Delta Air Lines Stock

Delta Air Lines, Inc. (Delta) operates as a global airline based in the United States.

The company connects customers across its expansive global network with a commitment to industry-leading customer service, safety and innovation. In 2023, the company served over 190 million customers.

Segments

The company operates through two operating segments, Airline and Refinery.

Airline

The company’s Airline segment is managed as a single business unit that provides scheduled air transportation for passengers and cargo throughout the U.S. and around the world; and includes the company’s loyalty program, as well as other ancillary businesses. This allows the company to benefit from an integrated revenue pricing and route network. The company’s flight equipment forms one fleet, which is deployed through a single route scheduling system.

Refinery

The company’s Monroe subsidiary operates the Trainer oil refinery and related assets located near Philadelphia, Pennsylvania, as part of the company’s strategy to mitigate the cost of the refining margin reflected in the price of jet fuel. Monroe's operations include pipelines and terminal assets that allow the refinery to supply jet fuel to the company’s airline operations throughout the Northeastern U.S., including the company’s New York hubs at LaGuardia and JFK.

The company’s Refinery segment operates for the benefit of the airline segment by providing jet fuel to the airline segment from its own production and through jet fuel obtained through agreements with third parties. The refinery's production consists of jet fuel, as well as non-jet fuel products. The company uses several counterparties to exchange the non-jet fuel products produced by the refinery for jet fuel consumed in its airline operations.

Global Network

The company and its alliance partners collectively serve over 130 countries and territories and over 700 destinations around the world. As of December 31, 2023, the company offered more than 4,000 daily flights to more than 280 destinations on six continents.

The company’s domestic network is centered around core hubs in Atlanta, Minneapolis-St. Paul, Detroit and Salt Lake City. Core hubs have strong local passenger share, a high penetration of customers loyal to Delta, a competitive cost position and strong margins. Core hub positions complement coastal hub positions in Boston, Los Angeles, New York-LaGuardia, New York-JFK and Seattle. Coastal hubs provide a strong presence in large revenue markets and enable growth in premium products and international service.

In 2023, the company focused on restoring its core hubs while solidifying positions in the company’s coastal hubs. The company expects to leverage its coastal gateways and strategic relationships with international airline partners to further grow the company’s international service.

Internationally, the company operates significant hubs in, or have market presence in the key cities of, Amsterdam, Bogota, Lima, London-Heathrow, Mexico City, Paris-Charles de Gaulle, Santiago (Chile), Sao Paulo, Seoul-Incheon and Tokyo. Through innovative alliances with Aeromexico, LATAM Airlines Group S.A. (‘LATAM’), Air France-KLM, China Eastern, Korean Air and Virgin Atlantic, the company seeks to bring more choice to customers worldwide. The company’s strategic relationships with these international airlines are an important part of its business as they improve the company’s access to markets around the world and enable the company to provide customers a more seamless global travel experience across the company’s alliance network. The most significant of these arrangements are commercial joint ventures or cooperation agreements that include joint sales and marketing coordination, co-location of airport facilities and other commercial cooperation arrangements. In some cases, the company has reinforced strategic alliances through equity investments where the company has opportunity to create deep relationships and maximize commercial cooperation.

The company’s global network was supported by a fleet of 1,273 aircraft as of December 31, 2023 that are varied in size and capabilities, giving the company flexibility to adjust aircraft to the network. The company is continuing to refresh its fleet by acquiring new and more fuel-efficient aircraft with increased premium seating and cargo capacity to replace retiring aircraft. Simultaneously, the company continues on its multi-year journey of fleet simplification by replacing retiring aircraft with deliveries of next-generation aircraft. In 2023, the company took delivery of 43 aircraft, including new A321neos, A220-300s and A330-900s. The company’s new aircraft delivered since 2019 are on average 28% more fuel efficient per seat mile than aircraft retired since 2019. In January 2024, the company entered into a purchase agreement with Airbus for 20 A350-1000 aircraft, with an option to purchase an additional 20 widebody aircraft. Deliveries of these aircraft are scheduled to begin in 2026.

Customer Loyalty

The company is elevating the customer experience by deploying its newest aircraft, accelerating generational airport investments in key markets, including new facilities that opened at New York-LaGuardia, Los Angeles and Salt Lake City, and investing in the company’s digital transformation.

SkyMiles Program

The company’s SkyMiles program provides members with the ability to earn mileage credits (‘miles’) when traveling on Delta, Delta Connection and the company’s partner airlines. Miles may also be earned by using certain services offered by program partners, such as credit card, retail, ridesharing, car rental and hotel companies. To facilitate transactions with participating companies, the company sells miles to non-airline businesses and other airlines.

Miles may be used toward award redemptions, such as flights and upgrades on Delta, the company’s regional carriers and other participating airlines, as well as donations to specific charities and more. The company’s most significant and valuable contract to sell miles relates to its co-brand credit card relationship with American Express.

Commercial Arrangements with Other Airlines

Joint Venture/Cooperation Agreements: The company has implemented four separate joint venture or joint cooperation agreements with foreign carriers as described below. The company has sought to reinforce a number of the agreements through equity investments in those carriers.

Each of the company’s joint venture or cooperation arrangements provides for joint commercial cooperation with the relevant partner within the geographic scope of the arrangement, including the sharing of revenues and/or profits and losses generated by the parties on the joint venture routes, as well as joint marketing and sales, coordinated pricing and revenue management, network and schedule planning and other coordinated activities with respect to the parties' operations on joint venture routes. The company’s implemented commercial joint ventures/cooperation agreements consist of the following:

A combined joint venture with Air France, KLM and Virgin Atlantic with respect to transatlantic traffic flows. In addition to the joint venture, the company owns a non-controlling 49% equity stake in Virgin Atlantic Limited, the parent company of Virgin Atlantic Airways and a 3% ownership stake in the parent company of Air France and KLM.

A joint cooperation agreement with Aeromexico with respect to trans-border traffic flows between the U.S. and Mexico. In addition to the joint cooperation agreement, the company owns an approximately 20% equity stake in Grupo Aeromexico, S.A.B. de C.V., the parent company of Aeromexico.

A joint venture agreement with LATAM with respect to traffic flows between North and South America, allowing the company’s passengers to access more than 300 destinations between the United States/Canada and South America (Brazil, Chile, Colombia, Paraguay, Peru and Uruguay). The company owns an approximately 10% equity stake in LATAM.

A joint venture with Korean Air with respect to traffic flows between the United States and certain countries in Asia. In addition to the joint venture, the company owns just under 15% of the outstanding common stock of Hanjin-KAL, the largest shareholder of Korean Air.

Each of the company’s joint venture or joint cooperation agreements described above has been approved and granted antitrust immunity from the U.S. Department of Transportation (‘DOT’). The grant of antitrust immunity for the company’s joint cooperation agreement with Aeromexico is subject to a pending renewal application with the DOT, which was tentatively dismissed pursuant to an Order to Show Cause issued by the DOT on January 26, 2024. The existing immunity remains in effect pending final adjudication of the renewal application, the timing and outcome of which cannot be predicted at this time.

Enhanced Commercial Agreements with China Eastern: The company owns a 2% equity interest in China Eastern, with whom the company has a strategic joint marketing and commercial cooperation arrangement covering traffic flows between China and the U.S., which includes reciprocal codesharing, loyalty program participation, airport lounge access and joint sales cooperation.

SkyTeam. The company is a member of the SkyTeam global airline alliance. The other members of SkyTeam are Aerolíneas Argentinas, Aeromexico, Air Europa (Spain), Air France, China Airlines, China Eastern, Czech Airlines, Garuda Indonesia, ITA Airways (Italy), Kenya Airways, KLM, Korean Air, Middle East Airlines, Saudia, TAROM (Romania), Vietnam Airlines, Virgin Atlantic and Xiamen Airlines (China). Through alliance arrangements with other SkyTeam carriers, the company is able to link its route network with those of the other member airlines, providing opportunities to increase connecting traffic while offering enhanced customer service through reciprocal codesharing and loyalty program participation, airport lounge access and cargo operations.

Other International Carriers. The company also has marketing arrangements with other airlines to enhance the company’s global network. These arrangements may include codesharing, reciprocal loyalty program benefits, shared or reciprocal access to passenger lounges, joint promotions, common use of airport gates and ticket counters, office co-location and other activities.

Regional Carriers

The company has air service agreements with domestic regional air carriers that feed traffic to the company’s network by serving passengers primarily in small and medium-sized cities in the domestic market. These arrangements enable the company to better match capacity with demand in these markets.

Through the company’s regional carrier program, Delta Connection, the company has contractual arrangements with regional carriers to operate aircraft using the company’s ‘DL’ designator code. The company has contractual arrangements with Endeavor Air, Inc., a wholly owned subsidiary of the company (‘Endeavor’); Republic Airways, Inc.; and SkyWest Airlines, Inc. (‘SkyWest Airlines’).

The company’s contractual agreements with regional carriers are primarily capacity purchase arrangements, under which the company controls the scheduling, pricing, reservations, ticketing and seat inventories for the regional carriers' flights operating under the company’s ‘DL’ designator code. The company is entitled to all ticket, cargo, mail, in-flight and ancillary revenues associated with the flights under these capacity purchase arrangements.

SkyWest Airlines operates some flights for the company under a revenue proration agreement. This proration agreement establishes a fixed dollar or percentage division of revenues for tickets sold to passengers traveling on connecting flight itineraries.

Cargo

Through the company’s global network, its cargo operations are able to connect the world’s major freight gateways. The company generates cargo revenues in domestic and international markets through the use of cargo space on regularly scheduled passenger aircraft. The company is a member of SkyTeam Cargo, an international airline cargo alliance with eight other airlines that offer a network spanning six continents, through which the company provides global solutions to its customers by connecting the company’s network with those partners.

Other Complementary Businesses

The company has various other businesses arising from its airline operations, including the following:

In addition to providing maintenance and engineering support for the company’s fleet of 1,273 mainline and regional aircraft, the company’s MRO operation, known as Delta TechOps, serves aviation and airline customers from around the world. With agreements to service multiple next-generation aircraft engines, Delta TechOps is positioned as a leading global service provider for more sustainable engines.

The company’s vacation wholesale subsidiary, Delta Vacations, provides vacation packages to third-party consumers. Revenue allocated to Delta Vacations excludes flight revenue associated with vacation packages.

Monroe Energy

The company’s Monroe subsidiaries operate the Trainer refinery and related logistics assets located near Philadelphia, Pennsylvania. The facilities include pipelines and terminal assets that allow the refinery to supply jet fuel to the company’s airline operations throughout the Northeastern U.S., including the company’s New York hubs at LaGuardia and JFK. The company owns Monroe (Monroe Energy, LLC) as part of its strategy to maintain sufficiency of supply to the company’s New York operations.

Refinery Operations: The facility is capable of refining approximately 200,000 barrels of crude oil per day and sources domestic and foreign crude oil supply from a variety of providers. During 2023, Monroe successfully performed a planned plant-wide maintenance turnaround (‘turnaround’), which addressed all required inspections, allowed Monroe to clean and repair all of the equipment, as well as enable the installation of a new Fluidized Catalyst Cracking Unit Reactor.

Strategic Agreements: Monroe has agreements in place to exchange the non-jet fuel products the refinery produces with third parties for jet fuel consumed in the company’s airline operations.

Competition

Domestic

The company’s domestic operations are subject to significant competition from traditional network carriers, including American Airlines and United Airlines; national point-to-point carriers, including Alaska Airlines, JetBlue Airways and Southwest Airlines; and other discount or ultra-low-cost carriers, including Allegiant Air, Avelo Airlines, Breeze Airways, Frontier Airlines and Spirit Airlines.

Regulatory Matters

Route Authority

The company’s flight operations are authorized by certificates of public convenience and necessity and also by exemptions and limited-entry frequency awards issued by the DOT.

Airport Access

In the U.S., the FAA regulates the allocation of slots, slot exemptions, operating authorizations or similar capacity allocation mechanisms at Reagan National in Washington, D.C. and LaGuardia and JFK in the New York City area. The company’s operations at these airports generally require the allocation of slots or analogous regulatory authorizations. Similarly, the company’s operations at London's Heathrow airport, Tokyo's Haneda airport and other international airports are regulated by local slot coordinators pursuant to the International Air Transport Association's Worldwide Scheduling Guidelines and applicable local law.

The company participates in the Civil Reserve Air Fleet program (the ‘CRAF Program’), which permits the U.S. military to use the aircraft and crew resources of participating the U.S. airlines during airlift emergencies, national emergencies or times of war.

History

Delta Air Lines, Inc. was founded in 1924.