Delta Insights · Global Business Energy Technology/Cybersecurity/Digital Risk Management Finance/Accounting ... CFO and President, Enabling Services of The Coca-Cola Company Age:

Delta Insights

December 11, 2019

Delta Insights

Environmental Sustainability

International Partner Strategy

Driving Value from Customer Experience and Loyalty

Finance Insights

Governance Overview

Governance Overview

Board of Directors

4

Age: 62

Director since: 2010

Other Public COMMITTEES:

Boards: 1 N/A

Age: 70 INDEPENDENT



Boards: 2 Audit, Corporate Governance★,

and Personnel & Compensation

★ Committee Chair

2

11

Independence

1

57

Board Tenure

0-4 years

5-9 years

10+ years

5

8

Diversity

5

8

1

2

5

8

3

2

11

Government Affairs/Security

Global Business

Energy

Technology/Cybersecurity/Digital

Risk Management

Finance/Accounting

Marketing/Brand Management/Data

Airline/Transportation Industry

Senior Leadership

Skills Independent Directors Collectively Possess

All independent

except CEO and

ALPA Nominee

Average tenure 5

years

5 of 13 directors are

diverse from racial,

gender or ethnic

standpoint

Delta’s board includes a rich and varied mix of expertise as well as a broad

distribution of board tenure

EDWARD H. BASTIANCEO of Delta

FRANCIS S. BLAKEFormer Chairman and CEO of

The Home Depot

Non-executive Chairman of the

Board of Delta

Board of Directors

5

Age: 71 INDEPENDENT



Boards: 2 Corporate Governance, Finance,

and Personnel & Compensation★

Age: 65 INDEPENDENT



Boards: 0 Audit and Safety & Security

★ Committee Chair

Age: 55 INDEPENDENT



Boards: 2 Audit and Safety & Security★

Age: 70 INDEPENDENT



Boards: 2 Audit★, Corporate Governance, and

Safety & Security

Age: 52



Boards: 0 Safety & Security

Age: 63 INDEPENDENT



Boards: 0 Audit and Safety & Security

DANIEL A. CARPFormer Chairman and CEO of

Eastman Kodak

ASHTON B. CARTERDirector of the Belfer Center for

Science and International Affairs

at Harvard Kennedy School

DAVID G. DEWALTFormer Executive Chairman and

CEO of FireEye

WILLIAM H. EASTER IIIFormer Chairman, President and

CEO of DCP Midstream

CHRISTOPHER A. HAZLETONCaptain, Airbus 321, Delta

MICHAEL P. HUERTAFormer Administrator of the

Federal Aviation Administration

Board of Directors

6

Age: 68 INDEPENDENT



Boards: 2 Finance and Personnel &

Compensation

Age: 59 INDEPENDENT




Compensation

★ Committee Chair

KATHY N. WALLERFormer Executive Vice President,

CFO and President, Enabling

Services of The Coca-Cola

Company

Age: 60 INDEPENDENT

Director since 2015


Boards: 2 Audit, Corporate Governance, and

Safety & Security

Age: 53 INDEPENDENT



Boards: 1 Corporate Governance, Finance★,

and Personnel & Compensation

Age: 61 INDEPENDENT




Compensation

Age: 61 INDEPENDENT



Boards: 2 Audit, Corporate Governance and

Safety & Security

JEANNE P. JACKSONFormer President, Senior

Strategic Advisor to the CEO of

NIKE

GEORGE N. MATTSONFormer Partner of Goldman

Sachs

SERGIO A.L. RIALCEO of Banco Santander Brazil

DAVID S. TAYLORChairman of the Board,

President and Chief Executive

Officer of The Procter & Gamble

Company

KATHY N. WALLERFormer Executive Vice

President, CFO and President,

Enabling Services of The Coca-

Cola Company

7

Governance Practices

Sound Governance in Place

Delta has a history of a strong, independent Board, composed of seasoned members with diversity of experiences. The Board is committed to sound

corporate governance practices in line with evolving best practices

Board

• Separate non-executive Chairman and CEO roles

• All directors elected annually with majority voting in uncontested

elections

• No outside director will stand for re-election after age 72

• Robust annual self-evaluation of Board and committees

Shareholder rights

• 3/3/20 proxy access

• No shareholder rights plan (poison pill) or super-majority voting

Stock ownership

• Anti-hedging and anti-pledging policy for all employees and Board

• Meaningful stock ownership and retention guidelines for Board

and executive officers

• Ownership of specific airline competitors’ stock by Board and

officers prohibited

Executive Compensation Closely Tied to Performance

• Compensation based on linking pay to performance

through a mix of relative and absolute financial and

operational performance measures

• Measures of the operation include on-time performance,

baggage handling, flight completion factor, and net

promoter scores

• Financial measures include absolute pre-tax income,

relative pre-tax margin, relative TRASM performance,

return on invested capital, and relative total shareholder

return

8

9

Executive Compensation Practices

• Commitment to pay-for-performance philosophy that

emphasizes shareholder value creation

• Use of multiple performance measures, both absolute and

relative, both annual and long-term – aligned with broader

employee incentive plans

• Clawback policy for all officers

• “Double trigger” vesting of incentive awards in a termination

during a change in control

• No employment agreements for officers

• Full disclosure of incentive plan performance measures

“Pay for Performance” Approach to Compensation

Environmental Sustainability

John Laughter

Sr. Vice President Corporate Safety, Security

and Compliance

Investor Day Emissions Offset by Delta

All emissions associated with air travel for Investor Day have been offset by Delta through verified carbon offset credits from The Guatemalan Conservation Coast

Project, which protects 54,000 hectares of threatened rainforests, conserving over 400 bird species and supporting local farmers and communities.

11

“Being a good corporate

citizen is key to the Delta

culture, which is why our

sustainability efforts are more

than just words. Delta is

committed to producing

significant, measurable

results as a part of its

sustainability strategy.”

Ed Bastian, Delta CEO

9th year

5th year

B Score

Annual Corporate

Responsibility Report

12

Environmental Sustainability – Core to Delta’s Values-Led Brand

Reducing emissions from jet fuel is a primary

focus

Eliminating waste and diverting hundreds of

thousands of pounds from landfills

annually

Ensuring that our employees,

customers, and the communities we serve benefit from our commitment

13

Climate Action

Waste Reduction

Stakeholder Engagement

Environmental Sustainability – Key Focus Areas

Jet Fuel 98%

Other Emissions 2%

Fleet Renewal

Sustainable Aviation Fuel

Carbon Neutral Growth

Climate Action: Jet Fuel is Our Biggest Opportunity

14

Jet fuel accounts

for over 98% of

Delta’s total

emissions Fuel Efficiency

Fleet Renewal

300+NEW AIRCRAFT IN LAST 5 YEARS

25%MORE EFFICIENT THAN AIRCRAFT

THEY ARE REPLACING. :

2%ANNUAL FUEL

EFFICIENCY IMPROVEMENT

11%REDUCTION IN EMISSIONS SINCE 2005

Climate Action: Renewing our Fleet and Driving Efficiency

15

APUreduce fuel usage through heat carts,

ground power units, and enhanced power

conditioned air at gates

TURBULENCE APPreduce fuel burn by predicting altitude

and speed changes to avoid turbulence

COST TO CARRYreduce fuel burn by identifying lighter

weight components on aircraft and

improving catering provisions onboard

Fuel Efficiency

2020 GOAL: Save 45 Million Gallons

Climate Action: Sustainable Aviation Fuels (SAF)

Up to 80% reduction in lifecycle emissions compared to conventional jet

16

• Partnership with Airbus on delivery flights out of Toulouse

• Partnership with Airbus and Air BP for carbon neutral

delivery flights out of Mobile

Feasibility study for SAF production facility in Washington

State:

• Feedstock: wood residue in forests which can cause

forest fires

• If successful, SAF available late 2023

• SEA, PDX, SFO, LAX

SAF on Delivery Flights SAF Production Facility

17

Capping Emissions Through Carbon Offsets

Reduces CO2 in the atmosphere through

verified emissions reductions

12 MILLIONMETRIC TONS OF CO2 REDUCED

GLOBALLY BY DELTA'S CARBON

OFFSETS

EQUIVALENT TO EMISSIONS FROM

1.7 MILLIONPASSENGER VEHICLES FOR 1 YEAR

CARBON NEUTRAL

GROWTHSINCE 2012

Social Cobenefits

Advances the UN's Sustainable Development

Goals, such as:

• Decent Work and Economic Growth

• Reduced Inequalities

• Sustainable Communities

and Climate Action

Climate Action: Commitment to Carbon Neutral Growth

Delta is the only global airline to voluntarily cap emissions at 2012 levels

https://www.iconfinder.com/icons/700126/balance_finance_money_scale_icon

Reduced Waste

300,000POUNDS PER YEAR IN

PLASTIC REDUCTIONS

5%ON CAMPUS WASTE

REDUCTION THROUGH

COMPOSTING

350,000+POUNDS UNIFORMS

DIVERTED FROM

LANDFILLS

Waste Reduction

18

19

Green Up

Business Resource Group

• Delta’s largest and fastest growing BRG -

4,000 members

• 2,000 pounds of food donated in last 6

months

• Spearheaded compostable materials in

campus cafeterias

• Hosted first Electric Vehicle Expo to

educate employees

Youth Advisory Board

on Sustainability

• 16 members, representing 11 states &

American Samoa

• Provides Delta insight into our younger

generation's mindset around

sustainability

Habitat for Humanity

• In Flight Recycling - Recycled more than

3 million pounds of aluminum, which is

equivalent to the weight of 6 Airbus

350s

• Raised enough funds to build 12 of

Delta’s 270+ Habitat for Humanity homes

in communities we serve

Engaging Our Employees, Customers and Communities

Delta’s International Partner Strategy

Steve Sear

President, International

EVP, Global Sales

Delta’s Joint Ventures and Equity Investments

21

~$3B Joint Venture

10% equity stake in Hanjin-KAL

~$1B Joint Venture

~$11B Joint Venture

9% Equity stake

~$3B Joint Venture

49% Equity stake

Pending ~$1B Joint Venture

Equity Joint Venture

~$1B Joint Venture

47% Voting Interest 3% Equity stake

Expanded JV of ~$13B(Launching January 1, 2020)

Note: WestJet JV subject to government approvals; LATAM equity stake subject to tender offer completion and JV subject to government approvals; Aeromexico is non-

controlling 51% equity interest (voting by foreign shareholders limited under Mexican law).

Planned Future ~$2B Joint Venture

Pending 20% Equity Stake

• IROP Protection

• Inventory Access

• Through Check-In

• Joint Commercial

and Operational

Planning

• Harmonized

Policies

• Profit Sharing

Based

• Operational and

Customer

Experience

Coordination

• Board Participation

in Most

Relationships

• Single Brand

Selling (DL*)

• Loyalty / Lounge

• Complete Strategic

Alignment

• Talent exchange

and best practices

Uniquely Creating Deeper Partnerships That Maximize Benefits

22

Minimal Cooperation Deep Cooperation

Highest value

Interline Joint VentureIncl. Antitrust Immunity (ATI)

Codeshare Equity Equity and Joint Venture

Note: WestJet JV subject to government approvals; LATAM JV and equity stake are subject to tender completion and government approvals; Aeromexico is non-


Value from Delta’s Partner Investments Continue to Mature in 2020

• Through 2019, Delta has made

significant progress in building

out a strong partner portfolio

• Benefits extend beyond 2020 as

initiatives mature

23

Continued growth and ramp-up

Implement new transborder JV

Launch strategic partnership

Implement new expanded JV

Note: WestJet JV subject to government approvals; LATAM JV and equity stake are subject to tender completion and government approvals

Delta’s International Partner Strategy Panel

24

Steve SearPresident International & EVP Global Sales

Perry CantaruttiSenior Vice President Alliances

Matteo CurcioVice President Asia Pacific (Seoul)

Nicolas FerriChief Commercial Officer, Aeromexico (Mexico City)

Roberto IoriattiVice President Transatlantic (Amsterdam)

Driving Value from Customer Experience and Loyalty

Sandeep Dube

Sr. Vice President

Customer Engagement

& Loyalty

The Value of Customer Experience

26

When consumers love your

products and services, it

leads to better business

results

NPS: Delta’s Measure of Customer Experience

27

Promoter DetractorNeutral

Definitely Will5 Probably Will4 3 2 1May or May Not Probably Will Not Definitely Will Not

Survey Question

How likely are you to recommend Delta?

Calculation

Net Promoter Score (NPS) = % Promoters - % Detractors

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

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

28

Strong relationship observed between

NPS andRevenue Premium

106%

117%119%

15%

38%

51%

2010 2015 2019YTD 3Q19

Domestic Revenue Premium Domestic NPS

Domestic NPS & Revenue Premium

The Delta People

Delta Leverages Its Key Assets to Elevate Customer Experience

29

NPS is measured across the travel ribbon to understand customer pain points and to inform decisions on future investments

START DEST.ARRIVALONBOARDBOARDINGSECURITYCHECK-INBOOKING

Data and Process Understanding the Customer

Improving Customer Experience Drives Loyalty Which Unlocks Value

“Delivering a distinctive journey

experience makes it more likely

that customers repeat a purchase,

spend more, recommend to their

friends, and stay with your

company” Source: From touchpoints to journeys - Seeing the world as customers do

(McKinsey Quarterly, March 2016)

Top Line Revenue

Brand LoveLoyalty

SkyMiles Member

with Credit Card

ActiveSkyMiles Member

Non-

Member

Lifetime Customer Value30

The Strategic Importance of American Express

31

Contract renewal through 2029 provides platform for significant value creation

for both partners

Delta-American Express Contribution

$1.4B

~$7B

2010 2023E

Finance Insights

Jill Greer Vice President, Investor Relations

Julie StewartManaging Director, Investor Relations

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 11, 2019, and which we have no current intention to update.

33

Agenda

34

Commonly Asked Modeling Questions- Revenue disclosures

- Pension update

- Tax update

- Joint Ventures & equity investment accounting

- Profit sharing calculation

- Airport investments

Investor Relations Update- Perception study feedback

- Update on approach to financial guidance

P E R C E P T I O N S T U D Y

We Asked – You Told Us

35

Strengths

• A clear strategic vision

• Competitive positioning

• Strong management

• Building brand loyalty

• Leading financial performance

Opportunities

• Demonstrate ability to sustain

success over a cycle

• Maintain margin premium

• Cost management

• Target setting

U P D A T E O N A P P R O A C H T O F I N A N C I A L G U I D A N C E

Evolving Our Guidance Approach

36

Focus on the metrics that inform our business decisions

Reduce number of adjustments in key performance measures

Reduce near-term updates and provide better information

for long-term investment

Streamline annual

guidance

Reduce

adjustments

Long-term

perspective


Reducing Adjustments to Improve Transparency

37

Revised Definition(starting in 2020)

Prior Definition

Non-fuel unit cost Excluding fuel and profit sharingExcluding fuel, profit sharing and ancillary

businesses

Free Cash FlowOperating Cash Flow less net Property &

Equipment (adj. for LGA)

Operating Cash Flow

less GAAP Investing Cash Flow

adjusted for LGA and short-term

investments


2020 Guidance Metrics

38

• Total revenue growth

• Earnings per share

• Free cash flow

• Pre-tax margin

• Total revenue growth

• Unit revenue (TRASM)

• Unit cost (CASM-ex)

• Fuel price

• Pre-tax margin

Annual

Focusing on metrics that create shareholder value

Quarterly

Including key performance drivers

Reducing near-term noise and providing a

more long-term perspective

• Ending quarter-end

guidance updates

• Eliminating monthly

traffic

• Moving Investor Day to

June

• Establishing multi-year

targets

• Evaluating enhanced

loyalty disclosure

• Increased insight into

portfolio businesses

39


Evolving Our Approach

Long-Term Focus Better InsightFewer Near-Term Updates

Agenda

40

Commonly Asked Modeling Questions- Revenue disclosures

- Pension update

- Tax update

- Joint Ventures & equity investment accounting

- Profit sharing calculation

- Airport investments

Investor Relations Update- Perception study feedback

- Update on approach to financial guidance

6%

8%

5%

18%

63%

Ancillary and Cargo

Travel Related Services

Loyalty Program

Premium Products

Main Cabin

R E V E N U E D I S C L O S U R E S

Building Durability through Healthy and Diverse Revenue Streams

41In

du

str

y

2019E~$47B

Ge

og

rap

hy

Lo

ya

lty

Corporate Revenue Mix by Sector

Top Sectors

1. Financial Services (15%)

2. Manufacturing (15%)

3. Technology (14%)

Domestic (72%)

Atlantic (15%)

Latin (7%)

Pacific (6%)

Ticket Revenue Mix by Entity

Ticket Revenue Mix by SkyMiles Status

Elite (29%)

General Member (33%)

Non Member (38%)

47%

32%

10%

5%

6%

Note: All figures based on 2019 estimates

2011$35B


Revenue Components of Disclosed Categories

Note: Premium revenue based on cabin flown

Total Revenue

Passenger Revenue (~90% of Total Revenue)

Other Revenue(~8% of Total Revenue)

Travel-Related

Services

Loyalty

Travel Awards

Ancillary and

Refinery

Miscellaneous

LoyaltyTicket

Main Cabin

• Main

• Basic Economy

Ticket

Premium

• Delta One

• Domestic First Class

• Delta Premium Select

• Comfort+

• Mileage redemptions for

travel (includes mileage

upgrades)

• Services related to flight

(bag fees, change fees,

on board sales, co-brand

bag waivers)

• MRO

• Delta Vacation

• Third-party refinery sales

• Sky Club lounge access (includes revenue from co-brand

partner for club access on certain card products)

• Codeshare

• Brand value of mileage

sales under marketing

agreements

• Redemption of miles for

non-travel awards

Cargo(~2% of Total Revenue)

Note: Revenue percentages are a breakout of 2019 estimates

42


Methodology for Revenue Allocation

• Premium revenue growth driven by fleet

transformation, branded fares, and

improved upsell capabilities

• Classification of ticket revenue

determined by cabin flown

‒ Use of miles as payment allocates

portion to loyalty-related revenue

‒ Post-ticketing upgrades shift

original fare to premium ticket

revenue

Revenue Allocation

Purchase ExamplesMain -

Ticket

Premium -

TicketLoyalty

$200 Main Cabin Fare $200 fare

20,000 Mile Main Cabin Fare $200 fare

$250 Premium Fare $250 fare

25,000 Mile Premium Fare $250 fare

$200 Main Cabin Fare and

$50 Upgrade to Premium$200

$200 fare

$50 upgrade

$200 Main Cabin Fare and

5,000 Mile Upgrade to Premium$200 $200 fare $50 upgrade

20,000 Mile Main Cabin Fare and

5,000 Mile Upgrade to Premium

$200 fare

$50 upgrade

20,000 Mile Main Cabin Fare and

$50 Upgrade to Premium$50 upgrade $200 fare

43


Mileage Sales and Recognition in the Financial Statements

Cash from Mileage Sales Agreements

Remainder to Balance Sheet as Deferred Revenue

Recognized in Revenue When Miles are Redeemed

44

Income Statement Recognition:

Category Subcategory

Companion Certificates Passenger Revenue Ticket

Bag Fee Waivers, Priority Boarding Passenger Revenue Travel-Related Services

Brand Value Other Revenue Loyalty

Sky Club Other Revenue Miscellaneous

Operating Expense (contra) Operating Expense Other selling expenses (contra)

Delta Delivers Again in 2017P E N S I O N U P D A T E

Proactively Addressing Pension Obligation

• Impact of lower interest rates on liability mitigated by elective contributions and strong returns

• Expect unfunded liability ~$6 billion at the end of 2019

• Elective contribution of $1 billion in 2019 with $500 million planned in 2020

• Pension relief provides flexibility with no mandatory funding through 2024

• Non-operating headwind from pension in 2019 reversing in 2020

• Expect favorability in year-over-year from pension income driven by strong expected return in 2019

38%

68% ~70%

2012 2018 2019E

Funded Status %

Balance Sheet

Cash Flow

Income Statement

45

5.4x

0.9x 0.7x

2012 2018 2019E

Funded Status as % OCF

Book Tax Rate Estimated CashTax Rate

23-24%

10-12%

T A X U P D A T E

Cash Taxes Expected To Begin in 2021

• Cash tax rate is expected to remain below the

book tax rate for next several years

• Lower cash tax rate reflects:

─ Immediate expensing of asset additions allowed

by Tax Cuts and Jobs Act of 2017

─ Pension funding

• Expect to exhaust NOLs and tax credits in 2020

and transition to a full cash tax payer in 2021 at

a 10% to 12% rate

$17.5 $15.3

$5.9

$2.2

2010 2013 2016 2018

Expected Book vs. Cash Tax Rate

Net Operating Loss Carry Forwards ($B)

46

47

~$3B Joint Venture

10% equity stake in Hanjin-KAL

~$1B Joint Venture

~$11B Joint Venture

9% Equity stake

~$3B Joint Venture

49% Equity stake

Pending ~$1B Joint Venture

Equity Joint Venture

~$1B Joint Venture

47% Voting Interest 3% Equity stake

Expanded JV of ~$13B(Launching January 1, 2020)

Note: WestJet JV subject to government approvals; LATAM JV and equity stake are subject to tender completion and government approvals; Aeromexico is non-


Planned Future ~$2B Joint Venture

Tender Underway for 20% Equity Stake

J O I N T V E N T U R E & E Q U I T Y I N V E S T M E N T A C C O U N T I N G

Delta’s Joint Ventures and Equity Investments


JVs and Equity Investments Create Strong Commercial Cooperation

• Allow close cooperation and provide more

choice for customers

• Sharing of economic benefits drives

customer-focused partner alignment

• Antitrust immunity allows for legal

coordination, forming a fully cooperative

relationship

• Contribution to operating results through JV

settlements

• Commitment to relationship, often reinforced

through board-level participation

• Increased opportunities for best practice

implementation and talent sharing

• Delta’s portion of partner results is

recognized in the non-operating line when

ownership stake is 20% or greater

48

Joint Ventures Equity Investments


Driving Value Through Joint Ventures and Equity InvestmentsBenefits from improved revenues, cost efficiencies and percentage of partner earnings

49

Revenue for Delta-operated flights in JV flow through

passenger revenue

JV settlements flow through other revenue, accrued

quarterly based on full year expected settlements

Delta realizes cost efficiencies through scale & scope –

expenses for DL-operated flights in JV flow through

operating expenses

~50% of net income for Aeromexico and Virgin Atlantic

flows through non-op, giving Delta effectively 75% of the

JV economics

Delta 3Q19

Press Release

Equity changes for <20% stakes are marked-to-market

and flow through non-op, and are excluded from

adjusted earnings


Joint Venture Settlements Balance Profits

($M) Delta Partner Total

Baseline Year Profit (A) 100 60 160

Total Year 2 Profit (B) 250 220 470

Incremental Value (C = B-A) 150 160 310

50/50 Split of Value (D) 155 155 310

Settlement (E = D - C) 5 (5) 0

JV Settlement - Sample Calculation

for a 50/50 Split• Joint venture economics determined by pre-set

baselines, set for each carrier at the start of the

contract

• Current year profits are measured against the

established baseline with incremental profits split

proportionately through a settlement mechanism

• Joint venture settlements are accrued quarterly as

part of other revenue based on full year expected

settlement

• Changes to JV settlement payables / receivables

reflected in Cash Flow from Operating Activities

3Q19 Earnings Press Release:

50

P R O F I T S H A R I N G C A L C U L A T I O N

Understanding Delta’s Employee Profit Sharing Program

• Rewarding employees through profit sharing is a

unifying force

• Eligible profit sharing pool is determined by

Delta’s adjusted pre-tax profits

─ Employees receive 10% of first $2.5 billion of eligible profits and 20% above that

─ Delta incurs employer taxes and other costs which add 2% to 2.5% at 10% level and 3% to 4% at 20% level

• Profit sharing accrual is updated monthly

• Expect 2019 will mark record profit sharing and

6th annual profit sharing accrual over $1 billion

$1.1B

$1.5B

$1.1B $1.1B

$1.3B

~$1.5B

2014 2015 2016 2017 2018 2019E

Annual Profit Sharing

51

Blended Average Profit Sharing Rate

Pre-Tax Income

Revenue $ 44.0B

Expenses (excluding profit sharing) $ 37.8B

Profit Sharing $ 1.2B

Pre-Tax Income $ 5.0B

Profit Sharing Total

$2.5B threshold = $2.5B x ~12.5% $0.3B

Above threshold = $3.7B x ~23.5% $0.9B

Profit Sharing Pool = $6.2B $1.2B

Profit Sharing Pool

Revenue: $ 44.0B

Expenses (excluding profit sharing): $ 37.8B

Revenue – Expenses = Profit Sharing Pool: $ 6.2B

P R O F I T S H A R I N G C A L C U L A T I O N

Impact of Profit Sharing on the Income Statement – Illustrative Example

Profit Sharing Total

Profit Sharing Pool

$1.2B

$6.2B= = ~20%

=

=

Total =

52

• Delta maintains control over project cost

and timeline

• Provides greater control of customer

service and operational disruption

• Costs paid up front or reimbursed by

airport

• Airport usually issues bonds to fund

construction

• Airport recovers costs through rents/fees

over lease term

• Examples: ATL – Delta concourses, LAX

• Delta approaches each construction project individually, working closely with airport partners

• Airports have different structures for how they charge airlines fees and rents

− Landing/flight fees are assessed by aircraft weight and cover airfield-related costs to construct, maintain, and operate runways

and taxiways

− Rents cover the cost to construct, maintain and operate landside assets (primarily terminals and concourses), assessed by

facilities leased, passenger volumes, or other measure of usage

A I R P O R T I N V E S T M E N T S

Delta’s Financial Approach to Airport Investments

• Delta maintains control over project cost

and timeline

• Provides greater control of customer

service and operational disruption

• Cash or debt financing by Delta locks in

ownership costs and avoids periodic rent

increases related to construction/building

• Facility rents decline, depreciation

increases (and interest expense, if

financed)

• Example: LGA

Delta Managed /

Financed

Delta Managed /

Airport Financed

• Airport manages project and usually

finances through bond offerings

• Delta engages with airport to mitigate

potential customer impact from

construction

• Delta has less input on costs, design

• Airport recovers costs through rents/fees

over lease term

• Examples: ATL – Airfield, SLC, SEA

Airport Managed /

Financed

Renovation funding of key airports including ATL, LAX, LGA, SEA, and SLC

53

Documents

Delta Insights · Global Business Energy Technology/Cybersecurity/Digital Risk Management Finance/Accounting ... CFO and President, Enabling Services of The Coca-Cola Company Age: