Delta Air Lines, Inc. · NYSE:DAL
Delta Air Lines — Cowen and Company 9th Annual Global Transportation Conference (September 2016)
16 slides from Delta Air Lines's conference presentation, Sep 7, 2016
Slide 1: Delta – Delivering Sustainable Results
Delta – Delivering Sustainable Results Cowen and Company 9th Annual Global Transportation Conference September 7, 2016
Slide 2: Safe Harbor
Safe Harbor 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
Slide 3: Delta: Delivering Sustainable Results
Delta: Delivering Sustainable Results Leveraging our solid foundation to produce consistent, sustainable results for shareholders through the business cycle • Business producing solid margins and cash flows through Delivering Solid Results headwinds from operational disruption, volatile fuel prices,
Slide 4: Producing a Solid September Quarter
Producing a Solid September Quarter On track to produce solid 18-19% operating margin and nearly $1.5B of operating cash flow, despite headwinds from operational disruption, volatile fuel prices, and continued unit revenue weakness • The outage event and subsequent operational recovery efforts are e
Slide 5: The Path To Positive PRASM
The Path To Positive PRASM Broad commercial initiatives should result in Delta being the first network carrier to return to positive unit revenue growth - an important indicator that margins and cash flows are sustainable regardless of the direction of fuel prices Domestic Latin • Capacity growth de
Slide 6: Fuel Tailwind Now Behind Us
Fuel Tailwind Now Behind Us Volatile fuel environment underscores importance of unit revenue growth to achieving long-term targets Brent Crude Prices • Brent prices have increased over 85% since bottoming $55 in late January $50 • No hedge book remaining for 2016 $45 $40 • Refinery provides Delta wi
Slide 7: Solid Cost Opportunity Pipeline
Solid Cost Opportunity Pipeline Productivity pipeline remains robust and will allow Delta to maintain non-fuel unit cost growth below 2% annually Average Network Gauge • Leading operational efficiency and reliability drives unit cost 7% productivity • Upgauging and refleeting initiatives will contin
Slide 8: Committed to Achieving Our Long-Term Goals
Committed to Achieving Our Long-Term Goals Delta’s EPS growth, ROIC, and Free Cash Flow are in the top 10% of S&P Industrials 2013 Goals 2015 Goals 2016 – 2018 Framework Operating 10-12% 14-16% 17-19% Margin EPS 10-15% 15% + 15% + Growth ROIC 15% + 20-25% 25% + $7-8B op cash flow; $8-9B of operating
Slide 9: Consistently Improving Our Performance
Consistently Improving Our Performance Delta’s focus on its long-term financial goals has driven improved returns and de-risked the balance sheet, while allowing for increased shareholder returns Return on Adjusted Capital Returns Invested Capital Net Debt to Shareholders $17.0B $3.1B 31.0% 23.5% $2
Slide 10: Strong Cash Generation Differentiates Delta
Strong Cash Generation Differentiates Delta Continued strong cash generation, with ~$25 billion of operating cash flow expected over the next three years • Strong cash generation funds investments in the future, reductions in leverage, and capital returns to owners Capital Expenditures & Operating C
Slide 11: Balanced Approach to Capital Deployment
Balanced Approach to Capital Deployment Strong free cash flow generation funds consistent shareholder returns, while also allowing for continued debt reduction Committed to Maintaining an Investment ….While Returning at Least 70% of Grade Balance Sheet… Free Cash Flow to Shareholders • Investment gr
Slide 12: Delta Is A Compelling Investment
Delta Is A Compelling Investment Performance is consistent with high quality industrial peers, but current valuation overprices risk Implied Delta Stock Price at High Quality Industrial Transport Valuation Multiples $113 $94 $97 $37 +205% +155% +160% Current DAL @ High DAL @ High DAL @ High Stock Pr
Slide 13: Non-GAAP Reconciliations
Non-GAAP Reconciliations 13
Slide 14: Non-GAAP Reconciliations
Non-GAAP Reconciliations Non-GAAP Financial Measures Note A: The following tables show reconciliations of non-GAAP financial measures. The reasons Delta uses these measures are described below. Delta sometimes uses information ("non-GAAP financial measures") that is derived from the Consolidated Fin
Slide 15: Non-GAAP Reconciliations – Adjusted Net Debt
Non-GAAP Reconciliations Adjusted Net Debt Delta uses adjusted total debt, including aircraft rent, in addition to long-term adjusted debt and capital leases, to present estimated financial obligations. Delta reduces adjusted debt by cash, cash equivalents and short-term investments, and hedge margi
Slide 16: Non-GAAP Reconciliations – Operating Cash Flow, adjusted
Non-GAAP Reconciliations Operating Cash Flow, adjusted Delta presents adjusted operating cash flow because management believes adjusting for the following items provides a more meaningful measure for investors. Adjustments include: Hedge deferrals. During the March 2015 quarter, we effectively defer