Delta Airlines Pitch

1. DELTA AIRLINES PITCH: DAL
January 1, 2015

2. AGENDA
CONTENT SLIDE
INDUSTRY OUTLOOK 3
COMPANY OVERVIEW 4
INVESTMENT RATIONALE 5
CATALYSTS 6
RISKS 7
VALUATION 8-9
TARGET PRICE 10

3. INDUSTRY OVERVIEW
MARGINS AND DISPOSABLE INCOME INCREASE SUPPLY AND DEMAND OF OIL BENEFIT DELTA
ValuationCatalysts & RisksInvestment RationaleCompany OverviewIndustry Overview
• 2015 Per capita disposable income: expected to increase. Inbound trips
by non-US residents is anticipated to increase 3.5% per year on average
during the five years to 2019
• Airlines amongst the most vulnerable to global or local shocks
Contingencies include cash reserves, hedging of major risks
• Capacity utilization of the plane (passenger load factors), are predicted
to rise in the next five years as airlines use technology and adjustable
price ticketing to increase loads. Revenue is then bolstered by higher
load numbers
• A large production
increase in oil from the
United States is putting
downward pressure on
oil prices. Jet fuel is
distilled from oil
• OPEC is also refusing to
change production levels
causing a price war to
occur with the United
States
• A decrease in economic
value within Europe and
China are causing a lack
of demand for oil
• Downward pressure is
placed on oil, with a
forecasted growth in oil
demand of only 1% in
2015.
MARKET SHARE OF MAJOR US PLAYERS
SOURCE: IBIS WORLD
Price of Brent Crude Lowest Since 2009
($56.4/BBL)
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4. COMPANY OVERVIEW
BUSINESS OVERVIEW GEOGRAPHIC SEGMENTATION
GROWTH IS STRONG AND RELIABLE
ValuationCatalysts & RisksInvestment RationaleCompany OverviewIndustry Overview
• Delta Air Lines, Inc. provides scheduled air transportation for
passengers and cargo worldwide. It also provides aircraft
maintenance, repair, and overhaul services for aviation and airline
customers, as well as offers staffing services, professional security
and training services, and aircraft management and programs
Headquartered in Atlanta, Georgia.
70% of its revenues
is generated within
North America
Revenue by Geographic Segment
North America
Atlantic
Pacific
Latin America
(20.0%)
0.0%
20.0%
40.0%
60.0%
12 months
Dec-31-2011
12 months
Dec-31-2012
12 months
Dec-31-2013
LTM
12 months
Sep-30-2014
EBITDA Growth in Past 3 Years
EBITDA Linear ( EBITDA)
MANAGEMENT TEAM
Richard Anderson
(CEO)
Paul Jacobson
(E.V.P and CFO)
Gil West
(E.V.P and COO)
25 years of aviation
experience
Continental Airlines
Northwest Airlines
Board member Owen
graduate school
Aviation management
advisory board in Auburn
Laidlaw Transit Services (CEO)
Northwest Airlines
United Airlines & The Boeing
Company.
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5. INVESTMENT RATIONALE
INCREASE IN SEATTLE GATES BOLSTER GROWTH
ValuationCatalysts & RisksInvestment RationaleCompany OverviewIndustry Overview
• Airline companies are looking to expand western U.S hubs in areas
such as Seattle. Delta Airlines is looking to triple its gates at the
Seattle Airport (seeking 30 gates in the long term), challenging
market leader, Alaska Air Group.
5
FLEET RESTRUCTURING IMPROVE MARGINS
Domestic Fleet Restructuring
• Delta Airlines is looking to
replace 50-seaters with fewer,
larger aircrafts, improving
margins through higher
revenues and improved cost
efficiency
• So far this year, capacity
increased by 2%; departures
decreased by 4.5%
DELTA TO PROFIT FROM FALLING OIL PRICES
• Historically low oil costs
reduce fuel prices causing
DAL’s operating costs
forecasted to cut by half
• Airlines are the most oil
price sensitive businesses,
DAL has a competitive
advantage of owning its
own refinery
$2.70
$2.80
$2.90
$3.00
$3.10
$3.20
$3.30
2012 2013 2014E
Average Jet Fuel Price
Delta
Industry (ex
DAL)
HEALTHY GROWTH IN AIR TRAFFIC
• World GDP forecasted to grow 3.2% mainly from emerging markets
• GDP growth is causing forecasted air traffic growth to be 5%

6. CATALYSTS
CHINA VISA DEAL BOLSTERS GROWTH
ValuationCatalysts & RisksInvestment RationaleCompany OverviewIndustry Overview
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• Short-term visa extensions increase air traffic from China to the
United States by 4 times. Creating healthy growth prospects for DAL
as a leading company and its strong efficiency levels
INCREASING CASHFLOWS PROVIDE VALUE
• DAL’s dividend has recently increased by 50% due to successful
operations increasing cash flow
• Announced that there will be $2 billion worth of share buy backs no
later than 2016 increasing shareholder value
• Decreased 2009 $17 billion debt to $7.4 billion within 5 years, signaling
strong cash flow to repay debtsDAL FOCUSES ON US GROWTH
• Delta Airlines will shift most of its capacity growth next year into the
domestic market after a strong performance this year.
• Domestic capacity is expected to grow 3% in 2015, while international
capacity will increase less than a percentage point.
• DAL is one of the strongest airline players in the United States with one
of the highest margins, forcing them to be a primary contender in the
domestic markets.
SOURCE: SEEKING ALPHA

7. RISKS
CHANGE IN JET FUEL PRICES THREATEN GROWTH
ValuationCatalysts & RisksInvestment RationaleCompany OverviewIndustry Overview
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• Delta’s heavy reliance on crude oil and jet fuel prices being low
increase risk if input prices reverses in an upward trend
• Potential crude oil export ban being lifted in the states if oversupply
gets too strong
ADVERSE WEATHER CONDITIONS
• Poor weather conditions can cause air traffic to decrease leading to a
decrease in growth
• Profitability may be harmed as flight delays will occur
STEEL PRICE CHANGES
• With steel being a major input price in planes. A higher steel price may
decrease airline margins in the future.
• Steel demand growth is forecasted to be 2% in 2015
Market Risk Sensitivity Index of Steel

8. VALUATION
COMPARABLES ANALYSIS
ValuationCatalysts & RisksInvestment RationaleCompany OverviewIndustry Overview
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SOURCE: CAPITAL IQ
All values in millions, except per share data and ratios.
Company Comp Set
Market Cap
($MM)
Total Enterprise Value
($MM)
EV/EBITDA
Dividend Unlevered Free Cash
Flow
Passenger
Revenue/ KmsLTM 2015E Yield
American Airlines Group Inc. (NasdaqGS:AAL) 32,312.7 41,503.7 7.3x 4.64x 0.9% 417.3 92,776
United Continental Holdings, Inc. (NYSE:UAL) 21,513.1 28,093.1 7.0x 4.61x - 603.9 90,225
Southwest Airlines Co. (NYSE:LUV) 26,925.8 26,134.8 8.7x 6.35x 0.6% 947.8 45,901
International Consolidated Airlines Group, S.A. (LSE:IAG) 13,727.3 15,074.7 6.0x 3.88x - - 58,206
High 32,312.7 41,503.7 8.7x 6.35x 0.9% 947.8 92,776
Low 3,711.8 5,333.8 6.1x 4.39x 0.6% (140.8) 13,269
Mean 18,362.5 21,582.7 7.2x 4.98x 0.8% 409.5 51,694
Median 21,513.1 26,134.8 7.0x 4.64x 0.9% 417.3 45,901
Delta Air Lines, Inc. (NYSE:DAL) 37,486.6 43,880.6 6.8x 5.44x 0.8% 1,659.6 91,658

9. VALUATION
DCF ANALYSIS
ValuationCatalysts & RisksInvestment RationaleCompany OverviewIndustry Overview
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SOURCE: CAPITAL IQ
WACC CALCULATION
Corporate Tax Rate 35%
Total Equity 12296
Total Debt 10760
Value of Firm 23056
Return of Market 0.08
Risk Free Rate 0.0211
Beta 0.86
Cost of Equity 7.18%
Cost of Debt 2%
WACC 5.00%
Dividend Discount Model
Growth Rate 4%
Discount Rate 6.26%
DDM 96174.39609
Terminal Value 85414.39609
PV of Terminal 52437.0
Enterprise Value -> Equity
PV UFCF $11,893.37
PV of Terminal 52,437.03
EV $64,330.40
Add Cash
Equivalents 4607
Less Debt 15229
Equity Value $53,708.40
Shares Outstanding $825.00
Target Price 65.10
DELTA CASH FLOW PROJECTIONS
FY 2011 FY 2012 FY 2013 FYE 2014 FYE 2015 FYE 2016 FYE 2017 FYE 2018 FYE 2019 FYE 2020 FYE 2021 FYE 2022 FYE 2023
Revenue 31,284.0 32,744.0 33,879.0 35,522.0 38,008.54 40,669.14 43,515.98 46,562.10 49,821.44 53,308.94 57,040.57 61,033.41 65,305.75
EBITDA 3,702.0 4,089.0 5,074.0 6,475.0 6,928.25 7,413.23 7,932.15 8,487.40 9,081.52 9,717.23 10,397.44 11,125.26 11,904.02
Operating Income 2,243.0 2,600.0 3,526.0 4,832.0 5,170.24 5,532.16 5,919.41 6,333.77 6,777.13 7,251.53 7,759.14 8,302.28 8,883.43
Less: Taxes (85.0) 16.0 (8,013.0) (7,163.0) (2,016.4) (2,157.5) (2,308.6) (2,470.2) (2,643.1) (2,828.1) (3,026.1) (3,237.9) (3,464.5)
Add: Depreciation & Amortization
1459 1489 1548 1643
1728.93 1819.35 1914.50 2014.63 2120.00 2230.87 2347.55 2470.33 2599.52
Less: Increase in Working Capital 894 26 (497.0) (683.0) (717.2) (753.0) (790.7) (830.2) (871.7) (915.3) (961.0) (1,009.1) (1,059.6)
Less: Capital Expenditures (1,254.0) (1,968.0) (2,568.0) (2,725.6) (2,874.1) (3,030.8) (3,196.0) (3,370.1) (3,553.8) (3,747.5) (3,951.7) (4,167.1) (4,394.2)
Unlevered FCF 3,257.0 2,163.0 -6,004.0 -4,096.6 1,291.5 1,410.2 1,538.7 1,677.9 1,828.5 1,991.5 2,167.8 2,358.5 2,564.7
PV of UFCF -$3,901.52 $4,654.25 $1,218.16 $1,265.91 $1,314.68 $1,364.48 $1,415.34 $1,467.28 $1,520.32 $1,574.47
Sum of Unlevered FCF $11,893.37
Target Price $65.10

10. TARGET PRICE
RETURNS
ValuationCatalysts & RisksInvestment RationaleCompany OverviewIndustry Overview
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SOURCE: CAPITAL IQ
Price January 2, 2015: $49.18
Capital Gains 32.37%
Dividend Yield 0.73%
Total Implied Return 33.10%
Target Price $65.10

11. THANK YOU
11
Kelvin Li COMM 17