Why Delta, With Huge Profits, Won't Pay Taxes for Years

Years of deep financial losses carry a silver lining for airlines: a reprieve on income taxes when their fortunes improve.

Delta Air Lines earned $2.7 billion last year but paid no income taxes because of the big losses it posted in 2008 and 2009, totaling nearly $2 billion, and that’s just a small chunk of the total past losses the company can use to defray future earnings. The third-largest U.S. airline is sitting on more than $15 billion in what are called net operating loss carry forwards, an accounting device that lets a company apply past financial losses to future tax bills. Under accounting rules, corporations are required to value their deferred tax assets based on the performance of their business and tax rates.