Item 1.01 Entry into a Material Definitive Agreement.
On January 15, 2021, Delta Air Lines, Inc. ("Delta") entered into a Payroll
Support Program Extension Agreement (the "PSP Extension Agreement") with the
United States Department of the Treasury ("Treasury") pursuant to Subtitle A of
Title IV of Division N of the Consolidated Appropriations Act, 2021 (PSP
Extension Law).
Pursuant to the PSP Extension Agreement, Delta expects to receive $2.9 billion
in payroll support payments, which must be used exclusively for the continuation
of payment of employee wages, salaries and benefits. The payroll support
payments are also conditioned on, among other things, Delta's agreement to
continue essential air service as directed by the U.S. Department of
Transportation until March 1, 2022, certain limitations on executive
compensation until October 1, 2022, and prohibitions on share repurchases and
dividends through March 31, 2022. In addition, the PSP Extension Agreement
prohibits Delta from conducting involuntary layoffs or furloughs of U.S.
employees through March 31, 2021.
The relief payments consist of approximately $2.0 billion in grants and $830
million in an unsecured 10-year loan. Delta received the first installment of
$1.4 billion under the agreement on January 15, 2021 and expects to receive the
balance in the March quarter. The loan bears interest at an annual rate of 1.00%
for the first five years (through January 15, 2026) and the applicable secured
overnight financing rate plus 2.00% per year in the final five years.
Approximately 70% of the payment received on January 15, 2021 was in the form of
a grant, and approximately 30% was in the form of an unsecured loan. Delta
issued a promissory note to Treasury on January 15, 2021 for approximately $400
million with respect to the term loan, which will increase to its full principal
amount as the balance of payroll support payments is received. As a part of the
PSP Extension Agreement, Delta has also agreed to issue to Treasury warrants to
acquire approximately 2.1 million shares of Delta common stock, which warrant
issuances are being made under an exemption from registration pursuant to
Section 4(a)(2) of the Securities Act of 1933, as amended (the "Securities
Act"). Approximately one-half of the warrants were issued on January 15, 2021
and the remaining warrants will be issued as the balance of payroll support
payments is received. The warrants have an initial exercise price of $39.73 per
share (the closing price of Delta's common stock on December 24, 2020), subject
to adjustment in certain cases, and a five-year term.
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DELTA AIR LINES, INC. 
