Delta Air Lines, Inc. · NYSE:DAL
Delta Air Lines — Deutsche Bank Aviation & Transportation Conference 2011
16 slides from Delta Air Lines's conference presentation, Sep 13, 2011
Slide 1: Delta: Building a Better Airline
Delta: Building a Better Airline Deutsche Bank Aviation & Transportation Conference September 13, 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 Solid financial foundation allows Delta to be profitable and free cash flow positive this year despite $3 billion higher fuel price impact Adjusting to the New Fuel Environment Strong operating cash flows with limited capital expenditures allow for considerable f
Slide 4: Results Show Delta's Solid Financial Foundation
3 Results Show Delta’s Solid Financial Foundation June Quarter 2011 Operating Income ($M) June Quarter Highlights: • Increased revenues by 12% and generated a revenue premium to the industry • Revenue growth offset 70% of cost pressures, including $1 billion higher fuel price impact • Generated $700
Slide 5: Revenues Are Covering Higher Fuel Costs
Revenues Are Covering Higher Fuel Costs Focus on non-fuel cost growth Note: All results exclude special items 4
Slide 6: September Quarter Better Than Expected
5 September Quarter Better Than Expected Revenues offsetting 80% of cost pressures, including $1 billion fuel price impact Sept. Quarter Estimate Operating margin 9 - 11% Fuel price per gallon $3.07 Capital expenditures $300 million Unrestricted liquidity (at 9/30/11) $5.1 billion Sept. Quarter 2011
Slide 7: Recalibrating the Business To High Fuel Prices
6 Recalibrating the Business To High Fuel Prices • Corporate contract gains and revenues from new products and services, combined with solid demand environment, drive revenue momentum Higher Revenues Reduce Capacity Unit Cost Improvement Disciplined Capital Spending • Targeting 2010 unit cost levels
Slide 8: Building Solid Revenue Momentum
Building Solid Revenue Momentum 7 Revenue growth driven by corporate contract gains, revenues from new products/services combined with solid demand environment Passenger Unit Revenue Change, 2011 vs. 2010 Sept. PRASM impacted 3 pts by prior year adjustment 15%
Slide 9: Targeting Merchandising Revenue of $1 Billion by 2013
8 Targeting Merchandising Revenue of $1 Billion by 2013 Implemented Upcoming • Seat-related products, including Economy Comfort and premium up-sell programs • SkyPriority recognizes our highest-value customers • Ancillary products to improve the travel experience (e.g., hotels, SkyClub passes, Wi -F
Slide 10: Reducing Fourth Quarter Capacity by 4-5%
9 Reducing Fourth Quarter Capacity by 4 - 5% Reductions focused in markets 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 retirements Atlantic (10 - 12%)
Slide 11: High Fuel Prices Are the New Norm For The Industry
High Fuel Prices Are the New Norm For The Industry 10 22% Hedging program producing 12¢ per gallon net benefit in 2011 Per gallon benefit $0.12 $0.08 $0.13 $0.13 Fuel Hedge Benefits, net of premiums Jan 2011 Price Change YTD-2011 While Jet Fuel Has Remained High Despite WTI’s Recent Decline… …Delta’
Slide 12: Non-Fuel Costs Must Be Reduced
Non-Fuel Costs Must Be Reduced 11 Timing to sustain 2010 levels challenged by capacity reductions • Current initiatives on track to bring non-fuel unit costs to 2010 levels by end of this year • Resizing the airline by reducing headcount, fleet and facilities • Reducing maintenance expense • Improvi
Slide 13: Disciplined Approach To Fleet Renewal
12 Disciplined Approach To Fleet Renewal 12 Order for 100 B737-900ER maintains financial and capacity discipline • Modest capital expenditures keep company on track to achieve $10B adjusted net debt target in 2013 • Capacity neutral as new aircraft replace older technology 757, 767 and A320 aircraft
Slide 14: Maintain Annual CapEx at $1.2 - $1.4 Billion
International Product & Facilities Maintain Annual CapEx at $1.2 - $1.4 Billion Merger Integration Domestic Narrowbody Replacement 2008 - 2010 2010 - 2013 2013 - beyond Capital discipline underlies financial discipline Annual Capital Spending Levels ($B) 2008 $2.2 2009 $1.3 2010 $1.3 2011 $1.2 2012
Slide 15: Commitment to Debt Reduction Remains Intact
14 Commitment to Debt Reduction Remains Intact Adjusted Net Debt 12/31/09 Mid-2013 $17B $10B Debt reduction de-risks business and improves profitability Annual Interest Expense 6/30/11 $13.8B
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 Non-GAAP Financial Measures We sometimes use information that is derived from
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