Delta Air Lines, Inc. · NYSE:DAL
Delta Air Lines — Investor Day (June 2023)
60 slides from Delta Air Lines's investor day presentation, Jun 27, 2023
Slide 1: Delta Beyond 2023 Investor Day
1 Delta Beyond 2023 Investor Day June 27, 2023
Slide 2: Julie Stewart, VP Investor Relations
2 Julie Stewart VP INVESTOR RELATIONS
Slide 3: Safe Harbor
3 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
Slide 4: Today's Presenters
Today’s Presenters Ed Bastian Chief Executive Officer Glen Hauenstein President Allison Ausband EVP & Chief Customer Experience Officer Ranjan Goswami SVP Customer Experience Design Dwight James SVP Customer Engagement & Loyalty Dan Janki EVP & Chief Financial Officer Peter Carter EVP External Affai
Slide 5: Ed Bastian, Chief Executive Officer
5 Ed Bastian CHIEF EXECUTIVE OFFICER
Slide 6: Key Investor Takeaways
6 Key Investor Takeaways Constructive industry backdrop with structural demand tailwinds and multi - year supply constraints Unique opportunities to grow earnings by leveraging brand strength, competitive advantages and digital transformation Returns - focused strategy with emphasis on Free Cash Flo
Slide 7: Constructive Industry Backdrop
7 Revenue Source: 1980 – 2022: Delta internal dataset; 2023E: Delta internal estimate GDP source: 1980 – 2022: Bureau of Economic Analysis; 2023E S&P Global forecast May 2023 Constructive Industry Backdrop Pent - up demand for air travel not yet satisfied Employment remains strong Evolving consumer
Slide 8: Spend Shift To Services Continues
8 1 Source: Bureau of Economic Analysis, Rubinson Research. Services excl. housing & healthcare Share of Total Personal Consumption Expenditures 1 SERVICES TRENDLINE 29 31 33 Goods Services % 35 2016 2017 2018 2019 2020 2021 2022 1Q23 Spending on services still not fully recovered Long - term shift
Slide 9: Consumer Trends Remain Favorable
9 60 80 100 Consumer Trends Remain Favorable 1 Source: Federal Reserve, Rubinson Research; High - income defined as top 40% of U.S. incomes, spend on air travel based on 2021 2 Purchase priority defined as big ticket item purchase intent over next four months; high - income households defined as ear
Slide 10: Multi-Year Supply Constraints
10 2017 – 2022 industry ASMs as a % of 2019 sourced from U.S. DOT T100 Form 41 2020 – 2022 pre - pandemic estimated industry ASMs as a % of 2019 sourced from Deutsche Bank and Wolfe; 2023 assumes average growth rate of 4% continues 2023 current outlook industry ASMs as a % of 2019 sourced from Deuts
Slide 11: Raising 2023 Outlook & Reiterating 2024 Targets
11 Raising 2023 Outlook & Reiterating 2024 Targets Updating 2023 Guidance Prior Guidance Reiterating 2024 Targets Note: Adjusted for special items; non - GAAP financial measures reconciled in Appendix Prior full - year 2023 & 2024 guidance metrics were presented at the December 2022 Financial Outloo
Slide 12: Committed To Delivering Profitability Across The Cycle
Committed To Delivering Profitability Across The Cycle STRUCTURALLY IMPROVED BUSINESS More diversified, high - margin revenues Stronger brand loyalty and hub positions Prioritizing Free Cash Flow and debt reduction LEVERS TO MANAGE CYCLES Capacity and fleet flexibility Cost variability with new tool
Slide 13: Building On Durable Competitive Advantages
Building On Durable Competitive Advantages PEOPLE & CULTURE OPERATIONAL RELIABILITY 13 CUSTOMER LOYALTY FINANCIAL FOUNDATION GLOBAL NETWORK Delta People Are The Foundation Of Our Success And Future
Slide 14: Long-Term Strategic Priorities
Long - Term Strategic Priorities Delivering industry - leading operational performance Extending competitive advantages Welcoming & caring service Elevating experiences RUN THE WORLD’S BEST AIRLINE Transcending industry with brand momentum Growing SkyMiles and expanding loyalty ecosystem Partnering
Slide 15: Delta's Brand Transcends The Industry
15 U.S. eCommerce Retailer Cobrand Spend Approaching 1 % of U.S. GDP # 5 # 12 Most Admired Companies Delta’s Brand Transcends The Industry eCommerce retail analysis based on publicly disclosed U.S. eCommerce revenues using Delta Digital RPAD Data, Statista, internal data GDP source: 2023 S&P Global
Slide 16: Deepening Customer Relationships Drives Value
16 2014 2019 2023 Acquisitions reported on a monthly basis; 2020 SkyMiles monthly acquisitions excluded due to impact of the pandemic NPS = Net Promoter Score Deepening Customer Relationships Drives Value + 15 pts NPS Improvement + 20 pts Direct Distribution + $5B Amex Remuneration SINCE 2014 1 Mill
Slide 17: Digital Powers The Experience Of Delta's Brand And People
17 Digital Powers The Experience Of Delta’s Brand And People Industry - Leading Reliability Elevated Experience & Efficient Servicing Expanded Member Engagement & Loyalty Merchandising & World - Class Retailing NPS +6 To 10 Accelerates Margin - Accretive Revenue $1B+ In Long - Term Efficiency Gains
Slide 18: Accelerating Our Momentum Through Digital
18 Streaming speed Wi - Fi deployed on 80% of Mainline fleet by end of 2023 with full international roll - out by end of 2024 Fast Free Wi - Fi Accelerating Our Momentum Through Digital 1 YTD growth versus 2019 Seamlessly moving to cloud by 2024, increasing agility and resilience Cloud Migration Imp
Slide 19: Prioritizing Free Cash Generation
19 Free Cash Flow Prioritizing Free Cash Generation Note: Adjusted for special items; non - GAAP financial measures reconciled in Appendix Sustaining revenue premium Improving unit cost trajectory Disciplined reinvestment Increased weighting of Free Cash Flow in 2023 Executive Compensation Program T
Slide 20: Glen Hauenstein, President
20 Glen Hauenstein PRESIDENT
Slide 21: Generating Record Revenue
21 Generating Record Revenue Raising revenue outlook for June quarter and full year Robust consumer demand with corporate steady International on pace for record summer with strength continuing into the fall 2Q FY Prior Updated 15% - 17% 17% - 18% 15% - 20% 17% - 20% Updating Revenue Outlook Year Ov
Slide 22: Building Momentum Into 2024
22 Building Momentum Into 2024 Capacity growth normalizing Restoring best - in - class operational reliability Optimizing network and increasing fleet utilization Improving product, partnerships and offerings Corporate travel budgets continuing to improve GDP Source: May 2023 S&P Global Forecast Nom
Slide 23: Structural Demand Tailwinds
23 2010 2017 2024E Structural Demand Tailwinds LONG - TERM TREND COMPARED TO 2019 Consumers valuing experiences & travel + 10 Consumer mix of premium pts product revenue Demographic shifts driving travel demand + 35 % Growth from Millennials and younger Hybrid work flexibility driving more travel +
Slide 24: Integrated Commercial Strategy Drives Leading Profitability
24 Integrated Commercial Strategy Drives Leading Profitability INVEST FOR THE FUTURE Next - gen fleet evolution Generational airport upgrades Digital transformation EXPAND HIGH - MARGIN REVENUES Growing premium revenue Record growth in SkyMiles program Industry - leading cobrand portfolio ACCELERATE
Slide 25: Powerful Domestic Network
25 Powerful Domestic Network LAX #1 SEA #2 LGA/JFK #1 BOS #1 Best - In - Class Domestic Hub Structure ATL #1 DTW #1 MSP #1 SLC #1 Network carriers defined as DAL, UAL and AAL Airport ranks based on LTM 4Q22 revenue share per U.S. DOT’s 4Q22 DB1B report Leading Domestic Relevance #1 / #2 Position In
Slide 26: Reshaping Global Network To Drive Margin Expansion
26 MEX #1 BOG #2 LIM #1 GRU #1 SCL #1 LHR #2 AMS #1 CDG #1 ICN #1 PVG #1 Ranking defined as combined Delta and JV / non - JV partners June 2023 total seats; Partner hub capacity reflects Delta ASMs Reshaping Global Network To Drive Margin Expansion ACCELERATE NETWORK ADVANTAGES Delta’s Leading Domes
Slide 27: Fleet Evolution Supports Commercial Strategy
27 Contribution per aircraft based on annual expectations 2,000mi trip estimate for narrowbody; 4,000mi trip estimate for widebody Seat Cost (10%) MARGIN +10 - 12 pts Seat Cost (7.5%) MARGIN +10 pts 767 - 300ER (215 seats) A330 - 900neo (281 seats) 757 - 200 (199 seats) A321neo (194 seats) Premium S
Slide 28: Growing Demand For Premium
28 Premium seats: Delta One, First Class, Delta Premium Select or Comfort Plus cabins reaching 100% by October 2023. Frequent Flyers defined as taking 6+ trips per year Note: Adjusted for special items; non - GAAP financial measures reconciled in Appendix Premium Revenue Outperforming >10 pts Premiu
Slide 29: Growing SkyMiles Membership & Customer Value
29 SkyMiles Members based on total membership Cobrand accounts defined as Accounts in Force SINCE 2019 Growing SkyMiles Membership & Customer Value Drives Sustained Loyalty Growth +15 % SkyMiles Members +25 % Cobrand Accounts +60 % Cobrand Spend EXPAND HIGH - MARGIN REVENUES Cobrand Card Gaining Mom
Slide 30: Revenue Diversity Drives Margin
30 56% 47% 44% 40% 24% 32% 35% 37% 20% 21% 21% 23% 2014 2019 Long - Term Goal Main Premium 2023E Loyalty & Other MAIN GDP LONG - TERM GROWTH OUTLOOK PREMIUM GDP+ Total Revenue LOYALTY & OTHER GDP++ Other revenue defined as MRO and other ancillary, cargo and travel related services 2023 revenue estim
Slide 31: Ranjan Goswami and Allison Ausband
31 Ranjan Goswami SVP, CUSTOMER EXPERIENCE DESIGN Allison Ausband EVP & CHIEF CUSTOMER EXPERIENCE OFFICER
Slide 32: People Power The Delta Brand, Driving Customer Satisfaction
32 People Power The Delta Brand, Driving Customer Satisfaction 14% APP EXPERIENCE 17% ONBOARD PRODUCTS 26% SAFE, CLEAN, ON - TIME WITH BAGS + RECOVERY 24% EMPLOYEE INTERACTIONS 50% OF NPS ATTRIBUTED TO OUR PEOPLE Note: NPS data Domestic only, 1/1/22 – 6/30/22. Onboard product includes seat comfort,
Slide 33: Delivering Operational Excellence Is Foundational
33 Delivering Operational Excellence Is Foundational PERSONALIZATION INDUSTRY - LEADING OPERATIONAL RELIABILITY SAFE, CLEAN, ON - TIME WITH BAGS + RECOVERY DELTA BRAND DELIVERED BY OUR PEOPLE ELEVATED PRODUCT
Slide 34: Operational Performance Continues To Improve
34 Operational Performance Continues To Improve Completion Factor On - Time Arrivals Competitive rank includes AA, UA, DL network system; Completion Factor, A0 - DOT data; CF & A0 YTD June 2023, MBR data per 1,000 enplaned bags through March 2023 Competitive Rank #1 #1 #1 71.0% 68.6% 69.2% 2019 2022
Slide 35: Elevating The Customer Experience
35 Elevating The Customer Experience WELCOMING, ELEVATED & CARING SERVICE BRAND - READY AIRCRAFT FAST, FREE WI - FI AND DIGITAL ENGAGEMENT PREMIUM CABINS GENERATIONAL AIRPORT INVESTMENTS
Slide 36: Engaged Membership Drives NPS And Lifetime Customer Value
36 Engaged Membership Drives NPS And Lifetime Customer Value NON - MEMBER +SKYMILES MEMBERSHIP +FLY DELTA APP +MEDALLION STATUS +SKYMILES AMEX CARD +DELTA ONE/ FIRST +DELTA SYNC ANNUAL REVENUE CONTRIBUTION / CUSTOMER $ $$$ AND MORE +VACATIONS, CARS, STAYS, INSURANCE 2022 post flight survey NPS data
Slide 37: Membership Takes Customer Experience To The Next Level
37 Membership Takes Customer Experience To The Next Level PERSONALIZATION POWERED BY MEMBERSHIP INDUSTRY - LEADING OPERATIONAL RELIABILITY SAFE, CLEAN, ON - TIME WITH BAGS + RECOVERY DELTA BRAND DELIVERED BY OUR PEOPLE ELEVATED PRODUCT
Slide 38: Synchronizing Channels To Know And Serve Customers Better
38 Synchronizing Channels To Know And Serve Customers Better People Empowered by digital tools Delta.com In - Flight Service SkyPro Reservations OmniPro Delta Sync Powered by fast, free Wi - Fi Airport Customer Service SNAPP Kiosk Chat Fly Delta App
Slide 39: Free Wi-Fi Makes The Aircraft A Platform For Digital Engagement
39 Free Wi - Fi Makes The Aircraft A Platform For Digital Engagement Delta Sync Debuts Two New Onboard Digital Channels For SkyMiles Members DELTA SYNC Exclusives DELTA SYNC Seatback Screen
Slide 40: Dwight James, SVP Customer Engagement & Loyalty
40 Dwight James SVP, CUSTOMER ENGAGEMENT & LOYALTY
Slide 41: Strengthening The Power Of Membership Through Loyalty Ecosystem
41 Strengthening The Power Of Membership Through Loyalty Ecosystem Improving SkyMiles Membership Experience via Personalization Growing a More Engaged Member Base Delivering High - Margin Revenue Growth
Slide 42: Member Base Becoming Younger, More Engaged And More Premium
42 Member Base Becoming Younger, More Engaged And More Premium 44 42 39 2017 2019 2022 Average Age of New Members 6M 7M 2017 2019 2022 Members Engaging Beyond Flight (Cobrand, Travel Adjacent Experiences, Non - Air Partners) 9M BECOMING YOUNGER MORE ENGAGED SHIFTING TO MORE PREMIUM 15% 26% 29% 2017
Slide 43: Industry-Leading Cobrand Portfolio With Room To Grow
43 Active SkyMiles members and cobrand cardholders as of 6/1/2023 over LTM SkyMiles Member penetration defined as members with a cobrand card as of 6/1/2023 Industry - Leading Cobrand Portfolio With Room To Grow Premiumization Continued mix shift toward high spending premium cards SkyMiles Member Pe
Slide 44: Expanding Loyalty Ecosystem
44 Expanding Loyalty Ecosystem 2022 Datamart, L12M Active; Profitability defined as pre - tax income including profit sharing for travel - adjacent experiences Offering Members Compelling Travel Products Using SkyMiles As A Currency $250M >3X 2023E Long - Term Goal PROFITABILITY CURRENT MEMBER PENET
Slide 45: Delivering High-Margin Revenue Growth Through Expanding Loyalty Ecosystem
45 Trusted Travel Brand With Growing Membership Delta’s trusted brand drives customer preference and SkyMiles membership SkyMiles integration across loyalty ecosystem reinforces value of membership Digital investments enable personalized engagement with customers on the ground and in the air Strateg
Slide 46: Dan Janki, Chief Financial Officer
46 Dan Janki CHIEF FINANCIAL OFFICER
Slide 47: Returns-Focused Strategy Drives Sustained Value Creation
47 Returns - Focused Strategy Drives Sustained Value Creation Note: Adjusted for special items; non - GAAP financial measures reconciled in Appendix More diversified revenue, cost levers, participation in fuel declines Expect to remain profitable through full economic cycle EARNINGS DURABILITY Deliv
Slide 48: Executing Ahead Of Three-Year Financial Plan
48 Executing Ahead Of Three - Year Financial Plan Financial targets of three - year plan were announced at the December 2021 Capital Markets Day and cover years 2022, 2023 and 2024. See Appendix for updated financial guidance and key assumptions Note: Adjusted for special items; non - GAAP financial
Slide 49: Cost Trajectory At Inflection Point
49 4.7% 1% - 3% 1Q23 2Q23E 2H23E 2024E Cost Trajectory At Inflection Point Non - Fuel Unit Costs Year Over Year Capacity YoY 18% 17% 16% Mid Single - Digits Absolute costs tracking to plan with labor at market rates and inflation stable; capacity lower Non - fuel unit costs improving year over year
Slide 50: Over $1 Billion Of Cost Opportunity Through Efficiency
50 Flight crews: Moderate hiring & training, increase reserves, deploy resources to flying Maintenance: Reduce engine turnaround times and inventory to historical norms Airport operations: Optimize hours per flight departure as Core hubs fully restore Onboard products: Improve third - party labor pr
Slide 51: Longer-Term View Of Key Financial Drivers
51 Longer - Term View Of Key Financial Drivers Non - Fuel Unit Cost CAGR 2017 To 2024E Consistent With History And Below Inflation 2017 - 2024E 2010 - 2017 3% 2% TRASM CAGR 3% 3% NF CASM CAGR 4% 2% Inflation CAGR 6% (5%) Fuel Cost per ASM CAGR 14% 8% → 14% Operating Margins Inflation Source: S&P Glo
Slide 52: Expanding Margins And Returns
52 Improving ROIC 15% 8% 13%+ Mid - Teens Expanding Margins And Returns 0.3% 9% 15% 8% Top - End Of 10% - 12% 13% - 15% 2009 2010 - 2014 Average 2015 - 2019 Average 2022 2023E 2024E Operating Margin MARGIN AND ROIC DRIVERS Operational excellence Improving non - fuel unit costs Commercial strategy ‒
Slide 53: Strong Free Cash Flow Outlook
53 $3B >$4B 2023E 2024E Strong Free Cash Flow Outlook CapEx $5.5B $5B Driving Cash Generation Stronger cash flow driven by robust demand Consistent, disciplined reinvestment Accelerating debt repayment; expect to retire >$4 billion of gross debt in 2023 Recently re - initiated dividend Free Cash Flo
Slide 54: Restoring The Balance Sheet To Investment Grade Metrics
54 Restoring The Balance Sheet To Investment Grade Metrics Adjusted Debt / EBITDAR Pension Funded Status Unencumbered Assets 2024E 2023E 2017 - 2019 Avg. <2.5x 3x 2x 100% 100% 70% $25B >$20B $15B Balance Sheet Positioned To Exit 2024 Stronger Than 2019 Unencumbered assets 2017 - 2019 average based o
Slide 55: Delta Well-Positioned On Next-Gen Engine Platforms
55 1 CFM (LEAP), Rolls - Royce (Trent) and P&W (GTF) 2 In - service commercial passenger installed engines; Other series includes CF6, PW4000, PW2000, GP7200, RB211, JT8D, BR700, TAY, JT9D, GE9X, and PD - 14; Source: MRO Prospector Fleet Forecast, Market participant interviews, FAA Delta Well - Posi
Slide 56: MRO Growth Drives Earnings And Cash Flow
Delta MRO positioned to become premier non - OEM provider Targeting mid - teens margins Provides cost advantage for Delta fleet Existing next - gen facilities set stage for capital - efficient growth $0.8B $2B 2023E 2026E 2030E+ Delta MRO Revenue Forecast $5B+ MRO Growth Drives Earnings And Cash Flo
Slide 57: Delivering Sustained Value Creation
Delivering Sustained Value Creation Industry - Leading Core Airline Powered by the Best People Loyalty Ecosystem Build loyalty, deepen member engagement Grow cobrand, expand offerings Digital Transformation Improve experience Margin - accretive growth Cost & capital efficiency Premier Airline MRO Le
Slide 58: Key Investor Takeaways
Key Investor Takeaways Constructive industry backdrop with structural demand tailwinds and multi - year supply constraints Unique opportunities to grow earnings by leveraging brand strength, competitive advantages and digital transformation Returns - focused strategy with emphasis on Free Cash Flow,
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Slide 60: Appendix: Financial Guidance
60 Appendix: Financial Guidance Note: All guidance metrics are adjusted for special items; non - GAAP financial measures reconciled in Appendix 2024 2023 2Q23 Primary Metrics GDP+ +17% - 20% +17% - 18% Revenue YoY 13% - 15% Top - End of 10% - 12% 16% Operating Margin >$7 $6 $2.25 - $2.50 Earnings Pe