Delta Air Lines, Inc. · NYSE:DAL
Delta Air Lines — J.P. Morgan Aviation, Transportation and Industrials Conference 2015
18 slides from Delta Air Lines's conference presentation, Mar 3, 2015
Slide 1: Delta: Delivering Growing Value
Delta: Delivering Growing Value J.P. Morgan Aviation, Transportation and Industrials Conference March 3, 2015
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: Delivering Growing Value
Delivering Growing Value Significant Opportunity in 2015 Continuing To Expand Margins Balanced Capital Deployment Building on our strengths to expand margins and cash flow in order to reduce debt, return capital to shareholders and invest in our future • Stable revenue environment and lower fuel pri
Slide 4: Outpacing The Airline Industry
• Generated more than $4.5 billion in pre - tax income in 2014, almost $1.9 billion higher than 2013 • $3.7 billion of free cash flow, $7.3 billion of adjusted net debt, $900 million contributed to the pension plans, and more than $1.3 billion returned to shareholders • Industry - leading operationa
Slide 5: The Backdrop For 2015
The Backdrop For 2015 Improving on all aspects of our financial performance in 2015 as a solid revenue environment, lower fuel prices and Delta - specific initiatives produce another record year Across The Industry At Delta • Modest economic growth globally, with strength in North America • Continui
Slide 6: Restructured Hedge Book
Restructured Hedge Book 6 2H15 hedge book has been restructured to balance exposure while maintaining longer - term upside protection • Took advantage of rebound in market prices during the quarter to restructure 2015 - 16 hedge book • 2H15 hedge book is now better positioned for current market cond
Slide 7: Solid March Quarter Performance
Solid March Quarter Performance 7 Operating margin - excluding hedge restructuring 8% - 9% ~11% Fuel Price - excluding hedge restructuring $2.92 - $2.97 $2.60 - $2.65 Passenger unit revenue change year over year Down ~1% CASM – ex fuel change year over year Flat System capacity change year over year
Slide 8: A High-Quality Company: Long-Term Goals
A High - Quality Company • 11 - 14% operating margins • 2014: 13.1% Operating Margin • Annual EPS growth of 10% - 15% after 2014 • 2014: 70% on a pre - tax basis EPS Growth • 15 - 18% return on invested capital • 2014: 20.7% ROIC • $6 billion annual operating cash flow and $3 billion free cash flow
Slide 9: Continuing To Drive Margin Expansion
Continuing To Drive Margin Expansion Disciplined Capacity Growth • Drive capacity growth through better utilization of assets, producing more seat departures and higher capacity on a smaller fleet • Focus capacity growth on high - revenue, restricted/constrained markets Pricing Improvements • Invest
Slide 10: Corporate Customers Are Choosing Delta
Corporate Customers Are Choosing Delta Running a high - quality, customer - focused airline… …Produces strong gains in corporate revenues Momentum continues as corporate revenues have increased by 6% this year 10 6 7 7 6 6 5 5 4 1 1 1 1 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Bus
Slide 11: Higher Revenue Through Better Customer Segmentation
Higher Revenue Through Better Customer Segmentation Industry - leading consumer products in each of four Branded F are categories, allowing customers to tailor their travel experience Delta One / First Class Delta Comfort+ Main Cabin Basic Economy Delta One / First Class Main Cabin / Basic Economy D
Slide 12: Enhanced Agreement With American Express
Enhanced Agreement With American Express Partnering with American Express since 1996 to create the world’s most valuable airline co - brand portfolio • New, multi - year contract with American Express continues growth momentum of Delta’s $2 billion co - brand revenue stream • Significantly improved
Slide 13: Domestic Refleeting Improves Asset Utilization
Domestic Refleeting Improves Asset Utilization Higher domestic capacity levels on a lower capital base produce improvements in ROIC • 2015 domestic capacity growth driven by higher gauge and better asset utilization – 3% higher capacity on flat departures and 10 fewer aircraft • Increasing average s
Slide 14: International Revenues Face Headwinds
International Revenues Face Headwinds • Strong dollar puts pressure on revenue and RASM but is margin accretive • Re - evaluating post - summer capacity plans in Atlantic, Pacific, and Brazil in light of continued currency headwinds West Coast Atlantic Pacific Latin • Redeployment of capacity with V
Slide 15: Balanced Capital Deployment Drives Value
Balanced Capital Deployment Drives Value Reinvest In The Business • ~50% of operating cash flow to be reinvested in the business • Plan to invest $2 - $3 billion annually into fleet, products, facilities and technology Strengthen The Balance Sheet • Nearly $10 billion in debt reduction in last five
Slide 16: Paying Down Debt Remains A Priority
Paying Down Debt Remains A Priority Clear path to achieve $5 billion debt target in 2016, resulting in $1 billion of run - rate interest savings versus 2009 $ 17.0B $ 15.0B $ 12.9B $ 11.7B $ 9.4B $ 7.3B < $6.0B 2009 2010 2011 2012 2013 2014 2015E Adjusted Net Debt Interest $1.3B $1.2B $1.1B $1.0B $8
Slide 17: Competing on Capital Returns
…is now competing on capital returns Delta has returned over $2 billion to owners in less than two years 17% 37% 2013 2014 Strong Commitment To Returning Cash To Shareholders Capital Returns As A Percentage Of Free Cash Flow Cash Returned To Shareholders $ 100M $ 250M $ 250M $ 1,100M 2013 2014 2015
Slide 18: The Path To Value Creation
The Path To Value Creation Delta S&P Industrials Free Cash Flow Delta S&P Industrials EPS Growth Note: S&P Industrials are 2014 - 16 consensus estimates obtained from FactSet. Delta P/E reflects benefit of NOLs. Delta S&P Industrials Forward Price/Earnings Delta S&P Industrials Free Cash Flow Yield
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