Delta Air Lines, Inc. · NYSE:DAL
Delta Air Lines — Investor Presentation (May 2014)
14 slides from Delta Air Lines's investor presentation, May 6, 2014
Slide 1: Delta: Setting A New Standard
Delta: Setting A New Standard May 6, 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 Building Financial Momentum Setting Aggressive Targets Balanced Deployment of Capital • Long - term goals target solid margins and cash flow, investment grade credit metrics, and long - term sustainable shareholder returns • Financial performance exceeding expectations with
Slide 4: Strong Financial Foundation With Building Momentum
4 Strong Financial Foundation With Building Momentum… • Delta’s financial foundation has strengthened considerably since 2009, with a pipeline of initiatives in place for further improvement • Recent performance has exceeded expectations under 2013’s five year plan, with solid margin expansion, free
Slide 5: Drives Acceleration of Capital Deployment Plans
5 …Drives Acceleration of Capital Deployment Plans • Strong financial performance has allowed for acceleration of our capital deployment plans, producing a stronger balance sheet and larger capital returns for shareholders $ 11.7B $ 9.1B 2012 1Q14 Adjusted Net Debt $ 365M $ 700M 1st year plan 1st ye
Slide 6: Long-Term Goals Guide the Planning Process
6 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 7: 2014's Five Year Plan Continues Our Momentum
7 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, ancillary
Slide 8: Strong Cash Generation in the Business
$2.6 $3.8 $4.1 $4.8 $4.1 $2.9 $1.8 $1.3 $1.2 $0.9 $2.1 $2.6 $1.2 $1.3 $1.3 $2.0 $2.9 $2.3 $(2.0) $(1.0) $- $1.0 $2.0 $3.0 $4.0 $5.0 $6.0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014E CapEx Operating Cash Flow 8 Strong Cash Generation in the Business • Str
Slide 9: Appropriate Investment In The Business
9 Appropriate Investment In The Business • Funding prudent investment in the business through operating cash flow while also generating $3 billion in annual free cash flow • Annual capital expenditures in the range of $2 - $3 billion per year over the next five years – Reinvesting approximately 50%
Slide 10: Debt Reduction Remains A Priority
10 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 11: Targeting An Investment Grade Quality Balance Sheet
2013 2014E 2016 Targeting An Investment Grade Quality Balance Sheet • Significant progress on the balance sheet in the last year, but more work remains to achieve investment grade credit metrics 2013 2014E 2016 2013 2014E 2016 FFO/Debt EBITDA/Interest Debt/EBITDA 11 20.4% 35 - 40% 3.6x 5.0 – 5.5x 3.
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