Delta Air Lines, Inc. · NYSE:DAL
Delta Air Lines — Investor Presentation (May 2015)
14 slides from Delta Air Lines's investor presentation, May 13, 2015
Slide 1: Delta: Capital Evolution Continues
Delta: Capital Evolution Continues May 13, 2015
Slide 2: Safe Harbor
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 c
Slide 3: Delta: Capital Evolution Continues
Delta: Capital Evolution Continues Significant Financial Progress Investing for Long - Term Growth Capital Deployment Strategy Benefits Shareholders Strong cash generation allows for investment in the business: • Reinvesting $2.5 - 3 billion annually, which is the appropriate long - term investment
Slide 4: Financial Performance Significantly Improved
Financial Performance Significantly Improved • Delta’s financial foundation has strengthened considerably since 2012 • Delta’s performance has consistently exceeded targets, with strong margin expansion, free cash flow and returns on invested capital • Initiatives are still in the early stages and w
Slide 5: Strong Performance Relative To High Quality Peers
Strong Performance Relative To High Quality Peers • Establishing new framework to further build a franchise that generates solid margins and cash flow, an investment grade balance sheet, and sustainable shareholder returns • Strong progress drives the third upward revision to our targets in three ye
Slide 6: The Path To Further Improvement
The Path To Further Improvement • 2015 - 2017 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 Productivity Capacity Discipline Targeting ~5% annual revenue growth. Unit r
Slide 7: Appropriate Investment In The Business
Appropriate Investment In The Business • Supporting long - term growth in the business through $2.5 - 3 billion in annual capital spending CapEx as a % of Depreciation 173% 179% 130% Delta 2015-2017 High Qual. Ind. Transports 3 Yr Avg S&P Industrials 3 Yr Avg • $2.5 - 3 billion of annual spending su
Slide 8: Strong Cash Generation Funds Reinvestment
Strong Cash Generation Funds Reinvestment • Strong operating cash flow, combined with disciplined capital spending, produces sustainable free cash flow of $4 - 5 billion annually Note: Includes pre - merger NWA; Excludes special items Expect to produce over $20 billion in operating cash flow from 20
Slide 9: Setting Long-Term Adjusted Net Debt Target at $4B
Setting Long - Term Adjusted Net Debt Target at $4B • Goal is to achieve and maintain $4 billion adjusted net debt levels by 2017 Adjusted Net Debt $ 17.0B $9.4B $7.3B $4B 2009 2013 2014 LT Target • Determined $4 billion is optimal long - term debt level – Results in investment grade credit metrics
Slide 10: Targeting An Investment Grade Quality Balance Sheet
2010 2015E 2017E Targeting An Investment Grade Quality Balance Sheet • Significant progress on the balance sheet in the last five years makes Delta’s credit metrics consistent with investment grade industrials • Delta will be operating with investment grade (BBB - ) credit metrics by 2016 12% 34% 20
Slide 11: Addressing Long-Term Pension Obligations
Addressing Long - Term Pension Obligations • Plan to maintain pension funding at $1 billion per year through 2020 – $1.2 billion in 2015 contributions includes additional $200 million to cover 2014 asset return shortfall • Funding strategy has increased pension assets by $1.7 billion, net of $5.2 bi
Slide 12: Increasing Shareholder Returns
Increasing Shareholder Returns • Demonstrating a strong commitment to shareholder returns with 50% increase to the dividend and a new $5 billion share repurchase authorization • Plan to return at least 50% of free cash flow to shareholders through 2017 • On track to complete remaining $725M of 2014
Slide 13: 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 0% 50% 100% 150% 200% 250% 300% 350% 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q1
Slide 14: Valuation Remains at a Significant Discount
• Plan targets compare favorably with other industrials and should help drive better valuations …But Valuation Remains at a Significant Discount 15 %+ 13.1% 11.5% Delta High Qual. Ind. Transports S&P Industrials EPS Growth $4 - 5B $1.5B $1.6B Delta High Qual. Ind. Transports S&P Industrials Free Cas