Delta Air Lines, Inc. · NYSE:DAL
Delta Air Lines — J.P. Morgan Aviation, Transportation and Industrials Conference 2017
18 slides from Delta Air Lines's conference presentation, Mar 15, 2017
Slide 1: Delta – A Durable Business Model
Delta – A Durable Business Model J.P. Morgan Aviation, Transportation and Industrials Conference March 15, 2017
Slide 2: Safe Harbor
Safe Harbor Statements in this presentation that are not historical facts, including statements regarding our estimates, expectations, beliefs, intentions, projections or strategies for the future, may be "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995
Slide 3: A Durable Business Model
A Durable Business Model Leveraging our solid foundation to produce consistent, sustainable results for shareholders Consistently Producing • Running a reliable, customer-focused airline is producing strong profits and cash flows that are sustainable through the business Solid Results cycle 2017: A
Slide 4: Consistently Producing Solid Results
Consistently Producing Solid Results Running a reliable, customer-focused airline is producing strong profits and cash flows, allowing for improved balance sheet strength and increased return of capital to shareholders Pre-Tax Profit Total Adjusted Net Debt Capital Returns to Shareholders and Unfund
Slide 5: 2017 Is A Transition Year
2017 Is A Transition Year Capacity discipline is supportive of improving unit revenue trends, which will allow Delta to invest in our people and product and offset pressures from rising jet fuel prices • System capacity growth capped at 1% – appropriate level to balance capital investment and supply
Slide 6: Environment Supportive of Improving Revenue
Environment Supportive of Improving Revenue Favorable dynamics in the industry environment in combination with Delta specific initiatives should drive improving revenue trends through 2017 Industry Environment Supportive of Improving Revenue Trends • Lag between rising fuel prices and revenue recapt
Slide 7: Leveraging Customer Loyalty to Drive Value
Leveraging Customer Loyalty to Drive Value Stronger loyalty program has more value for all partners • Partnering with American Express since 1996 to create the world’s most valuable airline co-brand portfolio • American Express partnership is expected to produce over $300 million in incremental valu
Slide 8: Maintaining our Commitment on Costs
Maintaining our Commitment on Costs Delta remains committed to delivering non-fuel unit cost growth of 2% or less over the long-term • 2013-2017 non-fuel unit cost CAGR of 2.5% includes ~50 basis points of pressure from profit sharing given robust pre-tax earnings growth Historical Non-Fuel Unit Cos
Slide 9: Strong Cash Generation and Disciplined Capital Investment Differentiates Delta
Strong Cash Generation and Disciplined Capital Investment Differentiates Delta Combination of strong earnings and balanced allocation of cash flow creating a sustainable business model through the cycle 1997-2003 Capital Expenditures and 2010-2016 Capital Expenditures and Operating Cash Flow ($B) Op
Slide 10: Proactively Addressing Pension and De-risking Cash Flows
Proactively Addressing Pension and De-risking Cash Flows $2 billion unsecured debt issuance used to accelerate 2018-2020 pension funding commitment • $2 billion unsecured debt issued at a blended rate of 3.3% Pension Funding Commitment Unchanged – Delta’s first investment grade, unsecured issuance i
Slide 11: Balance Sheet Strategy Maintains Cash Flexibility for Future
Balance Sheet Strategy Maintains Cash Flexibility for Future Debt repayment and excess pension funding strategy will provide Delta with cash flow flexibility when the company becomes a full cash tax payer Debt Pension Taxes Target: $4B Adjusted Net Target: At Least 80% Expect to be Full Cash Tax Deb
Slide 12: Delta Committed To Consistent Shareholder Returns
Delta Committed To Consistent Shareholder Returns Plan to return 70% of free cash flow to owners, with an increasing focus on the dividend Regular dividend run-rate of Plan to complete $5 billion share $615 million per year repurchase authorization by mid-2017 • Dividend represents a long-term commi
Slide 13: Opportunity In Proving Durability
Opportunity In Proving Durability Delta’s stock price implies significant opportunity in reinforcing earnings sustainability Free Cash Flow Conversion ~100% Implied Delta Stock Price at High Quality ~55% Industrial Transport Valuation Multiples Delta High Qual. Ind. $125 Transports $100 Shareholder
Slide 14: Non-GAAP Reconciliations
Non-GAAP Reconciliations Non-GAAP Financial Measures Non-GAAP Financial Measures: We sometimes use information ("non-GAAP financial measures") that is derived from the Consolidated Financial Statements, but that is not presented in accordance with accounting principles generally accepted in the U.S.
Slide 15: Non-GAAP Reconciliations
Non-GAAP Reconciliations Pre-Tax Income and Net Income, Adjusted Year Ended Year Ended Year Ended (in billions) December 31, 2016 December 31, 2015 December 31, 2014 Pre-tax income $ 6.6 $ 7.2 $ 1.1 Adjusted for: MTM adjustments and settlements (0.4) (1.3) 2.3 Restructuring and other items — — 0.7 L
Slide 16: Non-GAAP Reconciliations
Non-GAAP Reconciliations Adjusted Net Debt Adjusted Net Debt. We use adjusted total debt, including aircraft rent, in addition to long-term adjusted debt and capital leases, to present estimated financial obligations. We reduce adjusted debt by cash, cash equivalents and short-term investments and h
Slide 17: Non-GAAP Reconciliations
Non-GAAP Reconciliations Operating Margin, adjusted Operating Margin, Adjusted. We adjust for the following items to determine operating margin, adjusted, for the reasons described below: MTM adjustments and settlements. MTM adjustments are defined as fair value changes recorded in periods other tha
Slide 18: Non-GAAP Reconciliations
Non-GAAP Reconciliations Non-Fuel Unit Cost per Available Seat Mile, Including Profit Sharing (“CASM-Ex”) Non-Fuel Unit Cost or Cost per Available Seat Mile, Including Profit Sharing ("CASM-Ex"). We adjust CASM for the following items to determine CASM-Ex, including profit sharing for the reasons de
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