Delta Air Lines, Inc. · NYSE:DAL
Delta Air Lines — Deutsche Bank Industrials & Basic Materials Conference 2015
17 slides from Delta Air Lines's conference presentation, Jun 4, 2015
Slide 1: Delta: Setting a New Standard
Delta: Setting a New Standard Deutche Bank Industrials & Basic Materials Conference June 4, 2015
Slide 2: Forward-looking statements
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, that could
Slide 3: Delta: Setting A New Standard
Delta: Setting A New Standard Deutsche Bank Industrials & Basic Materials Conference June 4, 2015
Slide 4: Forward-looking statements
2 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, that
Slide 5: Delta: Evolution Over The Past Decade
Delta: Evolution Over The Past Decade Consolidation High Quality Product Sustainable Earnings & Cash Flow • Investments in network, products, and services in addition to highly motivated employees drive Delta’s industry leading operational reliability, customer satisfaction and 15% domestic unit rev
Slide 6: Delta: Setting A New Standard
Delta: Setting A New Standard Significant Financial Progress Sustainable Returns Capital Deployment Strategy Benefits Shareholders Focus on sustaining and growing returns: • Optimizing revenue premium through product investment and technology pipeline • Reducing risk across the company – industry -
Slide 7: Across The Board Improvement In The Business
LTM 1Q14 LTM 1Q15 +54% 5 Across The Board Improvement In The Business • Delta continues to deliver industry leading operational reliability and customer satisfaction • LTM 1Q15 pretax margin expanded 350bps year over year to 11.5% (13.7% excluding hedges) • Lowered adjusted net debt by nearly $5 bil
Slide 8: June Quarter 2015 Forecast: Producing A Record June Quarter
Operating margin 15.5% - 16.5% Fuel Price $2.40 - $2.45 Non - operating expense ~$120 million Passenger unit revenue change year over year Down 4% - 5% CASM – ex fuel change year over year Flat System capacity change year over year Up ~3 % Free cash flow ~$1.5 billion Cash returned to shareholders $
Slide 9: Adjustments to Improve Unit Revenue Trajectory
7 Adjustments to Improve Unit Revenue Trajectory • Capacity reduction initiatives put company on path to achieve unit revenue growth by year end • Unit revenue performance being negatively impacted by foreign currency, lower international fuel surcharges and weaker than expected domestic yields • Ta
Slide 10: Fuel Tailwind Accelerates In Second Half 2015
8 Fuel Tailwind Accelerates In Second Half 2015 • 2H15 all - in price per gallon will be ~25% lower than 1H15, despite ~5% higher market fuel prices • Fuel is expected to be a $9.4 billion expense for Delta in 2015 – $1 move in crude impacts expense by $100 million annually – At current market price
Slide 11: Strong Performance Relative To High Quality Peers
Strong Performance Relative To High Quality Peers • Establishing new framework to further build a franchise that generates solid margins and cash flow, an investment grade balance sheet, and sustainable shareholder returns • Strong progress drives the third upward revision to our targets in three ye
Slide 12: Capital Deployment: Reinvest, Strengthen Balance Sheet, Return Cash
Reinvest In The Business • ~50% of operating cash flow to be reinvested in the business • Plan to invest $2.5 - $3 billion annually into fleet, products, facilities and technology • Allows for replacement of 20% of Delta’s mainline fleet over next 3 years Strengthen The Balance Sheet • Nearly $10 bi
Slide 13: Strong Cash Generation Funds Investment, Leverage Reduction, Capital Returns
Strong Cash Generation Funds Investment in The Future, Reductions in Leverage, and Capital Returns to Owners • Strong operating cash flow, combined with disciplined capital spending, produces sustainable free cash flow of $4 - 5 billion annually Note: Includes pre - merger NWA; Excludes special item
Slide 14: Setting Long-Term Adjusted Net Debt Target at $4B
Setting Long - Term Adjusted Net Debt Target at $4B • Goal is to achieve and maintain $4 billion adjusted net debt levels by 2017 Adjusted Net Debt $ 17.0B $9.4B $7.3B $4B 2009 2013 2014 LT Target • Determined $4 billion is optimal long - term debt level – Results in investment grade credit metrics
Slide 15: An Industry Focused On Shareholder Returns
An Industry Focused On Shareholder Returns • Capacity capacity growth for the four largest carriers being funded by replacement aircraft and fleet modification, not purchase of growth aircraft • The US carriers have returned over $4.3B to shareholders over the last year, an amount that is expected t
Slide 16: Delta's Stock Has Outperformed the Industrial Peers
Delta’s Stock Has Outperformed the Industrial Peers… • Delta’s strong financial performance and balanced capital deployment strategy has driven share price appreciation well in excess of the peer group over the last several years 0% 50% 100% 150% 200% 250% 300% 350% 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q1
Slide 17: Valuation Remains at a Significant Discount
• Plan targets compare favorably with other industrials and should help drive better valuations …But Valuation Remains at a Significant Discount 15 %+ 13.1% 11.5% Delta High Qual. Ind. Transports S&P Industrials EPS Growth $4 - 5B $1.5B $1.6B Delta High Qual. Ind. Transports S&P Industrials Free Cas
Delta Air Lines — Deutsche Bank Industrials & Basic Materials Conference 2015 on 6ix