Delta Air Lines, Inc. · NYSE:DAL
Delta Air Lines — Deutsche Bank Global Industrials and Basic Materials Conference 2014
16 slides from Delta Air Lines's conference presentation, Jun 4, 2014
Slide 1: Delta: Setting A New Standard
Delta: Setting A New Standard Deutsche Bank Global Industrials and Basic Materials Conference June 4, 2014
Slide 2: Safe Harbor
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 cou
Slide 3: Setting A New Standard
3 Setting A New Standard Taking Momentum into 2014 Setting the Long-Term Foundation Balanced Capital Deployment Leveraging Delta’s strengths with initiatives to further our financial momentum and achieve long-term financial goals Building on a record setting 2013 with further earnings growth, margin
Slide 4: Outpacing The Airline Industry
4 Outpacing The Airline Industry •Delta is the leader in an evolving industry $3,038 $2,563 $1,408 $904 $688 $262 • Record $444 million pre-tax profit, a $363 million increase year over year, with 400 basis points of pre- tax margin expansion • $390 million of free cash flow, adjusted net debt of $9
Slide 5: Taking Momentum Into 2014
5 Taking Momentum Into 2014 June 2014 Quarter Estimate Operatingmargin 14% -16% Fuelprice $2.93 -$2.98 CASM–exfuelchangeyearoveryear Up 0%-1% Profit sharing $350 million System capacity changeyear over year Up ~3% Note: Fuel price includes taxes, settled hedges, refinery contribution and excludes MT
Slide 6: Generating A Revenue Premium To The Industry
6 Generating A Revenue Premium To The Industry •Investments in the network, product and operations have produced solid, sustainable revenue gains, with a pipeline of initiatives in place to keep the momentum going 100% 102% 106% 106% 107% 2010 2011 2012 2013 YTD 2014 Delta Passenger Unit Revenue vs.
Slide 7: Sustaining Our Cost Performance
4.6% 3.7% 1.2% 0.3% 2012 1H13 2H13 1Q14 2Q14E Long Term <2% Growth 7 Sustaining Our Cost Performance •Initiatives have contributed to our ability to keep non-fuel unit costs below 2% Sustaining Our Cost Performance Non-Fuel Unit Cost Growth Excludes special items • A solid base of supply chain, prod
Slide 8: Reducing Risk Across the Business
Reducing Risk Across the Business 8 •Diversifying the top line –nearly 20% of annual revenues are generated from non-ticket sources like ancillary products and services, cargo and third-party business services •Immunized joint ventures with AirFrance/KLM/Alitalia, Virgin Atlantic and Virgin Australi
Slide 9: Long-Term Goals Guide the Planning Process
9 Long-Term Goals Guide the Planning Process •10-12% annual operating margins Operating Margin •Annual EPS growth of 10% - 15% EPS Growth •15%+ return on invested capital ROIC •$5+ billion annual operating cash flow with ~50% reinvested back into the business Cash Flow •Investment grade credit metri
Slide 10: 2014's Five Year Plan Continues Our Momentum
10 2014’s Five Year Plan Continues Our Momentum •2014’s five year plan shows path to achieving our long-term financial goals with margin expansion, free cash flow generation, and balance sheet improvement Revenue Growth Strong Cash Flow Cost Efficiency Capacity Discipline Grow passenger, ancillary a
Slide 11: Strong Cash Generation in the Business
$2.6 $3.8 $4.1 $4.8 $4.1 $2.9 $1.8 $1.3 $1.2 $0.9 $2.1 $2.6 $1.2 $1.3 $1.3 $2.0 $2.9 $2.3 $(2.0) $(1.0) $- $1.0 $2.0 $3.0 $4.0 $5.0 $6.0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 20132014E CapEx Operating Cash Flow 11 Strong Cash Generation in the Business •Stro
Slide 12: Debt Reduction Remains A Priority
12 Debt Reduction Remains A Priority •Debt levels have been reduced significantly, but more deleveringis needed; targeting $5 billion of adjusted net debt by the end of 2016 •Debt reduction provides earnings tailwind; interest expense at $5 billion debt level should be ~$350 million per year, down f
Slide 13: Addressing Long-Term Pension Obligations
13 Addressing Long-Term Pension Obligations •Plan to maintain pension funding at $1 billion per year through 2020, consistent with 2013-14 levels •Incremental pension funding helps drive balance sheet improvement –At current rates, pension would be 80% funded and balance sheet liability reduced to $
Slide 14: Increasing Shareholder Returns
14 Increasing Shareholder Returns •Demonstrating a strong commitment to shareholder returns with 50% increase to the dividend and a new $2 billion share repurchase authorization •Return levels moving closer to averages of high quality industrial peer set Regular Dividend $300 million per year Share
Slide 15: The Path To Improved Valuation
•Plan targets compare favorably with other high quality industrial transports and should help drive better valuations 15 The Path To Improved Valuation 14% Delta High Quality Industrial Transports ROIC Delta High Quality Industrial Transports EPS Growth $3.0B $1.5B Delta High Quality Industrial Tran
Slide 16: EXPERIENCE
EXPERIENCE
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