Delta Air Lines, Inc. · NYSE:DAL
Delta Air Lines — Investor Day (May 2017)
25 slides from Delta Air Lines's investor day presentation, May 11, 2017
Slide 1: Delta: Building on Our Success
Delta: Building on Our Success May 11, 2017
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's Evolution Over the Last Decade
Delta’s Evolution Over the Last Decade Delta’s entire business has been transformed, creating a new and durable franchise for all stakeholders 2007 2008 2009 2010 2012 Merged with Northwest Established JV Established Seattle and Delivered record pre-tax Completed successful to create world’s largest
Slide 4: Consistently Producing Solid Results
Consistently Producing Solid Results Running a reliable, customer-focused airline is producing strong profits and cash flows, allowing for improved balance sheet strength and return of capital to shareholders Pre-Tax Profit Free Cash Flow Capital Returns to Shareholders $6.1B $3.8B $3.1B $5.9B $3.8B
Slide 5: Leveraging Solid Foundation to Drive Further Improvement
Leveraging Solid Foundation to Drive Further Improvement Well positioned to achieve long-term targets given an improving revenue outlook, strong cost discipline, and a balanced capital allocation strategy • 2017 is a transition year as fuel prices rise, labor 2018 – 2020 Framework costs reset, and u
Slide 6: The Path to Sustainable Margins and Cash Flows
The Path to Sustainable Margins and Cash Flows Driving value for shareholders through top-line growth, margin expansion and prudent deployment of cash flows • Maintaining our lead on product innovation and customer service Revenue Growth • Leveraging network investments • Expanding international par
Slide 7: Revenue Environment Is Improving
Revenue Environment Is Improving Delta’s commercial initiatives, in combination with favorable industry backdrop, are driving improving revenue trends in 2017 Industry Environment Supportive of Improving Delta Initiatives Expected to Drive Additional Revenue Trends Revenue Benefits • Lag between ris
Slide 8: Opportunity to Improve Domestic Revenue Trajectory
Opportunity to Improve Domestic Revenue Trajectory With over two-thirds of Delta’s revenue derived from domestic markets, this entity is key to driving further revenue momentum • Domestic airline revenues have historically grown at or slightly above GDP in an expanding economy – In 2015/2016, the in
Slide 9: Established Solid Revenue Premium
Established Solid Revenue Premium Achieving a revenue premium by investing in the products, services, and network that our customers value • Delta’s strong customer focus combined with investments in our fleet, network, product, and partners have driven a significant revenue premium to the industry
Slide 10: Room for Further Top-Line Growth
Room for Further Top-Line Growth Solid pipeline of initiatives to drive sustainable revenue premium • Premium products – Delta One, Premium Select, Delta Better Comfort+ – offer value-adds for customers • Basic Economy domestic rollout complete, international Customer rollout in progress Segmentatio
Slide 11: Efficiency Focus Drives Revenue Improvement to Bottom-Line
Efficiency Focus Drives Revenue Improvement to Bottom-Line Delta remains committed to delivering non-fuel cost growth of 2% or less over the long-term • 2013-2016 average non-fuel unit cost growth of 2.8% includes 70 bps of pressure from profit Annual Non-Fuel CASM Growth sharing 2.8% – Achieved whi
Slide 12: Transforming Delta's Fleet
Transforming Delta’s Fleet Refleeting to best meet the needs of the network drives total cost efficiencies and better margins • Evolving fleet designed for pre-merger networks into Delta Total Aircraft one better suited for Delta’s restructured network 1,441 • Deferring 10 A350s scheduled for delive
Slide 13: Addressing the Fuel Challenge
Addressing the Fuel Challenge Fuel prices expected to increase over the next few years, but remain well below historic highs • Fuel prices projected to be $1.70 - $2.00 per gallon based on forward curve from 2017 to 2020 • Long-term success requires ability to pass fuel costs on through ticket price
Slide 14: Strong Cash Generation Differentiates Delta
Strong Cash Generation Differentiates Delta Combination of strong earnings and balanced allocation of cash flow creating a sustainable business model through the cycle 1997-2003 Capital Expenditures and 2010-2016 Capital Expenditures and Operating Cash Flow ($B) Operating Cash Flow ($B) $8 $8 CapEx
Slide 15: Investing in the Business for the Long-Term
Investing in the Business for the Long-Term Capital spending plan allows Delta to address upcoming fleet retirements and invest in high return opportunities • Capex planned at ~50% of operating cash flow Capital Spending as % of Operating Cash Flow – Allows for replacement of ~25% of Delta’s mainlin
Slide 16: Continuing to Strengthen the Balance Sheet
Continuing to Strengthen the Balance Sheet Investment grade balance sheet provides Delta with business flexibility and reduced financial risk • Remain committed to $4 billion adjusted net debt Total Adjusted Net Debt target and Unfunded Pension ($B) – Maturity profile for next few years will allow $
Slide 17: Commitment To Consistent Shareholder Returns
Commitment To Consistent Shareholder Returns Focused on increasing cash returned through dividends, providing more consistent cash returns for owners • Announcing 4th consecutive 50% increase to the Annual Dividend $875M dividend since initiated in 2013 – Annual dividend per share will increase to $
Slide 18: Delta: America's Leading Global Airline
Delta: America’s Leading Global Airline America’s Best Run Airline Leading Partnerships Throughout the World Driving value for our owners through Sustainable Margins, consistent execution, Returns, and Cash Flows sustainable results, and prudent Investment Grade deployment of capital Balance Sheet P
Slide 19: Non-GAAP Reconciliations
Non-GAAP Reconciliations 19
Slide 20: Non-GAAP Reconciliations
Non-GAAP Reconciliations Non-GAAP Financial Measures Non-GAAP Financial Measures: We sometimes use 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.
Slide 21: Non-GAAP Reconciliations: Adjusted Net Debt
Non-GAAP Reconciliations Adjusted Net Debt Adjusted Net Debt. We use adjusted total debt, including aircraft rent, in addition to long-term adjusted debt and capital leases, to present estimated financial obligations. We reduce adjusted debt by cash, cash equivalents and short-term investments and h
Slide 22: Non-GAAP Reconciliations: Free Cash Flow
Non-GAAP Reconciliations Free Cash Flow 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. Adjustments include: Hedge
Slide 23: Non-GAAP Reconciliations: CASM-Ex
Non-GAAP Reconciliations Non-Fuel Unit Cost per Available Seat Mile, Including Profit Sharing ("CASM-Ex") Non-Fuel Unit Cost or Cost per Available Seat Mile, Including Profit Sharing ("CASM-Ex"). We adjust CASM for the following items to determine CASM-Ex, including profit sharing for the reasons de
Slide 24: Non-GAAP Reconciliations: Unhedged Fuel Price per Gallon
Non-GAAP Reconciliations Unhedged Fuel Price per Gallon Unhedged Fuel Price per Gallon. The tables below show fuel price per gallon. We then adjust for the impact of hedging on the price per gallon to show our total unhedged fuel price. Removing hedging activity allows investors to better analyze th
Slide 25: Non-GAAP Reconciliations: Operating Cash Flow, adjusted
Non-GAAP Reconciliations Operating Cash Flow, adjusted 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 201