Delta Air Lines, Inc. · NYSE:DAL
Delta Air Lines — Investor Day (November 2024)
55 slides from Delta Air Lines's investor day presentation, Nov 20, 2024
Slide 1: Welcome
WELCOME.
Slide 2: Differentiated & Durable
Differentiated & Durable 2024 Investor Day November 20, 2024
Slide 3: Julie Stewart
JULIE STEWART Vice President, Investor Relations & Corporate Development
Slide 4: Safe Harbor
SAFE HARBOR Statements made in this presentation that are not historical facts, including statements regarding our estimates, expectations, beliefs, intentions, projections, goals, aspirations, commitments or strategies for the future, should be considered “forward-looking statements” under the Secu
Slide 5: Today's Agenda
TODAY’S AGENDA Ed Bastian CEO 8:35 – 9:15 AM Glen Hauenstein President 9:15 – 9:55 AM Dan Janki EVP & CFO 9:55 – 10:25 AM BREAK 10:25 – 10:45 AM Q&A 10:45 – 11:45 AM 5
Slide 6: Ed Bastian
ED BASTIAN Chief Executive Officer
Slide 7: Delta: A Compelling Investment
DELTA: A COMPELLING INVESTMENT Positioned Delivering Creating To Win Durability Value Trusted consumer brand, Competitive advantages, Disciplined reinvestment, led by Delta people, and 15 years diverse revenue, and secular continued debt reduction, of consistent strategy, investment, growth in trave
Slide 8: Enduring Competitive Advantages
ENDURING COMPETITIVE ADVANTAGES BEST-IN-CLASS PEOPLE AND UNMATCHED STRONG FINANCIAL CULTURE GLOBAL NETWORK FOUNDATION LEADING TRUSTED OPERATIONAL CONSUMER RELIABILITY BRAND 8
Slide 9: Consistent Execution
CONSISTENT EXECUTION 2021 CAPITAL MARKETS DAY PRIORITIES RESULTS DELIVER Industry-leading operations and service while Best-in-class Operations restoring the network and renewing the fleet Investments in people, technology, airports, STRENGTHEN Sky Clubs and Delta One Lounges, Delta Sync Brand & Cus
Slide 10: Delta's Brand Transcends the Industry
DELTA’S BRAND TRANSCENDS THE INDUSTRY Powered by Delta’s people 10
Slide 11: Brand Creates Differentiation & Value
BRAND CREATES DIFFERENTIATION & VALUE 114%+ +26pts ~1% Unit Revenue vs. Industry vs. Network Carriers of U.S. GDP REVENUE NET COBRAND PREMIUM PROMOTER SCORE CARD SPEND Revenue premium source: SEC filings, trailing twelve months as of 3Q24; GDP Source: October 2024 S&P Global Forecast NPS Source: NPS
Slide 12: Evolving Consumer and Industry
EVOLVING CONSUMER AND INDUSTRY Delta is uniquely positioned to capitalize on secular consumer and travel trends Secular growth in travel An advantaged U.S. consumer demand across generations in a resilient economy as experiences prioritized Growing demand for Accelerating pace of industry premium, c
Slide 13: Premium Consumer Is Thriving
PREMIUM CONSUMER IS THRIVING CONSUMER WEALTH CONTINUES TO GROW HOUSEHOLDS EARNING >$100K ANNUALLY ($ TRILLION) 140 130 120 110 100 +$10 Trillion ▪ High-income household wealth over since 2Q23 40% higher than 2019 90 80 ▪ High-income travelers accounted for 75% of spending on air travel 70 ▪ Leisure
Slide 14: Millennials Driving Premium Growth
MILLENNIALS DRIVING PREMIUM GROWTH HOUSEHOLD WEALTH BY GENERATION AT COMPARABLE AGES, INFLATION ADJ. $265k +36% +20% Millennials have more wealth than prior ▪ Air travel spend growth is outpacing generations at total spend for all generations by 3 - 4 pts the same age ▪ Millennials + Gen Z are the f
Slide 15: Delta Is Positioned to Win
DELTA IS POSITIONED TO WIN Elevate the World’s Unlock the Value of Deliver Sustained Best Airline Our Trusted Brand Value Creation ▪ Operational excellence ▪ Invest in experience and choice ▪ Margin expansion ▪ Technology transformation ▪ Grow loyalty to Delta’s brand ▪ Durable earnings and free cas
Slide 16: Operational Excellence Is Core to Delta
OPERATIONAL EXCELLENCE IS CORE TO DELTA COMPLETION FACTOR ON-TIME (A0) 2014-YTD2024 2014-YTD2024 98.7% 98.5% 70.5% 97.9% 97.9% 97.5% 97.5% 64.6% 63.5% 63.3% 61.3% 58.5% RELIABILITY PROVIDES THE FOUNDATION FOR EFFICIENCY 9/10 Years 10/10 Years Network Carrier Leader Network Carrier Leader System on-t
Slide 17: Transforming Through Technology
LEVERAGING TECHNOLOGY TRANSFORMING THROUGH TECHNOLOGY Investments in cloud Progress to date infrastructure is enabling enable acceleration acceleration MODERNIZED INTEGRATED Platforms & Software Data & Analytics More Reliable Operation, Connected Digital Enhanced Capabilities Efficiently Delivered E
Slide 18: Value Creation Framework
VALUE CREATION FRAMEWORK Three-to-five-year financial targets deliver sustained value creation MARGIN DURABLE EARNINGS BALANCE SHEET EXPANSION AND FREE CASH FLOW STRENGTH 10% 1x EPS Growth Mid-teens $3-5B Operating Margin Gross Leverage Free Cash Flow 15%+ RETURN ON INVESTED CAPITAL $40B+ UNENCUMBER
Slide 19: Balanced Capital Allocation
BALANCED CAPITAL ALLOCATION CONSISTENT, REDUCE FINANCIAL RISK DISCIPLINED REINVESTMENT THROUGH DEBT PAYDOWN 50% $9-11B 50% REINVEST ANNUAL OPERATING SHAREHOLDER RETURNS FOR GROWTH CASH FLOW Debt reduction, dividends, repurchases STEADY DIVIDEND INCREASE GROWTH SHAREHOLDER RETURNS 19
Slide 20: Delta Is Differentiated & Durable
DELTA IS DIFFERENTIATED & DURABLE Positioned Delivering Creating To Win Durability Value 20
Slide 21: Glen Hauenstein
GLEN HAUENSTEIN President
Slide 22: Favorable Current Environment
FAVORABLE CURRENT ENVIRONMENT Continued demand strength and increasingly constructive industry backdrop 25% INDUSTRY CAPACITY VS. UNIT REVENUE % CHANGE YOY 20% 15% 10% Moderating 5% supply growth 0% ▪ 4Q revenue outlook on track (5%) Improving unit ▪ Delta well positioned in 2025 -5% revenue trends
Slide 23: Unlocking Value of Delta's Brand
UNLOCKING VALUE OF DELTA’S BRAND Delivering customer value and driving durable high-margin revenue INVESTING GE I IN EXPERIENCE AND MORE CHOICE NV ENGA EST GROWING LOYALTY TO DELTA’S BRAND ENGAGING G RO W CUSTOMERS BEYOND FLIGHT 23
Slide 24: Investing in Elevated Experiences
INVESTING INVESTING IN ELEVATED EXPERIENCES 15+ years of investment in product & service innovation creates unmatched position GENERATIONAL AIRPORT MOST COMPREHENSIVE SEAMLESS, PERSONALIZED INVESTMENTS LOUNGE NETWORK EXPERIENCES AT SCALE GROWING VALUE OF PREMIUM PRODUCTS MEMBERSHIP ENGAGEMENT & CUST
Slide 25: Delta's Premium Product Journey
INVESTING DELTA’S PREMIUM PRODUCT JOURNEY 2010 and Before 2011-2014 2015-2019 2022-2024 Premium seat mix ~10% Premium seat mix ~20% Premium seat mix >25% Premium seat mix ~30% ▪ Low paid load factor ▪ Introduced branded fares ▪ Expanded branded fares ▪ Premium on 100% of flights ▪ Used for upgrades
Slide 26: Premium Has Significant Runway
INVESTING PREMIUM HAS SIGNIFICANT RUNWAY TICKET REVENUE BY CABIN ($) Increasing Premium Seat Mix MAIN ▪ Introducing A350-1000 with ~50% premium ▪ Launching A321neo flatbed aircraft ▪ Completing cabin modification programs to increase premium offerings and harmonize interiors PREMIUM Premium expected
Slide 27: Empowering Customers With Choice
INVESTING EMPOWERING CUSTOMERS WITH CHOICE 2010 2024 2025+ Pioneered Cabin Segmentation Give Customers More Choice COACH BASIC ECONOMY BASIC ECONOMY FIRST MAIN CABIN MAIN CABIN BUSINESS CLASS COMFORT+ Further Segmentation COMFORT+ DELTA PREMIUM SELECT Aligning Value DELTA PREMIUM SELECT DOMESTIC FIR
Slide 28: Right Offer, Right Time, Right Channel
INVESTING RIGHT OFFER, RIGHT TIME, RIGHT CHANNEL Improved Better User Optimized Distribution Experience Offers Meeting customers in their Simplifying the purchasing Generative AI decision-making channel of choice with omni- process and improving engine enables more granular channel distribution and
Slide 29: Personalized & Seamless Experiences
INVESTING PERSONALIZED & SEAMLESS EXPERIENCES Ease of Purchase Improved Day of Integrated & Check in Travel Experience Employee Tools Delta Sync Wi-Fi & Seatback Travel Adjacent Experiences Digital ID Bag Self-Servicing More to Come & Security Capabilities in 2025+ Vac at i on s S t ay s Car s Cr u
Slide 30: Growing Brand Loyalty
GROWING GROWING BRAND LOYALTY Deepening member engagement creates greater lifetime customer value ACTIVE SKYMILES MEMBERSHIP 2017-2024 50% Growth in Membership ▪ Members spend 5x on Delta ▪ New members are younger and more engaged ▪ Growing premium preference 2017 2018 2019 2022 2023 2024 (YTD) ▪ In
Slide 31: Industry-Leading Cobrand Card
GROWING INDUSTRY-LEADING COBRAND CARD Growth from new accounts, product innovation, and higher share of wallet AMERICAN EXPRESS REMUNERATION TO DELTA ($ BILLIONS) $10 >$7 ▪ Delta cobrand spend growth CAGR has $4 outperformed credit card industry by 3 points since 2013 <$2 ▪ Record cobrand card appli
Slide 32: Engaging Customers Beyond Flight
ENGAGING ENGAGING CUSTOMERS BEYOND FLIGHT SkyMiles integration reinforces value of membership ips Integrated With S h kyM ners ile t ar s P acent Experi el-Adj enc rav es T TRUSTED BRAND 32
Slide 33: Delivering High-Margin Revenue Growth
DELIVERING HIGH-MARGIN REVENUE GROWTH Value drivers support revenue premium and margin expansion REVENUE DIVERSIFICATION % OF TOTAL REVENUE 60%+ 57% ~40% ▪ Investing in the customer experience 43% 40% ~60% ▪ Driving premium outperformance 2010 2024E Long-Term ▪ Empowering customers with choice Targe
Slide 34: Dan Janki
DAN JANKI Executive Vice President & Chief Financial Officer
Slide 35: Differentiated Performance
DIFFERENTIATED PERFORMANCE RETURN ON FREE CASH FLOW INVESTED CAPITAL INVESTMENT-GRADE 2024E 2024E BALANCE SHEET >$3B 13% $30 BILLION OF Mid-single UNENCUMBERED ASSETS $5B +5pts digits CAPEX vs.WACC <$1B STEADY REST OF INDUSTRY REST OF INDUSTRY DIVIDEND GROWTH (total) (avg) Source: Based on SEC filin
Slide 36: Consistent Margin Outperformance
CONSISTENT MARGIN OUTPERFORMANCE OPERATING 16% MARGIN 14% 12% 10% 8% AAL, ALK, UAL 6% Structural Margin Premium 4% 2% ▪ Revenue diversity 0% ▪ Industry-leading operation Rest of -2% (2%) Industry ▪ High-margin core hubs (4%) -4% 2018 2019 2022 2023 1H24 2H24E ▪ Corporate leadership ▪ Best-in-class p
Slide 37: Value Creation Framework
VALUE CREATION FRAMEWORK Three-to-five-year financial targets deliver sustained value creation MARGIN DURABLE EARNINGS BALANCE SHEET EXPANSION AND FREE CASH FLOW STRENGTH 10% 1x EPS Growth Mid-teens $3-5B Operating Margin Gross Leverage Free Cash Flow 15%+ RETURN ON INVESTED CAPITAL $40B+ UNENCUMBER
Slide 38: Delivering Steady Margin Expansion
MARGIN EXPANSION DURABLE EARNINGS & CASH BALANCE SHEET STRENGTH DELIVERING STEADY MARGIN EXPANSION OPERATING MARGIN Mid-teens 11% Margin Expansion Drivers ▪ High-margin revenue growth ▪ Leveraging investments, normalizing maintenance, and accelerating technology Long-Term ▪ Improving industry backdr
Slide 39: Driving a Competitive Cost Structure
MARGIN EXPANSION DURABLE EARNINGS & CASH BALANCE SHEET STRENGTH DRIVING A COMPETITIVE COST STRUCTURE Expect to consistently deliver low single-digit non-fuel unit cost growth LEVERAGING INVESTMENTS MAINTENANCE NORMALIZING FLEET NETWORK Better utilization Scale core hubs TECHNOLOGY WORKFORCE AIRPORTS
Slide 40: Disciplined Approach to Fleet
MARGIN EXPANSION DURABLE EARNINGS & CASH BALANCE SHEET STRENGTH DISCIPLINED APPROACH TO FLEET Premium Fleet Utilization Simplification & Scale Fuel Efficiency ▪ Continued growth ▪ Full restoration of ▪ Reducing fleet families ▪ Expect 1% to 2% fuel in premium seat mix regional fleet from 13 to 7 eff
Slide 41: Durable Earnings and Free Cash Flow
MARGIN EXPANSION DURABLE EARNINGS & CASH BALANCE SHEET STRENGTH DURABLE EARNINGS AND FREE CASH FLOW Drivers of Durability 10% ▪ Consistent strategy, investment, and execution EPS Growth ▪ Best-in-class operations, network, and trusted brand $3-5B ▪ Diversified, high-margin revenue ▪ Leading cobrand
Slide 42: Fortifying Investment-Grade Balance Sheet
MARGIN EXPANSION DURABLE EARNINGS & CASH BALANCE SHEET STRENGTH FORTIFYING INVESTMENT-GRADE BALANCE SHEET Positioning Delta with the highest credit quality in its history GROSS LEVERAGE RATIO ▪ Debt maturities average 3.0x $2 billion annually 2.7x 2.4x ▪ Paying cash for new aircraft 2.0x 1.0x ▪ Stro
Slide 43: Balanced Capital Allocation
MARGIN EXPANSION DURABLE EARNINGS & CASH BALANCE SHEET STRENGTH BALANCED CAPITAL ALLOCATION CONSISTENT, REDUCE FINANCIAL RISK DISCIPLINED REINVESTMENT THROUGH DEBT PAYDOWN 50% $9-11B 50% REINVEST ANNUAL OPERATING SHAREHOLDER RETURNS FOR GROWTH CASH FLOW Debt reduction, dividends, repurchases STEADY
Slide 44: Strong Return on Invested Capital
STRONG RETURN ON INVESTED CAPITAL Delivering returns that are in the upper half of the S&P 500 MARGIN RETURN ON INVESTED CAPITAL EXPANSION 15%+ 13% DURABLE EARNINGS AND FREE CASH FLOW DAL WACC 8% BALANCE SHEET Long-Term STRENGTH 2024E Target Note: Adjusted for special items; historical non-GAAP fina
Slide 45: Delta: A Compelling Investment
DELTA: A COMPELLING INVESTMENT Positioned Delivering Creating To Win Durability Value Trusted consumer brand, Competitive advantages, Disciplined reinvestment, led by Delta people, and 15 years diverse revenue, and secular continued debt reduction, of consistent strategy, investment, growth in trave
Slide 46: Keep Climbing
KEEP CLIMBING.
Slide 47: Appendix
APPENDIX
Slide 48: Glossary and Notes
GLOSSARY AND NOTES ▪ Long-term financial targets are 3-to-5-year expectations (2027-2029) ▪ 2024 Baseline: All guidance metrics grow from a 2024 baseline that excludes the impact of the CrowdStrike-caused outage in the September quarter. Please see the supplemental information on Delta's Investor Re
Slide 49: Powerful Domestic Network
POWERFUL DOMESTIC NETWORK Delta is #1 or #2 in two-thirds of the top 100 U.S. markets SEA #2 GROWING Membership Engagement MSP #1 BOS BOS #1 DTW #1 LGA/JFK #1 SCALE SLC #1 in Core Hubs LAX #1 ATL #1 EFFICIENCY in Coastal Hubs S&P Global IHS Markit 2024 Multi-airport cities consolidated 49 Airport ra
Slide 50: Leading Global Network & Partnerships
LEADING GLOBAL NETWORK & PARTNERSHIPS Powerful domestic network creates strong foundation for international growth AMS #1 LHR #2 CDG ICN #1 #1 PVG #1 BOG #2 MEX #1 LIM #1 GRU #1 PARTNER JVs UNLOCK COMMERCIAL VALUE & SCL #1 CREATE A SEAMLESS CUSTOMER EXPERIENCE Ranking defined as combined Delta and J
Slide 51: Non-GAAP Financial Measures
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. Securities and Exchange
Slide 52: Non-GAAP Financial Measures
Non-GAAP Financial Measures After-tax Return on Invested Capital ("ROIC"). We present after-tax return on invested capital as management believes this metric is helpful to investors in assessing the company's ability to generate returns using its invested capital. Return on invested capital is tax-e
Slide 53: Non-GAAP Financial Measures
Non-GAAP Financial Measures Free Cash Flow. We present 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. Free cash flow is also used internally
Slide 54: Non-GAAP Financial Measures
Non-GAAP Financial Measures Operating Margin, adjusted Year Ended December 31, Six Months Ended 2018 2019 2022 2023 June 30, 2024 Operating margin 11.8% 14.1% 7.2% 9.5% 9.5% Adjusted for: MTM adjustments and settlements on hedges (0.1) 0.0 0.1 (0.1) 0.1 Third-party refinery sales 0.2 0.1 0.8 0.7 0.8
Slide 55: Non-GAAP Financial Measures
Non-GAAP Financial Measures Adjusted Debt to Earnings Before Interest, Taxes, Depreciation, Amortization and Rent ("EBITDAR"). We present adjusted debt to EBITDAR because management believes this metric is helpful to investors in assessing the company's overall debt profile. Adjusted debt includes o