Delta Air Lines Annual Report 2020 Form 10-K (NYSE:DAL) Published: February 13th, 2020 PDF generated by stocklight.com UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2019 Or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 001-5424 DELTA AIR LINES, INC. (Exact name of registrant as specified in its charter) Delaware 58-0218548 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) Post Office Box 20706 Atlanta, Georgia 30320-6001 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (404) 715-2600 Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading Symbol Name of each exchange on which registered Common Stock, par value $0.0001 per share DAL New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.Y es þ No o Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yeso No þ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No o Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act. Large accelerated filer☑ Accelerated filer ☐ Non-accelerated filer☐ Smaller reporting company ☐ Emerging growth company☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes☐ No þ The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant as of June 30, 2019 was approximately $36.9 billion. On January 31, 2020, there were outstanding 640,093,995 shares of the registrant's common stock. This document is also available on our website at http://ir.delta.com/. Documents Incorporated By Reference Part III of this Form 10-K incorporates by reference certain information from the registrant's definitive Proxy Statement for its Annual Meeting of Stockholders to be filed with the Securities and Exchange Commission. Table of Contents Page Forward-Looking Statements 1 PART I ITEM 1. BUSINESS 2 General 2 Executive Officers of the Registrant 12 ITEM 1A. RISK FACTORS 13 Risk Factors Relating to Delta 13 Risk Factors Relating to the Airline Industry 18 ITEM 1B. UNRESOLVED STAFF COMMENTS 21 ITEM 2. PROPERTIES 22 Flight Equipment 22 Ground Facilities 23 ITEM 3. LEGAL PROCEEDINGS 24 ITEM 4. MINE SAFETY DISCLOSURES 24 PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES 25 ITEM 6. SELECTED FINANCIAL DATA 27 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 29 Financial Highlights 29 Results of Operations 31 Non-Operating Results 35 Income Taxes 35 Refinery Segment 36 Financial Condition and Liquidity 37 Contractual Obligations 40 Critical Accounting Policies and Estimates 41 Supplemental Information 46 Glossary of Defined Terms 47 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 48 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 49 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 96 ITEM 9A. CONTROLS AND PROCEDURES 96 ITEM 9B. OTHER INFORMATION 98 PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE OF THE REGISTRANT 98 ITEM 11. EXECUTIVE COMPENSATION 98 Page ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS 98 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE 98 ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES 99 PART IV ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES 99 ITEM 16. FORM 10-K SUMMARY 102 SIGNATURES 103 Unless otherwise indicated, the terms "Delta," "we," "us," and "our" refer to Delta Air Lines, Inc. and its subsidiaries. FORWARD-LOOKING STATEMENTS Statements in this Form 10-K (or otherwise made by us or on our behalf) that are not historical facts, including statements about our estimates, expectations, beliefs, intentions, projections or strategies for the future, may be "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from historical experience or our present expectations. Known material risk factors applicable to Delta are described in "Risk Factors Relating to Delta" and "Risk Factors Relating to the Airline Industry" in "Item 1A. Risk Factors" of this Form 10-K, other than risks that could apply to any issuer or offering. All forward- looking statements speak only as of the date made, and we undertake no obligation to publicly update or revise any forward-looking statements to reflect events or circumstances that may arise after the date of this report. Part I ITEM 1. BUSINESS General We are the leading U.S. global airline serving 200 million customers every year. We connect customers across our expansive global network to more than 300 destinations in over 50 countries. We are the world’s largest airline by total revenues and the most profitable with five consecutive years of $5 billion or more in pre-tax income. We are committed to industry-leading safety and reliability and are consistently among the industry’s best performers. Our employees provide world- class travel experiences for our customers and give back to the communities where they live, work and serve. Our people and service are our strongest competitive advantage creating significant customer satisfaction improvements. Other key competitive advantages include operational reliability, our global network, customer loyalty and our investment grade balance sheet. We have diversified revenue streams beyond the basic sale of an airline ticket in order to reduce the impact of cyclicality on our results. Our growing partnership with American Express provides a co-brand revenue stream tied to broader consumer spending. Our focus in recent years on premium products and customer segmentation has enhanced our revenue growth and reduced reliance on the most price sensitive customer segment. We also maintain complementary portfolio businesses, such as our Maintenance, Repair and Overhaul (“MRO”) division, where we are well positioned for significant organic growth through contractual agreements with jet engine manufacturers. We are incorporated under the laws of the State of Delaware. Our principal executive offices are located at Hartsfield- Jackson Atlanta International Airport in Atlanta, Georgia. Our telephone number is (404) 715-2600 and our internet address is www.delta.com. Information contained on our website is not part of, and is not incorporated by reference in, this Form 10-K. The Delta Brand We have the world’s most valuable airline brand, one that is mentioned not just among the best global airlines, but also alongside top consumer brands. Over the last decade, we significantly improved the quality and reliability of our operations. As a result, customer satisfaction scores have more than tripled. With operational excellence and best-in-class service, we are earning our customers' trust and preference. Our continued investment in operations, product, service, airports and technology are reshaping customer perception of our brand and driving increased customer loyalty. Our Global Network and Fleet We offer more than 5,000 daily departures and as many as 15,000 affiliated departures including the premier SkyTeam alliance, of which Delta is a founding member. We generate over 70% of our passenger revenue from our domestic network, centered around high-margin core hubs in Atlanta, Minneapolis-St. Paul, Detroit and Salt Lake City. These core hub positions complement strong coastal hub positions in Boston, Los Angeles, New York- LaGuardia, New York-JFK and Seattle. We have agreements with domestic regional carriers that operate as Delta Connection® to feed traffic to our domestic hubs. We serve the Transatlantic, Transpacific and Latin America markets directly on Delta and through joint ventures with global airline partners. Internationally, we have significant hubs and market presence in Amsterdam, London-Heathrow, Mexico City, Paris-Charles de Gaulle and Seoul- Incheon. We will become the largest U.S. carrier to Tokyo-Haneda in 2020 as we consolidate operations in Tokyo, the preferred airport for the local and corporate markets. Through innovative alliances with Aeroméxico, Air France-KLM, China Eastern, Korean Air, Virgin Atlantic and Virgin Australia and alliances pending regulatory approval with LATAM Airlines and WestJet, we are bringing more choice to customers worldwide.