Delta Air Lines, Inc. · NYSE:DAL
Delta Air Lines — Investor Day (December 2021)
51 slides from Delta Air Lines's investor day presentation, Dec 16, 2021
Slide 1: Capital Markets Day December 16, 2021
Capital Markets Day De c em b er 16, 2021
Slide 2: Julie Stewart, Vice President, Investor Relations
Julie Stewart Vice President, Investor Relations
Slide 3: Agenda
Agenda Ed B a stian Chief Execu t ive Officer Accelerating Our Climb Glen Hauenstein President Delta – The Premium Airline Brand Alain Bellemare President - International Building A Global Future Dan Janki Chief Financial Of f icer Creating Long - Term Value Fireside Chat: Ed Basti an a n d Stephen
Slide 4: Safe Harbor
Safe Harbor 3 Statements made in this presentation that are not historical facts, including statements regarding our estimates, expectations, beliefs, intentions, projections, goals, aspirations, commitments or strategies for the future, should be considered “forward - looking statements” under the
Slide 5: Accelerating Our Climb
4 4 Accelerating Our Cli m b Ed Bastian Ch i ef Execut i ve Off i cer
Slide 6: Five Key Takeaways
Industry L e a d e r s h i p Brand P r e f e r e n c e E a r n i n g s Power Financial Foundation C o m p e t i t iv e Advantages Five Key Takeaways Delta’s actions during the pandemic further strengthened its competitive advantages and enhanced its position as a trusted consumer brand 1 Delta is le
Slide 7: Our Competitive Advantages And Brand Have Strengthened
Our Competitive Advantages And Brand Have Strengthened Financial Foundation Global N e t w o r k People and Culture O p e r a t i o n a l Reliability C us t o m e r Loyalty Unparalleled Competitive Advantages Support Our Trusted Consumer Brand 6
Slide 8: People And Culture – Powering The Delta Difference
People And Culture – Powering The Delta Difference x Dedicated and experienced team, including 9,000 new employees, that continue to deliver the best performance in the industry x Avoided pandemic furloughs with high percentage of workforce participating in voluntary programs x Highly en gaged emplo
Slide 9: Operational Reliability – Excellence That Sets Delta Apart
8 Operational Reliability – Excellence That Sets Delta Apart 5,325 22,517 23,922 33,901 Cancellations By Airline 1 November 2021 YTD 99 . 6 % 97 . 7 % 97 . 9 % 98 . 0 % C o m p l e t i o n F a c t o r 88.7% 85.2% 82.4% 80.4% 75.9% On Time Arrival By Airline 2 November 2021 YTD Delta Pre - Covid Reco
Slide 10: Global Network – Strengthened And Accelerated Footprint
9 Global Network – Strengthened And Accelerated Footprint Do m estic ▪ Improved local share in both core and coastal hubs by 3 points ▪ Accelerated generational airport investments in largest revenue centers International ▪ Maintained and supporting our partners through restructuring ▪ Fast - tracke
Slide 11: Customer Loyalty – The Power Of The Delta Brand
10 48 58 2019 2021 YTD Customer Loyalty – The Power Of The Delta Brand Domestic Net Promoter Score Customer Engagement 1 Domestic Corporate Share 2 30% 31% 32% 35% 2015 - 2018 2019 2020 2021E +10 Point Improvement in NPS vs. 2019 Record Customer Engagement With The Brand Domestic Corporate Share ~15
Slide 12: Delta Continues To Outperform Peers On Key Financial Metrics
11 Delta Continues To Outperform Peers On Key Financial Metrics Adj. Non - Fuel Unit Cost (3Q21 TTM) Adj. Pre - Tax Income (2H21) 2 14.15¢ 13.97¢ 12.09¢ 10.56¢ Non - F ue l C A S M 1 , U S C en t s 1 R e p o r t e d a d j u s t e d N o n - F u e l CA S M a s d e f i ne d b y e a c h c a rrie r 2 Rep
Slide 13: Well Positioned To Manage Continued Volatility
12 Well Positioned To Manage Continued Volatility I N D U S T R Y SUPPLY F U E L & INFLATION V A R I A N T RISK Approach to Managing Volatility x Measured and agile approach to capacity deployment x Fleet strategy gives us flexibility to optimize in a changing environment x Well positioned to recapt
Slide 14: Building Momentum For The Next Phase Of The Recovery
13 Building Momentum For The Next Phase Of The Recovery Consumer Busines s ▪ Pent - up demand is evident ▪ Impact of each variant on demand has been diminishing ▪ Choppiness continues as international travel restrictions evolve ▪ Healthy economy and record consumer savings rates ▪ Rising demand for
Slide 15: Path To Full Recovery By 2023
14 Path To Full Recovery By 2023 2022E C a p a c i t y vs. 2019 ~90% N o n - F u e l CASM vs. 2019 Up 7 to 10% CapEx ~$6 Billion ▪ Achieve sustained and significant profitability and cash generation ▪ Grow revenue premium ▪ Drive competitive cost structure ▪ Reduce debt and invest in our people and
Slide 16: 2024 Financial Targets And Value Creation Framework
Return on Invested Capital Delta People and Brand T h o u g h t f u l Capital Allocation 15 2024 Financial Targets And Value Creation Framework 2024 Financi a l Targ e ts Adj. Revenue >$50B Adj. Earnings per Share 1 >$7.00 Free Cash Flow >$4B I n d us t r y - Leading Margins Balance Sheet A d j. D e
Slide 17: Strategic Priorities On Path To Recovery
Strategic Priorities On Path To Recovery 16 Strengthening Our Trusted Consumer Brand Restoring Our Financial Performance Building A Better Future For Our People And Planet ▪ Rebuild scale and drive efficiency ▪ Deliver mid - teens operating margins and strong operating cash flow ▪ Reduce debt and re
Slide 18: Delta – The Premium Airline Brand
1 7 1 7 Delta – The P r emium Airl i ne Bra n d Glen H auenst e in President
Slide 19: Measured Approach To Managing Demand Environment
20% Mar 30% 40% 50% 60% 70% 80% 90% 100% Apr May Jun Jul Aug 2021 Sep Oct Nov Dec Measured Approach To Managing Demand Environment 18 TSA Volume, DAL and OA Capacity vs. 2019 1 1 Capacity defined as sellable seats, using a 7 - day rolling average; OA defined as AAL, UAL, LUV, ALK, JBLU and SAVE Note
Slide 20: Next Phase Of Recovery Driven By Return Of Business And Int'l
19 ~25% ~60 - 65% ~60% >100% Business Consumer Business Consumer Next Phase Of Recovery Driven By Return Of Business And Int’l 2021 Exit Rate 1 Domestic International 1 2021 exit rate is December sold passenger volumes vs. 2019 ▪ Delta is well positioned to capitalize on a changing demand environmen
Slide 21: Extending Our Commercial Advantage
Extending Our Commercial Advantage 20 Building On Multi - Year Efforts To Extend Our Advantages Positions Delta As The Global Industry Leader Commercial Strategy Pillars Investi ng In Premium Produc ts ▪ Premium resilience leading the recovery ▪ Responding to increasing premium demand ▪ Driver of hi
Slide 22: Demand For Premium Product Propels Our Strategy
21 Demand For Premium Product Propels Our Strategy Domestic First Class Paid Load Factor 55% 63% High 60% 2014 2019 20 24E Premium Product Resilience Has Led Us Through The Recovery Premium vs. Main Cabin Margin Main Cabin Margin Premium Ca bin Margin 10+ pt. differe n tial in margin Premium Revenue
Slide 23: Fleet Transformation Driving Efficiency And Elevating The Product
22 Fleet Transformation Driving Efficiency And Elevating The Product Evolution of Fleet Gauge 97 150+ 131 2009 Fleet fa mi l i e s 15 2021 Future State 11 8 Growth in Premium Seats 1 2009 Pr em i u m mix 9% Pr e mium Se a ts M a i n C abin Se a ts 2021 Future State 27% 30%+ 1 Count of premium and ma
Slide 24: Investing In The Customer Experience Across The Travel Ribbon
23 Investing In The Customer Experience Across The Travel Ribbon B oo k i n g Shopping Airport Post - Purchase In - F l i g h t T B U An Elevated Customer Experience Enabled By The Best People In The Industry Creates Higher Engagement With The Delta Brand ▪ Modernized disp lay platforms ▪ Simple, pe
Slide 25: Growing Our Loyalty Base Drives High-Margin Revenue
24 G r o w i n g O u r L o y a l t y B a s e D r i v e s H i g h - M a r g i n R e v e n u e ▪ Extending status and benefits ▪ Partnering with premier brands like Lyft and Airbnb More Valu ab le 2 Make SkyMi les Curre ncy ▪ S k y M i le s a w a rde d # 1 s p o t a m o n g g l o b a l a i rl i n e s
Slide 26: The Power Of The Delta And American Express Partnership
25 The Power Of The Delta And American Express Partnership ~$3 ~ $4 ~ $4 > $5 $7 2017 2019 2021E 2022E 2024E Higher Contribution Primarily Driven By Accelerating Acquisitions And Strong Spend Growth Delta - American Express Contribution ($B) Growth Opportunity Less than 1/3 of our SkyMiles members h
Slide 27: Leveraging Our Platform To Expand Our Revenue Ecosystem
26 20% 21% 25% 24% 32% 36% 56% 47% 39% 20 1 4 20 1 9 20 2 4E Leveraging Our Platform To Expand Our Revenue Ecosystem Main Cabin A d j us t e d Total Revenue >$50B Premium Products O t h e r 1 1 Includes loyalty program, MRO and other ancillary, cargo, and travel - related services Note: Adjusted for
Slide 28: Leveraging Strengths Of Our Industry-Leading Domestic Network
L e v e r a g i n g S t r e n g t h s O f O u r I n d u s t r y - L e a d i n g D o m e s t i c N e t w o r k Core Hubs Are Our Economic Engine Driving Industry - Leading Profitability And Coastal Hubs Are Enablers Of Premium And International Growth Core Hubs ▪ Presence in large revenue markets ▪ G
Slide 29: Unmatched Scale And Opportunity In International
Unmatched Scale And Opportunity In International Strong Delta Foundation Renewed Wid e body Fle et Structural Change To Landscape Stronger Partners And Unique JV Structure Next - Gen aircraft with full suite of products, enhanced cargo capability and fuel efficiency More rational landscape in all in
Slide 30: Building A Global Future
Buil d ing A Global F u ture Alain Bellemare Presid e nt - In t ernatio n al
Slide 31: Best International Platform For Long-Term Profitable Growth
Best International Platform For Long - Term Profitable Growth Transatlantic Unique profit - sharing approach aligning JV partner incentives #1 North Ameri ca To Europe JV 1 #1 Trans pacific J V Hub In Seou l 2 #1 Mexi c o and South American JVs 1 Americas Pacific T h e # 1 G l o b a l N e t w o r k
Slide 32: World's Leading Equity Partner Portfolio
World’s Leading Equity Partner Portfolio Best - in - Class Partners Emerging Stronger Structural Cost Revamped Reduction Fleet Improved Strengthened Balance Sheet Competitive Position Valuable Shanghai & Beijing Access Premier South American Franchise Largest U.S. – Mexico JV Gold Standard JV in Tra
Slide 33: Unique Equity Strategy Unlocks Synergy Opportunities
Unique Equity Strategy Unlocks Synergy Opportunities Equity Par t ne r s Delta Joint Scale Drives Synergy Opportunities Sustainability and Innovation Ancillary Businesses (MRO / Cargo) Seamless Customer Experience Enhanced Loyalty Offering Strategic Sourcing / Investment Impressive Global Scale 2019
Slide 34: International Margins Will Continue To Expand
International Margins Will Continue To Expand Margin Growth Drivers 20 1 4 20 1 9 Target I m pro v e ment to D o mes t ic L evels Renewed Next - Gen Fleet Premier Global Hub Structure Premium Product Expansion Equity Enhanced Value Improved Competitive Landscape Strong Partner Portfolio Value Evolut
Slide 35: Creating Long-Term Value
Creating Long - Term Value Dan Janki Chief Financial Officer
Slide 36: Financial Priorities For Value Creation
35 Reduce adjusted net debt to $15 billion by 2024 while strategically reinvesting for growth and productivity Unit revenue premium and competitive cost structure expected to drive industry - leading margins and strong operating cash flow Efficiently rebuild the airline, capture fleet renewal benefi
Slide 37: 2024 Financial Targets
2024 Financial Targets 1 Assumes tax rate of 24 %, 645 million shares outstanding and fuel price of $ 2 . 20 - $ 2 . 30 per gallon Adj. Earnings per Share 1 >$7.00 F re e Cash Flow >$4B B a l a n c e S h ee t $15B Ad j. Net Deb t Investm e nt Grade Metric s R Adj. evenue >$50B ▪ Capacity 100%+ vs. 2
Slide 38: Progression Of Non-Fuel Unit Costs
Progression Of Non - Fuel Unit Costs Non - Fuel CASM 1 vs. 2019 10.88 ₵ Up ~11% Up 7% - 10% Up low to mid sing le di g its Up low sing le di g its 2019 2021E 2022E 2023E 2024E Capacity vs. 2019 71% ~90% ~100% 100%+ Non - Fuel CASM excludes fuel and profit - sharing expense, includes ancillary busine
Slide 39: Non-Fuel Cost Framework And Drivers
Non - Fuel Cost Framework And Drivers Costs required to re - build and restore our network and operation Transition Investments support elevated customer experience, premium brand focus and growth in diverse revenue streams Investments Non - Fuel CASM Impact vs. 2019 2022E 2024E ~1 - 2 pts ~Flat Sca
Slide 40: Transition Costs Moderate As We Approach 2019 Scale
Transition Costs Moderate As We Approach 2019 Scale ▪ Aircraft Reactivation ▪ Hiring 9,000 in 2021 ▪ Training & Overtime ▪ Reservations Volume ~$900M ~$380M $0M 2023E 2021E 2022E N o n - F u e l C A S M v s . 201 9 Recovery - Related / Transition Costs and Drivers ~4 pts ~1 - 2 pts - 1H22: ~60% 2H22
Slide 41: Multiple Factors Impacting Underlying Business Non-Fuel CASM
Multiple Factors Impacting Underlying Business Non - Fuel CASM Impact vs. 2019 2021E 2022E 2024E ~4 pts ~(4) pts U n de r l y i n g B us i n e s s N o n - F u e l C A S M v s . 201 9 ~6 pts ~5 - 6 pts ~(1) pt Scale ~13 pts Impact of capacity, asset utilization, efficiency, entity mix and selling - r
Slide 42: Driving Operating Leverage And Efficiency As We Scale
Driving Operating Leverage And Efficiency As We Scale I m p a c t o f S c a l e o n N o n - F u e l CASM vs. 2019 ▪ As we rescale, we will drive operating leverage on fixed costs and improve efficiency across our workgroups ▪ Scale and efficiency expected to inflect to tailwind vs. 2019 as capacity
Slide 43: Fleet Transformation Drives Significant Multi-Year Benefit
F l ee t T r a n s f o r m a t i o n D r i v e s S i g n i f i c a n t M u l t i - Y e a r B e n e f i t Benefits Of Accelerated Fleet Renewal Superior Onboard Product | Better Margins | Lower Emissions Transition Underlying Business Investments $400M ~$650M ~$1.3B 2021E 2022E 2024E Driving Signific
Slide 44: Investing In The Customer Experience And Diversifying Revenue
Investing In The Customer Experience And Diversifying Revenue Investment Drivers A i rp o r t F a c i l i t i e s Accelerated redevelopment of key airports to improve customer experience, operations and market position Clean Industry - leading cleanliness standards through Global Clean organization
Slide 45: Margin And Cash Flow Focus Underpins Our Financial Success
M a r g i n A n d C a s h F l o w F o c u s U n d e r p i n s O u r F i n a n c i a l S u cc e s s Operating Margin ~13.5% Mid teens 2017 - 2019 Av g . 2024E Operating Cash Flow ~$7.5B >$9B 2017 - 2019 Av g . 2024E ▪ Measured capacity, premium focus and increasing revenue diversity support growing u
Slide 46: Restoring Our Balance Sheet
Restoring Our Balance Sheet 2.0x 2.0 x – 3.0x 2017 - 2019 Av g . 2024E Adj. Debt/EBITDAR ~$21B ~$15B 2021E 2024E Adj. Net Debt GAAP net pension liability L i q u i d i t y 1 ~$14B ~$5 - 6B ($6B) $0B No Equity Dilution During The Pandemic Enables Shareholders To Fully Participate In Upside Liquidity
Slide 47: Strategically Investing To Extend Our Leadership Position
Strategically Investing To Extend Our Leadership Position % A i r c r a f t / M o d s C a p E x 2017 - 2019 Av g . 2020 2021E 2022E 2023E 2024E ~ $ 5 . 0 $ 2 . 2 ~ $ 2 . 9 ~ $ 6 . 0 2 3 1 Pre - Covid Avg. CapEx Covid - Induced Deferred Spend Restore to Pre - Covid CapEx Levels Capital Expenditures $
Slide 48: Maintaining Flexibility And Remaining Nimble Through Recovery
Maintaining Flexibility And Remaining Nimble Through Recovery ▪ Fleet flexibility is our largest lever ▪ Flex fleets, aircraft utilization and network deployment are levers to rebalance capacity ▪ W e h a v e > 1 5 0 f le x f l ee t a i r c r a f t a c r o s s 76 7 - 300s, 717s, CRJ200s that can fle
Slide 49: Value Creation Framework
Value Creation Framework Positioned To Deliver Industry - leading Margins And Return To Investment Grade Metrics Return on Invested Capital Delta People and Brand T h o u g h t f u l Capital Allocation I n d us t r y - L e a d i n g Margins 48 48
Slide 50: Five Key Takeaways
Industry L e a d e r s h i p Brand P r e f e r e n c e E a r n i n g s Power Financial Foundation C o m p e t i t iv e Advantages Five Key Takeaways Delta’s actions during the pandemic further strengthened its competitive advantages and enhanced its position as a trusted consumer brand 1 Delta is le
Slide 51: The Power Of The DAL/AXP Partnership – CEO Fireside Chat
The Power Of The DAL / AXP Partner s hip CEO Fireside Chat Ed Bastian, Chief Executive Officer Delta Air Lines Stephen Squeri, Chairman and Chief Executive Officer American Express Non-GAAP Financial Measures Delta sometimes uses information ("non-GAAP financial measures") that is derived from the C