Delta Air Lines, Inc. · NYSE:DAL
Delta Air Lines — J.P. Morgan Aviation, Transportation and Industrials Conference 2015
25 slides from Delta Air Lines's conference presentation, Mar 3, 2015
Slide 1: Delta: Delivering Growing Value
Delta: Delivering Growing Value J.P. Morgan Aviation, Transportation and Industrials Conference March 3, 2015
Slide 2: Safe Harbor
Safe Harbor This presentation contains various projections and other forward-looking statements which represent Delta’s estimates or expectations regarding future events. All forward-looking statements involve a number of assumptions, risks and uncertainties, many of which are beyond Delta’s control
Slide 3: Delivering Growing Value
Delivering Growing Value Building on our strengths to expand margins and cash flow in order to reduce debt, return capital to shareholders and invest in our future Significant • Stable revenue environment and lower fuel prices, coupled with Delta-specific initiatives, are expected to produce margin
Slide 4: Outpacing The Airline Industry
Outpacing The Airline Industry 2014 Pre-Tax Income ($M) Record 2014 $4,536 • Generated more than $4.5 $4,164 billion in pre-tax income in 2014, almost $1.9 billion higher than 2013 • $3.7 billion of free cash flow, $2,233 $7.3 billion of adjusted net debt, $1,973 $900 million contributed to the pens
Slide 5: The Backdrop For 2015
The Backdrop For 2015 Improving on all aspects of our financial performance in 2015 as a solid revenue environment, lower fuel prices and Delta-specific initiatives produce another record year Across The Industry At Delta • Modest economic growth globally, with • Disciplined approach to capacity – m
Slide 6: Restructured Hedge Book
Restructured Hedge Book 2H15 hedge book has been restructured to balance exposure while maintaining longer-term upside protection 1Q15E Delta Fuel Price • Took advantage of rebound in market prices during the quarter to restructure 2015-16 hedge book $2.92- $0.33 $2.97 $2.60- • 2H15 hedge book is no
Slide 7: Solid March Quarter Performance
Solid March Quarter Performance Business continues to produce top line growth, margin expansion and strong free cash flow • Excluding impact of hedge restructuring, March quarter margin forecast is at the low end of original guidance range from January on slightly lower unit revenue and 15 cents hig
Slide 8: A High-Quality Company
A High-Quality Company Long-term goals guide the business toward generating solid margins and cash flow, achieving an investment grade-quality balance sheet and delivering sustainable shareholder returns Long-Term Goals EPS Growth Operating •11-14% operating margins Margin •2014: 13.1% Delta - Goal
Slide 9: Continuing To Drive Margin Expansion
Continuing To Drive Margin Expansion Disciplined capacity growth, pricing improvement and cost productivity combine to generate long- term revenue growth, margin expansion and greater cash generation Disciplined Capacity Pricing Cost Productivity Growth Improvements • Drive capacity growth • Investm
Slide 10: Corporate Customers Are Choosing Delta
Corporate Customers Are Choosing Delta Momentum continues as corporate revenues have increased by 6% this year Running a high-quality, …Produces strong gains in corporate customer-focused airline… revenues 1Q15 Ticketed Revenue vs Prior Year Business Travel News Survey Financial Services 13% 1 1 1 1
Slide 11: Higher Revenue Through Better Customer Segmentation
Higher Revenue Through Better Customer Segmentation Industry-leading consumer products in each of four Branded Fare categories, allowing customers to tailor their travel experience Delta One / Delta Comfort+ Main Cabin Basic Economy First Class Delta One Best-in-class / product Delta Comfort+ A dist
Slide 12: Enhanced Agreement With American Express
Enhanced Agreement With American Express Partnering with American Express since 1996 to create the world’s most valuable airline co-brand portfolio • New, multi-year contract with American Express continues growth momentum of Delta’s $2 billion co-brand revenue stream • Significantly improved econom
Slide 13: Domestic Refleeting Improves Asset Utilization
Domestic Refleeting Improves Asset Utilization Higher domestic capacity levels on a lower capital base produce improvements in ROIC • 2015 domestic capacity growth driven by higher gauge and better asset utilization – 3% higher capacity on flat departures and 10 fewer Post-Merger Domestic Fleet Tren
Slide 14: International Revenues Face Headwinds
International Revenues Face Headwinds • Strong dollar puts pressure on revenue and RASM but is margin accretive • Re-evaluating post-summer capacity plans in Atlantic, Pacific, and Brazil in light of continued currency headwinds West Coast Atlantic Pacific Latin • Redeployment of capacity with • Con
Slide 15: Balanced Capital Deployment Drives Value
Balanced Capital Deployment Drives Value Balanced approach to capital deployment has driven significant value for shareholders Reinvest In The Strengthen The Return Cash To Business Balance Sheet Shareholders • ~50% of operating cash • Nearly $10 billion in debt • Returned over $2 billion flow to be
Slide 16: Paying Down Debt Remains A Priority
Paying Down Debt Remains A Priority Clear path to achieve $5 billion debt target in 2016, resulting in $1 billion of run-rate interest savings versus 2009 Adjusted Net Debt $17.0B $15.0B $12.9B $11.7B $9.4B $7.3B < $6.0B 2009 2010 2011 2012 2013 2014 2015E Interest $1.3B $1.2B $1.1B $1.0B $850M $650
Slide 17: Strong Commitment To Returning Cash To Shareholders
Strong Commitment To Returning Cash To Shareholders Delta has returned over $2 billion to owners in less than two years • On track to return $2.2 billion to shareholders since starting program in mid-2013, including $500 million in March quarter – $425 million returned through dividends – Over $1.75
Slide 18: The Path To Value Creation
The Path To Value Creation Achieving our long-term goals and lowering risk across the business should result in improved valuation EPS Growth ROIC Free Cash Flow 10-15% 15-18% 12.3% 14.5% $3B+ $1.7B Delta S&P Industrials Delta S&P Industrials Delta S&P Industrials Forward Price/Earnings Free Cash Fl
Slide 19: Non-GAAP Reconciliations and Additional Information
Non-GAAP Reconciliations and Additional Information 19
Slide 20: Non-GAAP Reconciliations
Non-GAAP Reconciliations Non-GAAP Financial Measures Delta sometimes uses information ("non-GAAP financial measures") that is derived from the Consolidated Financial Statements, but that is not presented in accordance with accounting principles generally accepted in the U.S. (“GAAP”). Under the U.S.
Slide 21: Non-GAAP Reconciliations
Non-GAAP Reconciliations Pre-Tax Income, excluding special items Delta excludes special items from pre-tax income because management believes the exclusion of these items is helpful to investors to evaluate the company's recurring core operational performance in the periods shown. Therefore, we adju
Slide 22: Non-GAAP Reconciliations
Non-GAAP Reconciliations Free Cash Flow Delta presents free cash flow because management believes this metric is helpful to investors to evaluate the company's ability to generate cash that is available for use for debt service or general corporate initiatives. This metric is adjusted for the postin
Slide 23: Non-GAAP Reconciliations
Non-GAAP Reconciliations Operating Margin, adjusted Delta excludes MTM adjustments and restructuring and other from operating margin for the reasons described above under the heading Pre-Tax Income, excluding special items. Year Ended December 31,2014 Operating margin 5.5% Items excluded: MTM adjust
Slide 24: Non-GAAP Reconciliations
Non-GAAP Reconciliations Operating Cash Flow, adjusted Delta presents operating cash flow, adjusted because management believes adjusting for these amounts provides a more meaningful financial measure for investors. This metric is adjusted for the posting of hedge margin as we believe this inclusion
Slide 25: Information Regarding Fuel Hedge Restructuring
Information Regarding Fuel Hedge Restructuring Delta restructured its fuel hedge portfolio by early settling certain of its 2015 hedges and deferring the settlement of a portion of its remaining positions. A portion of contracts originally scheduled to expire in the second half of 2015 were early se
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