Delta Air Lines, Inc. · NYSE:DAL
Delta Air Lines — Investor Presentation (March 2007)
33 slides from Delta Air Lines's investor presentation, Mar 27, 2007
Slide 1: Fund the Flight Plan: Delta is a Strong Financial Competitor
Fund the Flight Plan: Delta is a Strong Financial Competitor Ed Bastian Chief Financial Officer March 27, 2007
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: Business Plan Key Messages
Throughout the restructuring, Delta has delivered on its commitments Transformed business model Created financial stability Goal to achieve superior margins through best-in-class unit cost structure and continued revenue momentum Financial discipline will be key - balancing strategic growth with con
Slide 4: Delta Losses Totaled $7.5 Billion Since 2001
Delta Losses Totaled $7.5 Billion Since 2001... Net Loss1 ($M) 2001 2002 2003 2004 2005 -1027 -958 -1042 -2281 -2208 ($1,027) ($958) ($1,042) ($2,281) ($2,208) 2004 2005 2003 2002 2001 1 Excluding special and reorganization items
Slide 5: Funded Losses With Debt; Borrowing Capacity Exhausted
Funded Losses With Debt; Borrowing Capacity Exhausted 1 Includes on-balance sheet debt plus 7x last twelve months' aircraft rent. Adjusted Total Debt ($M)1 2001 2002 2003 2004 2005 11185 14562 15830 17648 18910 $11,185 $14,562 $15,830 $17,648 $18,910 2000 2001 2002 2003 2004
Slide 6: Pre-Bankruptcy Actions Provided $5 Billion of Financial Benefits
Pre-Bankruptcy Actions Provided $5 Billion of Financial Benefits, But It Wasn't Enough... Non-Pilots EC Other Pilots 1.8 1.1 2.1 Non-Employment Cost Reductions and Revenue Enhancements $2.1B 42% Ground and Flight Attendant Employment Cost Reductions $1.8B 36% Pilot Employment Cost Reductions $1.1B 2
Slide 7: Three Pillars of our Transformation Plan
Three Pillars of our Transformation Plan Closing RASM Gap Right-size domestic capacity Greater international mix Improved operations and customer service 1 Repair Balance Sheet Improved liquidity Unsecured debt, fleet and facility restructuring 2 Best-in-Class Costs Improved productivity Streamlined
Slide 8: We Have Achieved Great Progress Against Our Transformation Plan
Transformation progress... Closing the revenue gap Best-in-class cost structure Top-tier operational performance Award winning customer service Highly engaged workforce ....driving substantial financial improvement 2006 YOY change in pre-tax income(1) ($M) We Have Achieved Great Progress Against Our
Slide 9: Quickly Regaining our Competitiveness
Quickly Regaining our Competitiveness 1 Adjusted to fuel price of $2.00/gal 2 Delta adjusted to include pilot pension termination. Second Half 2006 Operating Margin ($M) Assuming a common fuel price of $2.00/gallon and adjusting Delta's results for the now terminated pilot pension plan, Delta's fina
Slide 10: Best-in-Class Unit Cost Structure
Best-in-Class Unit Cost Structure Delta's Mainline Non-Fuel Unit Costs Down 27% From Pre-Restructuring Levels Column 1 Light Blue Medium Blue Dark Blue Light Red Medium Red Dark Red Yellow Orange Brown Tan White Lt Gray Medium Gray Dark Gray Very Dark Gray Black Right Hash Mark Vertical Hash Mark Le
Slide 11: Cost Competitiveness
Cost Competitiveness 1 Excluding special and non-cash reorganization items. Delta mainline non-fuel unit cost adjusted to exclude fuel taxes. US Airways, Northwest, and Continental exclude profit sharing. 2 Adjusted to Delta's average second half 2006 stage length of 1,193 miles. 3 Mainline stage le
Slide 12: Key Assumptions in Business Plan
Key Assumptions in Business Plan 1 Excluding profit sharing. Fuel $2.06 per gallon in 2007 (including taxes) Price grows 5% per year Non - Fuel CASM Mainline down 7% in 2007 (6.60 cents)(1) Target further reductions in future years Costs Revenue Capacity Grows 2 - 4% in 2007 Domestic down 1 - 3% Int
Slide 13: 2007 Projected Pre-Tax Income
2007 Projected Pre-Tax Income Roll Forward from 2006 ($M) 2006 Pre- Tax Income Revenue Fuel Price Net Cost Reductions Profit Sharing 2007 Pre- Tax Income 2 1 1 1 Excludes Special and Reorganization Items 2 Net of capacity-related expenses of $611M (452) 107 816 593 739 (171) Roll Forward from 2006 (
Slide 14: Plan Restores Financial Stability
Plan Restores Financial Stability Positioned To Compete On A Standalone Basis Light Green Light Blue Medium Blue Dark Blue Light Red Medium Red Dark Red Yellow Orange Brown Tan White Lt Gray Medium Gray Dark Gray Very Dark Gray Black Right Hash Mark Vertical Hash Mark Left Hash Mark Rain Pattern Bri
Slide 15: Healthy Operations Drive Substantially Improved EBITDAR
Healthy Operations Drive Substantially Improved EBITDAR Top-Tier EBITDAR Margin Performance Light Green Medium Green Light Blue Medium Blue Dark Blue Light Red Medium Red Dark Red Yellow Orange Brown Tan White Lt Gray Medium Gray Dark Gray Very Dark Gray Black Right Hash Mark Vertical Hash Mark Left
Slide 16: Plan Reduces Net Debt by More Than 50%
Plan Reduces Net Debt by More Than 50% Adjusted Total Debt Adjusted Net Debt Light Blue Medium Blue Dark Blue Light Red Medium Red Dark Red Yellow Orange Brown Tan White Lt Gray Medium Gray Dark Gray Very Dark Gray Black Right Hash Mark Vertical Hash Mark Left Hash Mark Rain Pattern Bright Red Brigh
Slide 17: Plan Allows for $6 Billion Reinvestment in the Business
Plan Allows for $6 Billion Reinvestment in the Business Strong Cash Flow From Operations Provides for Reinvestment While Strengthening Balance Sheet Column 1 Column 2 Light Blue Medium Blue Dark Blue Light Red Medium Red Dark Red Yellow Orange Brown Tan White Lt Gray Medium Gray Dark Gray Very Dark
Slide 18: NOLs are a Significant Asset
NOLs are a Significant Asset Offset regular taxable income in full until depleted Minimal AMT payments anticipated to occur during forecast period Annual payments of approximately 2% of net income - beginning in 2008 Focus on cash earnings $7.8 Billion of Net Operating Losses (NOLs)
Slide 19: Fresh Start Reporting
Fresh Start Reporting New Asset Values and Accounting Policies Impact the Income Statement Exiting Chapter 11 requires implementation of Fresh Start Reporting Balance sheet initially stated at fair value and accounting policies revisited Balance sheet valuation changes Adjust major assets (e.g., fle
Slide 20: The Momentum Continues: First Quarter 2007 Guidance
The Momentum Continues First Quarter 2007 Guidance 1 Excludes fuel taxes
Slide 21: We Will Seek Continued Opportunities to Unlock Shareholder Value
We Will Seek Continued Opportunities to Unlock Shareholder Value Restricted assets Industry-leading Maintenance Repair and Overhaul (MRO) business 2007 TechOps insourcing revenue expected to grow to $350 million Further monetization of assets
Slide 22: Plan of Reorganization Timetable for Exit
Plan of Reorganization Timetable for Exit Planned Emergence - April 30 Stock Relisting - Early May January February March April $2.5B Exit Financing Commitment Received April 19 Vote Tally Certification Disclosure Statement Approved File Final Supplements - - Compensation - - Certificate of Incorpor
Slide 23: Status of the Claims Pool
Status of the Claims Pool Delta Claims Comair Claims ($B)
Slide 24: Delta - Positioned to Win
Delta - Positioned to Win Industry leading balance sheet Lowest net debt of any network carrier Free cash flow in excess of $1.5 billion per year Best-in-class unit costs Mainline unit costs in mid-6 cent range Revenue momentum Commitment to achieve industry revenue parity - and beyond Motivated and
Slide 25: Net Loss
Net Loss 2001 2002 200320042005 {in lions) GAAP ($1,216) (51,272) (8779) ($5,198) (89,618) Items excluded: Pension settlements, asset writedawns, restructuring and related items, net 599 me (4) 888, Discontinued capital projects and contracts a - - - - Impairment of intangible assets : - - 4,875 - D
Slide 26: Debt
Debt Note: 7x last twelve months' aircraft rent is added back as management believes the addition of these items is helpful to the investor in evaluating total obligations and commitments of the Company.
Slide 27: Passenger RASM as % of Industry
Passenger RASM as % of Industry Note: Charter revenue is excluded and length of haul is adjusted as management believes this is helpful to investors in comparing the Company's passenger revenue per ASM to the industry.
Slide 28: Adjusted Net Debt
Adjusted Net Debt Note: 7x last twelve months' aircraft rent is added back as management believes the addition of these items and reduction of cash and cash equivalents is helpful to the investor in evaluating total obligations and commitments of the Company.
Slide 29: Pre-Tax Loss and Operating Margin
Pre-Tax Loss and Operating Margin Note: Certain non-recurring adjustments have been excluded as management believes the exclusion of these items is helpful to investors for comparison purposes on a year over year basis.
Slide 30: Operating Margin Second Half 2006
Operating Margin Second Half 2006 Note: Adjusting fuel to $2.00 per gallon and the addition of savings related to the pilot termination in calculating an adjusted operating income and margin is helpful to investors in evaluating the future performance of the Company.
Slide 31: Mainline Non-Fuel CASM
Mainline Non-Fuel CASM Note: Fuel expense and fuel taxes are excluded as management believes the exclusion of these items is helpful to investors for comparison purposes on a year over year basis.
Slide 32: Mainline Non-Fuel CASM Second Half 2006
Mainline Non-Fuel CASM Second Half 2006 Note: Fuel expense, fuel taxes and 6 months of the savings related to the termination of the Pilot Plan is included as management believes this is helpful to the investor in evaluating the ongoing operations.
Slide 33: Cash Capex and Scheduled Debt Maturities
Cash Capex and Scheduled Debt Maturities Note: Cash capex and scheduled debt maturities represent management's view of cash flows related to capital expenditures and debt maturities during the period.