|
(32
|
)
|
|
Three Months Ended March 31,
|
|||||
Consolidated(1)
|
2017
|
2016
|
||||
Revenue passenger miles (in millions)
|
47,952
|
|
47,725
|
|
||
Available seat miles (in millions)
|
57,871
|
|
58,145
|
|
||
Passenger mile yield
|
|
16.03
|
¢
|
|
16.26
|
¢
|
PRASM
|
|
13.28
|
¢
|
|
13.35
|
¢
|
CASM
|
|
13.99
|
¢
|
|
13.26
|
¢
|
CASM-Ex, including profit sharing(2)
|
|
10.92
|
¢
|
|
10.33
|
¢
|
Passenger load factor
|
82.9
|
%
|
82.1
|
%
|
||
Fuel gallons consumed (in millions)
|
918
|
|
930
|
|
||
Average price per fuel gallon(3)
|
$
|
1.62
|
|
$
|
1.50
|
|
Average price per fuel gallon, adjusted(3)(4)
|
$
|
1.71
|
|
$
|
1.33
|
|
Full-time equivalent employees, end of period
|
85,214
|
|
83,817
|
|
(1)
|
Includes the operations of our regional carriers under capacity purchase agreements. Full-time equivalent employees exclude employees of non-owned regional carriers.
|
(2)
|
Non-GAAP financial measure defined and reconciled to CASM in "Supplemental Information" below.
|
(3)
|
Includes the impact of fuel hedge activity and refinery segment results.
|
(4)
|
Non-GAAP financial measure defined and reconciled to average fuel price per gallon in "Results of Operations" for the three months ended March 31, 2017 and 2016.
|
|
Current Fleet(1)
|
|
Commitments
|
||||||||||
Aircraft Type
|
Owned
|
Capital Lease
|
Operating Lease
|
Total
|
Average Age
|
Purchase
|
Options
|
||||||
B-717-200
|
3
|
|
13
|
|
75
|
|
91
|
|
15.6
|
—
|
|
—
|
|
B-737-700
|
10
|
|
—
|
|
—
|
|
10
|
|
8.2
|
—
|
|
—
|
|
B-737-800
|
73
|
|
4
|
|
—
|
|
77
|
|
15.5
|
—
|
|
—
|
|
B-737-900ER
|
44
|
|
—
|
|
31
|
|
75
|
|
1.9
|
55
|
|
—
|
|
B-747-400
|
4
|
|
3
|
|
—
|
|
7
|
|
25.7
|
—
|
|
—
|
|
B-757-200
|
83
|
|
17
|
|
4
|
|
104
|
|
20.0
|
—
|
|
—
|
|
B-757-300
|
16
|
|
—
|
|
—
|
|
16
|
|
14.1
|
—
|
|
—
|
|
B-767-300
|
4
|
|
—
|
|
—
|
|
4
|
|
21.0
|
—
|
|
—
|
|
B-767-300ER
|
54
|
|
4
|
|
—
|
|
58
|
|
21.0
|
—
|
|
—
|
|
B-767-400ER
|
21
|
|
—
|
|
—
|
|
21
|
|
16.1
|
—
|
|
—
|
|
B-777-200ER
|
8
|
|
—
|
|
—
|
|
8
|
|
17.2
|
—
|
|
—
|
|
B-777-200LR
|
10
|
|
—
|
|
—
|
|
10
|
|
8.0
|
—
|
|
—
|
|
A319-100
|
55
|
|
—
|
|
2
|
|
57
|
|
15.1
|
—
|
|
—
|
|
A320-200
|
61
|
|
—
|
|
7
|
|
68
|
|
22.0
|
—
|
|
—
|
|
A321-200
|
8
|
|
—
|
|
10
|
|
18
|
|
0.6
|
64
|
|
—
|
|
A330-200
|
11
|
|
—
|
|
—
|
|
11
|
|
12.0
|
—
|
|
—
|
|
A330-300
|
27
|
|
—
|
|
3
|
|
30
|
|
8.5
|
1
|
|
—
|
|
A330-900neo
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
25
|
|
—
|
|
A350-900
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
25
|
|
—
|
|
CS100
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
75
|
|
50
|
|
MD-88
|
93
|
|
23
|
|
—
|
|
116
|
|
26.7
|
—
|
|
—
|
|
MD-90
|
65
|
|
—
|
|
—
|
|
65
|
|
20.1
|
—
|
|
—
|
|
Total
|
650
|
|
64
|
|
132
|
|
846
|
|
16.9
|
245
|
|
50
|
|
(1)
|
Excludes certain aircraft we own or lease, which are operated by regional carriers on our behalf and are shown in the table below.
|
|
Fleet Type
|
|
||||||||||
Carrier
|
CRJ-200
|
CRJ-700
|
CRJ-900
|
Embraer 170
|
Embraer 175
|
Total
|
||||||
Endeavor Air, Inc.(1)
|
57
|
|
—
|
|
81
|
|
—
|
|
—
|
|
138
|
|
ExpressJet Airlines, Inc.
|
32
|
|
35
|
|
28
|
|
—
|
|
—
|
|
95
|
|
SkyWest Airlines, Inc.
|
61
|
|
27
|
|
36
|
|
—
|
|
13
|
|
137
|
|
Compass Airlines, Inc.
|
—
|
|
—
|
|
—
|
|
4
|
|
36
|
|
40
|
|
Republic Airline, Inc.
|
—
|
|
—
|
|
—
|
|
16
|
|
16
|
|
32
|
|
GoJet Airlines, LLC
|
—
|
|
22
|
|
7
|
|
—
|
|
—
|
|
29
|
|
Total
|
150
|
|
84
|
|
152
|
|
20
|
|
65
|
|
471
|
|
(1)
|
Endeavor Air, Inc. is a wholly owned subsidiary of Delta.
|
(in millions, except average repurchase price)
|
Share Repurchase Authorization
|
Average Repurchase Price
|
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
|
|
$
|
44.25
|
|
December 31, 2017
|
|
$
|
1,150
|
|
•
|
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.
|
•
|
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.
|
|
Three Months Ended March 31,
|
|||||
|
2017
|
2016
|
||||
CASM
|
|
13.99
|
¢
|
|
13.26
|
¢
|
Adjusted for:
|
|
|
||||
Aircraft fuel and related taxes
|
(2.56
|
)
|
(2.40
|
)
|
||
Other expenses
|
(0.51
|
)
|
(0.53
|
)
|
||
CASM-Ex, including profit sharing
|
|
10.92
|
¢
|
|
10.33
|
¢
|
Period
|
Total Number of Shares Purchased
|
Average Price Paid Per Share
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
Approximate Dollar Value (in millions) of Shares That May
Yet be Purchased Under the
Plan or Programs
|
|||||||
January 2017
|
12,519
|
|
$
|
49.18
|
|
12,519
|
|
|
$
|
1,350
|
|
February 2017
|
2,076,062
|
|
$
|
49.63
|
|
2,076,062
|
|
|
$
|
1,275
|
|
March 2017
|
2,695,608
|
|
$
|
47.93
|
|
2,695,608
|
|
|
$
|
1,150
|
|
Total
|
4,784,189
|
|
|
4,784,189
|
|
|
|
10.1
|
10.2
|
10.3
|
15
|
31.1
|
31.2
|
32
|
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
|
|
Delta Air Lines, Inc.
|
|
(Registrant)
|
|
|
|
/s/ Craig M. Meynard
|
|
Craig M. Meynard
|
|
Vice President and Chief Accounting Officer
|
|
(Principal Accounting Officer)
|
April 12, 2017
|
|
DELTA AIR LINES, INC.
By /s/ Gregory A. May
Its Supply Chain Management & Fleet
|
THE BOEING COMPANY
By /s/ Will Witherspoon
Its Attorney in Fact
|
[***]
|
[***]
|
[***]
|
DAL‑PA‑2022‑LA-1104482R1
|
[***] for 737‑932ER Aircraft
|
SA‑17
|
DAL‑PA‑2022‑LA‑1104483
|
[***] Guarantee
|
SA-13
|
DAL‑PA‑2022‑LA‑1104484
|
Open Configuration Matters for 737‑932ER Aircraft
|
SA-13
|
DAL‑PA‑02022‑LA‑1104485
|
[***] Guarantees for 737‑932ER Aircraft
|
SA-13
|
DAL-PA-2022-LA-1105848R1
|
Agreement for [***] Guarantee
|
SA-17
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
DAL-PA-2022-LA-1105858R1
|
Option Aircraft
|
SA-17
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
DAL-PA-2022-LA-09503
|
Promotional Support
|
SA-14
|
[***]
|
[***]
|
[***]
|
DAL-PA-2022-LA-1501328R1
|
Put Option Aircraft
|
SA-20
|
Airframe Model/MTOW:
|
737-900ER
|
[***]
|
|
|
|
|
|
[***]
|
[***]
|
||
Engine Model/Thrust:
|
CFM56-7B27/B1F
|
[***]
|
|
|
Detail Specification:
|
[***]
|
[***]
|
||||
|
|
|
[***]
|
[***]
|
|
Airframe Price Base Year/Escalation Formula:
|
[***]
|
[***]
|
|||
Airframe Price:
|
|
[***]
|
[***]
|
|
Airframe Price Escalation Forecast:
|
[***]
|
[***]
|
||||
Optional Features:
|
|
[***]
|
[***]
|
|
Engine Price Base Year/Escalation Formula:
|
[***]
|
[***]
|
||||
Sub-Total of Airframe and Features:
|
[***]
|
[***]
|
|
|
|
|
|
|
|
||
Engine Price (Per Aircraft):
|
|
[***]
|
[***]
|
|
|
|
|
|
|
|
|
Aircraft Basic Price (Excluding BFE/SPE):
|
[***]
|
[***]
|
|
Airframe Escalation Data:
|
|
|
|
||||
Buyer Furnished Equipment (BFE) Estimate:
|
[***]
|
[***]
|
|
Base Year Index (ECI):
|
|
[***]
|
|
|
|||
Seller Purchased Equipment (SPE) Estimate:
|
[***]
|
[***]
|
|
Base Year Index (CPI):
|
|
[***]
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
[***]
|
|
|
[***]
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Escalation
|
|
|
Escalation Estimate
|
[***] (Amts. Due/Mos. Prior to Delivery):
|
|||||
Delivery
|
Number of
|
Factor
|
|
|
Adv Payment Base
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
Date
|
Aircraft
|
(Airframe)
|
|
|
Price Per A/P
|
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
|
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
|
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
|
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
|
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
|
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
|
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
|
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
|
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
|
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
Airframe Model/MTOW:
|
737-900ER
|
[***]
|
|
|
|
|
|
[***]
|
[***]
|
||
Engine Model/Thrust:
|
CFM56-7B27/B1F
|
[***]
|
|
|
Detail Specification:
|
[***]
|
[***]
|
||||
|
|
|
[***]
|
[***]
|
|
Airframe Price Base Year/Escalation Formula:
|
[***]
|
[***]
|
|||
Airframe Price:
|
|
[***]
|
[***]
|
|
Airframe Price Escalation Forecast:
|
[***]
|
[***]
|
||||
Optional Features:
|
|
[***]
|
[***]
|
|
Engine Price Base Year/Escalation Formula:
|
[***]
|
[***]
|
||||
Sub-Total of Airframe and Features:
|
[***]
|
[***]
|
|
|
|
|
|
|
|
||
Engine Price (Per Aircraft):
|
|
[***]
|
[***]
|
|
|
|
|
|
|
|
|
Aircraft Basic Price (Excluding BFE/SPE):
|
[***]
|
[***]
|
|
Airframe Escalation Data:
|
|
|
|
||||
Buyer Furnished Equipment (BFE) Estimate:
|
[***]
|
[***]
|
|
Base Year Index (ECI):
|
|
[***]
|
|
|
|||
Seller Purchased Equipment (SPE) Estimate:
|
[***]
|
[***]
|
|
Base Year Index (CPI):
|
|
[***]
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
[***]
|
|
|
[***]
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Escalation
|
|
|
Escalation Estimate
|
[***] (Amts. Due/Mos. Prior to Delivery):
|
|||||
Delivery
|
Number of
|
Factor
|
|
|
Adv Payment Base
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
Date
|
Aircraft
|
(Airframe)
|
|
|
Price Per A/P
|
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
|
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
|
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
|
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
|
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
|
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
|
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
|
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
|
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
Airframe Model/MTOW:
|
737-900ER
|
[***]
|
|
|
|
|
|
[***]
|
[***]
|
[***]
|
|
Engine Model/Thrust:
|
CFM56-7B27/B1F
|
[***]
|
|
|
Detail Specification:
|
|
[***]
|
[***]
|
[***]
|
||
|
|
|
[***]
|
[***]
|
|
Airframe Price Base Year/Escalation Formula:
|
[***]
|
[***]
|
[***]
|
||
Airframe Price:
|
|
[***]
|
[***]
|
|
Airframe Price Escalation Forecast:
|
[***]
|
[***]
|
[***]
|
|||
Optional Features:
|
|
[***]
|
[***]
|
|
Engine Price Base Year/Escalation Formula:
|
[***]
|
[***]
|
[***]
|
|||
Sub-Total of Airframe and Features:
|
[***]
|
[***]
|
|
|
|
|
|
|
|
||
Engine Price (Per Aircraft):
|
|
[***]
|
[***]
|
|
|
|
|
|
|
|
|
Aircraft Basic Price (Excluding BFE/SPE):
|
[***]
|
[***]
|
|
Airframe Escalation Data:
|
|
|
|
|
|||
Buyer Furnished Equipment (BFE) Estimate:
|
[***]
|
[***]
|
|
Base Year Index (ECI):
|
|
[***]
|
|
|
|||
Seller Purchased Equipment (SPE) Estimate:
|
[***]
|
[***]
|
|
Base Year Index (CPI):
|
|
[***]
|
|
|
|||
|
|
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|
[***]
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[***]
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|
|
|
|
|
|
|
|
|
Escalation
|
|
|
Escalation Estimate
|
[***] (Amts. Due/Mos. Prior to Delivery):
|
|||||
Delivery
|
Number of
|
Factor
|
|
|
Adv Payment Base
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
Date
|
Aircraft
|
(Airframe)
|
|
|
Price Per A/P
|
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
|
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[***]
|
[***]
|
[***]
|
[***]
|
[***]
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[***]
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[***]
|
[***]
|
[***]
|
[***]
|
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|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
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[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
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[***]
|
[***]
|
[***]
|
[***]
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[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
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|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
|
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
|
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
|
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
|
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
|
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
Subject:
|
[***]
|
Reference:
|
Purchase Agreement No. PA-02022 (Purchase Agreement) between The Boeing Company (Boeing) and Delta Air Lines, Inc. (Customer) relating to Model 737-900ER aircraft (Aircraft)
|
THE BOEING COMPANY
|
||
|
||
By
|
/s/ Will Witherspoon
|
|
|
||
Its
|
Attorney-In-Fact
|
|
|
||
ACCEPTED AND AGREED TO this
|
||
|
||
Date:
|
March 30, 2017
|
|
|
||
DELTA AIR LINES, INC.
|
||
|
||
By
|
/s/ Gregory A. May
|
|
|
||
Its
|
Senior Vice President – Supply Chain Management and Fleet
|
[***]
|
[***]
|
[***]
|
[***]
|
|
|
[***]
|
[***]
|
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|
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|
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|
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|
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|
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|
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|
[***]
|
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Subject:
|
Put Option Aircraft
|
Reference:
|
Purchase Agreement No. PA-02022 (Purchase Agreement) between The Boeing Company (Boeing) and Delta Air Lines, Inc. (Customer) relating to Model 737-900ER aircraft (Aircraft)
|
THE BOEING COMPANY
|
||
|
||
By
|
/s/ Will Witherspoon
|
|
|
||
Its
|
Attorney-In-Fact
|
|
|
||
ACCEPTED AND AGREED TO this
|
||
|
||
Date:
|
March 30, 2017
|
|
|
||
DELTA AIR LINES, INC.
|
||
|
||
By
|
/s/ Gregory A. May
|
|
|
||
Its
|
Senior Vice President - Supply Chain Management and Fleet
|
(i)
|
You hereby acknowledge that during the term of your employment with Delta Air Lines, Inc., its subsidiaries and affiliates (“Delta”), you have acquired and will continue to acquire knowledge of secret, confidential and proprietary information regarding Delta and its business that fits within the definition of “trade secrets” under the law of the State of Georgia and/or the law of the United States, including, without limitation, information regarding Delta’s present and future operations, its financial operations, marketing plans and strategies, alliance agreements and relationships, its compensation and incentive programs for employees, the business methods used by Delta and its employees and other information which derives
|
(ii)
|
You are notified by the virtue of this provision that federal law provides for immunity from liability for confidential disclosure of a trade secret as defined by federal law that is made (A) in confidence to a federal, state or local government official, either directly or indirectly, or to an attorney if that disclosure is made solely for the purpose of reporting or investigating a suspected violation of law or (B) in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.
|
(i)
|
You acknowledge and agree with the following:
|
(A)
|
Delta competes in a worldwide air transportation market that includes passenger transportation and services, air cargo services, repair and maintenance of aircraft and staffing services for third parties, vacation wholesale, refinery and private jet operations, and Delta’s business is both domestic and international in scope;
|
(B)
|
the airlines listed or described below and the related businesses listed on Exhibit 1 hereto are particular competitors to Delta and your employment or consulting with any of the listed or described entities would create more harm to Delta than would your possible employment or consulting with other companies;
|
(C)
|
you have been and are closely involved in the planning for or the direction of critical components of Delta’s operation and business and have developed or supplemented your expertise and skills as the result of such activities with Delta, and the use of such skills or disclosure of the details of such skills or knowledge to a competitor of Delta would be detrimental to Delta’s legitimate business interests; and
|
(D)
|
the restrictions imposed by this Section 2(d) will not prevent you from earning a livelihood, given both the broad demand for the type of skills you possess as well as the large number of worldwide and domestic passenger and cargo air carriers and related businesses not included in Section 2(d)(ii) or Exhibit 1 hereto.
|
(ii)
|
During the term of your employment with Delta and for the two-year period following the termination of such employment, you will not on your own behalf or on behalf of any person, firm, partnership, association, corporation or business organization, entity or enterprise, whether as an employee, consultant, partner or in any other capacity, provide services that are the same or similar to the services of the type conducted, authorized, offered or provided by either you or any other executive, key or professional employee of Delta or any of its subsidiaries/divisions on the Grant Date (or within two years prior to your termination of employment), to:
|
(A)
|
any of the following entities (including any successors thereto), any airline alliances (including Star Alliance and Oneworld) or airline industry associations (including Airlines for America and International Air Transport Association) in which such entity participates and any partially or wholly owned subsidiary or joint venture of such entity that operates an airline or a business operated by Delta as of the Grant Date: Alaska Air Group, Inc.,
|
(B)
|
any passenger or cargo air carrier that is more than 25% owned by Emirates Group, Qatar Airways or Etihad Airways P.J.S.C.;
|
(C)
|
if not included in clause (A) or (B) above, any foreign air carrier that operates passenger or cargo service into the United States or its territories more than 35 flights per week for more than six months in any rolling 12-month period; provided, however, this clause (C) shall not apply to employment by Delta profit sharing joint venture partners Air France KLM Group or Virgin Atlantic Airways Limited, but shall apply to Campagnia Aerea Italiana S.p.A. (Alitalia); or
|
(D)
|
any of the entities listed on Exhibit 1 hereto, provided that you (1) are employed by a Delta subsidiary or you have a significant role with and spend more than 75% of your time providing services to a Delta subsidiary or (2) are employed in Delta’s TechOps or Delta Connection division.
|
DELTA AIR LINES, INC.
|
|
|
|
By:
|
|
|
Name: Robert L. Kight
Title: Senior Vice President–Human Resources |
|
|
PARTICIPANT
|
|
|
Date:
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Delta Air Lines, Inc. ("Delta") for the quarterly period ended March 31, 2017;
|
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.
|
April 12, 2017
|
/s/ Edward H. Bastian
|
|
Edward H. Bastian
|
|
Chief Executive Officer
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Delta Air Lines, Inc. ("Delta") for the quarterly period ended March 31, 2017;
|
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.
|
April 12, 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
|
|
|