Delta Air Lines, Inc. · NYSE:DAL
Delta Air Lines — J.P. Morgan Aviation, Transportation & Defense Conference 2012
19 slides from Delta Air Lines's conference presentation, Mar 13, 2012
Slide 1: Delta: Keep Climbing
Delta: Keep Climbing J.P. Morgan Aviation, Transportation & Defense Conference March 13, 2012
Slide 2: Safe Harbor
2 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
Slide 3: Delta: Keep Climbing
3 Delta: Keep Climbing Solid business momentum going into 2012 Durable business model to offset higher fuel prices Building for long - term success Creating a solid franchise that generates strong margins and cash flow, provides for debt reduction and investment for the future Successfully offset $3
Slide 4: Solid Business Momentum Heading Into 2012
211 Solid Business Momentum Heading Into 2012 4 Note: All results exclude special items $371 $189 $103 $40 $19 $(209) YOY Change (140) (8) 27 (68) (39) Improved profitability and margin expansion in 4Q11, despite $500 million higher fuel costs December Quarter 2011 Pre - tax Income ($M)
Slide 5: Planning For Continued Fuel Pressure
5 Planning For Continued Fuel Pressure SOURCE: Bloomberg (Futures), Platts (Spot price) Brent spot crude price Brent futures Brent crude price: Spot vs. futures Market fuel prices have typically exceeded forward curve predictions
Slide 6: Actions Offset 2011 Fuel Increases
6 Actions Offset 2011 Fuel Increases By moving quickly to address fuel price pressures… …Delta successfully offset the worst fuel increase in its history • Higher revenues • Effectively passing through fuel increases to customers through fare increases and fuel surcharges • Capacity discipline • Red
Slide 7: Revenue Environment Remains Solid
8.0% 11.5% 13.0% 10.0% 14.5% 13.0% 14.5% 13.0% 11.5% July 2011 Aug Sept Oct Nov Dec Jan 2012 Feb Mar (est) Revenue Environment Remains Solid 7 PRASM growth driven by corporate contract gains, revenues from new products/services combined with solid demand environment Passenger Unit Revenue Change YOY
Slide 8: Solid Corporate Travel Demand
Solid Corporate Travel Demand 1Q12 YTD Booked Revenue vs. Prior Year Corporate booked revenues up 10% despite 3 - 4% reduction in capacity 8 Delta Corporate Revenue Breakdown Financial Services 12% Manufacturing 17% Technology 13% Other 20% Health Care 9% Automotive 8% Business Services 5% Transport
Slide 9: Momentum Continues In March Quarter
9 Momentum Continues In March Quarter March quarter 2012 Operating margin 1 – 3% Consolidated fuel price $3.27 Capital Expenditures $450 - 500M Total unrestricted liquidity $5.6 billion March quarter 2012 vs. March quarter 2011 Passenger unit revenue Up 12 - 13% Consolidated ex - fuel unit cost Up 3
Slide 10: Building For Long-Term Success
Building For Long - Term Success Grow Unit Revenues Improve Productivity Invest in the Business Delever the Balance Sheet Grow passenger and ancillary unit revenues through capacity discipline, corporate revenue gains, merchandising initiatives, and running a great and reliable operation Focus on to
Slide 11: Delta Achieving Revenue Premium to the Industry
Delta Achieving Revenue Premium to the Industry 103% 92% 87% 93% 98% 106% 101% 86% 103% 102% Domestic Transatlantic Latin Pacific System 4Q07 4Q11 Delta System Unit Revenue as Percentage of A4A Average Merger synergies, capacity discipline, focus on higher value customer and improved service offerin
Slide 12: Expanding Product Offerings To Improve Revenue Growth
Expanding Product Offerings To Improve Revenue Growth Target of $1 billion in annual merchandising revenue by 2013 Seat Related Products • Economy Comfort • First Class Upsell • Preferred Seats • Same Day Confirmed Travel Products and Services Technology and Product Investments • Trip Extras • Hotel
Slide 13: Running A Great and Reliable Operation
13 Running A Great and Reliable Operation
Slide 14: Non-Fuel Costs Present Opportunity
8.40 ¢ 8.80 ¢ Non - Fuel CASM Target Midpoint of 2012 Non - Fuel CASM Guidance Non - Fuel Costs Present Opportunity 0.40 ¢ • Structural changes being made to bring costs down to targeted levels over next 12 – 24 months Maintenance Efficiency: $200 - $250M • 737 - 900 deliveries improve maintenance e
Slide 15: Taking a Comprehensive Approach To Fuel
Taking a Comprehensive Approach To Fuel • Every cent matters – a 1¢ change in fuel price equates to $40 million of annual fuel expense • Utilizing fuel hedging to mitigate both price and volatility • Cost - effective hedging instruments and products • Fuel efficiency gains from investments in wingle
Slide 16: Investments In The Business Are Paying Off
Investments In The Business Are Paying Off Multi - Year Investments in Products, Services and Facilities • Flat bed seats – more than 50% of widebody international seats complete by end of 2012 • Facilities – state of the art international terminals slated for Atlanta (2012) and JFK (2013) • Wi - Fi
Slide 17: Derisking the Business through Debt Reduction
Derisking the Business through Debt Reduction Solid Progress On Debt Reduction… $17B 3 /31/12 $ 12.2B $10B 17 On track to achieve $10 billion adjusted net debt target in the next 18 months $1.3B $1.0 B $0.8 2009 2012 At Target …Producing Interest Expense Savings and Enhanced Flexibility 2009 Mid - 2
Slide 18: Delta: Keep Climbing
18 Delta: Keep Climbing Solid business momentum going into 2012 Durable business model to offset higher fuel prices Building for long - term success Creating a solid franchise that generates strong margins and cash flow, provides for debt reduction and investment for the future Successfully offset $
Slide 19: Non-GAAP Financial Measures
19 Non-GAAP Financial Measures Delta sometimes uses information that is derived from our 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 measur
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