Delta Air Lines, Inc. · NYSE:DAL
Delta Air Lines — J.P. Morgan Aviation, Transportation and Industrials Conference 2014
20 slides from Delta Air Lines's conference presentation, Mar 10, 2014
Slide 1: Continuing Our Climb
Continuing Our Climb J.P. Morgan Aviation, Transportation and Industrials Conference March 10, 2014
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: Continuing Our Climb
Continuing Our Climb Building a sustainable and durable franchise producing top line growth, margin expansion and capital returns for shareholders 3 Taking Momentum into 2014 Setting the Long - Term Foundation Prudent Capital Deployment Leveraging Delta’s strengths with initiatives to further our fi
Slide 4: Outpacing The Airline Industry
Outpacing The Airline Industry 4 $2,675 M $2,193 M $1,290 M $1,059 M $278 M 2013 Pre - Tax Income Delta is the leader in an evolving industry Note: Excludes special items • Record $2.7 billion pre - tax profit, a 71% increase year over year, with 2.8 points of pre - tax margin expansion • $2.1 billi
Slide 5: Taking Momentum Into 2014
Taking Momentum Into 2014 Projecting record March quarter profitability despite $55 million negative impact from severe weather 5 …And We Delivered March 2014 Quarter Estimate Operating margin 6.5% - 7.5% PRASM change year over year Up 3% - 4% Fuel Price $3.02 - $3.07 CASM – Ex Fuel change year over
Slide 6: Charting Our Course
Delta - Goal High Quality Industrial Transports - 5 yr average Delta - Goal High Quality Industrial Transports - 5 yr average Charting Our Course 6 Note: High quality industrial transports are companies with similar index characteristics to Delta – part of S&P 500 and Dow Tra nsportation Index (CHRW
Slide 7: The Path To Achieving Financial Goals
The Path To Achieving Financial Goals We have invested in a pipeline of initiatives to further our financial momentum and achieve long - term financial goals 7 • Domestic refleeting – upgauging fleet to more efficiently serve Delta’s expanded network • Product and Operational Investments – harvestin
Slide 8: Upgauging Domestic Fleet To Expand Margins
Merger 2009 2010 2011 2012 2013 2014E Profit margin Avg. total seats Avg. aircraft count Upgauging Domestic Fleet To Expand Margins Capital efficient restructuring of the domestic fleet provides for better revenue generation, improved cost efficiency, and a superior customer experience 8 • Fleet res
Slide 9: Corporate Customers Are Choosing Delta
6% 10% - 4% - 1% 6% 6% 7% 9% 10% 11% 15% Total Other Manufacturing Defense Health Care Technology Banking Media Automotive Business Services Financial Services Corporate Customers Are Choosing Delta Momentum continues as corporate revenues have increased by 6% in the March quarter A diverse base of
Slide 10: International Partnerships Expand Delta's Global Reach
International Partnerships Expand Delta’s Global Reach Leveraging experience with successful Air France/KLM joint venture to build on new partnerships with equity stakes in Virgin Atlantic, GOL, and AeroMexico 10 • Transatlantic joint venture is the model for successful international cooperation • J
Slide 11: Investments in New York Are Delivering Benefits
Investments in New York Are Delivering Benefits Building scale and improving the product to improve margin performance in the largest travel market in the US 11 MD - 90 Virgin Atlantic • Work so far has improved Delta’s margins by almost 6 pts in New York – New York share gap is closing, but work re
Slide 12: Taking A New Approach With SkyMiles
Taking A New Approach With SkyMiles 12 Delta is first legacy carrier to move to a revenue - based model that will reward our most valuable customers • Beginning in 2015, customers will earn redeemable miles based on ticket price – Allows travelers to earn miles based on dollars spent instead of mile
Slide 13: Delta's Cost Performance Is Sustainable
3% 5% 4% 1.2% 2011 2012 1H13 2H13 2014 + beyond Delta’s Cost Performance Is Sustainable 13 Valuation Allowance $1 billion cost initiatives stemmed rate of growth in costs; next phase leverages strengths across the business to keep annual cost growth below inflation Non - Fuel Unit Cost Growth Sustai
Slide 14: Managing Fuel Expense to Reduce Risk
-15 -10 -5 0 5 10 15 Jan-11 Jan-12 Jan-13 Jan-14 Jet Fuel Premium/(Discount) to ULSD Historical Avg (pre-2013) Last 6 months day average Unique approach to Delta’s largest input cost • Trainer expected to generate modest profit for 2014 – Small loss in 1Q14 despite taking down major unit to improve
Slide 15: Prudent Deployment of Cash Flows
2005 - 2009 Restructuring and Merger Integration Focus on restoring operating cash flow and combining the two airlines 2009 – 2013 Investing in the Business and Reducing Risk Operating cash flow dedicated to operational and product investments and balance sheet repair 2013 – forward Balanced Capital
Slide 16: Continuing To Strengthen The Balance Sheet
Continuing To Strengthen The Balance Sheet There is meaningful benefit to further debt reduction; new target is to achieve $7 billion of adjusted net debt $17.0 $15.0 $12.9 $11.7 $9.4 $7.0 2009 2010 2011 2012 2013 2015 Target Adjusted Net Debt ($B) 16 Further delevering creates value by: • Increases
Slide 17: Shareholder Returns To Grow Over Time
Shareholder Returns To Grow Over Time 17 • Moving quickly with our balanced capital deployment plan, with an initial $525 million returned to shareholders in the first nine months of our program – Capital returned to date through $150 million of dividends and $375 million of share repurchases • Plan
Slide 18: Achieving Our Goals Is The Path To Value Creation
Achieving Our Goals Is The Path To Value Creation Continued execution of our plan to produce earnings growth, solid returns on invested capital, and capital returns to shareholders should result in improved valuations 18 5.3 6.6 7.2 7.9 8.7 9.3 9.8 12.5 12.8 16.2 24.0 Note: Data source is Thomson On
Slide 19: Experience makes for a stronger tailwind
Experience makes for a stronger tailwind
Slide 20: Non-GAAP Reconciliations
ADELTA Non-GAAP Reconciliations
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