Delta Air Lines, Inc. · NYSE:DAL
Delta Air Lines — Investor Presentation (May 2017)
18 slides from Delta Air Lines's investor presentation, May 11, 2017
Slide 1: Delta: Building on Our Success
Delta: Building on Our Success May 11, 2017
Slide 2: Forward-looking statements
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. All forw
Slide 3: Delta's entire business has been transformed, creating a new and durable franchise
Delta’s entire business has been transformed, creating a new and durable franchise for all stakeholders 3 2007 Completed successful restructuring and re - listed on NYSE 2008 Merged with Northwest to create world’s largest airline 2010 Added to S&P 500; Company initiates dividend & share repurchases
Slide 4: 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 Target ~$6B in pretax p rofits again in 2017 $3.7B $3.8B $3.8B 2014 2015 2016 $4.5B $5.9B $6.1B 2014 2015 2016 $1.4B $3.1B 201
Slide 5: Leveraging Solid Foundation to Drive Further Improvement
5 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 Operating Margin EPS Growth After - Tax ROIC Cash Flow 2018 – 2020 Framework 16 – 18% 15 %+
Slide 6: The Path to Sustainable Margins and Cash Flows
6 The Path to Sustainable Margins and Cash Flows Driving value for shareholders through top - line growth, margin expansion and prudent deployment of cash flows Revenue Growth Capital Discipline Cost Productivity Measured Capacity Growth • Maintaining our lead on product innovation and customer serv
Slide 7: Revenue Environment Is Improving
7 Revenue Environment I s Improving Delta’s commercial initiatives, in combination with favorable industry backdrop, are driving improving revenue trends in 2017 • Lag between rising fuel prices and revenue recapture has historically been ~2 quarters • 2017 domestic capacity forecast of ~ 3.5% more
Slide 8: Opportunity to Improve Domestic Revenue Trajectory
Opportunity to Improve Domestic Revenue Trajectory 8 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, th
Slide 9: 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 – especially in domestic markets –
Slide 10: Better Customer Segmentation, International Partnerships, Product Investment
Better Customer Segmentation International Partnerships Product Investment • Premium products – Delta One, Premium Select, Delta Comfort + – offer value - adds for customers • Basic Economy domestic rollout complete, international rollout in progress • Improving distribution for consistent offers an
Slide 11: Efficiency Focus Drives Revenue Improvement to Bottom-Line
11 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 sharing – Achieved while absorbing signif
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 one better suited for Delta’s restructured network • Deferring 10 A350s scheduled for delivery in 2019/20 by 2 - 3 ye
Slide 13: Addressing the Fuel Challenge
13 Addressing the Fuel Challenge • 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 prices • Driving cost advantage and operational certainty through refinery ‒ Overall, our unh
Slide 14: Strong Cash Generation Differentiates Delta
14 Strong Cash Generation Differentiates Delta Combination of strong earnings and balanced allocation of cash flow creating a sustainable business model through the cycle $2.6 $3.8 $4.1 $4.8 $4.1 $2.9 $1.8 $- $2 $4 $6 $8 1997 1998 1999 2000 2001 2002 2003 CapEx Operating Cash Flow $1.3 $1.3 $2.0 $2.
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 – Allows for replacement of ~25% of Delta’s mainline fleet from 2017 - 2020, including retire
Slide 16: Continuing to Strengthen the Balance Sheet
40% 60% 80% 100% 2016 2017E 2018E 2019E 2020E 2021E Funded status at current discount rate Funded status assuming increased rates (+200 bps) Investment grade balance sheet provides Delta with business flexibility and reduced financial risk 16 Continuing to Strengthen the Balance Sheet $ 9.5 $12.5 $1
Slide 17: Commitment To Consistent Shareholder Returns
• Announcing 4 th consecutive 50% increase to the dividend since initiated in 2013 – Annual dividend per share will increase to $1.22, from $0.81, in September quarter – translates to $875 million per year or 15 - 20% of free cash flow target – Dividend increase translates to a ~2.5% dividend yield
Slide 18: Delta: America's Leading Global Airline
Delta: America’s Leading Global Airline 18 America’s Best Run Airline Leading Partnerships Throughout the World Sustainable Margins, Returns, and Cash Flows Investment Grade Balance Sheet Provides Solid Foundation Driving value for our owners through consistent execution, sustainable results, and pr