Delta Air Lines : Investor Day 2019 (opens in new window)

Agenda

Ed Bastian Chief Executive Officer

Delta: The Industry Leader

Glen Hauenstein President

Extending our Competitive Advantages

Gil West Sr. EVP and Chief Operating Officer

The World's Best Run Airline

Tim Mapes Chief Marketing and Communications Officer Reinforcing Brand Loyalty

Eric Phillips Sr. Vice President Revenue Management Industry-Leading Revenue Generation

Joanne Smith Chief People Officer

People Fuel our Success

Paul Jacobson Chief Financial Officer

Delivering Consistent Value for Shareholders

Safe Harbor

Statements in this presentation 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.

3

Delta:

The Industry Leader

Ed Bastian

Chief Executive Officer

Delivering Strong 2019 Performance

Our People

• Strong culture and employee engagement
• On track for highest profit sharing in history
• 6,800 new hires to support growth and improve service
• Raised base pay for twelfth time in the last thirteen years

Our Partners & Communities

• Proposed strategic partnership with LATAM
• Equity investment in Korean partner
• Returned over $55 million to communities where we live, work and serve
• Improved fuel efficiency by 2% and delivered carbon-neutral growth

Delivering

Results for all Stakeholders

Our Customers

• Industry-leadingreliability and record customer satisfaction
• Enhancing the customer experience through product and service improvements
• Renewed American Express partnership
• Growing loyalty with record acquisitions of SkyMiles members and co-brand cards

Our Owners

• Expect pre-tax income of $6 billion, 5th year at or above $5 billion
• Delivering top-line growth of ~7%
• Expanding profit margins
• Free cash flow of approximately $4 billion with $3 billion returned to owners

Note: Adjusted for special items; non-GAAP financial measures reconciled in Appendix

5

Continued Momentum in 2020

Revenue		Earnings Per Share	Free Cash Flow

	~$49B
~$47B	$6.75-$7.75	~$4B	~$4B

$6.75-$7.25

4% - 6%

~7%

2019	2020	2019	2020	2019	2020
Guidance	Outlook	Guidance	Outlook	Guidance	Outlook

Note: Adjusted for special items; non-GAAP financial measures reconciled in Appendix

6

Feedback We Hear From the Investment Community

Delta's biggest weakness is that it's an airline company - there are a lot

of fears around margins, cyclicality and exposure to macroeconomic or
"geopolitical shocks. "	Top owner

Note: Rivel perception study conducted in July 2019

7

Attractive Industry Dynamics

Delta is Leading a Growth Sector…

Average 2017 - 2019

GDP	Travel	Delta Revenue
Growth	Growth	Growth

Source: Travel growth based on February 2019 World Travel & Tourism Council report

…in a Stronger Airline Industry

• Consolidated structure
• Returns-orientedwith shareholder focus
• Differentiated and improved product
• Consistent profitability
• Addressing environmental impact

8

Feedback We Hear From the Investment Community

One way Delta could improve their valuation and change the way that the

market sees them would be to improve the level of disclosures on profitability
"of the various business lines. "	Sell Side Analyst

• Delta's premium to the industry and their outperformance to the upside raises questions about how long that can continue." Sell Side Analyst

Note: Rivel perception study conducted in July 2019

9

Delta's Strategic Priorities

Run the Premier	Grow our Brand	Accelerate	Invest for the
Global Airline	Premium	Globalization	Long Term

Safe, reliable and	Enhance customer	Grow our presence	Extend our competitive
customer-focused	trust and loyalty		advantages

Delivered by the best people and culture in

the industry

Long-term value creation for Delta stakeholders

10

Five Things to Take Away From Today

1	Building on a record 2019 - with expectations for 4% to 6% revenue growth, $6.75 to
$7.75 earnings per share and $4 billion free cash flow in 2020

2	Benefitting from favorable travel trends as the best performer within a structurally
improved airline industry

Extending our unmatched competitive advantages - our culture, operational reliability,

3 global network, customer loyalty and investment grade balance sheet - to retain our leadership position and drive long term value creation for all stakeholders

4	Enhancing our global scale with investments in fleet, partners, facilities and technology to
deliver best-in-class customer experiences and drive strong returns for owners

5	Creating long-term growth opportunity through growing brand preference, innovative
global partnership structure and continued revenue diversification from loyalty and MRO
Note: Forward-lookingnon-GAAP financial measures. See additional information in Appendix

11

Extending our Competitive Advantages

Glen Hauenstein

President

Agenda

Leveraging scale

Investing for the future

Extending our competitive advantages

13

Post-Merger Network Provided Limited Global Reach

NRT	MSP	DTW JFK
CVG
SLC	MEM
		ATL

Destinations:549

Countries:113

Joint Venture in transatlantic

Note: Route map as of 2008

AMS

CDG

14

Unprecedented Network Transformation Creates Global Scale

ICN

PVG

YVR	YYC		YYZ
SEA
	MSP	BOS
	SLC	DTW NYC
LAX			ATL
		MEX

BOG

LIM

GRU

	SCL	EZE
SYD

Destinations:549 982

Countries:113 143

Existing or planned Joint Ventures in all

geographic entities

LHR

AMS

CDG FCO

Note: Route map as of December 2019; WestJet JV subject to government approvals; LATAM equity stake subject to tender offer completion and JV subject to government approvals

15

Agenda

Leveraging scale

Investing for the future

Extending our competitive advantages

16

Global Scale Creates Opportunities to Invest for the Future

JV / Equity		Airports		Technology		Fleet
Partnerships				Transformation

Deepening customer,	Investing in key	Building digital tools,	Simplifying and
commercial and	airports to improve	driving personalization,	upgauging fleet to drive
operational integration	efficiency and	leveraging data to	substantial efficiency
with partners	customer experience	optimize operations	benefits

17

Agenda

Leveraging scale

Investing for the future

Extending our competitive advantages

18

Extending our Competitive Advantages

Unmatched Competitive

Advantages

Global	Customer
Culture Network	Loyalty
Global	Customer
Network	Loyalty

Operational Balance

Reliability Sheet

19

G L O B A L N E T W O R K

Scale Advantage Enables Attractive Growth Opportunities

Domestic

International

Product & Service

Fleet

Strengths

High-margin core hubs, coastal hub positions, strong local share

JV and equity partnerships

in every entity

Brand preference,

segmented product with

growing premium mix

Flexible fleet with low

ownership costs

2020

Core hub growth, mature coastal hubs, capitalize on local positions

Expand service in key

markets, launch strategic partnership with LATAM

Continue improvements, expand five-cabin strategy

Retire MD88 fleet by year end,

grow A220 and A321 fleet

Vision

Most efficient core hubs,

higher-margin coastal hubs, expanded focus city presence

Best-in-class customer

experience through deeper

partner integration

Enjoyable travel with better

technology and personalization

Simpler, more efficient, higher

gauge fleet

Note: LATAM equity stake subject to tender offer completion and JV subject to government approvals

20

G L O B A L N E T W O R K

Delta's Fleet Transformation is Multi-Faceted

Creating Value

from

Existing Fleet

Sizable Fleet

Replacement

Opportunity

Cabin Segmentation

• Provide choice and optimize revenue

Aircraft Deployment

• Drive efficiency through better asset deployment

Interior Investments

• Improve customer experience

Fleet Simplification

• Reduce complexity with fewer aircraft types

Next-Generation Technology

• Best-in-classeconomics and leading product

Gauge Growth

• Network enables continued upgauging opportunity

Evolution from legacy to optimal fleet provides

substantial efficiency benefits

21

G L O B A L N E T W O R K

Continuing to Renew Our Fleet

Evolution of Delta's Fleet Gauge

(average seats per aircraft)

150+

127

114

97

	2009	2014	2020E	Future State
Fleet	15		13	8
Families
Premium	9%		28%	>30%
Mix

• Average gauge has grown 30% since 2009
• Gauge growth temporarily pauses in 2020/2021, returning in 2022 and continuing for foreseeable future
• Next phase of fleet transformation driven by reduction of fleet families
• Benefits from product upgrades and higher premium seat mix continue in 2020 and beyond

22

C U S T O M E R L O Y A L T Y

Growing Loyalty and Trust in the Delta Brand

SkyMiles Program

Miles as

Currency

Co-Brand

Card

Strengths

Top-ranked loyalty

program with expanding

membership base

Loyalty currency in

high demand

Unique partnership with

Amex and premium

customer base

2020		Vision
Increase engagement and		Deeper customer relationships
enhance targeted offerings		with greater lifetime value

Expand mileage		More valuable currency with
redemption options		ubiquity of miles

Relaunch card portfolio with		Industry-leading, global
improved benefits		co-brand program

23

C U S T O M E R L O Y A L T Y

The Strategic Importance of American Express

Delta-American Express Contribution

• Two strong consumer brands with long-term

	partnership	~$7B
•	Integrated model with attractive economics
•	Higher contribution driven by improved
	economics, accelerating acquisitions and strong
	spend growth
•	Source of diversification and high-margin revenue
•	Delta represented 8% of American Express global
	billings and 21% of card member loans in 2018	$1.4B

20102023E

Contract renewal through 2029 provides platform for significant value creation for both partners

24

I N S U M M A R Y

The Delta Difference

A Powerful	Unmatched Competitive
Brand		Advantages
		Global	Customer
	Culture	Network	Loyalty

+

Operational Balance

Reliability Sheet

Long-Term

Value Creation

Top-Line Growth

Margin Expansion

Balanced Capital

Allocation

25

The World's

Best Run Airline

Gil West

Sr. EVP and

Chief Operating Officer

Agenda

Improving operational reliability

Growing portfolio businesses

27

Building Trust with Customers Through Operational Reliability

Best		More Customers		Record		Lowest Level of		Record
			Maintenance		Customer
Completion		Arrive On Time		Bag
			Cancellations in		Satisfaction
Factor				Performance		History		Scores

99.8%	85.5%	1.2x	99%	51%
				+5 pts YOY
DOT Completion	On-Time	Fewer lost bags	Reduction in	Domestic
Factor	Arrivals	versus industry	maintenance	NPS
			cancellations

Note: DOT completion factor, on-time arrivals (DOT A14) and maintenance cancellations are preliminary YTD-Nov 2019; DOT missed bag ratio (MBR) is YTD-Sep 2019; Domestic NPS is YTD-Oct 2019

28

Managing Irregular Operations to Further Differentiate Customer Service

	Irregular Operations (IROP)		IROP Net Promoter
	Cancellations			Scores
		(Mainline)
5,719									8%
									3%
		3,696
			1,812
								(15%)
	Average	2018	2019					Average	2018	2019
2010-2017		YTD		2010-2017		YTD

• Best-in-classoperational performance on blue-sky days
• IROPs provide an opportunity to differentiate versus competition
• Delivering operational tools to deliver excellent customer service:
• • Probabilistic weather forecasting
  • Crew resource management
  • Artificial intelligence / machine learning driven decision making
  • De-icingand thunderstorm constraint management

Note: IROP cancellations are preliminary YTD-Oct 2019; 100% completion factor days is FY 2010-2018

29

2020 Operational Priorities

Continue to Improve		Leverage Technology &		Grow Portfolio
IROP Recovery & Process
	Infrastructure		Businesses
Improvement

• Facilitate quicker recovery through predictive tools
• Reduce passenger stress through the travel ribbon
• Security and processing wait time reductions
• Improve gate throughput and asset utilization

• Enable personalized service through "Single View of the Customer"
• Unlock productivity using mobility platforms
• Optimize decision making processes with technology
• Replace ground service equipment

• Continue to grow MRO revenue
• Expand interior product sales through Delta Flight Products
• Leverage portfolio businesses to reduce cost
• Partner to drive value from non-core assets

30

Agenda

Improving operational reliability

Growing portfolio businesses

31

Unlocking Value from Portfolio Businesses Through Partnerships

• DPJ combining with Wheels Up to create one of the world's largest owned and managed fleets of private aircraft
• • Brings together complementary businesses representing best consumer brands in private and commercial aviation
  • Delta entering into a long-term partnership agreement with Wheels Up
  • Delta will hold a minority equity position in the combined company
  • Demonstrates ability to leverage Delta brand into adjacent industry

32

Pursuing Growth Opportunities in Core Competencies

• Manufacturing subsidiary established to create value for Delta in the cabin interior
• • Focus on supplier risk mitigation, Delta brand attributes and cost leverage
  • Currently producing wireless IFE systems, monuments and integration kits
• Capabilities to participate in approximately 50% of the cabin interiors markets
• Strong platform for growth even beyond cabin interiors

Expanding product lines and pivoting to external sales growth

33

MRO Positioned to Meet Growing Global Maintenance Demand

Demand Growing for New Engine Offerings

Global Installed Engine Forecast 2019-2029

+20%

CAGR

• Largest airline MRO in America with long-term OEM relationships
• Guarantees for 7,000+ engine shop visits over the next 30 years
• Contracts with Rolls Royce and Pratt & Whitney cover next-gen engine technology
• Expect to more than double MRO revenue by 2024 from 2019 base of $880 million as next-gen engine volume grows

2019	2020	2021	2022	2023	2024	2025	2026	2027	2028	2029
			PW GTF			Trent 1000		Trent 7000		Trent XWB

Source: AeroDynamic Advisory & Alton Aviation

34

I N S U M M A R Y

Delta: The World's Best Run Airline

Operational Excellence

• Building trust with customers through industry-leading operational reliability

Continuous Improvement

• Improving performance during irregular operations to minimize disruption and improve customer experience

Unique Value Drivers

• Unlocking value through partnerships and multi-year growth opportunities in portfolio businesses

35

Reinforcing

Brand Loyalty

Tim Mapes

Chief Marketing and

Communications Officer

Delta Has a Leading Consumer Brand that Transcends Travel

Corporate Partner Award

37

A Culture of Service at the Center of Everything We Do

The Rules of The Road

Apply our basic business principles

Know our business and improve it constantly

Demonstrate honesty, integrity and respect

Drive for results

Build great teams

38

Committed to Industry-Leading Safety and Reliability

39

Never Satisfied With the Status Quo

Modernizing the airport experience

• Terminal investments, biometrics, RFID expansion

Enhancing service

• Single View of the Customer enables more personalized experiences

Extending global relevance

• Building portfolio of industry-leading brands
• Deeper partner integration to improve travel experience between brands

Investing in Customer & Operations Recovery

• Enabling proactive recovery during irregular operations

Leveraging mobile technology

• Launching of Fly Delta 5.0 app

40

Values-Led and a Force for Positive Change Worldwide

Better connecting global communities starts with thousands of Delta people who connect millions of passengers to hundreds of global destinations - every day

But that's just the start, the heart of our business is about…

- Connecting people with each other

- Increasing cultural understanding

- Fostering economic growth

- Strengthening communities

41

Delta is Addressing Climate Change

Fleet Renewal		Fuel Savings Initiatives		Carbon Offsets

✓More than 300 new	✓APU usage reductions	✓Purchasing from 20+ projects
aircraft in last 5 years
✓New aircraft are 25%	✓Turbulence app reduces	✓Investing in carbon reductions
more fuel efficient	flight corrections	outside airline industry

11%	~2%	12 million
emissions reduction	annual fuel efficiency	carbon offsets
since 2005	improvement	purchased

42

Trust Drives Key Behaviors Including Buying and Staying Loyal

Percent Who Will Engage in Each Behavior on Behalf of a Brand

Brands you currently use and…

Do not fully trust

Have trusted for a long time

Buy First	Stay Loyal	Advocate	Defend
			62
	53	+33			51
+28		points					43
			+27
points				points		+21
		29				points
25			24
				22
Do not	Trust	Do not	Trust	Do not	Trust	Do not	Trust
trust		trust		trust		trust

Source: Edelman Trust Barometer Special Report

43

Better Business Results Driven by Best-in-Class Customer Experience

Domestic NPS & Revenue Premium

119%

117%51%

38%

106%

15%

2010	2015	2019
				YTD 3Q19
	Domestic Revenue Premium		Domestic NPS

Strong relationship observed between NPS and Revenue Premium

Note: NPS sourced from Domestic ISM Surveys; 2019 PRASM data is TTM 3Q19; 2019 NPS Data is YTD-Oct 2019

44

Delta's Brand is Built on Trust and Delivering What Customers Value

		Thoughtful				Reliable				Innovative				Values-Led
	1			2			3			4

Always have our		Understanding		Never satisfied with the		Determined to make the
customers, employees,		expectations is the		status quo, we		world better and more
communities and		standard - exceeding		continually invest,		connected by acting on
shareholders in mind		them is where we make		innovate, refresh and		our values
		the difference		renew

45

Industry-Leading Revenue Generation

Eric Phillips

Sr. Vice President

Revenue Management

Delta is the Airline of Choice

Leading Global	+	Best-in-class	Growing customer
preference and sustainable
Network	Experience
	revenue premium

More customers than ever are choosing to fly Delta, recommending the

airline and becoming loyal to our brand…

47

Evolution to Customer-Focused Revenue Generation

Then

Brand loyalty	Transactional

ProductsSeats

Purchase driver	Lowest fares

Domestic NPS	15%

Now

Relationship-based

Experiences

Reliability, service and

products

50%+

Vision

Deep knowledge of customer preferences

Personalized offers

Best-in-class

travel experience

Most trusted travel brand

48

Positioned to Continue Revenue Momentum in 2020

~$49B

4-6%

					~7%
		8%		• More choice in payment
			• 110%+ revenue
		• More choice in
$39B	4%		premium
	experience
		• Amex renewal
	• Reliable operation	• Fuel recapture
	• Branded Fares	• Premium revenue
	• Globalization	growth

2016

2017

2018

2019E

2020E

Revenue growth ~2-3x U.S. GDP

Note: Adjusted for special items; non-GAAP financial measures reconciled in Appendix

49

Executing on 2020 Revenue Drivers Will Further Brand Affinity

Building

Better Selling

Preferred

Loyalty

1

2

3

4

Customer Trust

and Servicing

Corporate Carrier

Revenue

Delivering sustainable	Offering right product	Maintaining our lead by	Driving acquisitions and
growth by earning and	at the right time,	investing in the things	enhancing card spend
keeping customer trust	across channels and	Corporate travelers

currenciesvalue

50

I N I T I A T I V E # 1 : B U I L D I N G C U S T O M E R T R U S T

Building Customer Trust Throughout the Travel Ribbon

Shopping

Booking

Post-Purchase

Airport

In-Flight

Consistency		Clarity of		Fairness in				Safe,
		policy for		Transparency
in pricing,		choices and				reliable,
		customers		in all customer
product, and		associated				on-time
		and		touchpoints
schedule		attributes				with bags
		employees

Opportunity		Foundational

51

I N I T I A T I V E # 2 : B E T T E R S E L L I N G A N D S E R V I C E

Brand Affinity + Product Affinity is a Powerful Combination

Customers Want Choice

70%

repeat

Once a customer purchases a premium product, 70% of those customers will purchase an equal or better product on a future trip

Growing Premium Revenue

+25% ~$15B

$12B

$5.5B

201020172019E

2017-2019E

Premium revenue has grown ~2x faster than total revenue

52

I N I T I A T I V E # 2 : B E T T E R S E L L I N G A N D S E R V I C E

Better Selling and Servicing Fortify Delta's Leading Position

Strong Direct Channels

Opportunity to Expand in Corporate Direct Booking Tools

Third Party Opportunity

(e.g. Expedia, Concur)

52%		42%
direct		of direct revenue
distribution		is premium
10%		81%
accounts with		accounts with a
Comfort+ in		premium product
policy		in policy

$400-500M

per point of mix improvement

in external channels

53

I N I T I A T I V E # 3 : P R E F E R R E D C O R P O R A T E C A R R I E R

Delta is the Preferred Carrier for Business Travel

Global Focus

Domestic:

80%+

Travel Programs

with Delta as

Preferred Carrier

2019 Yo2Y Industry Corporate Revenue

in Delta Markets

+17%

YoY Premium

Volume

+8%

Growing Corporate Markets

9%10%

14%

YoY Domestic Volume (+4 pts versus industry)

International:

Leveraging

Strengths Abroad

Core HubsCoastal Hubs Focus Cities

2019 Yo2Y Industry Corporate Revenue

	13%	14%	15%	18%
11%
China	France	UK	Korea Netherlands

43%

Premium

Passenger Mix

54

I N I T I A T I V E # 4 : L O Y A L T Y R E V E N U E

Amex Partnership Creates Value for Delta and Our Customers

			Delta-Amex Contribution
New and improved co-brand	~15%
card benefits and refreshed marketing
	CAGR
will accelerate acquisitions and drive		~$4.4B
portfolio spend		~$4B
1M+	12%+	$3.4B
New card	Portfolio
acquisitions for	spend CAGR
past three years	since 2012

2018

2019E

2020E

55

Strong Foundation with Durable Platform for Growth

Scale		Local Share		Corporate
Strong global presence,		Local share is growing,		Continued strength in
geographically balanced		~20% yield premium over		corporate volumes with
network		connecting traffic		higher premium mix

#1 carrier in revenue	~60% domestic	Preferred airline of the
generation	local mix	business traveler

Built to Win

56

I N S U M M A R Y

Best-in-Class Customer Experience = Sustained Revenue Growth

Trusted Brand

We have the right…

✓ Culture	✓ Technology
✓ Employees	✓ Loyalty program
✓ Network & Fleet	✓ Global partners
✓ Operational reliability	✓ Products & Services

2020

Top-line Growth

4% to 6%

…for future success

57

People Fuel our Success

Joanne Smith

Chief People Officer

Our Culture in Action

Our

People:

Caring for our people,

sustaining their

passion

Empowered

Our Employees

Brand:

Strengthening brand,

customer loyalty,

higher NPS

Our

Customers:

Caring for our

customers, who

become passionate

about Delta

59

Creating Moments That Matter Every Day

60

Care When It's Needed Most

"The decision to help was, without a doubt, who we are as a company that cares about connecting the world.

In this case, we were able to connect hundreds of people to safety and humanity. Our team's commitment to helping others continues to inspire me every day."

Dave Holtz, Senior Vice President -

Operations and Customer Center

61

A Culture of Giving Back

273	30	30
Habitat Homes	Playgrounds	JA Chapters
Delta employees build homes	Delta employees have built KaBOOM!	Delta supports Junior Achievement
annually - spanning 13 countries	playgrounds across 14 markets to give	chapters across 4 continents to teach
since 1995 - with Habitat for	kids a safe place to play	students financial literacy, work readiness
Humanity		and entrepreneurship

1,000	13,064	20
Bikes	Pints of Blood	Food Banks

Delta contributes to Toys for Tots annually and Delta employees build 1,000 bikes for

Delta employees donated blood at 254 drives making Delta #1 among American

Delta employees help repack more than 2 million pounds of food annually across

kids every holiday season	Red Cross corporate donors in FY19	the globe, including support of 18
		Feeding America food banks

62

I N S U M M A R Y

A Thriving Culture Strengthens Customer Loyalty

13X	More likely to have highly
engaged employees

	7X	More likely to have employees
	innovating

	6X	More likely to have higher Net
	Promoter Scores

Source: O.C. Tanner Global Culture Report 2020

63

Delivering Consistent Value for Shareholders

Paul Jacobson

Chief Financial Officer

Agenda

Financial highlights and outlook

Capital allocation

65

Strong 2019 Financial Performance Caps Decade of Transformation

Pre-Tax

Profit

~$6B

$5.3B

$1.5B

2010 2017 2019E

Operating

Cash Flow

~$8.5B

$6.8B

$2.8B

2010 2017 2019E

Returns to

Shareholders

~$3B

$2.4B

$0B

2010 2017 2019E

Fifth consecutive year

>$5 billion

Consistent	Targeting ~70%
reinvestment and	of FCF to owners with
shareholder returns	steady dividend growth

Note: Adjusted for special items; non-GAAP financial measures reconciled in Appendix

66

Robust Free Cash Flow Generation in 2019

	Core Capital
Operating Cash	Spending
	~$4.5B
Flow
~$8.5B
Free Cash Flow
		~$4B
	$2B	$1B

Buybacks Dividends

Note: Adjusted for special items; non-GAAP financial measures reconciled in Appendix

• Expect free cash flow to net income conversion of 80% to 90%
• Additional $500 million elective pension contribution in the December quarter

67

Continued Momentum in 2020

Revenue		Earnings Per Share

	~$49B
~$47B	$6.75-$7.75

$6.75-$7.25

4% - 6%

~7%

2019	2020	2019	2020
Guidance	Outlook	Guidance	Outlook

Note: Adjusted for special items; non-GAAP financial measures reconciled in Appendix

Free Cash Flow

~$4B~$4B

20192020

Guidance Outlook

68

Total Expense Growth in 2020 Expected to be Slightly Lower than 2019

Non-Fuel Expense

	Industry Wide
• Next-gen aircraft	•	Wage increases
	•	Airport construction
	•	Higher volume

	Key Drivers for Delta
•	Catering transformation	•	Lower gauge benefit
•	Depreciation	•	Product and service
•	One Delta	•	Technology

	Fuel	~ Flat
	Price per gallon

Non-

Operating

Profit

Sharing

Key Assumptions

• Approximately 2% fuel efficiency improvement
• Higher volume
• Pension favorability due to strong asset returns and cash contributions in 2019
• Increase in employee profit sharing on expectation of higher pre-tax income

69

Consistently Delivering Solid Financial Results

1	Industry-leading	Transformational decade has resulted in consistent financial
performance	performance that leads the industry

2	Exceeding	Exceeding initial 2019 financial targets including top-line growth,
2019 objectives	margin expansion and strong cash generation

3	Momentum	Earnings growth, sustained margins, strong free cash flow and
continuing	reinvestment in the business drive continued momentum

70

Agenda

Financial highlights and outlook

Capital allocation

71

Balanced Cash Deployment Over the Last Decade

2010 to 2019 Cumulative Operating Cash Flow

$64 billion

Business Investment		Shareholder Returns		Balance Sheet
Core capex, airport, strategic		Share repurchases, dividends		Debt reduction, pension funding
~50%		~20%		~30%

Note: All metrics calculated over 2010 to 2019E period. 2010 to 2019 cumulative operating cash flow excludes cash funding to pension; adjusted for special items; non-GAAP financial measures reconciled in Appendix

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Balanced Capital Allocation Priorities

1	Reinvest in	2	Maintain Investment	3	Return Cash
the Business	Grade Balance Sheet	to Owners
Renewing Delta's fleet with	Targeting adjusted debt to	Consistently returning cash to
more efficient next-generation	EBITDAR range of 1.5x -	shareholders, targeting 70%
aircraft, while investing in	2.5x, supporting investment	of free cash flow returned to
facilities and technology for	grade rating through the		owners annually
	future growth		economic cycle

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1 . R E I N V E S T I N T H E B U S I N E S S

Our Investments are Driving Strong Returns

ROIC and Invested Capital

~15%

~11%	~$34B
$17B

• Approximately 400 basis points of ROIC improvement on a $17 billion increase in invested capital base since 2010
• Compounding benefits of reinvestment support long-term growth

2010		2019E
		Invested Capital		ROIC, after-tax

Note: Adjusted for special items; non-GAAP financial measures reconciled in Appendix

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1 . R E I N V E S T I N T H E B U S I N E S S

Reinvestment Consistent but Flexible

Core Capital Spending

		$4.6B	~$4.5B ~$4.5B
			• Core capex spend in 2020 similar to 2019
$3.2B	$3.7B			‒ Expecting ~80 aircraft deliveries
				‒ Cabin refurbishment and product upgrades
				‒ Ground and facility investments
				‒ Technology investments

	2016	2017	2018		2019E	2020E
CapEx /			Aircraft		Technology		Ground/Other
8%	9%		11%	~10%	~9%
Sales

Note: Adjusted for special items; non-GAAP financial measures reconciled in Appendix

75

2 . M A I N T A I N I N V E S T M E N T G R A D E B A L A N C E S H E E T

Investment Grade Balance Sheet Provides Powerful Advantage

Adjusted Debt / EBITDAR

BBB- Baa3 BBB-

• Robust cash generation and strong balance sheet position Delta to:
• • Consistently reinvest in the business
  • Seize strategic opportunities
  • Return cash to shareholders
  • Manage through a business cycle

Long-Term

Target

1.5x - 2.5x

2010

2017

2019E

Note: Excludes underfunded pension obligations and includes debt for existing lease obligations

76

3 . R E T U R N C A S H T O O W N E R S

Sustained Free Cash Flow Enables Consistent Shareholder Returns

Free Cash Flow

~$4B ~$4B

$3.2B

$2.4B

2017

2018

2019E

2020E

Free Cash Flow Allocation Targets

Dividends	Balance
20% - 25%
Sheet
	30%

~$4B of

annual

FCF

Share

Buybacks 45% - 50%

Target 70% of FCF to

owners

Note: Adjusted for special items; non-GAAP financial measures reconciled in Appendix

77

3 . R E T U R N C A S H T O O W N E R S

Dividend Demonstrates Our Confidence

Dividend per Share

$1.61

$1.40

$1.22

$0.81

$0.54

	Sep-15	Sep-16	Sep-17	Sep-18	Sep-19
Dividend	$425M	$600M	$875M	$950M	$1B
Run Rate

• Dividend targeted at 20% to 25% of Free Cash Flow
• Track record of annual increases with current yield of 2.9%

78

Delta is a Compelling Long-Term Investment Opportunity

Powerful Brand	Unmatched	Strong Partner	Proven Track Record
With Industry-	Competitive	Portfolio and	of Execution &
Leading Returns	Advantages	Global Scale	Reinvestment

79

I N V E S T M E N T T H E S I S

Delta is a Compelling Long-Term Investment Opportunity

Powerful Brand	Unmatched
With Industry-	Competitive
leading Returns	Advantages

 Record customer	 Engaged and
satisfaction	empowered people
 Durable revenue and	 Unique loyalty and co-
margin premium	brand program
 Consistent returns to	 Extending our lead by
owners since 2013	investing for the future

Strong Partner	Proven Track Record
Portfolio and	of Execution &
Global Scale	Reinvestment

 Global relevance with	 Consistent operational
partner network		excellence
covering 98% of GDP		Best-in-class products
 Expanding footprint		and service
and deepening		Improving ROIC on a

integration with JV	growing capital base
partners

80

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.

81

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)
				Year Ended
				December 31, 2019
		Pre-Tax		Income			Net
(in billions)		Income		Tax			Income
GAAP	$	6.1	$	1.4	$	4.7
Adjusted for:
Unrealized gain/loss on investments		(0.1)			-		(0.1)
Non-GAAP	$	6.0	$	1.4	$	4.6
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

	(Projected)
	Year Ended
	December 31, 2019
	Net Income
	Per Diluted Share
$	~ $6.90 - $7.40
	~ (0.15)
$	~ $6.75 - $7.25

82

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%

83

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

84

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%

85

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-suitfacilities and other. Management believes investors should be informed that these reimbursements for build-to-suit leased 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

86

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

Last Twelve Months Ended

December 31, 2010

$	1
	1
	1
$	3
	(1)
$	2
$	9
	16
$	17
	~11%

87