Delta Air Lines, Inc. · NYSE:DAL
Delta Air Lines — UBS Industrials & Transportation Conference 2015
24 slides from Delta Air Lines's conference presentation, Nov 19, 2015
Slide 1: Delta: Setting a New Standard
Delta: Setting a New Standard UBS Industrials & Transportation Conference Paul Jacobson, EVP & CFO November 19, 2015
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: Evolution Over The Past Decade
Delta: Evolution Over The Past Decade • Through consolidation, innovation, and capital discipline, Delta is uniquely positioned among high performing S&P industrial companies • Leveraging network scale to produce better revenue efficiency Consolidation • Revenues have increased ~20% on 20% fewer dep
Slide 4: Across The Board Improvement In The Business
Across The Board Improvement In The Business • Delta continues to deliver industry leading operational reliability and customer satisfaction • LTM 3Q15 pretax margin expanded 320bps year over year and 800bps excluding hedges • Lowered adjusted net debt by more than $5 billion, while returning nearly
Slide 5: Continuing To Drive Margin Expansion
Continuing To Drive Margin Expansion Capacity growth, a sustainable revenue premium and cost productivity combine to generate long- term revenue growth, margin expansion and greater cash generation Efficient Capacity Revenue Premium Cost Productivity Growth • Drive capacity growth • Investments in n
Slide 6: Giving Customers What They Value Drives Revenue Growth
Giving Customers What They Value Drives Revenue Growth Investments in network, product, service, and operations have already produced solid, sustainable revenue gains with more room for growth • Optimizing capacity to Network leverage hub strengths and serve high revenue markets efficiently Total Re
Slide 7: Managing Capacity To Best Economic Opportunities
Managing Capacity To Best Economic Opportunities • Leveraging network opportunities in certain markets while maintaining system capacity discipline to improve unit revenues and margins • Combination of domestic growth and the international Capacity Levels – 4Q 2015 vs. 2014 reductions will result in
Slide 8: Opportunity to Expand Partnership with Aeromexico
Opportunity to Expand Partnership with Aeromexico • Delta intends to increase ownership stake in Grupo Aeromexico to up to 49% through a cash tender offer Top 10 US-Foreign Country Markets (Revenues $B) $7.2 $7.0 $6.9 • Delta and the Delta pension trust own shares and hold $5.2 derivatives covering
Slide 9: Fuel Tailwind Accelerates In Second Half 2015
Fuel Tailwind Accelerates In Second Half 2015 • Delta’s 2H15 all-in price per gallon will be ~35% lower than 1H15 and will be better than the industry average • At current market prices, fuel declines will provide a net $2 billion benefit for Delta in 2015, with further $2 billion benefit in 2016 De
Slide 10: Productivity Initiatives Driving Continued Cost Momentum
Productivity Initiatives Driving Continued Cost Momentum Solid pipeline of initiatives is the foundation that will allow Delta to absorb future cost increases • Delta’s compounded annual non-fuel cost growth since the merger has been below 2% • Additional focus on keeping fixed cost base low – Rough
Slide 11: Balanced Capital Deployment Drives Long-Term Value
Balanced Capital Deployment Drives Long-Term Value Balanced approach to capital deployment has driven significant value for shareholders Reinvest In The Strengthen The Return Cash To Business Balance Sheet Shareholders • ~50% of operating cash • More than $10 billion in debt • Announced new $5 billi
Slide 12: Strong Cash Generation Funds Investment in The Future, Reductions in Leverage, and 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 $8.0 Capital Spending and Operating Cash Flow ($B) $6.0
Slide 13: Increasing Shareholder Returns While Strengthening The Balance Sheet
Increasing Shareholder Returns While Strengthening The Balance Sheet • Strong cash generation funds significant increase in shareholder returns, while also allowing for continued debt reduction De-Risking the Balance Sheet Driving the Business for Cash Flow • Target is to achieve and maintain $4 bil
Slide 14: 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 Stock Price Performance 2013 - Current 350% Delta 327% 300% Airlines (
Slide 15: …But Valuation Remains at a Significant Discount
…But Valuation Remains at a Significant Discount • Plan targets compare favorably with other industrials and should help drive better valuations EPS Growth Forward Price to Earnings ROIC 16.3 20-25% 15.3 15%+ 22.3% 10.3% 9.5 8.1% 19.9% Delta High Qual. S&P Delta High Qual. S&P Delta High Qual. S&P I
Slide 16: The On-Time Machine. Keep Climbing
THE ON-TIME MACHINE. KEEP CLIMBING ADELTA #
Slide 17: Non-GAAP Reconciliations
Non-GAAP Reconciliations 17
Slide 18: Non-GAAP Reconciliations
Non-GAAP Reconciliations 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.
Slide 19: Non-GAAP Reconciliations
Non-GAAP Reconciliations Total Operating Revenue, Combined Delta presents total operating revenue, combined as if the company's merger with Northwest Airlines had occurred at the beginning of the period presented because management believes this metric is helpful to investors to evaluate the company
Slide 20: Non-GAAP Reconciliations
Non-GAAP Reconciliations Pre-Tax Income and Pre-Tax Margin, Adjusted for Special Items Delta adjusts for the following items to determine pre-tax income and pre-tax margin, adjusted, for the reasons described below: Mark -to-mark et ("MTM") adjustments and settlements. MTM adjustments are defined as
Slide 21: Non-GAAP Reconciliations
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 22: Non-GAAP Reconciliations
Non-GAAP Reconciliations Operating Cash Flow, Adjusted Delta presents adjusted operating cash flow because management believes adjusting for these amounts provides a more meaningful financial measure for investors. Adjustments include: Hedge margin. Delta adjusts for hedge margin as we believe this
Slide 23: Non-GAAP Reconciliations
Non-GAAP Reconciliations Total Combined Revenue Delta presents combined revenues for Delta and Northwest Airlines because management believes this metric is helpful to investors to evaluate the company's revenue metrics and provide a more meaningful comparison to our post-merger results. (in billion
Slide 24: Non-GAAP Reconciliations
Non-GAAP Reconciliations Non-Fuel Unit Cost or Cost per Available Seat Mile (“CASM-Ex”) We adjust CASM for the following items to determine CASM-Ex for the reasons described below: Aircraft fuel and related taxes. The volatility in fuel prices impacts the comparability of year-over-year non-fuel fin
Delta Air Lines — UBS Industrials & Transportation Conference 2015 on 6ix