Delta Air Lines, Inc. · NYSE:DAL
Delta Air Lines — Bank of America/Merrill Lynch Transportation Conference 2014
16 slides from Delta Air Lines's conference presentation, May 7, 2014
Slide 1: Delta: Setting A New Standard
Delta: Setting A New Standard Bank of America/Merrill Lynch Transportation Conference May 7, 2014
Slide 2: Safe Harbor
2 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
Slide 3: Setting A New Standard
3 Setting A New Standard Taking Momentum into 2014 Setting the Long - Term Foundation Balanced Capital Deployment Leveraging Delta’s strengths with initiatives to further our financial momentum and achieve long - term financial goals Building on a record setting 2013 with further earnings growth, ma
Slide 4: Outpacing The Airline Industry
4 Outpacing The Airline Industry • Delta is the leader in an evolving industry $3,038 $2,563 $1,408 $904 $688 $262 • Record $444 million pre - tax profit, a $363 million increase year over year, with 400 basis points of pre - tax margin expansion • $390 million of free cash flow, adjusted net debt o
Slide 5: Taking Momentum Into 2014
5 Taking Momentum Into 2014 June 2014 Quarter Estimate Operating margin 14% - 16% Fuel Price $2.97 - $3.02 CASM – Ex Fuel change year over year Up 0% - 2 % Free cash flow $1.25+ billion System capacity change year over year Up 2% - 3% Note: Fuel price includes taxes, settled hedges, refinery contrib
Slide 6: Generating A Revenue Premium To The Industry
6 Generating A Revenue Premium To The Industry • Investments in the network, product and operations have produced solid, sustainable revenue gains, with a pipeline of initiatives in place to keep the momentum going 100% 102% 106% 106% 107% 2010 2011 2012 2013 1Q14 Delta Passenger Unit Revenue vs. A4
Slide 7: Sustaining Our Cost Performance
4.6% 3.7% 1.2% 0.3% 2012 1H13 2H13 1Q14 2Q14E Long Term <2% Growth 7 Sustaining Our Cost Performance • Initiatives have contributed to our ability to keep non - fuel unit costs below 2% Sustaining Our Cost Performance Non - Fuel Unit Cost Growth Excludes special items • A solid base of supply chain,
Slide 8: Managing Fuel Expense to Reduce Risk
-15 -10 -5 0 5 10 15 Jan-11 Jan-12 Jan-13 Jan-14 Jet Fuel Premium/(Discount) to ULSD Historical Avg (pre-2013) • Trainer expected to generate modest profit for 2014 – Small loss in 1Q14 despite taking down major unit to improve future distillate production • Shifting to less expensive domestic Bakke
Slide 9: Long-Term Goals Guide the Planning Process
9 Long - Term Goals Guide the Planning Process • 10 - 12% annual operating margins Operating Margin • Annual EPS growth of 10% - 15% EPS Growth • 15%+ return on invested capital ROIC • $5+ billion annual operating cash flow with ~50% reinvested back into the business Cash Flow • Investment grade cre
Slide 10: 2014's Five Year Plan Continues Our Momentum
10 2014’s Five Year Plan Continues Our Momentum • 2014’s five year plan shows path to achieving our long - term financial goals with margin expansion, free cash flow generation, and balance sheet improvement Revenue Growth Strong Cash Flow Cost Efficiency Capacity Discipline Grow passenger, ancillar
Slide 11: Debt Reduction Remains A Priority
11 Debt Reduction Remains A Priority • Debt levels have been reduced significantly, but more delevering is needed; targeting $5 billion of adjusted net debt by the end of 2016 • Debt reduction provides earnings tailwind; interest expense at $5 billion debt level should be ~$350 million per year, dow
Slide 12: Addressing Long-Term Pension Obligations
12 Addressing Long - Term Pension Obligations • Plan to maintain pension funding at $1 billion per year through 2020, consistent with 2013 - 14 levels • Incremental pension funding helps drive balance sheet improvement – At current rates, pension would be 80% funded and balance sheet liability reduc
Slide 13: Increasing Shareholder Returns
13 Increasing Shareholder Returns • Demonstrating a strong commitment to shareholder returns with 50% increase to the dividend and a new $2 billion share repurchase authorization • Return levels moving closer to averages of high quality industrial peer set Regular Dividend $300 million per year Shar
Slide 14: The Path To Improved Valuation
• Plan targets compare favorably with other high quality industrial transports and should help drive better valuations 14 The Path To Improved Valuation 14% Delta High Quality Industrial Transports ROIC Delta High Quality Industrial Transports EPS Growth $ 3.0B $ 1.5B Delta High Quality Industrial T
Slide 15: EXPERIEN
EXPERIEN FOR A ST TAILWI
Slide 16: Non-GAAP Reconciliations
Non - GAAP Reconciliations 16
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