Debt

6 Months Ended

Jun. 30, 2021

Debt Disclosure [Abstract]

Debt

DEBT

Summary of outstanding debt by category
	Maturity			Interest Rate(s) Per Annum at			June 30,		December 31,
(in millions)	Dates			June 30, 2021			2021		2020
Unsecured notes	2022	to	2029	2.90%	to	7.38%	$	4,750	$	5,350
Unsecured Payroll Support Program Loan	2030			1.00%			1,648		1,648
Unsecured Payroll Support Program Extension Loan	2031			1.00%			957		—
Unsecured Payroll Support Program 3 Loan	2031			1.00%			891		—
Financing arrangements secured by SkyMiles assets:
SkyMiles Notes(1)	2023	to	2028	4.50%	and	4.75%	6,000		6,000
SkyMiles Term Loan(1)(2)	2023	to	2027	4.75%			3,000		3,000
Financing arrangements secured by slots, gates and/or routes:
2020 Senior Secured Notes	2025			7.00%			3,500		3,500
2020 Term Loan	n/a			n/a			—		1,493
2018 Revolving Credit Facility(2)	2022	to	2023	Undrawn			—		—
Financing arrangements secured by aircraft:
Certificates(1)	2021	to	2028	2.00%	to	8.00%	2,009		2,633
Notes(1)(2)	2021	to	2033	0.71%	to	5.75%	1,279		1,284
NYTDC Special Facilities Revenue Bonds, Series 2020(1)	2026	to	2045	4.00%	to	5.00%	1,511		1,511
NYTDC Special Facilities Revenue Bonds, Series 2018(1)	2022	to	2036	4.00%	to	5.00%	1,383		1,383
Other financings(1)(2)	2021	to	2030	2.25%	to	8.00%	594		412
Other revolving credit facilities(2)	2022			Undrawn			—		—
Total secured and unsecured debt							27,522		28,214
Unamortized (discount)/premium and debt issue cost, net and other							(257)		(240)
Total debt							27,265		27,974
Less: current maturities							(2,019)		(1,443)
Total long-term debt							$	25,246	$	26,531

(1)Due in installments.

(2)Certain financings are comprised of variable rate debt. All variable rates are equal to LIBOR (generally subject to a floor) or another index rate, in each case plus a specified margin.

Unsecured Payroll Support Program Extension Loans

The Consolidated Appropriations Act, 2021 was enacted on December 27, 2020, and included an extension of the payroll support program created under the Coronavirus Aid, Relief and Economic Security Act ("CARES Act") providing an additional $15 billion in grants and loans to the airline industry to be used for airline employee wages, salaries and benefits. In January 2021, we entered into a payroll support program extension agreement with the U.S. Department of the Treasury. During the six months ended June 30, 2021, we received a total of $3.3 billion in payroll support payments under this extension agreement, which must be used exclusively for the payment of employee wages, salaries and benefits and were conditioned on our agreement to refrain from conducting involuntary employee layoffs or furloughs from the date of the extension agreement through March 2021. Other conditions include prohibitions on share repurchases and dividends through March 2022 and certain limitations on executive compensation until October 2022. The Department of Transportation also has the authority until March 1, 2022 to require airlines that received payroll support program funds to maintain scheduled air service deemed necessary to any point served by the airline before March 1, 2020.

These support payments consisted of $2.3 billion in a grant and $957 million in an unsecured 10-year low interest loan and, in return, we entered into a promissory note for the loan and issued warrants to the U.S. Department of the Treasury to acquire approximately 2.4 million shares of Delta common stock. The loan bears interest at an annual rate of 1.00% for the first five years and the applicable Secured Overnight Financing Rate ("SOFR") plus 2.00% in the final five years. The warrants have an initial exercise price of $39.73 per share, subject to adjustment in certain cases, and a five-year term. We have recorded the value of the promissory note and warrants on a relative fair value basis as $905 million of noncurrent debt, net of discount, and $52 million in additional paid in capital, respectively.

The American Rescue Plan Act of 2021 was enacted on March 11, 2021, and included a further extension of the payroll support program providing an additional $14 billion in grants and loans to the industry to be used for airline employee wages, salaries and benefits. In April 2021, we entered into a Payroll Support Program 3 Agreement with the U.S. Department of the Treasury. During the June 2021 quarter we received a total of $3.1 billion in payroll support payments under this agreement, which must be used exclusively for the payment of employee wages, salaries and benefits and is conditioned on our agreement to refrain from conducting involuntary employee layoffs or furloughs from the date of the agreement through September 30, 2021 or the date on which we have expended all of the payroll support, whichever is later. Other conditions include prohibitions on share repurchases and dividends through September 30, 2022 and certain limitations on executive compensation until April 1, 2023.

These support payments consisted of $2.2 billion in a grant and $891 million in an unsecured 10-year low interest loan and, in return, we entered into a promissory note for the loan and issued warrants to the U.S. Department of the Treasury to acquire approximately 1.9 million shares of Delta common stock. The loan bears interest at an annual rate of 1.00% for the first five years and the applicable SOFR plus 2.00% in the final five years. The warrants have an initial exercise price of $47.80 per share, subject to adjustment in certain cases, and a five-year term. We have recorded the value of the promissory note and warrants on a relative fair value basis as $857 million of noncurrent debt, net of discount, and $34 million in additional paid in capital, respectively.

A summary of the amounts received and warrants issued under the initial payroll support program under the CARES Act and the program extensions is set forth in the following table:

Summary of payroll support program activity
(in millions)	Total		Grant		Loan		Number of Warrants	Percentage of Outstanding Shares at June 30, 2021
Payroll Support Program (PSP1)	$	5,594	$	3,946	$	1,648	6.8	1.1	%
Payroll Support Program Extension (PSP2) (1)	3,290		2,333		957		2.4	0.4	%
Payroll Support Program 3 (PSP3) (2)	3,069		2,178		891		1.9	0.3	%
Total	$	11,953	$	8,457	$	3,496	11.1	1.8	%

(1)During the June 2021 quarter the remaining $1.1 billion of this grant was recognized in government grant recognition in our income statement.

(2)During the June 2021 quarter $356 million of this grant was recognized in government grant recognition in our income statement and $1.8 billion is deferred in other accrued liabilities on our balance sheet as of June 30, 2021.

2020 Term Loan

In 2020 we entered into a $1.5 billion term loan secured by certain slots, gates and routes. In the March 2021 quarter we repaid in full the term loan, which was scheduled to mature in April 2023, and incurred a $56 million loss on extinguishment of debt, which is recorded in miscellaneous, net in non-operating expense in our income statement.

Enhanced Equipment Trust Certificates ("EETCs") Prepayments

In June 2021, we repaid in full approximately $450 million of various EETCs which were scheduled to mature between 2022 and 2023, and incurred a $26 million loss on extinguishment of debt, which is recorded in miscellaneous, net in non-operating expense in our income statement.

Availability Under Revolving Facilities

As of June 30, 2021, we had approximately $2.6 billion undrawn and available under our revolving credit facilities. In addition, we had outstanding letters of credit as of June 30, 2021, including approximately $300 million that reduced the availability under our revolving credit facilities and approximately $300 million that did not affect the availability of our revolving credit facilities.

Fair Value of Debt

Market risk associated with our fixed- and variable-rate debt relates to the potential reduction in fair value and negative impact to future earnings, respectively, from an increase in interest rates. The fair value of debt, shown below, is principally based on reported market values, recently completed market transactions and estimates based on interest rates, maturities, credit risk and where applicable, underlying collateral. Debt is primarily classified as Level 2 within the fair value hierarchy.

    

Fair value of outstanding debt
(in millions)	June 30, 2021		December 31, 2020
Net carrying amount	$	27,265	$	27,974
Fair value	$	29,600	$	29,800

Covenants

Our debt agreements contain various affirmative, negative and financial covenants. We were in compliance with the covenants in our debt agreements at June 30, 2021.