Delta Air Lines, Inc. · NYSE:DAL
Delta Air Lines — Investor Presentation (2023)
30 slides from Delta Air Lines's investor presentation, 2023
Slide 1: Delta Air Lines Investor Overview Q1 2023
Delta Air Lines Investor Overview Q12023
Slide 2: Safe Harbor
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 Secu
Slide 3: Key Takeaway: Delta Executing Well Against Three-Year Plan
Key Takeaway: Delta Executing Well Against Three-Year Plan DELTA IS THE INDUSTRY LEADER CONSTRUCTIVE INDUSTRY BACKDROP BUILDING FINANCIAL MOMENTUM Best-in-class people, service and operation Unique demand drivers EPS growing to $5 - $6 in 2023 and >$7 in 2024 Premium consumer brand with strong loyal
Slide 4: Strengthening Delta's Durable Competitive Advantages
Strengthening Delta's Durable Competitive Advantages PEOPLE OPERATIONAL GLOBAL CUSTOMER FINANCIAL & CULTURE RELIABILITY NETWORK LOYALTY FOUNDATION S&P Global Moopy’s FitchRatings = Forbes’ World's Best = Industry-leading operation = Best-in-class domestic = Trusted consumer = Industry-leading Employ
Slide 5: Industry Demand Continues To Recover To Long-Term Trend
Industry Demand Continues To Recover To Long-Term Trend Air Travel Revenue Below Long-Term GDP Trend 13% Industry Revenue To & From U.S. As % Of GDP Historical Average 15% 14% 14% 14% 14% 13% w 13% 13% 1.2% 1.2% | 11% 1980- 1990- — 2000- 1989 1999 2008 1.4% 1.4% 2009 2010 2011 2012 2013 2014 2015 20
Slide 6: Constructive Industry Backdrop Reinforces Confidence In 2023
Constructive Industry Backdrop Reinforces Confidence In 2023 Industry Capacity vs.2019 === "= Pre-Pandemic Analyst Estimates Post-Pandemi sst-Pandemic Lone 6% we--7777” Capacity 25 pts lower p> than pre-COVID estimates in 2022 92% 91% 51% 2017 2018 2019 2020 2021 2022 2022 nominal US, GDPsourced fro
Slide 7: Restoring Domestic Capacity Through Core Hubs
Restoring Domestic Capacity Through Core Hubs 2H22 Unit Revenue! Industry-Leading Hub Positions 2022 SHAPED BY UNIQUE 7 OPPORTUNITIES 220% #1 or #2 position in 66 of top 100 U.S. cities = Prioritized coastal ™ Protected local share hubs, securing leading in core hubs positions in largest revenue mar
Slide 8: Global Network Supported By Coastal Hubs And Leading JVs
Global Network Supported By Coastal Hubs And Leading JVs Partner JVs Unlock Commercial Value And Create A Seamless Customer Experience 4 Acromexico 2 LATAM #1US-MEXICO #1US-SOUTH AMERICA MARKET SHARE = Improved competitive position = Accessand scale to critical interior Mexico corporate markets "Six
Slide 9: Continuing To Increase Revenue Diversification
Continuing To Increase Revenue Diversification Revenue = Premium Products & Non-Ticket! == Main A +15%- 20% $47B 43% 57% eB 2014 2018 2019 2023E Note: Revenue adjusted for special items; non-GAAP financial measures reconciled in Appendix A " Non-Ticket includes loyalty program, MRO and other ancilla
Slide 10: Elevating Customer Experience Through Premium Products And Service
Elevating Customer Experience Through Premium Products And Service Premium Seat Growth Has Significantly Outpaced Main Cabin GROWING HIGH MARGIN PREMIUM PRODUCTS = Premium seat mix growing to 30% by 2024, a 2 pts vs.2019 and +21 5. 2009 10+ Point +2 pts vs. 2019 and +21 pts vs. 200: Differential = G
Slide 11: Delta's Loyalty Ecosystem Drives High Margin Revenue
ADELTA Delta's Loyalty Ecosystem Drives High Margin Revenue SKYMILES | sige American Express Remuneration To Delta LOYALTY GROWTH OPPORTUNITIES $7B+ — Card & Spend Small Non-Air =e: $5.5B Growth Business Partnerships baud ss Premium Personalization Travel $3B Mix Related Growing SkyMiles + Increasin
Slide 12: Focused On Margin Improvement
Focused On Margin Improvement Operating Margin LONG-TERM 14.5% 13%-15% MARGIN DRIVERS 10% -12% . = Commercial strategy - Premium revenue - Loyalty ecosystem - International growth = Fleet renewal 2010-2014 2015-2019 2022 2023E 2024E . Average Average = Operating leverage > Note: Adjusted for special
Slide 13: Applying Proven Playbook To International
Applying Proven Playbook To International A. International Margin High Single Digits 2014 2019 2023E Note: Fleet metrics represent expected 2023 vs. 2019 Domestic Levels Long-Term Target RESHAPING GLOBAL NETWORK = Leading Pacific connectivity via Seoul with developing Korean JV = AccelerateLATAMJV t
Slide 14: Executing Against Three-Year Financial Plan
Executing Against Three-Year Financial Plan Significant EPS Growth Earnings Per Share $7 $5-$6 >$3 $0.2B 2022 2023E 2024E 2022 Op. Margin Capex 8% 10% -12% 13%-15% $6.0B Note: Adjusted for special items; non-GAAP financial measures reconciled in Appendix A "Pension fully funded on a PPA basis as of
Slide 15: Delivering Long-Term Value Creation
Delivering Long-Term Value Creation ry ROIC / a Delta People And Brand oe, Mid-Teens Vv “” Low Double-Digits 4 < A RETURN ON : A INVESTED Y 5 CAPITAL : Thoughtful Industry- Capital Leading Allocation Margins 2023E 2024E AY. site: Acustesforspecel items; non-GAAP financial measures recone in Appel ak
Slide 16: Appendix
as sS = D a. a <—c
Slide 17: Appendix: Financial Guidance And Key Assumptions As Of January 13, 2023
Appendix: Financial Guidance And Key Assumptions As Of January 13, 2023 Guidance Metric 2022 Actual 2023E 2024E Operating Revenue $45.6B +15% -20% YoY GDP+ YoY Operating Margin 78% 10% -12% 13%-15% Earnings Per Share $3.20 $5-$6 >$7 Capital Expenditures $6.0B $5.5B $5B Free Cash Flow $0.2B >$2B >$4B
Slide 18: Fleet Evolution Enables Efficient Capacity Restoration
Fleet Evolution Enables Efficient Capacity Restoration System Capacity Restoration vs. 2019 98% 101% 86% 86% 85% 81% 2022 2023E 2022 2023E 2022 2023E A A A Departures Seats ASMs AX "By mid-2023 Achieving full ASM restoration on fewer departures in 2023 Mainline fleet larger than 2019 RJ fleet underu
Slide 19: 2023 Non-Fuel Unit Costs Expected To Decline 2% To 4% Year Over Year
2023 Non-Fuel Unit Costs Expected To Decline 2% To 4% Year Over Year Non-Fuel Unit Cost! Year-Over-Year UNIT COST DRIVERS 12.9¢ V (2%-4%) Y¥ (1%-2%) " Operating leverage Low-cost capacity growth Driving efficiency Completing rebuild Managing inflation Investing to extend advantages 2022 2023E 2024E
Slide 20: Driving Operating Leverage With Lower-Cost Capacity Growth
Driving Operating Leverage With Lower-Cost Capacity Growth Increasing Utilization And Gauge Rebuilding Int'l Long-Haul Mainline Fleet Utilization! System Capacity Mix Large narrowbodies half of mainline fleet Exiting 50-seat jets in ng 118 31% 30% 25% 2023 12 Domestic growth focused oncore hubs Low
Slide 21: Non-GAAP Financial Measures
Non-GAAP Financial Measures Delta sometimes uses 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. ("GAAP"). Under the U.S. Securities and Exchange
Slide 22: Non-GAAP Financial Measures
Non-GAAP Financial Measures Adjustments. These reconciliations include certain adjustments to GAAP measures, which are directly related to the impact of COVID-19 and our response. These adjustments are made to provide comparability between the reported periods, if applicable, as indicated below: Res
Slide 23: Operating Revenue, adjusted
Operating Revenue, adjusted Year Ended December 31, (in billions) 2014 2018 2019 2022 Operating revenue $ 40.0 $ 44.4 $ 47.0 $ 50.6 Adjusted for: Third-party refinery sales - (0.5) (0.1) 5.0 DGS sale adjustment - (0.2) - - Delta Private Jets adjustment - - (0.2) - Operating revenue, adjusted $ 40.0
Slide 24: Operating Margin, adjusted
Operating Margin, adjusted Year Ended 2010 - 2014 2015 - 2019 Year Ended December 31, 2009 Average Average December 31, 2022 Operating margin (1.2)% 6.6% 15.4% 7.2% Adjusted for: Restructuring charges 1.5 1.3 - (0.2) MTM adjustments and settlements on hedges - 1.0 (1.0) 0.1 Third-party refinery sale
Slide 25: Free cash flow reconciliation
Year Ended (in billions) December 31, 2022 Net cash provided by operating activties: $ 6.4 Net cash used in investing activties: (6.9) Adjusted for: Net redemptions of short-term investments (0.1) Strategic investments and related 0.7 Net cash flows related to certain airport construction projects a
Slide 26: Gross capital expenditures reconciliation
Year Ended (in billions) December 31, 2022 Flight equipment, including advance payments $ 4.5 Ground property and equipment, including technology 1.9 Adjusted for: Financed aircraft acquisitions 0.2 Net cash flows related to certain airport construction projects (0.6) Gross capital expenditures $ 6.
Slide 27: Adjusted Debt and EBITDAR
(in billions) December 31, 2022 Debt and finance lease obligations $ 23 Plus: Operating lease liability 8 Plus: Sale leaseback liability 2 Adjusted Debt $ 33 Year Ended (in billions) December 31, 2022 Operating income $ 4 Adjusted for: Depreciation and amortization 2 Fixed portion of operating lease
Slide 28: Adjusted net debt reconciliation
(in billions) December 31, 2022 Debt and finance lease obligations $ 23 Plus: sale-leaseback financing liabilities 2 Adjusted debt and finance lease obligations $ 25 Plus: 7x last twelve months' aircraft rent 4 Adjusted total debt $ 29 Less: cash, cash equivalents and short-term investments (7) Adju
Slide 29: Return on Invested Capital reconciliation
Year Ended (in billions) December 31, 2022 Pre-tax income $ 1.9 Adjusted for: Restructuring charges (0.1) Loss on extinguishment of debt 0.1 MTM adjustments on investments 0.8 Amortization of retirement actuarial loss 0.3 Interest expense, net and interest expense included in aircraft rent 1.4 Pre-t
Slide 30: Non-Fuel Unit Cost (CASM-Ex) reconciliation
Non-Fuel Unit Cost or Cost per Available Seat Mile, adjusted ("CASM-Ex") Year Ended (in cents) December 31, 2022 CASM 20.1 Adjusted for: Restructuring charges 0.1 Third-party refinery sales (2.1) Aircraft fuel and related taxes (4.9) Profit sharing (0.2) CASM-Ex 12.9