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Published on : Wednesday, May 13, 2015
Delta’s Board of Directors today announced a new $5 billion share repurchase program, to be completed no later than December 31, 2017. In addition, the company’s quarterly dividend will increase by 50 percent to $0.135 per share beginning in the September 2015 quarter. These two programs are expected to return more than $6 billion to shareholders through 2017. The company also announced that it is on track to complete the remaining $725 million of its prior $2 billion share repurchase authorization by June 30.
Delta Air Lines and the Delta Connection carriers offer service to nearly 370 destinations on six continents.
“Today’s announcement marks the next phase of Delta’s long-term capital deployment strategy as we near conclusion of our balance sheet transformation and place even greater emphasis on returning our free cash flow to shareholders,” said Daniel Carp, chairman of Delta’s Board of Directors. “The expansion of our shareholder return program reflects the Board’s confidence in Delta’s ability to sustain and improve upon its strong financial performance.”
Raising the Bar on Shareholder Returns
In an investor presentation this morning, Delta provided an update on its progress against the capital deployment plan announced by the company in May 2014. The company announced plans to drive additional shareholder value by accelerating cash returns to shareholders while strengthening the balance sheet through debt and pension reductions.
“Our long-term plan stays true to Delta’s core values – running the most operationally reliable and customer-focused airline, maintaining the culture that drives our success, and investing in our business,” said Richard Anderson, Delta’s chief executive officer. “Delta continues to raise the bar among industrial companies, leading its peer set in free cash flow generation. Our latest shareholder return announcement underlines Delta’s efforts to build a durable, sustainable franchise that will benefit our customers, employees, and shareholders for many years to come.”
Cash returns to shareholders: The company is on track to complete the remaining $725 million of its current $2 billion repurchase authorization by the end of June 2015, one and a half years ahead of schedule. When this authorization is completed, Delta will have returned a total of $3 billion in dividends and share repurchases since announcing its initial program two years ago. Going forward, the company intends to return at least 50 percent of free cash flow to shareholders through 2017. The new $5 billion repurchase authorization and 50 percent increase to the quarterly dividend approved by Delta’s Board of Directors are expected to return more than$6 billion to shareholders through 2017.
Debt: Delta ended the March 2015 quarter with $7.4 billion of adjusted net debt, a reduction of $2.0 billion since the end of 2013 and roughly $10 billion since the company began its debt reduction efforts in 2009. The company has set a target to achieve and maintain$4 billion of adjusted net debt by year end 2017. This debt level is expected to result in annual net interest expense of ~$200 million, a$1.1 billion reduction compared to 2009.
Pension: Since 2009, Delta has increased its pension plan assets by $1.7 billion, net of $5.2 billion in distributions, through a combination of contributions and asset returns. The company plans to maintain its current $1 billion annual funding level through 2020, with a goal of achieving 80 percent funded status by that date. Delta made a one-time additional $200 million contribution in 2015, for a total contribution of $1.2 billion for the year, to keep the company on track to achieve its 2020 target.
Repurchases under Delta’s program may be made through a variety of methods, which may include open market purchases, privately negotiated transactions, block trades, or accelerated share repurchase transactions in compliance with applicable regulatory guidelines, including Securities and Exchange Commission Rule 10b-18. Purchases will be made subject to market and economic conditions, applicable legal requirements, and other relevant factors.
Delta Air Lines serves more than 170 million customers each year. Delta was named to FORTUNE magazine’s top 50 World’s Most Admired Companies in addition to being named the most admired airline for the fourth time in five years. Additionally, Delta has ranked No.1 in the Business Travel News Annual Airline survey for four consecutive years, a first for any airline. With an industry-leading global network, Delta and the Delta Connection carriers offer service to 327 destinations in 60 countries on six continents. Headquartered in Atlanta, Delta employs nearly 80,000 employees worldwide and operates a mainline fleet of more than 700 aircraft. The airline is a founding member of the SkyTeam global alliance and participates in the industry’s leading trans-Atlantic joint venture with Air France-KLM and Alitalia as well as a newly formed joint venture with Virgin Atlantic. Including its worldwide alliance partners, Delta offers customers more than 15,000 daily flights, with key hubs and markets including Amsterdam, Atlanta, Boston, Detroit, Los Angeles, Minneapolis/St. Paul, New York-JFK, New York-LaGuardia, Paris-Charles de Gaulle, Salt Lake City, Seattle and Tokyo-Narita. Delta has invested billions of dollars in airport facilities, global products, services and technology to enhance the customer experience in the air and on the ground.
Source:- Delta Airlines
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