Delta Air Lines, Inc. · NYSE:DAL
Delta Air Lines — 2011 Global Transportation Conference
17 slides from Delta Air Lines's conference presentation, May 19, 2011
Slide 1: Delta: Building a Better Airline
Delta: Building a Better Airline 2011 Global Transportation Conference May 19, 2011
Slide 2: Safe Harbor
1 1 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 con
Slide 3: Delta: Building a Better Airline
2 2 Delta: Building a Better Airline Significant pressure on the business from rising fuel prices, impact of events in Japan, and Transatlantic weakness Adjusting to the New Fuel Environment Strong operating cash flows with limited capital requirements allow for considerable free cash flow generatio
Slide 4: Results Show Delta's Solid Foundation
3 Results Show Delta’s Solid Foundation LTM March 2011 Operating Income ($M) March Quarter Highlights: • Increased revenues by 13% • Generated $450 million in free cash flow • Refinanced Delta’s exit facility with a new $2.6 billion credit facility in April • Reduced adjusted net debt to $14.5 billi
Slide 5: Current Trends Are Positive
4 Current Trends Are Positive • Strong yields drove April RASM up 7%, with May up 12% • Corporate revenue up 25% in 2011, from new accounts and increased share • Domestic showing strong yields and load factors • Double digit yields for Latin, Transatlantic and Pacific • Japan continues to rebound •
Slide 6: High Fuel Prices are the Norm for the Industry
5 High Fuel Prices are the Norm for the Industry • 17 successful pricing actions in 2011, coupled with international fuel surcharges, resulting in double digit yield improvements across all entities Higher Revenues Reduce Capacity Flat Non-Fuel Cost Fuel Management • Resizing the airline to achieve
Slide 7: Need to Size Airline to Ensure It Can Cover Higher Fuel Costs
6 Need to Size Airline to Ensure It Can Cover Higher Fuel Costs Revenue increases must keep pace with rising cost of operating flights March Quarter 2011 YOY Change Entity Unit Revenue Unit Cost Domestic Up 9% Up 12% Latin Up 16% Up 11% Pacific Up 11% Up 7% Atlantic Down 1% Up 11% System Up 7% Up 11
Slide 8: Reducing Delta's Post-Labor Day Capacity by 4%
7 Reducing Delta’s Post-Labor Day Capacity by 4% Targeted reductions where revenue not keeping pace with costs Domestic (1-3%) • Reducing Memphis hub departures by 25% • Right-size domestic network for high fuel environment, continued progress on 140 aircraft reduction Atlantic (10-12%) • Market can
Slide 9: SkyTeam JV Partners Working Together to Address Transatlantic Capacity
8 SkyTeam JV Partners Working Together to Address Transatlantic Capacity Transatlantic Winter YOY Capacity Change (10-12%) (7-9%) 3-4% 7-8% Original Plan Revised Plan • All carriers are significantly reducing post-Labor Day capacity from prior plans • Total JV capacity down ~15 points from plan • Ca
Slide 10: Targeting Incremental Revenue of $1 Billion by 2013
9 9 Targeting Incremental Revenue of $1 Billion by 2013 New revenue streams expected to deliver $150-200 million this year Deliver a Consistent, Quality Experience for Customers • Improved seat experience with flat-beds, Economy Comfort and more domestic first class seats • State of the art faciliti
Slide 11: Targeting Flat Ex-Fuel Unit Costs by End of Year
10 Selling and Other Expenses Headcount Reductions Maintenance Savings • Reduced distribution costs • Technology-driven productivity (i.e. kiosk auction for voluntary “bumping”) • Full corporate review of discretionary expenses • Announced company-wide voluntary exit program, with 55,000 employees e
Slide 12: Moderating Fuel Offsets Other Cost Pressures
11 11 Moderating Fuel Offsets Other Cost Pressures June quarter 2011 Operating margin 7 - 9% Fuel price $3.20 Total unrestricted liquidity $5.7 billion June quarter 2011 vs. June quarter 2010 Consolidated non-fuel unit cost Up 3 - 5% System capacity Up 1 - 3% Domestic Flat to down 2% International U
Slide 13: Commitment to Debt Reduction Remains Intact
12 Commitment to Debt Reduction Remains Intact Adjusted Net Debt 12/31/09 Mid-2013 6/30/11 $13.8 billion $17 billion $10 billion Expect to generate $700 million in free cash flow in June quarter
Slide 14: Near-Term Debt Maturities are Manageable
13 Near-Term Debt Maturities are Manageable $1.6 $1.3 $1.9 EETC Other debt / capital leases • Maintaining solid liquidity position through free cash flow generation and proactive management of near-term debt maturities • Taking advantage of market opportunities to proactively address future maturiti
Slide 15: Plan to Maintain Annual CapEx at $1.2 to $1.4 Billion
14 Plan to Maintain Annual CapEx at $1.2 to $1.4 Billion Annual Capital Spending Levels (billions) Prudent capital management enables sustainable annual free cash flows 14 2008 2009 2010 2011 2012 2013 2014+ $2.2 $1.3 $1.3 $1.2 $1.2 $1.4 $1.3 Merger Integration International Product & Facilities Dom
Slide 16: Path To Improving Shareholder Returns
15 15 Path To Improving Shareholder Returns Generate sustainable 10%+ return on invested capital 10 - 12% operating margin $5 billion EBITDAR Minimize capital reinvestment requirements Use cash to delever the balance sheet
Slide 17: Non-GAAP Financial Measures
16 Non-GAAP Financial Measures We sometimes use information that is derived from our Condensed Consolidated Financial Statements, but that is not presented in accordance with accounting principles generally accepted in the U.S. (“GAAP”). Certain of this information is considered “non-GAAP financial
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