Delta Air Lines, Inc. · NYSE:DAL
Delta Air Lines — Stifel 2015 Transportation and Logistics Conference
24 slides from Delta Air Lines's conference presentation, Feb 10, 2015
Slide 1: Setting A New Standard
Setting A New Standard Stifel Transportation & Logistics Conference February 10, 2015
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 Delta’s control
Slide 3: Setting A New Standard
Setting A New Standard Building on our strengths to expand margins and cash flow in order to reduce debt, return capital to shareholders and invest in the future • Improving on all aspects of our financial performance in 2015 as 2015: Building On a solid revenue environment and lower fuel prices, co
Slide 4: Outpacing The Airline Industry
Outpacing The Airline Industry Delta is the industry leader 2014 Pre-Tax Income ($M) Record 2014 $4,536 • Generated more than $4.5 $4,164 billion in pre-tax income in 2014, almost $1.9 billion higher than 2013 • $3.7 billion of free cash flow, $2,233 ~$7 billion of adjusted net debt, $1,973 $900 mil
Slide 5: A High-Quality Company
A High-Quality Company Continuing progress toward our long-term goals of generating solid margins and cash flow, an investment grade balance sheet and sustainable shareholder returns Long-Term Goals EPS Growth Operating •11-14% operating margins Margin •2014: 13.1% Delta - Goal 10-15% 10-15% • Annua
Slide 6: Continuing To De-Risk The Business
Continuing To De-Risk The Business Taking risk out of the business produces more sustainable, consistent results Lower Business Lower Financial Risk Lower Labor Risk Lower Fuel Risk Risk • Better revenue • Industry-leading • Vertically integrated • Reduced debt by generation through labor relations
Slide 7: Maintaining Our Cost Performance
Maintaining Our Cost Performance Pipeline of initiatives in place to maintain non-fuel unit cost growth below 2% annually • Benefits from upgauging, maintenance savings and commercial productivity initiatives provide foundation to build upon in 2015 Non-Fuel Unit Cost Growth – Upgauging: Improved op
Slide 8: Fuel Declines Provide Earnings Tailwind
Fuel Declines Provide Earnings Tailwind Fuel declines expected to provide significant benefit to Delta • At January 16th forward curve, Delta’s 2015 all-in fuel Market Jet Fuel Prices price was forecasted at $2.25 – $2.35 per gallon, $3.50 including hedge and refinery impact 2014 actual • Commercial
Slide 9: Balanced Capital Deployment Drives Value
Balanced Capital Deployment Drives Value Balanced approach to capital deployment has driven significant value for shareholders in the past two years Reinvest In The Strengthen The Return Cash To Business Balance Sheet Shareholders • ~50% of operating cash • Over $4 billion in debt • Returned $1.7 bi
Slide 10: Generating Solid Cash Flows From The Business
Generating Solid Cash Flows From The Business Maintaining our focus on managing the business to generate free cash flow Capital Spending and Operating Cash Flow ($B) $7.0 $6.0 CapEx Operating Cash Flow $5.0 $4.8 $4.1 $4.1 $4.0 $3.8 $2.9 $2.9 $3.0 $2.6 $2.6 $2.1 $2.0 $2.1 $2.0 $1.8 $1.3 $1.2 $1.2 $1.
Slide 11: Disciplined Reinvestment In The Business
Disciplined Reinvestment In The Business Strong operating cash flow funds appropriate level of reinvestment while allowing for significant free cash flow generation • Disciplined capital process with senior management approval for capital requests greater than $1 million Capital Expenditures ensurin
Slide 12: Paying Down Debt Remains A Priority
Paying Down Debt Remains A Priority Clear path to achieve $5 billion debt target in 2016, resulting in $1 billion of run-rate interest savings versus 2009 Adjusted Net Debt $17.0B $15.0B $12.9B $11.7B $9.4B $7.3B < $6.0B 2009 2010 2011 2012 2013 2014 2015E Interest $1.3B $1.2B $1.1B $1.0B $850M $650
Slide 13: Strong Commitment To Returning Cash To Shareholders
Strong Commitment To Returning Cash To Shareholders Returned more than 35% of free cash flow to shareholders in 2014 Cash Returned To Shareholders Dividends Share Repurchases • Returned $1.35 billion to shareholders in 2014, a $1,500M $1 billion increase over 2013 …is now competing on capital return
Slide 14: An Industry Focused On Capital Returns
An Industry Focused On Capital Returns The landscape of the U.S. airline industry has undergone a significant transformation An industry that historically competed …Is now competing on capital returns on market share… Mainline Aircraft Deliveries for Major U.S. Carriers 2014 Capital Returns Dividend
Slide 15: The Path to Value Creation
The Path to Value Creation Achieving our long-term goals and lowering risk across the business should result in improved valuation EPS Growth ROIC Free Cash Flow 10-15% 15-18% 12.3% 14.5% $3B+ $1.7B Delta S&P Industrials Delta S&P Industrials Delta S&P Industrials Forward Price/Earnings Free Cash Fl
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Slide 17: Non-GAAP Reconciliations
Non-GAAP Reconciliations 17
Slide 18: Non-GAAP Reconciliations
Non-GAAP Reconciliations Non-GAAP Financial Measures Delta sometimes uses 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. (“GAAP”). Under the U.S.
Slide 19: Non-GAAP Reconciliations
Non-GAAP Reconciliations Pre-Tax Income, Excluding Special Items Delta excludes special items from pre-tax income because management believes the exclusion of these items is helpful to investors to evaluate the company's recurring core operational performance in the periods shown. Therefore, we adju
Slide 20: Non-GAAP Reconciliations
Non-GAAP Reconciliations Free Cash Flow Delta presents free cash flow because management believes this metric is helpful to investors to evaluate the company's ability to generate cash that is available for use for debt service or general corporate initiatives. This metric is adjusted for the postin
Slide 21: Non-GAAP Reconciliations
Non-GAAP Reconciliations Operating Margin, Adjusted Delta excludes MTM adjustments and restructuring and other from operating margin for the reasons described above under the heading Pre-Tax Income, excluding special items. Year Ended December 31, 2014 Operating margin 5.5% Items excluded: MTM adjus
Slide 22: Non-GAAP Reconciliations
Non-GAAP Reconciliations Operating Cash Flow, Adjusted Delta presents operating cash flow, adjusted because management believes adjusting for these amounts provides a more meaningful financial measure for investors. This metric is adjusted for the posting of hedge margin for the same reason describe
Slide 23: Non-GAAP Reconciliations
Non-GAAP Reconciliations Non-Fuel Unit Cost or Cost Per Available Seat Mile ("CASM-Ex") We exclude the following items from consolidated CASM to evaluate the company’s core unit cost performance: Aircraft fuel and related taxes. The volatility in fuel prices impacts the comparability of year-over-ye
Slide 24: Non-GAAP Reconciliations
Non-GAAP Reconciliations Capital Expenditures, Net Delta presents net capital expenditures because management believes adjusting for these amounts provides a more meaningful financial measure for investors. This metric is adjusted for reimbursements related to build-to-suit facilities and other for
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