Delta Air Lines, Inc. · NYSE:DAL
Delta Air Lines — Bank of America Merrill Lynch 2013 Global Transportation Conference
18 slides from Delta Air Lines's conference presentation, May 15, 2013
Slide 1: Delta: Building A Better Airline
Delta: Building A Better Airline Bank of America Merrill Lynch 2013 Global Transportation Conference May 15, 2013
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: Building A Better Airline
Building A Better Airline • Expect record June quarter following first March quarter profit in over a decade • Building on 2012’s financial momentum to grow earnings and expand margins in 2013 and beyond • Investing in network, operations, product and people to drive revenue growth and corporate sha
Slide 4: A Path of Significant Improvement
A Path of Significant Improvement Delta’s financial foundation has strengthened considerably over the past five years, with a solid pipeline of initiatives in place for further improvement $1.4B $2.8B 2009 2012 1.5% 11.3% 2009 2012 $17.0B $ 11.0B 2009 1Q13 Operating Cash Flow Return on Invested Capi
Slide 5: Momentum Continues In 2013
Momentum Continues In 2013 2Q13 Operating margin 9% - 11% Fuel price, including taxes and settled hedges $3.00 - $3.05 Free cash flow ~$500 million 2Q13 vs. 2Q12 Consolidated ex - fuel unit cost Up 3.5% - 4.5% System capacity Flat to up 1% 5 Note: Fuel price excludes mark - to - market adjustments;
Slide 6: Delta Is Taking a Different Approach
Delta Is Taking a Different Approach All stakeholders need to share in our success to break the industry’s historical pattern 6 Employees • Best employee relations in the industry Customers • Continued benefits from investments in product, service, technology and operations Shareholders • 4 th conse
Slide 7: Investing in the Business and Operational Reliability
Investing in the Business …and Operational Reliability 7 Investing in Network, Product and Facilities….. • Onboard: – Launch of Economy Comfort – Flat bed seats on 85% of international aircraft by end of 2013 – Wi - Fi on all two - class aircraft – Personal on - demand entertainment • Facilities: –
Slide 8: Generating a Revenue Premium To The Industry
14.5 % 13% 13% 11% 6% 8% 4.5 % 4% 0.5% 5.5 % 2.5% 4% 5.5% 5% 2% - 2% 9% 5% 7% 8% 4% 5% 2% 1% - 1% 2% - 1% 1% 2.5% 3% 3% - 4% Jan-12 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan-13 Feb Mar Apr Delta A4A Excl DAL Generating a Revenue Premium To The Industry • Delta has a network, product and operat
Slide 9: Cost Control Key To Margin Expansion
1H13 2H13 Longer term Cost Control Key To Margin Expansion $1 billion structural cost initiatives designed to stabilize cost trends and pave the way for margin expansion in 2013 and beyond • Non - fuel unit costs expected to grow 3 - 5% for 2013 • Cost growth expected to peak in 1Q13 and stabilize b
Slide 10: Managing Fuel Expense to Reduce Risk
Taking a unique approach to Delta’s number one input cost • Trainer Refinery is a unique approach to addressing Delta’s $12 billion annual fuel spend • Trainer expected to produce a modest profit for the June quarter • Agreements in place for 10% of refinery’s crude supply to come from Bakken in sec
Slide 11: Capital Discipline Drives Free Cash Flow
Capital Discipline Drives Free Cash Flow Capital Spending and Operating Cash Flow ($ Billion) Note: Includes pre - merger NWA Delta’s business model produces both solid financial results and significant free cash flow 1998 – 2000 Cumulative earnings: $6.5 billion Cumulative free cash flow: ($2.0 bil
Slide 12: Plan For Free Cash Flow Deployment
Plan For Free Cash Flow Deployment Delta’s long - term financial plan calls for significant free cash flow, and creation of up to $5 billion in value for shareholders through a combination of further debt reduction, capital return to shareholders and opportunistic pension funding 12 Debt Reduction R
Slide 13: Debt Reduction Remains A Priority
Debt Reduction Remains A Priority • There is meaningful benefit to further debt reduction; new target is to achieve and maintain $7 billion of adjusted net debt • Additional debt reduction drives improvement to earnings and cash flow, while strengthening the balance sheet $17.0 $15.0 $12.9 $11.7 $10
Slide 14: Pension Liability Will Decline Over Time
Pension Liability Will Decline Over Time • Delta’s defined benefit pension plans are permanently frozen and closed to new participants. No additional benefits are accruing to existing plan participants. • Airline relief within the 2006 Pension Protection Act provides for both a favorable discount ra
Slide 15: Incremental Pension Contributions Can Address Longer-Term Pension Funding
$- $500 $1,000 2014 2016 2018 2020 2022 2024 2026 2028 2030 Required funding with addl. contributions 5-year plan average Incremental Pension Contributions Can Address Longer - Term Pension Funding • Incremental contributions of up to $1 billion over next five years would smooth remaining funding re
Slide 16: Implementing A Program To Return Cash To Shareholders
Implementing A Program To Return Cash To Shareholders • Delta’s Board has approved a program aimed at returning more than $1 billion over the next three years to shareholders through regular dividends and share repurchases • D emonstrates strong commitment to shareholders, while preserving flexibili
Slide 17: Building A Better Airline
Building A Better Airline • Expect record June quarter following first March quarter profit in over a decade • Building on 2012’s financial momentum to grow earnings and expand margins in 2013 and beyond • Investing in network, operations, product and people to drive revenue growth and corporate sha
Slide 18: Delta: Building A Better Airline
Delta: Building A Better Airline Bank of America Merrill Lynch 2013 Global Transportation Conference May 15, 2013
Delta Air Lines — Bank of America Merrill Lynch 2013 Global Transportation Conference on 6ix