Delta Air Lines, Inc. · NYSE:DAL
Delta Air Lines — Investor Presentation (March 2009)
23 slides from Delta Air Lines's investor presentation, Mar 10, 2009
Slide 1: Delta: One Great Airline
Delta: One Great Airline Ed Bastain, President March 10, 2009
Slide 2: Safe Harbor
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 Deltas control,
Slide 3: Delta: One Great Airline
Delta: One Great Airline Track Record Of Meeting Our Commitments •Top line growth, best-in-class costs and liquidity • Completed Northwest merger Industry-leading capacity discipline Solid Foundation For Long-Term Success • Strong financial foundation and liquidity • Unmatched $2 billion synergy opp
Slide 4: Significant Accomplishments Despite Challenging Financial Environment
Significant Accomplishments Despite Challenging Financial Environment •Top line growth •Industry-leader in capacity rationalization • Maintained best-in-class cost structure •Announced and closed Northwest merger •Strong operational and customer service performance •Ended year with $6.1 billion of l
Slide 5: Business Has A Strong Financial Foundation
Business Has A Strong Financial Foundation 8.2% 7.1% 3.8% 3.6% 0.5% 2008 Operating Revenue % change YoY 2008 Mainline Non-Fuel Unit Costs (¢) 2008 Liquidity ($B ) 7.19 7.51 7.99 8.08 8.36 $6.1 $3.7 $3.0 $2.6 $1.8 •Premier global network drives unit revenue premium and provides tools to manage econom
Slide 6: Delta Has An Unmatched $2 Billion Opportunity
Delta Has An Unmatched$2 Billion Opportunity Successful integration key to unlocking value of the combination •Merger will generate $2 billion in annual run-rate synergies •Targeting $0.5 billion in 2009 and itl$05billiihincremental ~$0.5 billion in each of the next three years Merger Synergy Target
Slide 7: Integration Of The Airlines Is On Track
Integration Of The Airlines Is On Track Significant Progress in Four Months •24 Northwest aircraft painted in Delta livery •107 stations integrated and rebranded •Seniority and representation resolved for 25% of workforce •New American Express agreement •Customer-facing employees in Delta uniforms e
Slide 8: Moving Quickly To Stay In Front Of Demand Changes
Moving Quickly To Stay In Front Of Demand Changes Incremental 10 point international capacity reduction beginning in September Capacity vs. prior year September –December 2009 Atlantic Down 11 – 13% Pacific Down 12 – 14% International Down 10% •Changes will result in 5 point incremental system capac
Slide 9: March Quarter In Line With Expectations
March Quarter In Line With Expectations March quarter 2009 January 27 guidance Operating margin (5) –(6)%(5) –(7)% Fuel Price $2.31 $2.34 Total liquidity $5.1 billion $5.3 billion March quarter 2009 vs. March quarter 2008Passenger unit revenue Down 10% Mainline non-fuel unit cost Up 8%Up 7 -9%System
Slide 10: Out-of-Money Fuel Hedges Roll Off By End of Second Quarter
Out-of-Money Fuel Hedges Roll Off By End of Second Quarter % of Fuel Consumption Hedged Call options Swaps Collars 76% 75% 55% 35% 1Q09 2Q09 3Q09 4Q09 Projected Fuel Price Downside Participation $2.31 $2.03 $1.81 $1.69 32% 36% 74% 84% Current fuel prices, net of hedges, drive more than $5 billion in
Slide 11: Delta Has A Strong Liquidity Position
Delta Has A Strong Liquidity Position Fuel price decline, capacity rationalization and merger synergies allow for cash generation in face of economic downturn Cash From Operations $3.2 B Capital Expenditures ($1.5B) Net Debt Maturities ($0.8B) Increase in Liquidity $0.9 B Total Liquidity $6.1 B $7.0
Slide 12: Delta: Positioned For Long-Term Success
Delta: Positioned For Long-Term Success Strategic Objectives Enhance a strong •Preserve and grow liquidity financial foundation •Maintain best-in-class unit cost position Manage the business responsibly Capitalize on the value of the world’s largest airline •Commitment to capacity discipline •Discip
Slide 13: Delta: One Great Airline
Delta: One Great Airline Durable financial foundation Solid balance sheet and liquidity position Financial and strategic benefits of consolidation Premier global network and leading alliances Investments in customer service and operational improvements Engaged, committed workforce
Slide 14: Non-GAAP Reconciliations
Non-GAAP Reconciliations ADELTA
Slide 15: Non-GAAP Reconciliations
Non-GAAP Reconciliations Note: The following tables show reconciliations of certain financial measures. The reasons Delta uses these measures are described below. Because Delta completed its merger with Northwest Airlines on October 29, 2008,Delta’s financial results under generally accepted account
Slide 16: Non-GAAP Reconciliations (continued)
Non-GAAP Reconciliations (continued) Delta excludes special items because management believes the exclusion of these items is helpful to investors to evaluate the company’s recurring operational performance. Delta excludes mark-to-market ("MTM") adjustments on fuel hedges settling in 2009 in order t
Slide 17: EBITDAR
EBITDAR Year Ended(in millions)December 31, 2008Combined EBITDAR Pre-tax loss(9,041)$ Northwest pre-tax loss January 1 to October 29, 2008(5,673) Combined pre-tax loss(14,714) Depreciation and amortization 1,678 Other non-operating expense, net 1,011 Aiftt491Aircraft rent491 Items excluded: Impairme
Slide 18: Operating Revenue
Operating Revenue Year Ended Year Ended Percent Change(in millions)December 31, 2008 December 31, 2007 Year over Year Operating revenue Total operating revenue22,697 $ 19,154 $ Northwest operating revenue January 1, 2008 to October 29, 2008 and January 1, 2007 to December 31, 2007, respectively 11,5
Slide 19: Mainline Non-Fuel CASM
Mainline Non-Fuel CASM Year Ended December 31, 2008 Combined Mainline CASMMainlineCASM18.27¢Mainline CASM18.27 ¢ Combined Mainline CASM19.27 ¢ items excluded: Impairment of goodwill and other intangible assets(5.52) Transactions with third parties and other(067)Transactions with third parties and ot
Slide 20: Liquidity
Liquidity (in millions)December 31, 2008March 31, 2009Total liquidity: Cash and cash equivalents 4,255 $ 3,800 $ Short term investments212 100 Short-term investments 212 100 Undrawn line of credit 500 500 Total liquidity4,967 4,400 Net cash collateral posted with hedge counterparties 1,139 700 Total
Slide 21: Operating Margin Forecast
Operating Margin FORECAST March 2008 Quarter Operating margin(6)(7)%Operating margin(6) - (7)%Restructuring and related items1Operating margin excluding special items(5) - (6)%
Slide 22: Passenger Unit Revenue Forecast
Passenger Unit Revenue FORECAST March 2009 Quarter vs.(in millions, except per cent data)March 2008 Quarter Combined passenger unit revenue Combined passenger unit revenue Combined March 2009 quarter passenger unit revenue10.29 ¢ Delta passenger revenue 4,100 $ Northwest passenger revenue 2,708 Tota
Slide 23: Mainline Non-Fuel CASM Forecast
Mainline Non-Fuel CASM FORECAST March 2009 Quarter March 2008 Quarter Combined Mainline CASM Mainline CASM 32.29 ¢ Combined Mainline CASM 12.30 ¢ 32.09 ¢ Items excluded: Impairment of goodwill- (19.47) Transactions with third parties and other(0.51) (0.75) Restructuring and related items(010)(003)Re