Delta Air Lines, Inc. · NYSE:DAL
Delta Air Lines — Investor Presentation (March 2008)
21 slides from Delta Air Lines's investor presentation, Mar 18, 2008
Slide 1: Delta Air Lines – Edward H. Bastian, President and CFO
Delta Air Lines Edward H. Bastian President and Chief Financial Officer
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: 2007 – A Year of Continued Financial Progress
2007 –A Year of Continued Financial Progress Delivering on our commitments drives substantial value of those measures to comparable GAAP measures on our website at delta.com. 0.20.40.6 First annual profit since 2000 Closed RASM gap to 95% of industry average Best-in-class cost structure -mainline no
Slide 4: Dramatic Progress in All Areas: 2007 vs. 2005
Dramatic Progress in All Areas2007vs20052007 vs. 2005 Improving Unit Revenues Best-in-Class Costs Strong Balance Sheet (¢)(¢)Consolidated PRASM Mainline Non-Fuel Unit Costs Adjusted Net Debt $B(1)12 11 10 9 8 702005 2007 2005 2007 6/30/05 2007 9.31 11.15 7.39 6.80 16.96 7.9 +20% -10% >50% 3 1Include
Slide 5: High Fuel Costs Are A Reality
High Fuel Costs Are A Reality Jet Fuel Prices up 85% Since Beginning of the 2007 $3.32 12/29/2006 1/12/2007 1/26/20072/9/2007 2/23/2007 3/9/2007 3/23/20074/6/2007 4/20/20075/4/20075/18/2007 6/1/2007 6/15/2007 6/29/20077/13/2007 7/27/2007 8/10/2007 8/24/2007 9/7/2007 9/21/2007 10/5/2007 10/19/2007 11
Slide 6: Strategy is Working But Must Be Calibrated to Current Economic Environment
Strategy is Working But Must Be Calibrated to Current Economic Environment International Growth Domestic Capacity Rationalization Cost and Cash Flow Discipline •Reduce system capacity by an additional 5% –Expect to remove up to • Continued growth and diversification to create global network • Identi
Slide 7: International Expansion Continues
International Expansion Continues Over 20 new international markets and 12 new destinations in 2008 Global diversification promotes long-term success Shanghai Salt Lake City New York Hairfax Charlottetown Atlanta Queretaro San JoseLiberia Antigua St. Kitts Georgetown Bogota Georgetown Stockholm Bogo
Slide 8: Network Dramatically Restructured
Network Dramatically Restructured Summer 2008 vs. 2005 •System capacity flat versus 2005•International capacity up 77% •International capacity 41% of total network•First mover advantage to Africa and Eastern Europe 77.4% 70% ASM % Change50% 30% 10% -10% -30% 0.3 -22.5% Consolidated System Domestic I
Slide 9: Fleet Plan Provides Foundation for International Strategy
Fleet Plan Provides Foundation for International Strategy Designed for growth and flexibility •Opens world-wide markets from ATL and JFK Initially deployed on JFK-Mumbai •First lie-flat premium product for Delta•Increase gauge and profitability in international markets •“Follow the sun” during contr
Slide 10: Cost Discipline is Fundamental to Leadership Position
Cost Discipline is Fundamental to Leadership Position 2007 Mainline Non-Fuel CASM(¢)6.80 6.80 8.81 7.77 8.01 8.22 DAL NWA LCC AMR CAL UAUA 91Excludes special and non-recurring items and profit sharing expense. Stage length adjusted to Delta stage length of 1,237 miles
Slide 11: Cash Flow Discipline
Cash Flow Discipline 2008 CAPEX $1.3 billion –a $200 million reduction from plan Aircraft spending reduced $125 million –Deferral of three CRJ-900 aircraft to 2009–Potential additional sales / subleases being negotiated •Non-aircraft spend reduced $75 million–Aircraft modifications and inventory red
Slide 12: Long-Term Fuel Hedge Strategy in Place
Long-Term Fuel Hedge Strategy in Place Multi-year hedging strategy utilizes call options, collars, swaps Percent Hedged Jet Fuel Equivalent Cap 27% 41% 26% 11% 9% 5% $2.76 $2.71 $2.67 $2.67 $2.57 $2.69 Percent Hedged Jet Fuel Equivalent Cap 1q 2008 2q 20008 3q 2008 4q 2008 2009 2010
Slide 13: March Quarter In Line With Expectations
March Quarter In Line With Expectations Strong international demand mitigates fuel price increase 2008 March 2008 Quarter Current Projection January 23 Guidance Operating Margin(3%)Fuel Price$2.83$2.74Mainline non-fuel CASM (vs. PY)Up 5%Up 4 -6%(2%) - -(4%) System Capacity (vs. PY)Up 2%Up 1 -2%Domes
Slide 14: Delta – Focused on Performance
Delta –Focused on Performance Taking our performance to top tier •Continued unit revenue gains combined with cost and cash flow discipline • Recalibrating business to a high fuel price environment International growth and diversification is key to long-term success•Air France joint venture, fleet fl
Slide 15: ADELTA, \@
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Slide 16: Non-GAAP to GAAP Reconciliation
Non-GAAP to GAAP Reconciliation
Slide 17: Pre-Tax Income (Loss)
Pre-Tax Income (Loss) (Combined)(Predecessor)(in millions)20072006Pre-Tax Income (Loss) 1,819 $ (6,968) $ Items excluded: Accounting adjustments- 310 Reorganization expense net (1215) 6206 Reorganization expense, net (1,215) 6,206 Interest due to bankruptcy 12 - Post emergence related professional f
Slide 18: Length-of-Haul Adjusted Passenger RASM
Length-of-Haul Adjusted Passenger RASM Passenger RASM11.15 ¢Adjustment for charter and other airline revenue(0.01) Passenger RASM excluding charter and other airline revenue11.14 ¢Length of haul adjustment(0.33) Length of haul adjusted Passenger RASM excluding charter revenue and other airline reven
Slide 19: Mainline Non-Fuel CASM
Mainline Non-Fuel CASM (Combined)(Predecessor)(Predecessor) Twelve Months Ended Months Ended Months Ended December 31, 2007December 31, 2006December 31, 2005Mainline CASM10.68 ¢10.75 ¢11.11 ¢ Items excluded: Aircraft maintenance to third parties(0.25) (0.19) (0.13) Staffing services to third parties
Slide 20: Free Cash Flow
Free Cash Flow (Cbid)(Combined)Twelve Months Ended(in millions)December 31, 2007Net cash provided by operating activities1,359 $ Adjustments: Payments to ALPA and PBGC for bankruptcy related obligations 875 Payments to ALPA and PBGC for bankruptcy related obligations 875 Changes in short-term invest
Slide 21: Adjusted Net Debt
Adjusted Net Debt (Combined)(Predecessor)(in millions)December 31, 2007June 30, 2005Debt and capital lease obligations 9,000 $ 14,082 $ Plus: 7x LTM aircraft rent 1,722 4,529 Adjusted total debt 10,722 $ 18,611 $ Less: Cash and Cash Equivalents (2,648) $ (1,341) $ Less: Short-term Investments (138)