Weighted average expected long-term rate of return on plan assets (percent)

Notes to the Consolidated Financial StatementsFair 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 underlying collateral. Debt is primarily classified as Level 2 within the fair value hierarchy.    

|  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |
| Fair value of outstanding debt |
| (in millions) | September 30,2022 | December 31,2021 |
| Net carrying amount | $ | 21,523  |  | $ | 25,084  |  |
| Fair value | $ | 20,500  |  | $ | 26,900  |  |

  
Covenants  
Our debt agreements contain various affirmative, negative and financial covenants. We were in compliance with the covenants in our debt agreements at September 30, 2022.  
  
NOTE 6. EMPLOYEE BENEFIT PLANS  


|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Employee benefit plans net periodic (benefit) cost  |
|  | Pension Benefits |  | Other Postretirement and Postemployment Benefits |
| (in millions) | 2022 | 2021 |  | 2022 | 2021 |
| Three Months Ended September 30, |  |  |  |  |  |
| Service cost | $ | —  |  | $ | —  |  |  | $ | 18  |  | $ | 21  |  |
| Interest cost | 153  |  | 146  |  |  | 32  |  | 29  |  |
| Expected return on plan assets | (330) |  | (381) |  |  | (4) |  | (9) |  |
| Amortization of prior service credit | —  |  | —  |  |  | (1) |  | (2) |  |
| Recognized net actuarial loss | 64  |  | 88  |  |  | 13  |  | 15  |  |
| Settlements | —  |  | 1  |  |  | —  |  | —  |  |
| Net periodic (benefit) cost | $ | (113) |  | $ | (146) |  |  | $ | 58  |  | $ | 54  |  |
|  |  |  |  |  |  |
| Nine Months Ended September 30, |  |  |  |  |  |
| Service cost | $ | —  |  | $ | —  |  |  | $ | 53  |  | $ | 64  |  |
| Interest cost | 459  |  | 437  |  |  | 96  |  | 88  |  |
| Expected return on plan assets | (990) |  | (1,142) |  |  | (12) |  | (26) |  |
| Amortization of prior service credit | —  |  | —  |  |  | (4) |  | (5) |  |
| Recognized net actuarial loss | 191  |  | 266  |  |  | 41  |  | 42  |  |
| Settlements | —  |  | 1  |  |  | —  |  | —  |  |
| Net periodic (benefit) cost | $ | (340) |  | $ | (438) |  |  | $ | 174  |  | $ | 163  |  |

  
Service cost is recorded in salaries and related costs in our income statement, while all other components are recorded within pension and related benefit under non-operating expense.  
Expected Long-Term Rate of Return. Based on our funded status as of December 31, 2021, we have modified the strategic asset allocation mix to reduce the investment risk of the portfolio. As a result of the lower risk profile of the portfolio, the weighted average expected long-term rate of return on our defined benefit pension plan assets for 2022 net periodic benefit cost is 7.0%.  
  
Delta Air Lines, Inc. September 2022 Form 10-Q                                 14
