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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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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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July 13, 2017
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(in millions, except share data)
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June 30,
2017 |
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December 31,
2016 |
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ASSETS
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|||||||
Current Assets:
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||||
Cash and cash equivalents
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$
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2,241
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|
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$
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2,762
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Short-term investments
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747
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|
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487
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Accounts receivable, net of an allowance for uncollectible accounts of $11 and $15 at June 30, 2017
and December 31, 2016, respectively
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2,164
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2,064
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Fuel inventory
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537
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519
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Expendable parts and supplies inventories, net of an allowance for obsolescence of $119 and $110
at June 30, 2017 and December 31, 2016, respectively
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401
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372
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Prepaid expenses and other
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1,087
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1,247
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Total current assets
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7,177
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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 $13,336 and $12,456
at June 30, 2017 and December 31, 2016, respectively
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25,367
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24,375
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Other Assets:
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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 $837 and $828 at June 30, 2017
and December 31, 2016, respectively
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4,855
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4,844
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Deferred income taxes, net
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2,077
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3,064
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Other noncurrent assets
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2,545
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1,733
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Total other assets
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19,271
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19,435
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Total assets
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$
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51,815
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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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||||
Current maturities of long-term debt and capital leases
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$
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1,098
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$
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1,131
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Air traffic liability
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6,365
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4,626
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Accounts payable
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2,726
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2,572
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Accrued salaries and related benefits
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2,259
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|
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2,924
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Frequent flyer deferred revenue
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1,726
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1,648
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Other accrued liabilities
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2,457
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2,338
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Total current liabilities
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16,631
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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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7,916
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6,201
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Pension, postretirement and related benefits
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9,623
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13,378
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Frequent flyer deferred revenue
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2,281
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2,278
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Other noncurrent liabilities
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1,885
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1,878
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Total noncurrent liabilities
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21,705
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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 $0.0001 par value; 1,500,000,000 shares authorized, 731,451,949 and 744,886,938
shares issued at June 30, 2017 and December 31, 2016, respectively
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—
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—
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Additional paid-in capital
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12,279
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|
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12,294
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Retained earnings
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8,905
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7,903
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Accumulated other comprehensive loss
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(7,549
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)
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(7,636
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)
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Treasury stock, at cost, 7,421,731 and 14,149,229 shares at June 30, 2017 and December 31, 2016,
respectively
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(156
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)
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(274
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)
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Total stockholders' equity
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13,479
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12,287
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Total liabilities and stockholders' equity
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$
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51,815
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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 June 30,
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Six Months Ended June 30,
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||||||||||||
(in millions, except per share data)
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2017
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2016
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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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7,699
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$
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7,471
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$
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14,103
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$
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13,915
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Regional carriers
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1,532
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1,499
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2,816
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|
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2,817
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Total passenger revenue
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9,231
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8,970
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|
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16,919
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|
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16,732
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Cargo
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183
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|
|
165
|
|
|
343
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|
|
327
|
|
||||
Other
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1,377
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|
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1,312
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|
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2,677
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|
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2,639
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Total operating revenue
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10,791
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|
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10,447
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|
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19,939
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19,698
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Operating Expense:
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Salaries and related costs
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2,616
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2,391
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5,089
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4,702
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Aircraft fuel and related taxes
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1,448
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1,228
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2,688
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2,455
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Regional carriers expense
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1,081
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1,096
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2,191
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|
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2,102
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Depreciation and amortization
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535
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|
|
470
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1,075
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|
|
956
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Contracted services
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543
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484
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1,066
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|
960
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Aircraft maintenance materials and outside repairs
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475
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446
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993
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895
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|
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Passenger commissions and other selling expenses
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458
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437
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862
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|
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825
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|
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Landing fees and other rents
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379
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|
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376
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|
|
744
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|
|
724
|
|
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Passenger service
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271
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|
|
221
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|
|
491
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|
|
410
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|
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Profit sharing
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338
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|
|
324
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|
|
489
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|
|
596
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|
||||
Aircraft rent
|
86
|
|
|
66
|
|
|
170
|
|
|
132
|
|
||||
Other
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533
|
|
|
485
|
|
|
1,000
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|
|
978
|
|
||||
Total operating expense
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8,763
|
|
|
8,024
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|
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16,858
|
|
|
15,735
|
|
||||
|
|
|
|
|
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||||||||
Operating Income
|
2,028
|
|
|
2,423
|
|
|
3,081
|
|
|
3,963
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|
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|
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|
|
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||||||||
Non-Operating Expense:
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|
|
|
|
|
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||||||||
Interest expense, net
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(103
|
)
|
|
(93
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)
|
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(197
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)
|
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(200
|
)
|
||||
Miscellaneous, net
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(34
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)
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|
20
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|
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(78
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)
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|
21
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|
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Total non-operating expense, net
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(137
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)
|
|
(73
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)
|
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(275
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)
|
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(179
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)
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|
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Income Before Income Taxes
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1,891
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|
|
2,350
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|
|
2,806
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|
|
3,784
|
|
||||
|
|
|
|
|
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Income Tax Provision
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(667
|
)
|
|
(804
|
)
|
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(979
|
)
|
|
(1,292
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Net Income
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$
|
1,224
|
|
|
$
|
1,546
|
|
|
$
|
1,827
|
|
|
$
|
2,492
|
|
|
|
|
|
|
|
|
|
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Basic Earnings Per Share
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$
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1.68
|
|
|
$
|
2.04
|
|
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$
|
2.51
|
|
|
$
|
3.25
|
|
Diluted Earnings Per Share
|
$
|
1.68
|
|
|
$
|
2.03
|
|
|
$
|
2.50
|
|
|
$
|
3.23
|
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Cash Dividends Declared Per Share
|
$
|
0.20
|
|
|
$
|
0.14
|
|
|
$
|
0.41
|
|
|
$
|
0.27
|
|
|
|
|
|
|
|
|
|
||||||||
Comprehensive Income
|
$
|
1,246
|
|
|
$
|
1,546
|
|
|
$
|
1,914
|
|
|
$
|
2,488
|
|
|
|
|
|
|
|
|
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||||||||
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
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Six Months Ended June 30,
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||||||
(in millions)
|
2017
|
|
2016
|
||||
Net Cash Provided by Operating Activities
|
$
|
1,585
|
|
|
$
|
4,226
|
|
|
|
|
|
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Cash Flows from Investing Activities:
|
|
|
|
||||
Property and equipment additions:
|
|
|
|
||||
Flight equipment, including advance payments
|
(1,292
|
)
|
|
(1,644
|
)
|
||
Ground property and equipment, including technology
|
(498
|
)
|
|
(273
|
)
|
||
Purchase of equity investments
|
(622
|
)
|
|
—
|
|
||
Purchase of short-term investments
|
(567
|
)
|
|
(866
|
)
|
||
Redemption of short-term investments
|
307
|
|
|
1,051
|
|
||
Other, net
|
(40
|
)
|
|
19
|
|
||
Net cash used in investing activities
|
(2,712
|
)
|
|
(1,713
|
)
|
||
|
|
|
|
||||
Cash Flows from Financing Activities:
|
|
|
|
||||
Payments on long-term debt and capital lease obligations
|
(564
|
)
|
|
(1,149
|
)
|
||
Repurchase of common stock
|
(800
|
)
|
|
(1,801
|
)
|
||
Cash dividends
|
(297
|
)
|
|
(210
|
)
|
||
Fuel card obligation
|
341
|
|
|
4
|
|
||
Proceeds from long-term obligations
|
2,004
|
|
|
450
|
|
||
Other, net
|
(78
|
)
|
|
(117
|
)
|
||
Net cash provided by (used in) financing activities
|
606
|
|
|
(2,823
|
)
|
||
|
|
|
|
||||
Net Decrease in Cash and Cash Equivalents
|
(521
|
)
|
|
(310
|
)
|
||
Cash and cash equivalents at beginning of period
|
2,762
|
|
|
1,972
|
|
||
Cash and cash equivalents at end of period
|
$
|
2,241
|
|
|
$
|
1,662
|
|
|
|
|
|
||||
Non-Cash Transactions:
|
|
|
|
||||
Treasury stock contributed to our qualified defined benefit pension plans
|
$
|
350
|
|
|
$
|
350
|
|
Flight and ground equipment acquired under capital leases
|
208
|
|
|
50
|
|
||
|
|
|
|
||||
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
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(in millions)
|
June 30,
2017 |
Level 1
|
Level 2
|
||||||
Cash equivalents
|
$
|
1,720
|
|
$
|
1,720
|
|
$
|
—
|
|
Short-term investments
|
|
|
|
||||||
U.S. government and agency securities
|
103
|
|
96
|
|
7
|
|
|||
Asset- and mortgage-backed securities
|
158
|
|
—
|
|
158
|
|
|||
Corporate obligations
|
405
|
|
—
|
|
405
|
|
|||
Other fixed income securities
|
81
|
|
—
|
|
81
|
|
|||
Restricted cash equivalents and investments
|
63
|
|
63
|
|
—
|
|
|||
Long-term investments
|
133
|
|
107
|
|
26
|
|
|||
Hedge derivatives, net
|
|
|
|
||||||
Fuel hedge contracts
|
(203
|
)
|
(52
|
)
|
(151
|
)
|
|||
Interest rate contract
|
(4
|
)
|
—
|
|
(4
|
)
|
|||
Foreign currency exchange contracts
|
(7
|
)
|
—
|
|
(7
|
)
|
(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
|
|
•
|
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 25% to 33% 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
|
$
|
239
|
|
||
Due after one year through three years
|
438
|
|
|||
Due after three years through five years
|
51
|
|
|||
Due after five years
|
19
|
|
|||
Total
|
$
|
747
|
|
•
|
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 non-operating expense in our Condensed Consolidated Statements of Operations and Comprehensive Income.
|
•
|
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 original cost of our investment.
|
•
|
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 when we will be within one year of the lapse of the restrictions. 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 June 30, 2017, China Eastern's stock traded 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
|
|
$
|
(5
|
)
|
$
|
—
|
|
$
|
(4
|
)
|
Foreign currency exchange contracts
|
44,493
|
|
Japanese yen
|
November 2019
|
11
|
|
—
|
|
(12
|
)
|
(6
|
)
|
(7
|
)
|
|||||
532
|
|
Canadian dollars
|
April 2020
|
||||||||||||||||
Not designated as hedges
|
|
|
|
|
|
|
|
|
|||||||||||
Fuel hedge contracts (1)
|
231
|
|
gallons - crude oil, diesel and jet fuel
|
December 2018
|
152
|
|
—
|
|
(355
|
)
|
—
|
|
(203
|
)
|
|||||
Total derivative contracts
|
|
|
$
|
163
|
|
$
|
1
|
|
$
|
(372
|
)
|
$
|
(6
|
)
|
$
|
(214
|
)
|
(1)
|
As discussed above, during 2016, we entered into fuel 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 fuel 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
|
||||||||||
June 30, 2017
|
|
|
|
|
|
||||||||||
Net derivative contracts
|
$
|
7
|
|
$
|
1
|
|
$
|
(216
|
)
|
$
|
(6
|
)
|
$
|
(214
|
)
|
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 June 30,
|
|
|
|
|
|
||||||||
Foreign currency exchange contracts
|
$
|
4
|
|
$
|
12
|
|
|
$
|
(8
|
)
|
$
|
(63
|
)
|
Six Months Ended June 30,
|
|
|
|
|
|
||||||||
Foreign currency exchange contracts
|
$
|
11
|
|
$
|
36
|
|
|
$
|
(33
|
)
|
$
|
(145
|
)
|
(in millions)
|
June 30,
2017 |
December 31,
2016 |
||||
Total debt at par value
|
$
|
8,678
|
|
$
|
7,112
|
|
Unamortized discount and debt issue cost, net
|
(108
|
)
|
(104
|
)
|
||
Net carrying amount
|
$
|
8,570
|
|
$
|
7,008
|
|
|
|
|
||||
Fair value
|
$
|
8,900
|
|
$
|
7,300
|
|
|
Pension Benefits
|
Other Postretirement and Postemployment Benefits
|
||||||||||
(in millions)
|
2017
|
2016
|
2017
|
2016
|
||||||||
Three Months Ended June 30,
|
|
|
|
|
||||||||
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
|
|
|
|
|
|
|
||||||||
Six Months Ended June 30,
|
|
|
|
|
||||||||
Service cost
|
$
|
—
|
|
$
|
—
|
|
$
|
44
|
|
$
|
34
|
|
Interest cost
|
426
|
|
458
|
|
70
|
|
74
|
|
||||
Expected return on plan assets
|
(572
|
)
|
(452
|
)
|
(34
|
)
|
(36
|
)
|
||||
Amortization of prior service credit
|
—
|
|
—
|
|
(14
|
)
|
(14
|
)
|
||||
Recognized net actuarial loss
|
132
|
|
118
|
|
16
|
|
12
|
|
||||
Net (benefit) cost
|
$
|
(14
|
)
|
$
|
124
|
|
$
|
82
|
|
$
|
70
|
|
(in millions)
|
Total
|
||
Six months ending December 31, 2017
|
$
|
1,620
|
|
2018
|
3,490
|
|
|
2019
|
3,070
|
|
|
2020
|
2,150
|
|
|
2021
|
2,080
|
|
|
Thereafter
|
1,290
|
|
|
Total
|
$
|
13,700
|
|
Aircraft Type
|
|
Purchase Commitments
|
|
B-737-900ER
|
|
51
|
|
A321-200
|
|
100
|
|
A330-900neo
|
|
25
|
|
A350-900
|
|
25
|
|
CS100
|
|
75
|
|
Total
|
|
276
|
|
(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 $6)
|
—
|
|
(14
|
)
|
32
|
|
18
|
|
||||
Reclassifications into earnings (net of tax effect of $40)(1)
|
83
|
|
(7
|
)
|
(7
|
)
|
69
|
|
||||
Balance at June 30, 2017 (net of tax effect of $1,424)
|
$
|
(7,631
|
)
|
$
|
76
|
|
$
|
6
|
|
$
|
(7,549
|
)
|
(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 $42)
|
—
|
|
(69
|
)
|
16
|
|
(53
|
)
|
||||
Reclassifications into earnings (net of tax effect of $29)(1)
|
72
|
|
(23
|
)
|
—
|
|
49
|
|
||||
Balance at June 30, 2016 (net of tax effect of $1,235)
|
$
|
(7,282
|
)
|
$
|
48
|
|
$
|
(45
|
)
|
$
|
(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 June 30, 2017
|
|
|
|
|
|
|
||||||||
Operating revenue:
|
$
|
10,724
|
|
$
|
1,139
|
|
|
|
|
$
|
10,791
|
|
||
Sales to airline segment
|
|
|
|
$
|
(193
|
)
|
(1)
|
|
||||||
Exchanged products
|
|
|
|
(756
|
)
|
(2)
|
|
|||||||
Sales of refined products
|
|
|
|
(123
|
)
|
(3)
|
|
|||||||
Operating income(4)
|
2,022
|
|
6
|
|
|
—
|
|
|
2,028
|
|
||||
Interest expense, net
|
103
|
|
—
|
|
|
—
|
|
|
103
|
|
||||
Depreciation and amortization
|
524
|
|
11
|
|
|
—
|
|
|
535
|
|
||||
Total assets, end of period
|
50,328
|
|
1,487
|
|
|
—
|
|
|
51,815
|
|
||||
Capital expenditures
|
928
|
|
60
|
|
|
—
|
|
|
988
|
|
||||
|
|
|
|
|
|
|
||||||||
Three Months Ended June 30, 2016
|
|
|
|
|
|
|
||||||||
Operating revenue:
|
$
|
10,398
|
|
$
|
1,027
|
|
|
|
|
$
|
10,447
|
|
||
Sales to airline segment
|
|
|
|
$
|
(178
|
)
|
(1)
|
|
||||||
Exchanged products
|
|
|
|
(745
|
)
|
(2)
|
|
|||||||
Sales of refined products
|
|
|
|
(55
|
)
|
(3)
|
|
|||||||
Operating income (loss)(4)
|
2,433
|
|
(10
|
)
|
|
—
|
|
|
2,423
|
|
||||
Interest expense, net
|
92
|
|
1
|
|
|
—
|
|
|
93
|
|
||||
Depreciation and amortization
|
461
|
|
9
|
|
|
—
|
|
|
470
|
|
||||
Total assets, end of period
|
50,213
|
|
1,421
|
|
|
—
|
|
|
51,634
|
|
||||
Capital expenditures
|
1,026
|
|
20
|
|
|
—
|
|
|
1,046
|
|
(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)
|
Airline
|
Refinery
|
|
Intersegment Sales/Other
|
|
Consolidated
|
||||||||
Six Months Ended June 30, 2017
|
|
|
|
|
|
|
||||||||
Operating revenue:
|
$
|
19,811
|
|
$
|
2,267
|
|
|
|
|
$
|
19,939
|
|
||
Sales to airline segment
|
|
|
|
$
|
(383
|
)
|
(1)
|
|
||||||
Exchanged products
|
|
|
|
(1,489
|
)
|
(2)
|
|
|||||||
Sales of refined products
|
|
|
|
(267
|
)
|
(3)
|
|
|||||||
Operating income(4)
|
3,031
|
|
50
|
|
|
—
|
|
|
3,081
|
|
||||
Interest expense, net
|
197
|
|
—
|
|
|
—
|
|
|
197
|
|
||||
Depreciation and amortization
|
1,054
|
|
21
|
|
|
—
|
|
|
1,075
|
|
||||
Capital expenditures
|
1,704
|
|
86
|
|
|
—
|
|
|
1,790
|
|
||||
|
|
|
|
|
|
|
||||||||
Six Months Ended June 30, 2016
|
|
|
|
|
|
|
||||||||
Operating revenue:
|
$
|
19,570
|
|
$
|
1,792
|
|
|
|
|
$
|
19,698
|
|
||
Sales to airline segment
|
|
|
|
$
|
(322
|
)
|
(1)
|
|
||||||
Exchanged products
|
|
|
|
(1,271
|
)
|
(2)
|
|
|||||||
Sales of refined products
|
|
|
|
(71
|
)
|
(3)
|
|
|||||||
Operating income (loss)(4)
|
4,001
|
|
(38
|
)
|
|
—
|
|
|
3,963
|
|
||||
Interest expense, net
|
199
|
|
1
|
|
|
—
|
|
|
200
|
|
||||
Depreciation and amortization
|
938
|
|
18
|
|
|
—
|
|
|
956
|
|
||||
Capital expenditures
|
1,884
|
|
33
|
|
|
—
|
|
|
1,917
|
|
(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
|
(47
|
)
|
|
Additional expenses and other
|
(10
|
)
|
|
Liability as of June 30, 2017
|
$
|
272
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||
(in millions, except per share data)
|
2017
|
2016
|
|
2017
|
2016
|
||||||||
Net income
|
$
|
1,224
|
|
$
|
1,546
|
|
|
$
|
1,827
|
|
$
|
2,492
|
|
|
|
|
|
|
|
||||||||
Basic weighted average shares outstanding
|
728
|
|
758
|
|
|
728
|
|
766
|
|
||||
Dilutive effect of share-based awards
|
3
|
|
5
|
|
|
3
|
|
6
|
|
||||
Diluted weighted average shares outstanding
|
731
|
|
763
|
|
|
731
|
|
772
|
|
||||
|
|
|
|
|
|
||||||||
Basic earnings per share
|
$
|
1.68
|
|
$
|
2.04
|
|
|
$
|
2.51
|
|
$
|
3.25
|
|
Diluted earnings per share
|
$
|
1.68
|
|
$
|
2.03
|
|
|
$
|
2.50
|
|
$
|
3.23
|
|
|
Three Months Ended June 30,
|
Increase (Decrease)
|
% Increase (Decrease)
|
||||||||
(in millions)
|
2017
|
2016
|
|||||||||
Passenger:
|
|
|
|
|
|||||||
Mainline
|
$
|
7,699
|
|
$
|
7,471
|
|
$
|
228
|
|
3.1
|
%
|
Regional carriers
|
1,532
|
|
1,499
|
|
33
|
|
2.2
|
%
|
|||
Total passenger revenue
|
9,231
|
|
8,970
|
|
261
|
|
2.9
|
%
|
|||
Cargo
|
183
|
|
165
|
|
18
|
|
10.9
|
%
|
|||
Other
|
1,377
|
|
1,312
|
|
65
|
|
4.9
|
%
|
|||
Total operating revenue
|
$
|
10,791
|
|
$
|
10,447
|
|
$
|
344
|
|
3.3
|
%
|
|
|
Increase (Decrease)
vs. Three Months Ended June 30, 2016
|
||||||||||||||
(in millions)
|
Three Months Ended June 30, 2017
|
Passenger Revenue
|
RPMs (Traffic)
|
ASMs (Capacity)
|
Passenger Mile Yield
|
PRASM
|
Load Factor
|
|||||||||
Mainline
|
$
|
4,962
|
|
5.1
|
%
|
3.1
|
%
|
2.5
|
%
|
1.9
|
%
|
2.5
|
%
|
0.6
|
|
pts
|
Regional carriers
|
1,532
|
|
2.2
|
%
|
(2.3
|
)%
|
(2.8
|
)%
|
4.6
|
%
|
5.1
|
%
|
0.4
|
|
pts
|
|
Domestic
|
6,494
|
|
4.4
|
%
|
2.3
|
%
|
1.6
|
%
|
2.1
|
%
|
2.8
|
%
|
0.6
|
|
pts
|
|
Atlantic
|
1,501
|
|
(0.6
|
)%
|
7.0
|
%
|
1.3
|
%
|
(7.1
|
)%
|
(1.9
|
)%
|
4.5
|
|
pts
|
|
Pacific
|
578
|
|
(12.9
|
)%
|
(12.8
|
)%
|
(10.9
|
)%
|
(0.1
|
)%
|
(2.2
|
)%
|
(1.8
|
)
|
pts
|
|
Latin America
|
658
|
|
14.1
|
%
|
7.2
|
%
|
3.0
|
%
|
6.4
|
%
|
10.8
|
%
|
3.5
|
|
pts
|
|
Total
|
$
|
9,231
|
|
2.9
|
%
|
2.1
|
%
|
0.4
|
%
|
0.8
|
%
|
2.5
|
%
|
1.4
|
|
pts
|
|
Three Months Ended June 30,
|
Increase
(Decrease)
|
% Increase
(Decrease)
|
||||||||
(in millions)
|
2017
|
2016
|
|||||||||
Loyalty programs
|
$
|
484
|
|
$
|
449
|
|
$
|
35
|
|
7.8
|
%
|
Administrative fees, club and on-board sales
|
327
|
|
317
|
|
10
|
|
3.2
|
%
|
|||
Ancillary businesses and refinery
|
277
|
|
275
|
|
2
|
|
0.7
|
%
|
|||
Baggage fees
|
238
|
|
232
|
|
6
|
|
2.6
|
%
|
|||
Other
|
51
|
|
39
|
|
12
|
|
30.8
|
%
|
|||
Total other revenue
|
$
|
1,377
|
|
$
|
1,312
|
|
$
|
65
|
|
4.9
|
%
|
|
Three Months Ended June 30,
|
Increase (Decrease)
|
% Increase (Decrease)
|
||||||||
(in millions)
|
2017
|
2016
|
|||||||||
Salaries and related costs
|
$
|
2,616
|
|
$
|
2,391
|
|
$
|
225
|
|
9.4
|
%
|
Aircraft fuel and related taxes
|
1,448
|
|
1,228
|
|
220
|
|
17.9
|
%
|
|||
Regional carriers expense
|
1,081
|
|
1,096
|
|
(15
|
)
|
(1.4
|
)%
|
|||
Depreciation and amortization
|
535
|
|
470
|
|
65
|
|
13.8
|
%
|
|||
Contracted services
|
543
|
|
484
|
|
59
|
|
12.2
|
%
|
|||
Aircraft maintenance materials and outside repairs
|
475
|
|
446
|
|
29
|
|
6.5
|
%
|
|||
Passenger commissions and other selling expenses
|
458
|
|
437
|
|
21
|
|
4.8
|
%
|
|||
Landing fees and other rents
|
379
|
|
376
|
|
3
|
|
0.8
|
%
|
|||
Passenger service
|
271
|
|
221
|
|
50
|
|
22.6
|
%
|
|||
Profit sharing
|
338
|
|
324
|
|
14
|
|
4.3
|
%
|
|||
Aircraft rent
|
86
|
|
66
|
|
20
|
|
30.3
|
%
|
|||
Other
|
533
|
|
485
|
|
48
|
|
9.9
|
%
|
|||
Total operating expense
|
$
|
8,763
|
|
$
|
8,024
|
|
$
|
739
|
|
9.2
|
%
|
|
Three Months Ended June 30,
|
Increase (Decrease)
|
% Increase (Decrease)
|
||||||||
(in millions)
|
2017
|
2016
|
|||||||||
Aircraft fuel and related taxes(1)
|
$
|
1,448
|
|
$
|
1,228
|
|
$
|
220
|
|
|
|
Aircraft fuel and related taxes included within regional carriers expense
|
239
|
|
219
|
|
20
|
|
|
||||
Total fuel expense
|
$
|
1,687
|
|
$
|
1,447
|
|
$
|
240
|
|
16.6
|
%
|
(1)
|
Includes the impact of fuel hedging and refinery results described further in the table below.
|
|
|
Average Price Per Gallon
|
||||||||||||||||
|
Three Months Ended June 30,
|
Change
|
Three Months Ended June 30,
|
Change
|
||||||||||||||
(in millions, except per gallon data)
|
2017
|
2016
|
2017
|
2016
|
||||||||||||||
Fuel purchase cost(1)
|
$
|
1,676
|
|
$
|
1,440
|
|
$
|
236
|
|
$
|
1.60
|
|
$
|
1.37
|
|
$
|
0.23
|
|
Airline segment fuel hedge impact(2)
|
17
|
|
(3
|
)
|
20
|
|
0.02
|
|
—
|
|
0.02
|
|
||||||
Refinery segment impact(2)
|
(6
|
)
|
10
|
|
(16
|
)
|
(0.01
|
)
|
0.01
|
|
(0.02
|
)
|
||||||
Total fuel expense
|
$
|
1,687
|
|
$
|
1,447
|
|
$
|
240
|
|
$
|
1.61
|
|
$
|
1.38
|
|
$
|
0.23
|
|
MTM adjustments and settlements(3)
|
52
|
|
617
|
|
(565
|
)
|
0.05
|
|
0.59
|
|
(0.54
|
)
|
||||||
Total fuel expense, adjusted
|
$
|
1,739
|
|
$
|
2,064
|
|
$
|
(325
|
)
|
$
|
1.66
|
|
$
|
1.97
|
|
$
|
(0.31
|
)
|
(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)
|
Mark-to-market ("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.
|
|
Six Months Ended June 30,
|
Increase (Decrease)
|
% Increase (Decrease)
|
||||||||
(in millions)
|
2017
|
2016
|
|||||||||
Passenger:
|
|
|
|
|
|||||||
Mainline
|
$
|
14,103
|
|
$
|
13,915
|
|
$
|
188
|
|
1.4
|
%
|
Regional carriers
|
2,816
|
|
2,817
|
|
(1
|
)
|
—
|
%
|
|||
Total passenger revenue
|
16,919
|
|
16,732
|
|
187
|
|
1.1
|
%
|
|||
Cargo
|
343
|
|
327
|
|
16
|
|
4.9
|
%
|
|||
Other
|
2,677
|
|
2,639
|
|
38
|
|
1.4
|
%
|
|||
Total operating revenue
|
$
|
19,939
|
|
$
|
19,698
|
|
$
|
241
|
|
1.2
|
%
|
|
|
Increase (Decrease)
vs. Six Months Ended June 30, 2016
|
||||||||||||||
(in millions)
|
Six Months Ended June 30, 2017
|
Passenger Revenue
|
RPMs (Traffic)
|
ASMs (Capacity)
|
Passenger Mile Yield
|
PRASM
|
Load Factor
|
|||||||||
Mainline
|
$
|
9,214
|
|
3.2
|
%
|
3.0
|
%
|
2.3
|
%
|
0.1
|
%
|
0.8
|
%
|
0.6
|
|
pts
|
Regional carriers
|
2,816
|
|
—
|
%
|
(1.8
|
)%
|
(1.8
|
)%
|
1.8
|
%
|
1.8
|
%
|
0.1
|
|
pts
|
|
Domestic
|
12,030
|
|
2.4
|
%
|
2.2
|
%
|
1.6
|
%
|
0.2
|
%
|
0.8
|
%
|
0.6
|
|
pts
|
|
Atlantic
|
2,383
|
|
(1.9
|
)%
|
4.0
|
%
|
(0.6
|
)%
|
(5.7
|
)%
|
(1.3
|
)%
|
3.7
|
|
pts
|
|
Pacific
|
1,128
|
|
(13.3
|
)%
|
(12.3
|
)%
|
(10.5
|
)%
|
(1.1
|
)%
|
(3.0
|
)%
|
(1.7
|
)
|
pts
|
|
Latin America
|
1,378
|
|
9.9
|
%
|
6.2
|
%
|
2.4
|
%
|
3.5
|
%
|
7.3
|
%
|
3.1
|
|
pts
|
|
Total
|
$
|
16,919
|
|
1.1
|
%
|
1.3
|
%
|
—
|
%
|
(0.2
|
)%
|
1.1
|
%
|
1.1
|
|
pts
|
|
Six Months Ended June 30,
|
Increase
(Decrease)
|
% Increase
(Decrease)
|
||||||||
(in millions)
|
2017
|
2016
|
|||||||||
Loyalty programs
|
$
|
949
|
|
$
|
873
|
|
$
|
76
|
|
8.7
|
%
|
Administrative fees, club and on-board sales
|
642
|
|
630
|
|
12
|
|
1.9
|
%
|
|||
Ancillary businesses and refinery
|
549
|
|
576
|
|
(27
|
)
|
(4.7
|
)%
|
|||
Baggage fees
|
441
|
|
439
|
|
2
|
|
0.5
|
%
|
|||
Other
|
96
|
|
121
|
|
(25
|
)
|
(20.7
|
)%
|
|||
Total other revenue
|
$
|
2,677
|
|
$
|
2,639
|
|
$
|
38
|
|
1.4
|
%
|
|
Six Months Ended June 30,
|
Increase (Decrease)
|
% Increase (Decrease)
|
||||||||
(in millions)
|
2017
|
2016
|
|||||||||
Salaries and related costs
|
$
|
5,089
|
|
$
|
4,702
|
|
$
|
387
|
|
8.2
|
%
|
Aircraft fuel and related taxes
|
2,688
|
|
2,455
|
|
233
|
|
9.5
|
%
|
|||
Regional carriers expense
|
2,191
|
|
2,102
|
|
89
|
|
4.2
|
%
|
|||
Depreciation and amortization
|
1,075
|
|
956
|
|
119
|
|
12.4
|
%
|
|||
Contracted services
|
1,066
|
|
960
|
|
106
|
|
11.0
|
%
|
|||
Aircraft maintenance materials and outside repairs
|
993
|
|
895
|
|
98
|
|
10.9
|
%
|
|||
Passenger commissions and other selling expenses
|
862
|
|
825
|
|
37
|
|
4.5
|
%
|
|||
Landing fees and other rents
|
744
|
|
724
|
|
20
|
|
2.8
|
%
|
|||
Passenger service
|
491
|
|
410
|
|
81
|
|
19.8
|
%
|
|||
Profit sharing
|
489
|
|
596
|
|
(107
|
)
|
(18.0
|
)%
|
|||
Aircraft rent
|
170
|
|
132
|
|
38
|
|
28.8
|
%
|
|||
Other
|
1,000
|
|
978
|
|
22
|
|
2.2
|
%
|
|||
Total operating expense
|
$
|
16,858
|
|
$
|
15,735
|
|
$
|
1,123
|
|
7.1
|
%
|
|
Six Months Ended June 30,
|
Increase (Decrease)
|
% Increase (Decrease)
|
||||||||
(in millions)
|
2017
|
2016
|
|||||||||
Aircraft fuel and related taxes(1)
|
$
|
2,688
|
|
$
|
2,455
|
|
$
|
233
|
|
|
|
Aircraft fuel and related taxes included within regional carriers expense
|
481
|
|
386
|
|
95
|
|
|
||||
Total fuel expense
|
$
|
3,169
|
|
$
|
2,841
|
|
$
|
328
|
|
11.5
|
%
|
(1)
|
Includes the impact of fuel hedging and refinery results described further in the table below.
|
|
|
Average Price Per Gallon
|
||||||||||||||||
|
Six Months Ended June 30,
|
Change
|
Six Months Ended June 30,
|
Change
|
||||||||||||||
(in millions, except per gallon data)
|
2017
|
2016
|
2017
|
2016
|
||||||||||||||
Fuel purchase cost(1)
|
$
|
3,207
|
|
$
|
2,533
|
|
$
|
674
|
|
$
|
1.63
|
|
$
|
1.28
|
|
$
|
0.35
|
|
Airline segment fuel hedge impact(2)
|
12
|
|
270
|
|
(258
|
)
|
0.01
|
|
0.14
|
|
(0.13
|
)
|
||||||
Refinery segment impact(2)
|
(50
|
)
|
38
|
|
(88
|
)
|
(0.03
|
)
|
0.02
|
|
(0.05
|
)
|
||||||
Total fuel expense
|
$
|
3,169
|
|
$
|
2,841
|
|
$
|
328
|
|
$
|
1.61
|
|
$
|
1.44
|
|
$
|
0.17
|
|
MTM adjustments and settlements(3)
|
136
|
|
462
|
|
(326
|
)
|
0.07
|
|
0.23
|
|
(0.16
|
)
|
||||||
Total fuel expense, adjusted
|
$
|
3,305
|
|
$
|
3,303
|
|
$
|
2
|
|
$
|
1.68
|
|
$
|
1.67
|
|
$
|
0.01
|
|
(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, see "Supplemental Information" below.
|
Non-Operating Results
|
Three Months Ended June 30,
|
|
|
Six Months Ended June 30,
|
|
||||||||||||||
(in millions)
|
2017
|
2016
|
Favorable/(Unfavorable)
|
|
2017
|
2016
|
Favorable/(Unfavorable)
|
||||||||||||
Interest expense, net
|
$
|
(103
|
)
|
$
|
(93
|
)
|
$
|
(10
|
)
|
|
$
|
(197
|
)
|
$
|
(200
|
)
|
$
|
3
|
|
Miscellaneous, net
|
(34
|
)
|
20
|
|
(54
|
)
|
|
(78
|
)
|
21
|
|
(99
|
)
|
||||||
Total non-operating expense, net
|
$
|
(137
|
)
|
$
|
(73
|
)
|
$
|
(64
|
)
|
|
$
|
(275
|
)
|
$
|
(179
|
)
|
$
|
(96
|
)
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||
Consolidated(1)
|
2017
|
2016
|
|
2017
|
2016
|
||||||||
Revenue passenger miles (in millions)
|
57,575
|
|
56,415
|
|
|
105,527
|
|
104,140
|
|
||||
Available seat miles (in millions)
|
66,227
|
|
65,979
|
|
|
124,098
|
|
124,124
|
|
||||
Passenger mile yield
|
|
16.03
|
¢
|
|
15.90
|
¢
|
|
|
16.03
|
¢
|
|
16.07
|
¢
|
PRASM
|
|
13.94
|
¢
|
|
13.59
|
¢
|
|
|
13.63
|
¢
|
|
13.48
|
¢
|
TRASM(2)
|
|
16.29
|
¢
|
|
15.83
|
¢
|
|
|
16.07
|
¢
|
|
15.87
|
¢
|
TRASM, adjusted(3)
|
|
16.19
|
¢
|
|
15.76
|
¢
|
|
|
15.96
|
¢
|
|
15.77
|
¢
|
CASM
|
|
13.23
|
¢
|
|
12.16
|
¢
|
|
|
13.58
|
¢
|
|
12.68
|
¢
|
CASM-Ex, including profit sharing(3)
|
|
10.24
|
¢
|
|
9.54
|
¢
|
|
|
10.56
|
¢
|
|
9.91
|
¢
|
Passenger load factor
|
86.9
|
%
|
85.5
|
%
|
|
85.0
|
%
|
83.9
|
%
|
||||
Fuel gallons consumed (in millions)
|
1,047
|
|
1,046
|
|
|
1,965
|
|
1,976
|
|
||||
Average price per fuel gallon(4)
|
$
|
1.61
|
|
$
|
1.38
|
|
|
$
|
1.61
|
|
$
|
1.44
|
|
Average price per fuel gallon, adjusted(4)(5)
|
$
|
1.66
|
|
$
|
1.97
|
|
|
$
|
1.68
|
|
$
|
1.67
|
|
Full-time equivalent employees, end of period
|
87,263
|
|
84,791
|
|
|
|
|
(1)
|
Includes the operations of our regional carriers under capacity purchase agreements. Full-time equivalent employees exclude employees of non-owned regional carriers.
|
(2)
|
Total revenue per available seat mile ("TRASM").
|
(3)
|
Non-GAAP financial measure defined and reconciled to TRASM and CASM, respectively, in "Supplemental Information" below.
|
(4)
|
Includes the impact of fuel hedge activity and refinery segment results.
|
(5)
|
Non-GAAP financial measure defined and reconciled to average fuel price per gallon in "Results of Operations" for the three and six months ended June 30, 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
|
|
15.8
|
—
|
|
—
|
|
B-737-700
|
10
|
|
—
|
|
—
|
|
10
|
|
8.4
|
—
|
|
—
|
|
B-737-800
|
73
|
|
4
|
|
—
|
|
77
|
|
15.8
|
—
|
|
—
|
|
B-737-900ER
|
48
|
|
—
|
|
31
|
|
79
|
|
2.1
|
51
|
|
—
|
|
B-747-400
|
4
|
|
3
|
|
—
|
|
7
|
|
26.0
|
—
|
|
—
|
|
B-757-200
|
85
|
|
13
|
|
3
|
|
101
|
|
20.1
|
—
|
|
—
|
|
B-757-300
|
16
|
|
—
|
|
—
|
|
16
|
|
14.4
|
—
|
|
—
|
|
B-767-300
|
3
|
|
—
|
|
—
|
|
3
|
|
22.0
|
—
|
|
—
|
|
B-767-300ER
|
54
|
|
4
|
|
—
|
|
58
|
|
21.3
|
—
|
|
—
|
|
B-767-400ER
|
21
|
|
—
|
|
—
|
|
21
|
|
16.5
|
—
|
|
—
|
|
B-777-200ER
|
8
|
|
—
|
|
—
|
|
8
|
|
17.5
|
—
|
|
—
|
|
B-777-200LR
|
10
|
|
—
|
|
—
|
|
10
|
|
8.3
|
—
|
|
—
|
|
A319-100
|
55
|
|
—
|
|
2
|
|
57
|
|
15.3
|
—
|
|
—
|
|
A320-200
|
58
|
|
—
|
|
7
|
|
65
|
|
22.1
|
—
|
|
—
|
|
A321-200(2)
|
9
|
|
—
|
|
13
|
|
22
|
|
0.7
|
100
|
|
—
|
|
A330-200
|
11
|
|
—
|
|
—
|
|
11
|
|
12.2
|
—
|
|
—
|
|
A330-300
|
28
|
|
—
|
|
3
|
|
31
|
|
8.4
|
—
|
|
—
|
|
A330-900neo
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
25
|
|
—
|
|
A350-900
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
25
|
|
—
|
|
CS100
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
75
|
|
50
|
|
MD-88
|
95
|
|
20
|
|
—
|
|
115
|
|
27.0
|
—
|
|
—
|
|
MD-90
|
65
|
|
—
|
|
—
|
|
65
|
|
20.4
|
—
|
|
—
|
|
Total
|
656
|
|
57
|
|
134
|
|
847
|
|
17.0
|
276
|
|
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.
|
(2)
|
Airbus has the option to confirm delivery commitments for five additional A321-200 aircraft.
|
|
Fleet Type
|
|
||||||||||
Carrier
|
CRJ-200
|
CRJ-700
|
CRJ-900
|
Embraer 170
|
Embraer 175
|
Total
|
||||||
Endeavor Air, Inc.(1)
|
58
|
|
—
|
|
81
|
|
—
|
|
—
|
|
139
|
|
ExpressJet Airlines, Inc.
|
23
|
|
33
|
|
28
|
|
—
|
|
—
|
|
84
|
|
SkyWest Airlines, Inc.
|
71
|
|
28
|
|
36
|
|
—
|
|
18
|
|
153
|
|
Compass Airlines, Inc.
|
—
|
|
—
|
|
—
|
|
—
|
|
36
|
|
36
|
|
Republic Airline, Inc.
|
—
|
|
—
|
|
—
|
|
20
|
|
16
|
|
36
|
|
GoJet Airlines, LLC
|
—
|
|
22
|
|
7
|
|
—
|
|
—
|
|
29
|
|
Total
|
152
|
|
83
|
|
152
|
|
20
|
|
70
|
|
477
|
|
(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 2015 Program
|
$
|
5,000
|
|
$
|
44.88
|
|
December 31, 2017
|
|
$
|
550
|
|
May 2017 Program
|
$
|
5,000
|
|
$
|
—
|
|
December 31, 2020
|
|
$
|
5,000
|
|
•
|
Third-party refinery sales. We adjust TRASM for refinery sales to third parties to determine TRASM, adjusted because these revenues are not related to our airline segment. TRASM, adjusted therefore provides a more meaningful comparison of revenue from our airline operations to the rest of the airline industry.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||
|
2017
|
2016
|
|
2017
|
2016
|
||||||||
TRASM
|
|
16.29
|
¢
|
|
15.83
|
¢
|
|
|
16.07
|
¢
|
|
15.87
|
¢
|
Adjusted for:
|
|
|
|
|
|
||||||||
Third-party refinery sales
|
(0.10
|
)
|
(0.07
|
)
|
|
(0.11
|
)
|
(0.10
|
)
|
||||
TRASM, adjusted
|
|
16.19
|
¢
|
|
15.76
|
¢
|
|
|
15.96
|
¢
|
|
15.77
|
¢
|
•
|
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 June 30,
|
|
Six Months Ended June 30,
|
||||||||||
|
2017
|
2016
|
|
2017
|
2016
|
||||||||
CASM
|
|
13.23
|
¢
|
|
12.16
|
¢
|
|
|
13.58
|
¢
|
|
12.68
|
¢
|
Adjusted for:
|
|
|
|
|
|
||||||||
Aircraft fuel and related taxes
|
(2.55
|
)
|
(2.19
|
)
|
|
(2.55
|
)
|
(2.29
|
)
|
||||
Other expenses
|
(0.44
|
)
|
(0.43
|
)
|
|
(0.47
|
)
|
(0.48
|
)
|
||||
CASM-Ex, including profit sharing
|
|
10.24
|
¢
|
|
9.54
|
¢
|
|
|
10.56
|
¢
|
|
9.91
|
¢
|
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
|
|||||||
April 2017
|
1,761,204
|
|
$
|
45.39
|
|
1,761,204
|
|
|
$
|
1,070
|
|
May 2017
|
4,614,518
|
|
$
|
47.98
|
|
4,614,518
|
|
|
$
|
850
|
|
June 2017
|
5,835,850
|
|
$
|
51.73
|
|
5,835,850
|
|
|
$
|
550
|
|
Total
|
12,211,572
|
|
|
12,211,572
|
|
|
|
10.1(a)
|
10.1(b)
|
10.2(a)
|
10.2(b)
|
10.3
|
10.4
|
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)
|
July 13, 2017
|
|
1.
|
DEFINITIONS
|
1.1
|
Clause 0 of the Agreement is hereby amended to add the following term:
|
1.2
|
Clause 0 of the Agreement is hereby amended to replace the following terms:
|
1.3
|
Clause 1 of the Agreement is hereby deleted in its entirety and is replaced with the following:
|
2.
|
DELIVERY SCHEDULE
|
2.1
|
Clause 9.1.1 of the Agreement is hereby deleted in its entirety and is replaced with the following:
|
9.1.1
|
Subject to the provisions of the Agreement, the Seller shall have the Aircraft (including the 2017 A321 [***]) Ready for Delivery at the Delivery Location, and the Buyer shall accept the same, during the months (each a “Scheduled Delivery Month”), quarters (each, a “Scheduled Delivery Quarter”) and semesters (each, a “Scheduled Delivery Semester”) set forth in the table below:
|
CAC ID
|
Aircraft
|
Scheduled Delivery Month/Quarter/ Semester/Year
|
468257
|
2013 A330
|
May 2015
|
468258
|
2013 A330
|
June 2015
|
468259
|
2013 A330
|
July 2015
|
468260
|
2013 A330
|
November 2015
|
468261
|
2013 A330
|
January 2016
|
468268
|
2013 A321
|
February 2016
|
468269
|
2013 A321
|
March 2016
|
468270
|
2013 A321
|
April 2016
|
468262
|
2013 A330
|
April 2016
|
468271
|
2013 A321
|
May 2016
|
468263
|
2013 A330
|
May 2016
|
468264
|
2013 A330
|
May 2016
|
468272
|
2013 A321
|
June 2016
|
468273
|
2013 A321
|
June 2016
|
468274
|
2013 A321
|
July 2016
|
468267
|
2013 A321
|
July 2016
|
468275
|
2013 A321
|
August 2016
|
468276
|
2013 A321
|
August 2016
|
468277
|
2013 A321
|
September 2016
|
468278
|
2013 A321
|
October 2016
|
468279
|
2013 A321
|
November 2016
|
468280
|
2013 A321
|
December 2016
|
468281
|
2013 A321
|
December 2016
|
468282
|
2013 A321
|
January 2017
|
468283
|
2013 A321
|
February 2017
|
468284
|
2013 A321
|
March 2017
|
468265
|
2013 A330
|
January 2017
|
468285
|
2013 A321
|
April 2017
|
CAC ID
|
Aircraft
|
Scheduled Delivery Month/Quarter/ Semester/Year
|
468286
|
2013 A321
|
May 2017
|
468287
|
2013 A321
|
June 2017
|
468288
|
2013 A321
|
June 2017
|
468266
|
2013 A330
|
April 2017
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
CAC ID
|
Aircraft
|
Scheduled Delivery Month/Quarter/ Semester/Year
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
CAC ID
|
Aircraft
|
Scheduled Delivery Month/Quarter/ Semester/Year
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
(a)
|
[***]
|
(b)
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
2.2
|
Clause 9.1.2 of the Agreement is deleted in its entirety and is replaced with the following:
|
2.3
|
Letter Agreements
|
(i)
|
Letter Agreement No. 1 to the Agreement is deleted in its entirety and is replaced with the Amended and Restated Letter Agreement No. 1 dated as of the date hereof.
|
(ii)
|
Letter Agreement No. 2 to the Agreement is deleted in its entirety and is replaced with the Amended and Restated Letter Agreement No. 2 dated as of the date hereof.
|
(iii)
|
Letter Agreement No. 8 to the Agreement is deleted in its entirety and is replaced with Amended and Restated Letter Agreement No. 8 dated as of the date hereof.
|
(iv)
|
Letter Agreement No. 10 to the Agreement is deleted in its entirety and is replaced with Amended and Restated Letter Agreement No. 10 dated as of the date hereof.
|
3.
|
EFFECT OF THE AMENDMENT
|
(a)
|
the Agreement will be deemed amended to the extent herein provided, and, except as specifically amended hereby, will continue in full force and effect in accordance with its original terms,
|
(b)
|
this Amendment will supersede any previous understandings, commitments, or representations whatsoever, whether oral or written, related to the subject matter of this Amendment, and
|
(c)
|
both Parties agree that this Amendment will constitute an integral, nonseverable part of the Agreement and be governed by its provisions, except that if the Agreement and this Amendment have specific provisions that are inconsistent, the specific provisions contained in this Amendment will govern.
|
4.
|
CONFIDENTIALITY
|
5.
|
GOVERNING LAW
|
6.
|
ASSIGNMENT
|
7.
|
COUNTERPARTS
|
1
|
CREDIT MEMORANDA
|
1.1
|
A321 Aircraft
|
1.1.1
|
In respect of each A321 Aircraft, the Seller shall provide to the Buyer the following [***]:
|
(i)
|
[***]
|
(ii)
|
[***]
|
(iii)
|
[***],
|
(iv)
|
[***]
|
(v)
|
[***]
|
(vi)
|
[***]
|
(vii)
|
[***]
|
(viii)
|
[***]
|
(ix)
|
[***]
|
(x)
|
[***]
|
(xi)
|
[***]
|
(xii)
|
[***]
|
(xiii)
|
[***]
|
(xiv)
|
[***]
|
1.1.2
|
The A321 Aircraft [***].
|
1.1.3
|
The A321 Aircraft [***].
|
1.2
|
[***]
|
1.3
|
[***]
|
1.3.1
|
[***]
|
1.3.2
|
[***]
|
1.4
|
[***]
|
1.4.1
|
[***]
|
1.4.2
|
[***]
|
1.4.3
|
[***]
|
1.4.4
|
[***]
|
1.4.4.1
|
[***]
|
1.4.4.2
|
[***]
|
1.4.4.3
|
[***]
|
1.4.4.4
|
[***]
|
1.4.4.5
|
[***]
|
1.5
|
[***]
|
1.5.1
|
[***]
|
1.5.2
|
[***]
|
(i)
|
[***]
|
a)
|
[***] and
|
b)
|
[***]
|
(ii)
|
[***]
|
1.5.3
|
[***]
|
1.5.4
|
[***]
|
(ii)
|
[***]
|
(ii)
|
[***]
|
1.5.5
|
[***]
|
1.5.6
|
[***]
|
1.5.7
|
[***]
|
1.5.8
|
[***]
|
1.6
|
A330 Aircraft
|
1.6.1
|
In respect of each A330 Aircraft, [***]
|
(i)
|
[***]
|
(ii)
|
[***]
|
(iii)
|
[***]
|
(iv)
|
[***]
|
(v)
|
[***]
|
(vi)
|
[***]
|
1.6.2
|
[***]
|
1.6.3
|
[***]
|
1.6.4
|
[***]
|
1.7
|
[***]
|
1.7.1
|
[***]
|
1.7.2
|
[***]
|
1.7.3
|
[***]
|
2
|
[***]
|
2.1
|
A321 Aircraft
|
2.1.1
|
[***]
|
(i)
|
[***]
|
(ii)
|
[***]
|
(iii)
|
[***]
|
(iv)
|
[***]
|
2.1.2
|
[***]
|
(a)
|
[***]
|
(i)
|
[***]
|
(ii)
|
[***]
|
(iii)
|
[***]
|
(iv)
|
[***]
|
(b)
|
[***]
|
(i)
|
[***]
|
(ii)
|
[***]
|
(iii)
|
[***]
|
(iv)
|
[***]
|
2.2
|
A330 Aircraft
|
2.2.1
|
[***]
|
(a)
|
[***]
|
(i)
|
[***]
|
(ii)
|
[***]
|
(iii)
|
[***]
|
(iv)
|
[***]
|
(b)
|
[***]
|
(i)
|
[***]
|
(ii)
|
[***]
|
(iii)
|
[***]
|
(iv)
|
[***]
|
2.2.2
|
[***]
|
(a)
|
[***]
|
(b)
|
[***]
|
(c)
|
[***]
|
(i)
|
[***]
|
(ii)
|
[***]
|
(iii)
|
[***]
|
3
|
[***]
|
3.1
|
[***]
|
3.2
|
[***]
|
3.3
|
[***]
|
4
|
ASSIGNMENT
|
5
|
CONFIDENTIALITY
|
6
|
COUNTERPARTS
|
1
|
[***]
|
5.2.1
|
[***]
|
5.2.2
|
INTENTIONALLY LEFT BLANK
|
5.2.3.1
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
5.2.3.2
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
5.2.3.3
|
[***]
|
5.2.3.4
|
[***]
|
2
|
[***]
|
2.1
|
[***]
|
2.2
|
[***]
|
2.2.1
|
[***]
|
(i)
|
[***]
|
(ii)
|
[***]
|
(iii)
|
[***]
|
2.2.2
|
[***]
|
2.2.3
|
[***]
|
3
|
ASSIGNMENT
|
4
|
CONFIDENTIALITY
|
5
|
COUNTERPARTS
|
1
|
WARRANTIES
|
1.1
|
Warranties and Service Life Policy
|
1.1.1
|
Standard Warranty
|
(i)
|
design and furnish to the Buyer a correction for such Item subject to a Failure and provide any parts required for such correction (including Seller designed standard parts but excluding industry standard parts unless a part of an Item), or
|
(ii)
|
replace such Item.
|
1.1.3
|
[***]
|
1.1.4
|
[***]
|
1.1.5
|
[***]
|
2
|
TECHNICAL PUBLICATIONS
|
3
|
[***]
|
3.1
|
[***]
|
3.2
|
Appendix A to Clause 16 of the Agreement is deleted in its entirety and replaced with the following text:
|
4
|
[***]
|
4.1
|
[***]
|
4.1.1
|
[***]
|
4.1.2
|
[***]
|
4.1.3
|
[***]
|
4.2
|
[***]
|
4.2.1
|
[***]
|
4.2.2
|
[***]
|
4.2.3
|
[***]
|
4.3
|
[***]
|
4.3.1
|
[***]
|
4.3.2
|
[***]
|
4.3.3
|
[***]
|
4.4
|
[***]
|
4.4.1
|
[***]
|
4.4.2
|
[***]
|
4.5
|
[***]
|
(i)
|
[***]
|
(ii)
|
[***]
|
4.6
|
[***]
|
4.6.1
|
[***]
|
4.6.2
|
[***]
|
4.6.3
|
[***]
|
4.7
|
[***]
|
4.7.1
|
[***]
|
4.7.2
|
[***]
|
5
|
[***]
|
(i)
|
[***]
|
(ii)
|
[***]
|
(i)
|
|
(iii)
|
[***]
|
6
|
[***]
|
7
|
ASSIGNMENT
|
8
|
CONFIDENTIALITY
|
9
|
COUNTERPARTS
|
1
|
[***]
|
2
|
[***]
|
2.1
|
[***]
|
2.2
|
[***]
|
(i)
|
[***]
|
(ii)
|
[***]
|
2.3
|
[***]
|
(6)
|
[***]
|
(9)
|
[***]
|
(ii)
|
[***]
|
2.4
|
The above commitments from the Seller are subject to the Buyer not being in default under [***] or the Agreement. Further, it is agreed and understood by the parties that any amounts that adjust in accordance with the Airframe Price Revision Formula or the Propulsion System Price Revision Formula shall be adjusted to the actual month and year of Delivery of such Undelivered Aircraft.
|
3
|
CLAUSE 0 – DEFINITIONS
|
3.1
|
Clause 0 of the Agreement is amended to delete the following defined term and replace it as follows:
|
3.2
|
Clause 0 of the Agreement is amended to add the following defined terms:
|
4
|
CLAUSE 2 – SPECIFICATION
|
5
|
CLAUSE 3 – PRICE
|
6
|
CLAUSE 5 – PAYMENT TERMS
|
6.1
|
Subclause 5.4 of the Agreement is deleted in its entirety and replaced as follows:
|
“5.4
|
Payment of Other Amounts
|
5.4.1
|
[***]
|
5.4.2
|
[***]
|
6.2
|
Subclause 5.5 of the Agreement is deleted in its entirety and replaced as follows:
|
“5.5
|
Overdue Payments
|
7
|
CLAUSE 7 – CERTIFICATION
|
7.1
|
Subclause 7.3.3 of the Agreement is deleted in its entirety and replaced with the following:
|
7.2
|
A new Subclause 7.5 is added to the Agreement as follows:
|
8
|
CLAUSE 8 – THE BUYER’S ACCEPTANCE
|
8.1
|
Subclause 8.1.2 of the Agreement is deleted in its entirety and replaced with the following:
|
8.2
|
Subclause 8.2 of the Agreement is deleted in its entirety and replaced with the following:
|
(i)
|
[***]
|
(ii)
|
[***]
|
(iii)
|
[***]
|
9
|
CLAUSE 9 - DELIVERY
|
10
|
CLAUSE 10 – EXCUSABLE DELAY
|
11
|
CLAUSE 11 – INEXCUSABLE DELAY
|
12
|
CLAUSE 20 – INDEMNIFICATION AND INSURANCE
|
13
|
CLAUSE 21 – TERMINATION FOR CERTAIN EVENTS
|
14
|
ASSIGNMENT
|
15
|
CONFIDENTIALITY
|
16
|
COUNTERPARTS
|
2.2.2.1
|
In the event that the Buyer requests a change to the Specification, the Seller shall issue a request for change substantially in the form set out in Exhibit B-3 (“RFC”) and carry out a feasibility study of such change. If the Seller determines that such RFC is feasible to incorporate, the Seller shall produce an SCN and submit such SCN to the Buyer for the Buyer’s approval. If such SCN is rejected by the Buyer, such RFC and proposed SCN shall be cancelled without charge to the Buyer.
|
2.2.2.2
|
In the event that the Buyer requests the Seller in writing to incorporate a proposed change (excluding Development Changes) in an Aircraft and the Seller agrees to such request but the change is not subsequently made the subject of an SCN for any reason (other than the Seller’s unreasonable refusal to sign the SCN or otherwise acting in bad faith), [***] and incurred by the Seller, provided that in the event the Seller’s reasonable estimate of the cost of developing such proposed change [***] after the Seller’s receipt of the Buyer’s request to incorporate a proposed change and secured the Buyer’s agreement prior to incurring any such costs.
|
CT1301535_LA 10_TO_AMD 9_DAL_A321_A330_EXECUTION
PRIVILEGED AND CONFIDENTIAL
|
1
Apx 1 - 1
|
2.2.3.2
|
In the event of the Seller revising the Specification to incorporate Development Changes which have no adverse effect on the performance, weight, Base Price, Delivery Date of the Aircraft affected thereby or the interchangeability or replaceability requirements under the Specification, such revision shall be performed by the Seller without the Buyer’s consent. In such cases, the Buyer shall have access to the details of such changes through the relevant application in AirbusWorld.
|
2.2.3.3
|
The Seller is considering turning certain items, which are currently BFE in the Specification, into Seller Furnished Equipment. If such BFE becomes Seller Furnished Equipment, it shall be excluded from the provisions of Subclauses 2.2.3.1 and 2.2.3.2 above and be chargeable to the Buyer, however, the price of such Seller Furnished Equipment shall not exceed the price of such BFE.
|
CT1301535_LA 10_TO_AMD 9_DAL_A321_A330_EXECUTION
PRIVILEGED AND CONFIDENTIAL
|
2
Apx 1 - 2
|
3.3.1
|
The Seller shall bear and pay the amount of [***].
|
3.3.2
|
The Buyer shall bear and pay the amount of [***].
|
3.3.3
|
The Seller shall [***].
|
3.3.4
|
It is expressly understood and agreed that [***].
|
3.3.5
|
It is expressly understood and agreed that [***].
|
3.3.6
|
[***]
|
3.3.7
|
[***]
|
3.3.8
|
[***]
|
3.3.9
|
[***]
|
3.3.10
|
[***]
|
10.6
|
[***]
|
(i)
|
[***]
|
(ii)
|
[***]
|
(i)
|
[***]
|
(ii)
|
[***]
|
(iii)
|
[***]
|
(iv)
|
[***]
|
11.8
|
[***]
|
11.9
|
[***]
|
20.1
|
[***]
|
20.2
|
[***]
|
(A)
|
[***]
|
(B)
|
[***]
|
20.3
|
[***]
|
(A)
|
[***]
|
(B)
|
[***]
|
20.4
|
[***] Notice of the claim or suit shall be accompanied by all information pertinent to the matter as is reasonably available to the Indemnified Party and shall be followed by such cooperation by the Indemnified Party as the Indemnitor or its counsel may reasonably request, at the expense of the Indemnitor.
|
(A)
|
[***]
|
(B)
|
[***]
|
(i)
|
[***]
|
(ii)
|
[***]
|
(iii)
|
[***]
|
21.1
|
Any of the following shall be considered a material breach of, [***] (“Material Breach”):
|
(1)
|
[***], the Buyer [***] shall commence any case, proceeding or other action with respect [***] the Buyer in any jurisdiction relating to bankruptcy, insolvency, reorganization or relief from debtors or seeking a reorganization, arrangement, winding-up, liquidation, dissolution or other relief with respect to its debts and such case, proceeding or action is not dismissed [***].
|
(2)
|
An action is commenced seeking the appointment of a receiver, trustee, custodian or other similar official for [***]the Buyer for all or substantially all of its assets and such action is not stayed or dismissed [***] or the Buyer makes a general assignment for the benefit of its creditors.
|
(3)
|
An action is commenced against [***] the Buyer seeking [***].
|
(4)
|
[***]
|
(5)
|
[***]
|
(6)
|
The Buyer fails to make any [***] Payment required to be made pursuant to the Agreement when such payment comes due or fails to make payment [***] required to be made pursuant to Subclause 5.3 of the Agreement.
|
(7)
|
[***]
|
(8)
|
[***]
|
(9)
|
[***]
|
(10)
|
[***]
|
(11)
|
[***]
|
21.2
|
[***]
|
1.1.
|
Clause 0 of the Agreement is hereby amended to delete the following term:
|
1.2.
|
Clause 0 of the Agreement is hereby amended to add the following term:
|
2.1.
|
[***]
|
(i)
|
[***]
|
(ii)
|
[***]
|
(iii)
|
[***]
|
(iv)
|
[***]
|
(v)
|
[***]
|
(vi)
|
[***]
|
(vii)
|
[***]
|
2.2.
|
Clauses 9.1.1 and 9.1.2 of the Agreement are deleted in their entirety and are replaced with the following:
|
9.1.1
|
Subject to the provisions of the Agreement, the Seller shall have the Aircraft Ready for Delivery at the Delivery Location, and the Buyer shall accept the same, during the months (each a “Scheduled Delivery Month”) and quarters (each, a “Scheduled Delivery Quarter”) set forth in the table below:
|
CAC ID
|
Aircraft type
|
Scheduled Delivery Period
|
CAC ID
|
Aircraft type
|
Scheduled Delivery Period
|
10025681
|
A350-900
|
MAY 2017
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
9.1.2
|
Not later than [***] prior to the start of the relevant Scheduled Delivery Quarter, the Seller shall give the Buyer notice of the anticipated month within the Scheduled Delivery Quarter during which each Aircraft shall be Ready for Delivery (the “Scheduled Delivery Month”) provided that no more than [***] shall be scheduled for Delivery pursuant to this Clause in any calendar month.
|
2.3.
|
[***]
|
(a)
|
[***]
|
(b)
|
[***]
|
(c)
|
[***]
|
(d)
|
[***]
|
(e)
|
[***]
|
(a)
|
the Agreement will be deemed amended to the extent herein provided, and, except as specifically amended hereby, will continue in full force and effect in accordance with its original terms,
|
(b)
|
this Amendment will supersede any previous understandings, commitments, or representations whatsoever, whether oral or written, related to the subject matter of this Amendment, and
|
(c)
|
both Parties agree that this Amendment will constitute an integral, nonseverable part of the Agreement and be governed by its provisions, except that if the Agreement and this Amendment have specific provisions that are inconsistent, the specific provisions contained in this Amendment will govern.
|
5.1.
|
THIS AMENDMENT AND THE AGREEMENTS CONTEMPLATED HEREIN WILL BE GOVERNED BY AND CONSTRUED AND THE PERFORMANCE THEREOF WILL BE DETERMINED IN ACCORDANCE WITH THE PROVISIONS OF CLAUSE 22.6 OF THE AGREEMENT.
|
5.2.
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It is agreed that the United Nations convention on contracts for the international sale of goods will not apply to this amendment.
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1.
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FLEXIBILITY
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1.1
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A330-900 Flexibility
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1.1.1
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[***]
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1.1.1.1
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The Seller grants the Buyer the right to [***] (each an [***]) certain firmly ordered A330-900 Aircraft [***] subject to the following:
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(i)
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[***]
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(ii)
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[***]
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(iii)
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[***]
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1.1.1.2
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[***]
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(i)
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[***]
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(ii)
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[***]
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(iii)
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[***]
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(iv)
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[***]
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1.1.1.3
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[***]
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(i)
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[***]
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(ii)
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[***]
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1.1.2
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[***]
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1.1.2.1
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The Seller grants the Buyer the right [***], subject to the following:
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(i)
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[***]
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(ii)
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[***]
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(iii)
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[***]
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(iv)
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[***]
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1.1.2.2
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[***]
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(i)
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[***]
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(ii)
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[***]
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(iii)
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[***]
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(iv)
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The Seller’s obligation to comply with an A330-900 [***] shall be subject to the provisions of Paragraph 1.3.
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1.1.2.3
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[***]
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(i)
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[***]
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(ii)
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[***]
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1.2
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A350-900 Flexibility
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1.2.1
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[***]
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1.2.1.1
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[***]
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(i)
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[***]
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(ii)
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[***]
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(iii)
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[***]
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1.2.1.2
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[***]
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(i)
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[***]
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(ii)
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[***]
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(iii)
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[***]
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(iv)
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[***]
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1.2.1.3
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[***]
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(i)
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[***]
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(ii)
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[***]
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1.2.2
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[***]
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1.2.2.1
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The Seller grants the Buyer the right [***].
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1.2.2.2
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[***]
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(i)
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[***]
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(ii)
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[***]
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1.2.2.3
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[***]
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(i)
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[***]
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(ii)
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[***]
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1.2.3
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[***]
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1.2.3.1
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[***]
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1.2.3.2
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[***]
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(i)
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[***]
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(a)
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[***]
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(b)
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[***]
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(ii)
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[***]
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(iii)
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[***]
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(a)
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[***]
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(b)
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[***]
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(iv)
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[***]
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1.3
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General provisions applicable to Flexibility Rights
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1.3.1
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[***]
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1.3.2
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[***]
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1.3.3
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[***]
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1.3.4
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[***]
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2.
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[***]
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2.1
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[***]
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(i)
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[***]
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(ii)
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[***]
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2.2
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[***]
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(i)
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[***]
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(ii)
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[***]
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(iii)
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[***]
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3.
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ASSIGNMENT
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4.
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CONFIDENTIALITY
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5.
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COUNTERPARTS
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1
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WARRANTIES
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1.1
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Warranties and Service Life Policy
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1.1.1
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Standard Warranty
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1.1.2
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Seller Service Life Policy
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(i)
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design and furnish to the Buyer a correction for such Item subject to a Failure and provide any parts required for such correction (including Seller designed standard parts but excluding industry standard parts unless a part of an Item), or
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(ii)
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replace such Item.
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1.1.3
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[***]
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1.1.4
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[***]
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1.1.5
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[***]
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2
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TECHNICAL PUBLICATIONS
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2.1
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Clause 14.6 of the Agreement is deleted in its entirety and replaced with the following: “14.6 Revision Service
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3
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[***]
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3.1
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[***]
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3.1.1
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[***]
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3.1.1.1
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[***]
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3.1.1.2
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[***]
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(a)
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[***]
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(i)
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[***]
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(ii)
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[***]
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(b)
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[***]
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3.1.2
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[***]
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(A)
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[***]
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(B)
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[***]:
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(i)
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[***]
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(ii)
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[***]
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3.1.3
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[***]
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(i)
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[***]
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(ii)
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[***]
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3.2
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[***]
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3.2.1
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[***]
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3.2.1.1
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[***]
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3.2.1.2
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[***]
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(a)
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[***]
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(i)
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[***]
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(ii)
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[***]
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(b)
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[***]
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3.2.2
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[***]
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3.2.3
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[***]
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(i)
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[***]
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4
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[***]
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5
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ASSIGNMENT
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6
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CONFIDENTIALITY
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7
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COUNTERPARTS
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Participants:
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All members of Delta’s Board of Directors (the “Board”) who are not employees of Delta (“Non-Employee Directors”). These directors are:
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Francis S. Blake
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Jeanne P. Jackson
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Daniel A. Carp
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George N. Mattson
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David G. DeWalt
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Sergio A. L. Rial
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William H. Easter III
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Kathy N. Waller
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Mickey P. Foret
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Type of Award:
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Restricted Stock, as defined and granted under the Delta Air Lines, Inc. Performance Compensation Plan (the “Performance Compensation Plan”).
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Grant Date:
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June 30, 2017
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Shares:
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The number of shares of Restricted Stock granted to each
Non-Employee Director equals the result of the following formula: $160,000 divided by Y, where |
Partial Shares:
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Any partial shares resulting from the above formula will be ignored and the aggregate shares of Restricted Stock for each Non-Employee Director will be rounded up to the nearest whole ten shares.
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Vesting:
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Each grant awarded to a Non-Employee Director under the terms of this Attachment A (a “2017 Grant”) will vest (the “Vesting Date”) on the earlier of (1) June 30, 2018 and (2) the date of Delta’s 2018 Annual Meeting of Stockholders, subject to such Non-Employee Director’s continued service as a member of the Board on the Vesting Date.
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Vesting:
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Notwithstanding the foregoing, accelerated vesting will occur prior to the Vesting Date as follows: individual 2017 Grants will immediately vest on the date such Non-Employee Director ceases to be a member
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Forfeiture:
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Except as expressly set forth above, a Non-Employee Director will immediately forfeit any unvested Restricted Stock on the date such Non-Employee Director ceases to be a member of the Board for any reason, other than due to death, Disability or Retirement.
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Dividends:
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In the event a cash dividend is paid with respect to shares of Delta Common Stock at a time during which the 2017 Grant is unvested, the Non-Employee Director will be eligible to receive the dividend when the 2017 Grant vests.
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1.
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I have reviewed this quarterly report on Form 10-Q of Delta Air Lines, Inc. ("Delta") for the quarterly period ended June 30, 2017;
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2.
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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;
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3.
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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;
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4.
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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:
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(a)
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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;
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(b)
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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;
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(c)
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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
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(d)
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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
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5.
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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):
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(a)
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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
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(b)
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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.
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July 13, 2017
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/s/ Edward H. Bastian
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Edward H. Bastian
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Chief Executive Officer
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1.
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I have reviewed this quarterly report on Form 10-Q of Delta Air Lines, Inc. ("Delta") for the quarterly period ended June 30, 2017;
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2.
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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;
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3.
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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;
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4.
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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:
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(a)
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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;
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(b)
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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;
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(c)
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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
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(d)
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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
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5.
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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):
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(a)
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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
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(b)
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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.
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July 13, 2017
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/s/ Paul A. Jacobson
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Paul A. Jacobson
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Executive Vice President and Chief Financial Officer
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1.
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such Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and
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2.
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the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Delta.
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/s/ Edward H. Bastian
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Edward H. Bastian
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Chief Executive Officer
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/s/ Paul A. Jacobson
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Paul A. Jacobson
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Executive Vice President and Chief Financial Officer
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