Delta Air Lines : Form8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): December 12, 2019

DELTA AIR LINES, INC.

(Exact name of registrant as specified in its charter)

Delaware	001-05424	58-0218548
(State or other jurisdiction	(Commission	(IRS Employer
of incorporation)	File Number)	Identification No.)
	P.O. Box 20706, Atlanta, Georgia 30320-6001
	(Address of principal executive offices)
	Registrant's telephone number, including area code: [phone]
	Registrant's Web site address: www.delta.com

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

• Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
• Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
• Pre-commencementcommunications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
• Pre-commencementcommunications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, par value $0.0001 per share	DAL	New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR 230.405) or Rule 12b- 2 of the Securities Exchange Act of 1934 (17 CFR 240.12b-2).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 7.01 Regulation FD Disclosure.

Delta Air Lines, Inc. ("Delta") issued today a press release related to its annual investor day, which is furnished as Exhibit 99.1 to this Form 8-K.

The investor day conference will also be webcast. Materials to be used in conjunction with the conference are furnished as Exhibit 99.2 to this Form 8-K.

Item 8.01

Other Events.

Delta Air Lines yesterday hosted an informal session for investors. Materials used in conjunction with this session are furnished as Exhibit 99.3 to this Form 8-

K.

In accordance with general instruction B.2 of Form 8−K, the information in this report (including the exhibits) that is being furnished pursuant to Item 7.01 and Item 8.01 of Form 8−K shall not be deemed to be "filed" for the purposes of Section 18 of the Securities Exchange Act, as amended, or otherwise subject to liabilities of that section, nor shall they be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as expressly set forth in such filing. This report will not be deemed an admission as to the materiality of any information in the report that is required to be disclosed solely by Regulation FD.

Statements in this Form 8-K and the attached exhibits that are not historical facts, including statements regarding our estimates, expectations, beliefs, intentions, projections or strategies for the future, may be "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. All forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from the estimates, expectations, beliefs, intentions, projections and strategies reflected in or suggested by the forward-looking statements. These risks and uncertainties include, but are not limited to, the cost of aircraft fuel; the availability of aircraft fuel; the impact of fuel hedging activity including rebalancing our hedge portfolio, recording mark-to-market adjustments or posting collateral in connection with our fuel hedge contracts; the performance of our significant investments in airlines in other parts of the world; the possible effects of accidents involving our aircraft; breaches or security lapses in our information technology systems; disruptions in our information technology infrastructure; our dependence on technology in our operations; the restrictions that financial covenants in our financing agreements could have on our financial and business operations; labor issues; the effects of weather, natural disasters and seasonality on our business; the effects of an extended disruption in services provided by third parties; failure or inability of insurance to cover a significant liability at Monroe's Trainer refinery; the impact of environmental regulation on the Trainer refinery, including costs related to renewable fuel standard regulations; our ability to retain senior management and key employees; damage to our reputation and brand if we are exposed to significant adverse publicity through social media; the effects of terrorist attacks or geopolitical conflict; competitive conditions in the airline industry; interruptions or disruptions in service at major airports at which we operate; the effects of extensive government regulation on our business; the sensitivity of the airline industry to prolonged periods of stagnant or weak economic conditions; uncertainty in economic conditions and regulatory environment in the United Kingdom related to the exit of the United Kingdom from the European Union; and the effects of the rapid spread of contagious illnesses.

Additional information concerning risks and uncertainties that could cause differences between actual results and forward-looking statements is contained in our Securities and Exchange Commission filings, including our Annual Report on Form 10-K for the fiscal year ended December 31, 2018. Caution should be taken not to place undue reliance on our forward-looking statements, which represent our views only as of December 12, 2019, and which we have no current intention to update.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.
Exhibit 99.1	Press Release dated December 12, 2019 titled "Delta Hosts Investor Day, Highlighting its Global Scale, Powerful Brand and
	Unmatched Competitive Advantages"
Exhibit 99.2	Investor Day Presentation
Exhibit 99.3	Finance Insights Presentation
Exhibit 104	The cover page from this Current Report on Form 8-K, formatted in Inline XBRL

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

DELTA AIR LINES, INC.

	By: /s/ Paul A. Jacobson
	Paul A. Jacobson
Date: December 12, 2019	Executive Vice President & Chief Financial Officer

3

Exhibit 99.1

Delta Hosts Investor Day, Highlighting its Global Scale, Powerful Brand and Unmatched Competitive

Advantages

ATLANTA, Dec. 12, 2019 -- Delta (NYSE:DAL) today will host its annual event for the investment community, where leadership will provide an update on the Company's business strategy and 2020 financial targets.

"We are executing well against our strategic priorities and on track for a record 2019 - a testament to the incredible work of Delta employees worldwide who serve our customers with a focus on providing exceptional travel experiences each and every day," said Ed Bastian, CEO. "As the industry leader, Delta is well positioned for long-term growth, with a focus on extending our unmatched competitive advantages, enhancing our global scale and growing brand preference. We see momentum continuing in 2020 and plan to deliver earnings of $6.75 to $7.75 per share on 4 percent to 6 percent revenue growth."

"Delta's unprecedented network transformation has created global scale that we are building on through investment in our facilities, fleet, technology, and global partnerships. Our scale advantage enables attractive growth opportunities as we increase loyalty and trust in the Delta brand," said Glen Hauenstein, President.

During today's presentations the leadership team will discuss how Delta is:

• Building on a record 2019 with expectations for another year of solid revenue and earnings supporting strong cash flow generation;
• Benefitting from favorable travel trends as the best performer within a structurally improved airline industry;
• Extending its unmatched competitive advantages - its culture, operational reliability, global network, customer loyalty, and investment-grade balance sheet - to retain its leadership position and drive long-term value creation for all stakeholders;
• Enhancing its global scale with investments in facilities, fleet, technology, and global partnerships to deliver best-in-class customer experiences and drive strong returns for owners; and
• Creating long-term growth opportunity through growing brand preference, innovative global partnership structure and continued revenue diversification from loyalty and portfolio businesses.

Delta will provide financial targets for 2020, including:

• $6.75 to $7.75 diluted earnings per share
• 4 percent to 6 percent top-line growth
• $4 billion of free cash flow

"Delta's transformation over the past decade has resulted in consistent delivery of industry-leading financial results," said Paul Jacobson, Chief Financial Officer. "In 2020, we expect to maintain our margins while delivering another year of $4 billion in free cash flow. We will continue to deploy capital to reinvest in the business and remain committed to returning 70 percent of free cash flow to our owners."

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The Investor Day event will feature presentations and Q&A sessions with Ed Bastian, Chief Executive Officer; Glen Hauenstein, President; Paul Jacobson, Chief Financial Officer; Gil West, Chief Operating Officer; Tim Mapes, Chief Marketing & Communications Officer; Joanne Smith, Chief People Officer; and Eric Phillips, Senior Vice President - Pricing & Revenue Management.

As a part of its ongoing commitment to sustainability, Delta will be making all travel related to the 2019 Investor Day carbon neutral through verified carbon offset credits with The Guatemalan Conservation Coast Project, which protects 54,000 hectares of threatened rainforests, conserving over 400 bird species and supporting local farmers and communities.

Delta invites shareholders, the investment community, the media and employees to listen to a live webcast of its annual Investor Day Conference from 8:30 a.m. to 1:00 p.m ET on Thursday, Dec. 12, 2019.

The webcast will be available at http://ir.delta.com/news-and-events/calendar/. An online replay will be available at the same site shortly after the webcast is complete.

2

Exhibit 99.2

Non-GAAP Reconciliations

Non-GAAP Financial Measures

The following tables show reconciliations of non-GAAP financial measures. The reasons Delta uses these measures are described below. Reconciliations may not calculate due to rounding.

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. Securities and Exchange Commission rules, non-GAAP financial measures may be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for or superior to GAAP results. The tables below show reconciliations of non-GAAP financial measures used in this presentation to the most directly comparable GAAP financial measures.

Forward Looking Projections. While we are able to reconcile forward looking non-GAAP financial measures related to 2019, we do not reconcile future period measures (i.e., beyond 2019) because the adjusting items such as those used in the reconciliations below will not be known until the end of the period and could be significant.

82

Non-GAAP Reconciliations

Pre-tax Income and Net Income, Adjusted

We adjust pre-tax income and net income for the following items to determine pre-tax income and net income, adjusted for the reasons described below. We include the income tax effect of adjustments when presenting net income, adjusted.

MTM adjustments and settlements. Mark-to-market ("MTM") adjustments are defined as fair value changes recorded in periods other than the settlement period. Such fair value changes are not necessarily indicative of the actual settlement value of the underlying hedge in the contract settlement period. Settlements represent cash received or paid on hedge contracts settled during the period.

Equity investment MTM adjustments. We record our proportionate share of earnings/loss from our equity investments in Virgin Atlantic and Aeroméxico in non-operating expense. We adjust for our equity method investees' hedge portfolio MTM adjustments to allow investors to better understand and analyze our core operational performance in the periods shown.

Unrealized gain/loss on investments. We record the unrealized gains/losses on our equity investments in GOL, China Eastern, Air France-KLM and Korean Air, which are accounted for at fair value in non-operating expense. Adjusting for these gains/losses allows investors to better understand and analyze our core operational performance in the periods shown.

Restructuring and other and Loss on extinguishment of debt. Because of the variability from period to period, the adjustments for these items are helpful to investors to analyze the company's core operational performance in the periods shown.

						(Projected)								(Projected)
						Year Ended								Year Ended
					December 31, 2019								December 31, 2019
		Pre-Tax			Income				Net			Net Income
(in billions)		Income				Tax				Income			Per Diluted Share
GAAP	$	6.1		$	1.4	$	4.7			$	~ $6.90 - $7.40
Adjusted for:
Unrealized gain/loss on investments		(0.1	)				-		(0.1	)			~ (0.15)
Non-GAAP	$	6.0		$	1.4	$	4.6			$	~ $6.75 - $7.25
Free cash flow to net income conversion		~ 80% - 90%
		Year Ended				Year Ended
		December 31, 2017		December 31, 2010
		Pre-Tax				Pre-Tax
(in billions)		Income				Income
GAAP	$			5.5		$			0.6
Adjusted for:
MTM adjustments and settlements				(0.3)					-
Equity investment MTM adjustments				0.1					-
Restructuring and other				-					0.5
Loss on extinguishment of debt				-					0.4
Total adjustments				(0.2	)				0.9
Non-GAAP	$			5.3		$			1.5

83

Non-GAAP Reconciliations

Operating Revenue, Adjusted

We adjust operating revenue for refinery sales to third parties to determine operating revenue, adjusted because refinery sales to third parties are not related to our airline segment. Operating revenue, adjusted therefore provide a more meaningful comparison of revenue from our airline operations to the rest of the airline industry. Because we sold DAL Global Services, LLC ("DGS") in December 2018, we have excluded the impact of DGS from 2018 results for comparability. We do not present reconciliations for the years ended December 31, 2017 and December 31, 2016 as the adjusted operating revenue in these years is the same as the GAAP operating revenue.

		(Projected)
		Year Ended			Year Ended
(in millions)		December 31, 2019			December 31, 2018		Change
Operating revenue	$	~46,850		$	44,438
Third-party refinery sales		~(150)			(548)
DGS sale adjustment		-			(244	)
Operating revenue, adjusted	$	~46,700		$	43,645			~7%

84

Non-GAAP Reconciliations

Free Cash Flow

We present 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. Adjustments include:

Net purchases (redemptions) of short-terminvestments. Net redemptions of short-term investments represent the net purchase and sale activity of investments and marketable securities in the period, including gains and losses. We adjust for this activity to provide investors a better understanding of the company's free cash flow generated by our operations.

Net cash flows related to certain airport construction projects and other. Cash flows related to certain airport construction projects are included in our GAAP operating activities and capital expenditures. We have adjusted for these items, which were primarily funded by cash restricted for airport construction, to provide investors a better understanding of the company's free cash flow and capital expenditures that are core to our operational performance in the periods shown.

Hedge deferrals. During the March 2016 quarter, we deferred settlement of a portion of our hedge portfolio until 2017 by entering into transactions that, excluding market movements from the date of inception, would provide approximately $300 million in cash receipts during the second half of 2016 and require approximately $300 million in cash payments in 2017. Free cash flow is adjusted to include the impact of these deferral transactions in order to allow investors to understand the net impact of hedging activities in the period shown.

2017 pension plan contribution. In 2017, we contributed $2 billion to our pension plans using net proceeds from our debt issuance. We adjusted free cash flow to exclude this contribution to allow investors to understand the cash flows related to our core operations in the periods shown.

Strategic Investments. Cash flows related to our investment in Grupo Aeroméxico and Air France-KLM, are included in our GAAP investing activities. We adjust free cash flow for this activity because it provides a more meaningful comparison to the airline industry.

		(Projected)
		Year Ended		Year Ended		Year Ended
(in billions)		December 31, 2019		December 31, 2018		December 31, 2017
Net cash provided by operating activities	$	~9	$	7.0	$	5.0
Net cash used in investing activities		~(5)		(4.4)		(5.3)
Adjustments:
Net purchases (redemptions) of short-term investments		-		(0.6)		0.4
Net cash flows related to certain airport construction
projects and other		-		0.4		0.1
Hedge deferrals		-		-		(0.2)
2017 pension plan contribution		-		-		2.0
Strategic investments		-		-		1.2
Total free cash flow	$	~4	$	2.4	$	3.2

85

Non-GAAP Reconciliations

Capital Expenditures, Net

We present core capital spending which includes proceeds for sales of E190 aircraft because management believes investors should be informed that these proceeds effectively offset the cash paid for these aircraft earlier in the year. Management believes investors should be informed that reimbursements for build-to- suit leased facilities effectively reduce net cash provided by operating activities.

		(Projected)
		Year Ended			Year Ended			Year Ended			Year Ended
(in billions)		December 31, 2019			December 31, 2018			December 31, 2017			December 31, 2016
Flight equipment, including advance payments	$	~3.4		$	3.7		$	2.7		$	2.6
Ground property and equipment, including
technology		~1.7			1.5			1.2			0.8
Net cash flows related to certain airport construction
projects		~(0.6)			(0.5)			(0.2)			-
Proceeds from sale of E190 aircraft		-			-			-			(0.2	)
Capital expenditures, net	$	~4.5		$	4.6		$	3.7		$	3.2
Operating revenue	$	~47		$	44		$	41		$	39
Capital expenditures, net to operating revenue		~10%			11%			9%			8%

86

Non-GAAP Reconciliations

Operating Cash Flow, Adjusted

We present operating cash flow, adjusted because management believes adjusting for the following items provides a more meaningful measure for investors. We do not present reconciliations for the years ended December 31, 2019 (Projected) and December 31, 2010 as the adjusted net cash provided by operating activities in these years is the same as the GAAP net cash provided by operating activities. Adjustments include:

Reimbursements from third parties related to build-to-suit facilities and other. Management believes investors should be informed that these reimbursements for build-to-suitleased facilities effectively reduce net cash provided by operating activities and related capital expenditures.

2017 pension plan contribution. In 2017, we contributed $2 billion to our pension plans using net proceeds from our debt issuance. We adjusted operating cash flow to exclude this contribution to allow investors to understand the cash flows related to our core operations in the periods shown.

Pension plan cash contributions. Operating cash flow is adjusted for our cash contributions to the pension plan as we believe this adjustment allows investors to better understand the cash flows related to our core operations in the periods shown. This adjustment includes the 2017 pension plan contribution of $2 billion.

		Year Ended
(in billions)		December 31, 2017
Net cash provided by operating activities	$	5.0
Adjustments:
Reimbursements from third parties related to build-to-suit facilities and other		(0.2)
2017 pension plan contribution		2.0
Net cash provided by operating activities, adjusted	$	6.8
		(Projected)
		Years Ended
		December 31, 2010 to
(in billions)		December 31, 2019
Net cash provided by operating activities	$	54
Adjustments:
Pension plan cash contributions		10
Net cash provided by operating activities, adjusted, excluding pension plan cash contributions	$	64

87

Non-GAAP Reconciliations

After-Tax Return on Invested Capital

We present after-tax return on invested capital as management believes this metric is helpful to investors in assessing the company's ability to generate returns using its invested capital as a measure against the industry. Return on invested capital is tax-effected adjusted total pre-tax income divided by average adjusted invested capital. Average adjusted invested capital represents the sum of the adjusted book value of equity at the end of the last five quarters, adjusted for pension and fuel hedge impacts within other comprehensive income. Average adjusted gross debt is calculated using amounts as of the end of the last five quarters. All adjustments to calculate ROIC are intended to provide a more meaningful comparison of our results to the airline industry.

		(Projected)
		Last Twelve Months Ended			Last Twelve Months Ended
(in billions)		December 31, 2019			December 31, 2010
Pre-tax income	$	~6		$	1
Adjusted for:
Restructuring and other		-			1
Interest expense, net and interest expense included in aircraft rent		~1			1
Pre-tax adjusted income	$	~7		$	3
Tax effect		~(2)			(1	)
Tax-effected adjusted total pre-tax income	$	~5		$	2
Adjusted book value of equity	$	~22		$	9
Average adjusted gross debt		~12			16
Averaged adjusted invested capital	$	~34		$	17
After-tax return (Tax-effected adjusted total pre-tax income)		~15%			~11%
Change year-over-year		~400 bps
Change year-over-year in invested capital	$	~17

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Exhibit 99.3