As a result, demand for travel declined at a rapid pace in the March 2020 quarter and has remained depressed, which has had an unprecedented and materially adverse impact on our revenues and financial position. Although demand improved compared to the June 2020 quarter, it remains significantly below the prior year. The exact timing and pace of the recovery remain uncertain as certain markets have reopened, some of which have since experienced a resurgence of COVID-19 cases, while others, particularly international markets, remain closed or are enforcing extended quarantines for most U.S. residents. Additionally, some states have instituted travel restrictions, advisories or quarantines for travelers from other states. We expect the demand environment to remain depressed until widespread advances by the medical community are available. Our forecasted expense and liquidity management initiatives may be modified as the demand environment evolves.

In response to these developments, beginning in March and continuing through the September 2020 quarter, we have implemented enhanced measures focusing on the safety of our customers and employees, while at the same time seeking to mitigate the impact on our financial position and operations and to position our business for recovery.

Taking Care of our Customers and Employees. The safety of our customers and employees is our primary focus. As the COVID-19 pandemic has progressed, we have taken numerous steps to help promote the safety of our customers and employees on the ground and in the air in keeping with current health-expert recommendations, including:

◦Implementing significant workforce social distancing and protection measures, including reconfiguring call center spaces to promote social distancing, increasing cleaning and disinfecting of our facilities and encouraging employees to work remotely when possible.

•Giving customers flexibility to plan and re-book travel, including extending expiration on certain tickets and travel credits through December 2022, eliminating change fees for domestic tickets, with the exception of Basic Economy tickets, and waiving change fees for all international and Basic Economy tickets purchased between March 1 and December 31, 2020. Additionally, we are extending 2020 Medallion Status an additional year, rolling Medallion Qualification Miles into 2021 and extending Delta SkyMiles American Express Card benefits and Delta Sky Club memberships.

•Offering pay protection to employees who have tested positive for COVID-19, who must quarantine due to exposure to COVID-19 or who are considered being at high-risk for illness from COVID-19 according to the Centers for Disease Control and Prevention ("CDC") guidelines and do not have the ability to work remotely.

•Offering on-site COVID testing at our hubs and making at-home testing available for our U.S.-based employees. We have also added rapid testing in most U.S. hubs for active flight crews. Over 40,000 employees have been tested and retesting protocols are being developed.

Capacity Reductions. Beginning in the second half of March, we experienced a precipitous decrease in demand as COVID-19 spread throughout the world. While we have increased capacity compared to the lowest levels in April 2020, system capacity remains significantly lower than prior to the pandemic. For the September 2020 quarter, system capacity was reduced approximately 60% compared to the September 2019 quarter, with international capacity reduced by approximately 80% and domestic capacity reduced by approximately 50%. For the December 2020 quarter, system capacity is expected to be down approximately 40-45% compared to the December 2019 quarter. As a result of reduced demand expectations and lower capacity in the December 2020 quarter and beyond, we have parked approximately 40% of our fleet, including the permanent retirement of certain aircraft, as discussed in the valuation of long-lived assets section of this footnote, below.

•Reducing capacity as described above to align with expected demand, which has resulted in removing from active service approximately 500 aircraft as of September 30, 2020, including certain fleets or aircraft that we have decided to early retire as described below.

◦Due to projected levels of flying and staffing levels, notifying our pilots of the potential of furloughs. We continue to actively work with ALPA on alternative courses of action that would allow us to avoid furloughing approximately 1,700 pilots after October 31, 2020.

Balance Sheet, Cash Flow and Liquidity. Our cash, cash equivalents, short-term investments and aggregate principal amount committed and available to be drawn under our revolving credit facilities balance ("liquidity") as of September 30, 2020 was $21.6 billion as a result of the following actions to increase liquidity and strengthen our financial position during the nine months ended September 30, 2020:

◦Entering into loan agreements to borrow $1.5 billion from the New York Transportation Development Corporation ("NYTDC") in connection with NYTDC's issuance of Special Facilities Revenue Bonds, Series 2020, to finance, among other things, a portion of the construction costs for the new terminal facilities at LaGuardia Airport.

•Reducing planned capital expenditures by approximately $3.3 billion for the year, including optimizing the timing of our future aircraft deliveries, delaying aircraft modifications and postponing certain information technology initiatives and ground equipment replacement. See Note 9, "Commitments and Contingencies," for additional information about our aircraft purchase commitments.

In October 2020, we repaid all outstanding borrowings under our $3.0 billion 2020 secured term loan facility, which was subsequently terminated, and repaid $2.6 billion in outstanding borrowings under our revolving credit facilities. We have additional unencumbered assets available for potential financing arrangements, if needed.

Our debt agreements contain various affirmative, negative and financial covenants, including our credit facilities and our SkyMiles financing agreements, each of which contains, among other things, a minimum liquidity covenant. The minimum liquidity covenant replaced the fixed charge coverage ratio previously included in our credit facilities as part of amendments that were completed in the June 2020 quarter. Certain of our debt agreements also include collateral coverage ratios, and our SkyMiles financing agreements include a debt service coverage ratio. We were in compliance with the covenants in these debt agreements as of September 30, 2020.

We apply a fair value-based impairment test to the carrying value of goodwill and indefinite-lived intangible assets on an annual basis (as of October 1) and, if certain events or circumstances indicate that an impairment loss may have been incurred, on an interim basis. Our December 2019 quarter quantitative impairment tests of goodwill and intangibles concluded that there was no indication of impairment as the fair value exceeded our carrying value:


	Carrying Value at					Fair Value Excess at 2019 Testing Date
(in millions)	September 30, 2020		December 31, 2019
Goodwill⁽¹⁾	$	9,753	$	9,781	234%
International routes and slots	2,583		2,583		15% to 29%
Airline alliances⁽²⁾	1,863		1,005		67% to 576%
Delta tradename	850		850		185%
Domestic slots	622		622		61% to 181%
Total	$	15,671	$	14,841

⁽²⁾ As part of our strategic alliance with and investment in LATAM Airlines Group S.A. ("LATAM"), we have recorded an alliance-related indefinite-lived intangible asset of $1.2 billion, which was not reflected in the 2019 quantitative impairment assessment. See Note 5, "Investments," for more information on this transaction.

Despite the significant excess fair value identified in our 2019 impairment assessment, we determined that the reduced cash flow projections and the significant decline in our market capitalization as a result of the COVID-19 pandemic indicate that an impairment loss may have been incurred. Therefore, we qualitatively assessed whether it was more likely than not that the goodwill and indefinite-lived intangible assets were impaired as of September 30, 2020. We reviewed our previous forecasts and assumptions based on our current projections that are subject to various risks and uncertainties, including: (1) forecasted revenues, expenses and cash flows, including the duration and extent of impact to our business and our alliance partners from the COVID-19 pandemic, (2) current discount rates, (3) the reduction in our market capitalization, (4) observable market transactions, (5) changes to the regulatory environment and (6) the nature and amount of government support that has been and is expected to be provided in the future.

Based on our interim impairment assessment as of September 30, 2020, we have determined that our goodwill and indefinite-lived intangible assets are not impaired. However, we are unable to predict how long conditions related to the pandemic will persist, when widespread advances by the medical community will be available, what additional measures may be introduced by governments or private parties or what effect any such additional measures may have on air travel and our business. Any measure that requires or encourages potential travelers to stay in their homes, engage in social distancing or avoid larger gatherings of people is highly likely to be harmful to the air travel industry in general, and consequently our business. We expect any traveler wariness of airports and commercial aircraft to have a similar effect.

Our flight equipment and other long-lived assets, which are classified as property and equipment, net on our Consolidated Balance Sheet ("balance sheet"), have a recorded value of $26.6 billion at September 30, 2020. We review flight equipment and other long-lived assets used in operations for impairment losses when events and circumstances indicate the assets may be impaired.

As part of our capacity reductions related to the negative effect on our business from the COVID-19 pandemic, we have removed approximately 500 aircraft from active service as of September 30, 2020, including certain fleets and other aircraft that are being retired early.


Fleet Type	Number of Aircraft	Estimated Final Retirement During the Quarter Ended	Impairment-Related Charge (in millions)		Quarter Decision was Made
717	91	December 2025	$	950	September 2020
767-300ER	49	December 2025	905		September 2020
CRJ-200 ⁽¹⁾	125	December 2023	320		September 2020
777	18	December 2020	1,440		June 2020
MD-90	26	June 2020	330		June 2020
737-700	10	September 2020	220		June 2020
767-300ER	7	June 2020	180		June 2020
A320	10	June 2020	60		June 2020
MD-88	47	June 2020	22		March 2020
Total	383		$	4,427

These impairment and other related charges are recorded in restructuring charges in our Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income ("income statement"). These charges were calculated using Level 3 fair value inputs based primarily upon recent market transactions, published pricing guides and our assessment of existing market conditions based on industry knowledge. Following the impairment charges, the remaining cumulative net book value of these aircraft is $520 million.

To determine whether impairments exist for active and temporarily parked aircraft, we group assets at the fleet-type level or at the contract level for aircraft operated by third-party regional carriers (i.e., the lowest level for which there are identifiable cash flows) and then estimate future cash flows based on projections of capacity, passenger mile yield, fuel and labor costs and other relevant factors. Given the substantial reduction in our active aircraft and diminished projections of future cash flows in the near term, we evaluated the remainder of our fleet and determined that only the fleet-types discussed above were impaired, as the future cash flows from operation of the fleet through the respective retirement dates exceeded the carrying value. As we obtain greater clarity about the duration and extent of reduced demand and potentially execute further capacity adjustments, we will continue to evaluate our current fleet compared to network requirements and may decide to permanently retire additional aircraft.

On March 27, 2020, President Trump signed the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") into law. The CARES Act is a relief package intended to assist many aspects of the American economy, including providing the airline industry with up to $25 billion in grants to be used for employee wages, salaries and benefits.

In April 2020, we entered into an agreement with the U.S. Department of the Treasury to receive emergency relief through the CARES Act payroll support program, which totaled $5.6 billion after receiving $701 million in the September 2020 quarter. This includes the final installment paid in July under the original $5.4 billion allocation, plus an incremental installment of $157 million paid in September. The relief payments are conditioned on our agreement to refrain from conducting involuntary employee layoffs or furloughs through September 30, 2020. Other conditions include prohibitions on share repurchases and dividends through September 30, 2021, continuing essential air service as directed by the U.S. Department of Transportation and certain limitations on executive compensation. The relief payments consisted of $4.0 billion in a grant and $1.6 billion in an unsecured 10-year low interest loan. The loan bears interest at an annual rate of 1.00% for the first five years (through April 2025) and the Secured Overnight Financing Rate ("SOFR") plus 2.00% in the final five years. In return, we issued to the U.S. Department of the Treasury warrants to acquire more than 6.7 million shares of Delta common stock. These warrants have an exercise price of $24.39 per share and a five-year term.

The relative fair value of the warrants is recorded within stockholder's equity and as a discount reducing the carrying value of the loan which is being amortized as interest expense in our income statement over the term of the loan. The proceeds of the grant were recorded in cash and cash equivalents when received and are being recognized as contra-expense in CARES Act grant recognition in our income statement over the periods that the funds are intended to compensate.

As of September 30, 2020, we had recognized $2.6 billion of the grant as contra-expense with the remaining $1.3 billion recorded as a deferred contra-expense in other accrued liabilities on our balance sheet. We expect to recognize the remainder of the grant proceeds from the CARES Act payroll support program as contra-expense by the end of 2020. See Note 7, "Debt," for further discussion of the unsecured loans and warrants to acquire Delta shares issued under the CARES Act payroll support program.

The CARES Act also provided for up to $25 billion in secured loans to the airline industry. We were eligible and entered into a non-binding letter of intent in the June 2020 quarter with the U.S. Department of the Treasury for $4.6 billion under the loan program. In the September 2020 quarter, however, we elected not to participate in this program.

Finally, the CARES Act also provides for deferred payment of the employer portion of social security taxes through the end of 2020, with 50% of the deferred amount due December 31, 2021 and the remaining 50% due December 31, 2022. This is expected to provide us with approximately $200 million of additional liquidity during the current year.

In the June 2020 quarter, we entered into $2.8 billion of sale-leaseback transactions for 85 aircraft including 25 A321-200s, 25 A220-100s, 23 CRJ-900s, 10 737-900ERs and two A330-900s. Of these transactions, 74 did not qualify as a sale as they are finance leases or have an option to repurchase at a stated price. The assets associated with these transactions remain on our balance sheet within property and equipment, net and we recorded the related liabilities under the lease. These liabilities are classified within other accrued or other noncurrent liabilities on our balance sheet. These transactions are treated as financing inflows on the Condensed Consolidated Statements of Cash Flows ("cash flow statement").

The other 11 transactions qualified as sales, generating an immaterial loss, and the associated assets were removed from our balance sheet within property and equipment, net and recorded within operating lease right-of-use assets. The liabilities are recorded within current maturities of operating leases and noncurrent operating leases on our balance sheet. These transactions are treated as investing cash inflows on the cash flow statement.