Delta Air Lines, Inc. · NYSE:DAL
Delta Air Lines — Investor Presentation (May 2016)
17 slides from Delta Air Lines's investor presentation, May 16, 2016
Slide 1: Delta: Delivering Sustainable Results
Delta: Delivering Sustainable Results May 16, 2016
Slide 2: Forward-looking statements
Statements in this presentation that are not historical facts, including statements regarding our estimates, expectations, beliefs, intentions, projections or strategies for the future, may be "forward - looking statements" as defined in the Private Securities Litigation Reform Act of 1995. All forw
Slide 3: Delta: Delivering Sustainable Results
Delta: Delivering Sustainable Results Addressing Near - Term Issues t o Drive Long - Term Success Continuing to Deliver on Aggressive Targets Maintaining Disciplined Capital Deployment Strategy • Strong brand with consistent execution and a focus on the customer has Delta in the top 10% of S&P Indus
Slide 4: Strong Brand Drives Revenue Premium
Strong Brand Drives Revenue Premium • Building a brand that embodies what customers value, improves loyalty, enables segmentation, and drives a sustainable revenue premium to the industry • The investments Delta is making in the business will enhance the customer experience while also improving effi
Slide 5: Continued Momentum With Corporate Travelers
Continued Momentum With Corporate Travelers 5 • Volumes across most corporate sectors remain positive, although fares continue to be depressed 5 4 1 1 1 1 1 2009 2010 2011 2012 2013 2014 2015 Corporate travelers are recognizing Delta’s high quality product and service… …Resulting in solid increases
Slide 6: Reducing Capacity Plan For The Second Half Of 2016
Reducing Capacity Plan For T he Second Half Of 2016 6 System Capacity Growth YoY • Capacity growth slows to below 2 % for 2H16 driven by actions across all regions • Domestic growth will be reduced from 4%+ during the first three quarters to 2.5% for 4Q – Capacity moderates in each quarter this year
Slide 7: The Path To Positive PRASM
The Path To Positive PRASM 7 • Broad commercial initiatives should result in Delta being the first network carrier to return to positive unit revenue growth later this year - an important indicator that margins and cash flows are sustainable regardless of the direction of fuel prices Domestic • Dece
Slide 8: Consistently Improving Our Performance
Consistently Improving Our Performance • Delta’s focus on its long - term financial goals has driven improving returns and materially de - risked the balance sheet, while allowing for increasing shareholder returns Note: Delta ROIC reflects benefit of NOLs; Adjusted for special items Foundation in p
Slide 9: Continuing To Raise The Bar
9 Continuing To Raise The Bar • Delta’s EPS growth, ROIC, and Free Cash Flow are in the top 10% of S&P Industrials 14 - 16% Operating Margin EPS Growth ROIC Cash Flow 2013 Goals 2015 Goals 10 - 12% 10 - 15% 15% + 15% + 20 - 25% $5B+ op cash flow $7 - 8B op cash flow; $4 - 5B FCF $7B Adj. Net Debt by
Slide 10: The Path To Continued Outperformance
The Path To Continued Outperformance • Delta has a strong track record of solid execution with a large pipeline of initiatives in place to deliver solid top - line growth, while maintaining our cost discipline Revenue Growth Strong Cash Flow Cost Productivity Capacity Discipline Targeting revenue gr
Slide 11: Strong Cash Generation Differentiates Delta
11 Strong Cash Generation Differentiates Delta • Plan contemplates continued strong cash generation, with ~$25 billion of operating cash flow produced over the next three years Operating and Free Cash Flow • Strong cash generation funds investments in the future , reductions in leverage , and capita
Slide 12: Fleet Strategy Driving Improving Efficiency
Fleet Strategy Driving Improving Efficiency • Fleet strategy focused on narrowbody replacements to drive improved efficiency; deferring 4 widebody deliveries from 2018 to 2019/20 Average Network Gauge • Recent orders aimed at narrowbody fleet replacement – C Series, 737 - 900s, and A321s offer bette
Slide 13: Cash Taxes Well Below Book Tax Expense
Cash Taxes Well Below Book Tax Expense • Delta currently expects to utilize its $ 9 billion of NOLs and is well positioned to absorb cash taxes in 2018 • Taxable income is expected to be significantly lower than pre - tax book income over the next five years driven by, among other things: – Accelera
Slide 14: Continuing To Reduce Debt At A Measured Pace
Continuing To Reduce Debt At A Measured Pace • Investment grade balance sheet provides Delta with flexibility, reduces financial risk, and should drive sustainable results through the economic cycle • Targeting $4B adjusted net debt by 2020 – Pace allows for more focus on pension funding, while cont
Slide 15: Proactively Addressing Pension Obligation
Proactively Addressing Pension Obligation • Delta’s pension contributions are above required levels and should result in Delta getting to an 80% funded status by 2020 15 Pension Funded Status 40% 60% 80% 100% 120% 2016E 2018E 2020E Funded status at current discount rate (4.6%) Funded status assuming
Slide 16: Commitment To Consistent Shareholder Returns
Commitment T o Consistent Shareholder Returns • Announcing 3 rd consecutive 50% increase to the dividend since initiated in 2013 • Plan to complete remaining $3B of 2015 share repurchase authorization by May 2017, including $375M ASR in the June 2016 quarter Regular dividend i ncreased to $625 milli
Slide 17: Delta Is A Compelling Investment
• Performance is consistent with high quality industrial peers, but current valuation overprices risk Delta Is A Compelling Investment ~$5B of FCF $1.4B of FCF 17 Note: High quality industrial transports include CHRW, CSX, EXPD, FDX, KSU, NSC, R, UNP, UPS; Adjusted for special items $42 $104 $105 $1