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2015 Delta Investor Day Presentation

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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 rebalancing our hedge portfolio, recording mark-to-market adjustments or posting collateral in connection with our fuel hedge contracts; the possible effects of accidents involving our aircraft; the restrictions that financial covenants in our financing agreements will have on our financial and business operations; labor issues; interruptions or disruptions in service at one of our hub or gateway airports; disruptions or security breaches of our information technology infrastructure; our dependence on technology in our operations; the effects of weather, natural disasters and seasonality on our business; the effects of an extended disruption in services provided by third party regional carriers; 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 management and key employees; competitive conditions in the airline industry; the effects of extensive government regulation on our business; the sensitivity of the airline industry to prolonged periods of stagnant or weak economic conditions; the effects of terrorist attacks or geopolitical conflict; 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 Dec. 31, 2014. Caution should be taken not to place undue reliance on our forward-looking statements, which represent our views only as of Dec. 17, 2015, and which we have no current intention to update. In this presentation, we will discuss certain non-GAAP financial measures. You can find the reconciliations of those measures to comparable GAAP measures on our website at delta.com. 2


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Delta: A High-Quality Company Richard Anderson Chief Executive Officer


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A High-Quality Company America’s Best Run Airline Consistently Producing High-Quality Returns and Cash Flows Sustainably and Durably Growing Our Business A high-quality company uniquely positioned among the S&P Industrials Raising the Bar on Our Performance 4


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Delta: Evolution Over The Past Decade Through consolidation, innovation and capital discipline, Delta is uniquely positioned among highperforming S&P industrial companies Consolidation • Reallocating capacity and leveraging scale to produce better revenue efficiency • Revenues have increased ~20% on 20% fewer departures, 4% fewer seats and 12% fewer aircraft since the merger High-Quality Product • Investments in network, products and services in addition to highly motivated employees drive Delta’s industry leading operational reliability, customer satisfaction and 14% domestic unit revenue premium Sustainable Earnings & Cash Flow • Top-line growth, non-fuel cost productivity and lower interest expense producing margin and earnings expansion • $4-5 billion annual free cash flow driving progress towards investment grade balance sheet and increasing cash returns to shareholders Capital Efficiency • Managing to a 20%+ annual ROIC target as capacity growth is driven by seat-density and upgauging rather than incremental aircraft purchases • ROIC has improved ~27 points since merger Delta’s ROIC, Free Cash Flow and EPS growth are in the top 10% of S&P Industrials 5


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Managing Business To Long-Term Goals • • Balanced, metric-driven approach producing strong results for shareholders that are consistent with high-quality industrial companies Since introducing goals in 2013, Delta has consistently outperformed and then raised longterm targets at our May analyst meeting 2015E Results 2013 Goals 2014 Goals 2015 Goals 2015E Results Operating Margin 10-12% 11-14% 14-16% ~16% Operating Margin EPS Growth 10-15% 10-15% 15% + 35%+ EPS growth – #4 in S&P Industrials ROIC 15% + 15-18% 20-25% 28% Return on Invested Capital – Top 25% in S&P Industrials Cash Flow $5B+ op cash flow $6B op cash flow; $3B FCF $7-8B op cash flow; $4-5B FCF Nearly $4B of Free Cash Flow – #7 in S&P Industrials Balance Sheet $7B Adj. Net Debt by 2015 $6B Adj. Net Debt by 2016 $4B Adj. Net Debt by 2020 Adjusted Net Debt Below $7B All results exclude special items; Delta ROIC reflects benefits of NOLs 6


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Changing Investor Perception Despite record results and an improving financial profile, Delta’s multiple has remained at a discount to industrials as investors still ascribe significant risk to the airline’s earnings and cash flows Can the airline industry overcome its history? Are Delta’s earnings and cash flows sustainable throughout the business cycle? How successful has Delta been at retaining the fuel benefit and where have those savings been invested? 7


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Opportunity Ahead For Investors Delta’s stock represents an opportunity for investors to purchase a high-quality industrial at an attractive valuation Consistently producing highquality returns and cash flows… …While valuations remain at a discount ROIC - 3 Year Average Forward Price to Earnings 22.4% 14.3x 21.3% 15.6x 9.5x 18.9% Delta High-Quality Ind. S&P Industrials Transports Delta High-Quality Ind. S&P Industrials Transports Free Cash Flow - 3 Year Average Forward Price to Free Cash Flow $3.1B 19.5x $1.2B Delta $1.5B High-Quality Ind. S&P Industrials Transports 16.8x 8.2x Delta High-Quality Ind. S&P Industrials Transports High quality industrial transports are companies with similar index characteristics to Delta – part of S&P 500 and Dow Transportation Index (CHRW, CSX, EXPD, FDX, KSU, NSC, R, UNP, UPS); For both peer groups, ROIC and free cash flow are the 2013-15E (cons.) average. Data source is FactSet; Delta ROIC & P/E reflect benefit of NOLs; P/E is as of 12/15/15; Adjusted for Special Items 8


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Leveraging Delta’s Solid Foundation Ed Bastian President


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Leveraging Delta’s Solid Foundation Using Delta’s solid foundation to produce consistent, sustainable results for shareholders while developing longer-term growth opportunities Consistently Producing Solid Results • Running a reliable, customer-focused airline is producing record profits and returns, allowing for improved balance sheet strength and increased capital returns to shareholders Positioned to Grow Earnings and Cash Flow in 2016 • Fuel tailwind, modest capacity growth and success with commercial and cost initiatives provide solid earnings momentum into 2016 International is Key to Long-Term Growth • Delta’s unique approach to international partnerships enhances long-term earnings growth opportunities 10


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Meeting Our 2015 Commitments Solid execution across the business leads to a record year for Delta What We Said Investor Day 2014 2015 Accomplishments • Run a reliable, customer focused operation • Industry’s best operational performance, including 173 100% mainline completion factor days (6x more than entire industry combined) and 86%+ on-time rate • Improve on all aspects of our financial performance • $5.8 - $5.9B of pre-tax income, a $1.3B increase over 2014, a 28% ROIC, up 7.5 points year over year, and EPS growth of over 35% • Drive higher revenue through better customer segmentation • Branded Fares delivered $250 million in incremental revenue over 2014, contributing to Delta’s 14% domestic unit revenue premium • Enhanced agreement with American Express driving momentum with $2 billion co-brand revenue stream • Strong partnership with American Express delivered over $400 million in benefit in 2015 • Drive majority of fuel savings to the bottom line • Successfully retained 75% of fuel benefit • Maintain non-fuel unit cost growth below 2% • Kept non-fuel unit costs flat to 2014 • Run company on investment grade metrics • 3 upgrades by ratings agencies in 2015 – S&P and Fitch have Delta one notch below investment grade • Return at least 50% of free cash flow to owners – a minimum of $1.5 billion • $2.6 billion in total capital returns, ~70% of 2015 free cash flow All results exclude special items; ROIC reflects benefit of NOLs 11


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Completing Another Record Year in 2015 December quarter caps a successful year of top line growth, margin expansion and free cash flow generation • Solid demand environment, along with winter capacity actions, combined to produce unit revenues above initial guidance range • Results include $75 million write-off of Venezuelan currency and $60 million early hedge settlements December Quarter 2015 Forecast Operating margin PRASM change year over year Fuel price 16.5 – 17.5% Down ~2% $1.82 - $1.87 CASM – Ex Fuel change year over year Up ~2% Non-operating expense $200M System capacity change year over year Fuel price includes taxes, settled hedges, refinery contribution and excludes MTM adjustments; Guidance excludes special items Flat 12


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Consistently Producing Solid Results Running a reliable, customer-focused airline is producing stronger returns, allowing for improved balance sheet strength and increased return of capital to shareholders Return on Invested Capital 28% Capital Returns To Shareholders Adjusted Net Debt $9.4B $7.3B 21% $2.6B $6.8B 15% $1.35B $350M 2013 2014 2015E 2013 2014 2015E 2013 2014 2015E Foundation in place to produce high-quality, sustainable returns for shareholders All results exclude special items 13


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Looking Ahead To 2016 Delta is well-positioned to maintain its industry leadership position in 2016 Across the Industry At Delta • Global GDP growth estimated at 2-3% with domestic 3% and international 2% – Domestic demand expected to remain solid; international markets mixed • Top line growth, fuel savings and sustained cost discipline drive 5th consecutive year of margin expansion. 1Q16 operating margin forecasted to grow ~8 points to 16-17% • Increasing headwinds from rapid growth of ULCCs in domestic markets • Continued capacity efficiency – 0-2% system capacity growth produced with fewer aircraft • International revenues under pressure from the strong dollar, competitive capacity growth, and global economic uncertainty • Nearly $3 billion fuel savings on lower year over year market fuel prices and lower hedge losses • GBTA expects corporate travel spend to increase 3.7% • All-in market jet fuel price of ~$1.40, ~$0.35 lower than 2015 • Low fuel prices, solid demand environment and modest capacity growth combining to produce more durable earnings and cash flows across the industry • High debt levels as most carriers remain highly levered throughout the business cycle • Focused on pushing fuel benefit to bottom line and regaining momentum in unit revenues • Disciplined cost performance keeps non-fuel unit cost below 2% annually • Strong operating cash flow allocated between reinvestment in the business, further balance sheet improvement, and capital returns to shareholders – Balance sheet approaching investment grade • Highest free cash generation in the industry with commitment to return at least 50% to shareholders 14


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Positioned To Grow Earnings And Cash Flow In 2016 Modest capacity growth, fuel tailwind and momentum with commercial initiatives provide Delta with solid earnings momentum going into 2016 • System capacity growth of 0-2% - appropriate level to balance capital investment and supply and demand, while also ensuring progress toward our long-term financial targets – 2016 growth focused on markets with strong demand (US, UK, Mexico, Caribbean) with offsetting reductions in weaker markets (Brazil, Japan, Middle East) – Leveraging investments in network, products, and operations to expand domestic revenue premium • Fuel provides nearly $3 billion tailwind at current crude market price of $40/barrel – Successfully retained ~ 75% of the fuel savings to the bottom line in 2015 • Strong momentum with commercial initiatives – Domestic fleet initiatives improving efficiency and margins in our largest entity – Solid growth in corporate volumes through share gains – Pacific restructuring efforts have improved Pacific margins by 6 points in last year Delta fuel prices include taxes and transportation costs, and the impact of hedges and the refinery 2016 Capacity vs Prior Year 1-3% 0-2% Flat – (2%) System Domestic International Realized Jet Fuel Price $2.87 $2.23 ~$1.45 2014 2015E 2016E 15


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Strong Momentum With Corporate Travelers Leveraging operational reliability and network/service investments to gain corporate share Corporate travelers are recognizing Delta’s high quality product and service… …Resulting in solid increases in volumes this year Business Travel News Survey YTD Ticket Volumes vs Prior Year 1 1 1 1 1 Financial Services 9% 5% Transportation 5 2009 2010 4% Health Care 4 2011 2012 2013 2014 2015 Business Services 4% 3% Media 2016 Morgan Stanley Global Corporate Travel Survey Footprint Lift Product Reliability Price 2016 Delta Delta Delta Delta Delta 2015 Delta Delta Delta Delta Delta 2014 United United/Delta Delta Delta 3% Technology Delta Automotive Other Total Source: Alphawise, Morgan Stanley Research 2% 2% 4% 16


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Delta Has A Proven International Model Equity investments, immunized joint ventures and strong commercial cooperation mimic benefits of cross-border consolidation Delta has a proven model with two principles at the core of our international strategy: Top 10 U.S. 48 – International Markets (2014 Revenues) • Immunized joint ventures allow closest cooperation between airlines, providing higher quality options for customers and producing better profitability – Existing joint ventures with Air France/KLM, Virgin Atlantic, and Virgin Australia encompass more than 270 daily flights and $14.5 billion in annual revenues – Application for anti-trust immunity with Aeromexico submitted. Expect approval to launch $1.5 billion joint venture in 2016 – Open Skies coming with Brazil UK • Equity investments are capital efficient means to expand and diversify Delta’s network into high-revenue and high-growth markets at a quicker pace than organic growth – With equity stakes in Virgin Atlantic, China Eastern, Aeromexico, and GOL, Delta is the only US carrier to have ownership interests in every international region $7.7B China $7.4B Canada $4.7B Mexico $4.4B Germany $4.3B Brazil $4.1B Japan $3.9B France $3.8B India Italy $3.3B $3.0B Equity partner and/or joint venture Delta hub 17


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Transatlantic Providing Industry Leading Returns Improved joint venture performance key to further gains in the Transatlantic Air France/KLM Joint Venture is the Model • Long-standing AirFrance/KLM joint venture is the most integrated and advanced commercial partnership in the airline industry. Delta leveraged this structure with Virgin Atlantic JV • AF/KL and Virgin JVs cover over 15% of Delta’s passenger revenue and produce margins above system average Maturation of Virgin Atlantic Joint Venture • Successful joint venture with Virgin Atlantic now entering its third year • Coordinated commercial and marketing efforts in London aimed at premium travelers • Additional benefits from Virgin Atlantic’s network and fleet initiatives accrue to Delta through the 49% equity stake Globalize Delta’s Business Operations • Opportunity to further improve effectiveness of JV partnerships by moving decision making for Delta’s transatlantic entity to Amsterdam-based organization • Co-location of Delta employees with JV counterparts will accelerate intended benefits of the joint ventures • Strong global brands require local decision making capabilities 18


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Pacific Restructuring Improving Margins Early efforts have restored profitability of Narita hub, improved Pacific margins by 6 points • First phase of Pacific restructuring has been successful – Entity margins have increased by 6 points over last year, with Narita hub restored to profitability despite $160 million Yen headwind 2016 Pacific Capacity vs. 2015 5 - 7% (4%) – (6%) • Downgauging better matches capacity with demand, allows for full retirement of 747 fleet, effectively lowering seat cost • Leveraging strength of US hubs for direct Asia connections – Continue to build out Seattle hub while improving Pacificfocused feed for other US hubs • China to become second key pillar of Delta’s Asia-Pacific franchise – China has surpassed Japan as the largest Transpacific market from the US and future growth is expected to come from China – Delta’s partnership and ownership stake in China Eastern combines Delta’s leading US network with China Eastern’s large China domestic network, including its hub in Shanghai Total Pacific (3%) (8%) – (10%) Japan China Other US-China Daily Passengers (each way) China POS US POS 4,260 3,859 3,495 9,184 2,952 4,254 6,251 2,016 2010 % China ~40% POS 2015 2020E 2025E ~70% 19


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A Growing Force In Latin America Focused on maximizing value of partnerships while driving value from Delta’s network, product and service investments Leveraging Delta’s Latin Investments • Recognized as US airline with greatest brand momentum but working aggressively to build preference and awareness • Focusing capacity growth on stronger-performing USD-driven markets (Mexico and Caribbean) with offsetting reductions in weaker markets (Brazil) Strengthening GOL as an Airline and a Partner • Increased ownership stake in GOL and guaranteed financing as part of GOL’s plan to improve liquidity • Implementing enhanced commercial cooperation with GOL • Supporting GOL’s restructuring efforts Building a Deeper Relationship with Aeromexico • Approval for anti-trust immunity and joint venture expected in 2016 • Recently announced intention to increase ownership in Grupo Aeromexico to up to 49% through tender offer 20


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Expanding Partnership With Aeromexico New investment demonstrates Delta’s confidence in Mexico’s future • Mexico is the largest US market in Latin America and its economy is well positioned for the future – Open Skies is expected to be approved in 2016 and Delta has already applied for ATI with Aeromexico – The increased ownership stake will help Delta to accrue benefits through improved level of coordination Mexican Domestic Seat Capacity 35% 25% 25% 12% • US – Mexico transborder volume has increased over 20% in the last two years – Open Skies likely to drive further expansion • Delta intends to increase ownership stake in Grupo Aeromexico to up to 49% through a cash tender offer – Delta and the Delta pension trust own shares and hold derivatives covering approximately 17% in Grupo Aeromexico – ~$750 million capital investment is subject to regulatory approvals and tender offer would likely commence in the June quarter Transborder Market Share 26% 24% 23% 14% 12% + 21


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Leveraging Delta’s Solid Foundation Using Delta’s solid foundation to produce consistent, sustainable results for shareholders while developing longer-term growth opportunities Consistently Producing Solid Results • Running a reliable, customer-focused airline is producing record profits and returns, allowing for improved balance sheet strength and increased capital returns to shareholders Positioned to Grow Earnings and Cash Flow in 2016 • Fuel tailwind, modest capacity growth and success with commercial and cost initiatives provide solid earnings momentum into 2016 International is Key to Long-Term Growth • Delta’s unique approach to international partnerships enhances long-term earnings growth opportunities 22


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Running A Reliable, Customer-Focused Operation Gil West Chief Operating Officer


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Delivering Top Tier Operational Results Top of Industry Operational Performance – YTD November DOT Completion Factor DOT Missed Bag Ratio Alaska 99.6% Delta jetBlue 99.6% Delta United 98.8% United Southwest 98.7% Southwest American 98.4% Alaska jetBlue 98.3% Alaska 96% 97% 98% 99% 80.0% United 3.39 78.1% jetBlue 3.92 76.6% 70% 75% American American United 0.68 United Southwest 0.79 Southwest 1.14 0.5 1.0 80% 85% 90% Real On-Time (A0) 71.2% Alaska 0.35 0.0 American 3.28 80.0% Delta 0.16 Alaska Southwest 3.18 1.5 2.0 2.5 3.0 3.5 4.0 4.5 100% 0.02 Delta 86.1% 2.09 Involuntary Denied Boarding (IDB) jetBlue 86.3% Delta 1.79 American 95% DOT On-Time (A14) jetBlue 60% 66.6% 63.7% 62.9% 62.3% 61.8% 65% 70% 75% 24


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Driving Core Reliability Performance TechOps YTD Performance TechOps Leverage • 45% reduction in mechanical cancellations vs. record breaking 2014 Maintenance Cancellations – YTD • • • • • • Superior execution skills Expanded maintenance footprint Growing internal maintenance capabilities Serviceable levels Reliability projects Leverage Cargo’s improved Dash performance • Big data/predictive maintenance 100% Completion Factor Days – YTD +635% 147 (93%) 2,999 72 1,169 723 393 224 2011 2012 2013 2014 2015 DL 197 173 13 2013 AA+UA+WN 95 20 2012 Domestic 100% CF Days - YTD 2014 2015 2014 31 YTD October 2015 25


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Keeping Cost Down Maintenance Expense Delta preserves its relative strength in maintenance, leading network carriers in CASM, despite the highest average fleet age and complexity in the industry Maintenance Cost Per Seat Block Hour ($) – Last 12 Months Ending June Qtr ‘15 5.78 Ind Avg 5.2 4.48 5.16 4.68 4.88 WN YOY Change H/(L) Avg Aircraft Age DL B6 UA AA (3.0%) (4.8%) (0.8%) (5.5%) 4.2% 12 17 8 13 12 Best Reliability at Lowest Unit Cost 26


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Improving the Customer Experience Customer Surveys • • • • Awards and Recognition • Top Airline by Business Travel News for 5 consecutive years • Most Admired Airline for the 4th time in 5 Years by Fortune Magazine • Reservation Sales Earns J.D. Power Certification for 2nd Consecutive Year • 2nd Place in J.D. Power Customer Satisfaction Survey • 11 Stevie Awards Recognizing Reservations for Outstanding Customer Service Sophisticated customer surveys Driving record performance R&D service concepts Leveraging Technology and Analysis Product • • • • • Interior upgrades Food and beverage improvements Entertainment on demand Wi-Fi Airport investments Flight Attendant Interaction - YTD Domestic Net Promoter Score - YTD (5 = Excellent) 4.28 4.34 4.38 27.2% 31.1% 33.5% 37.8% 92.2 94.4 88.1 77.7 4.14 2012 Cabin Maintenance Audit - YTD (3rd Party Audit Score: 100 = Excellent) 2013 2014 2015 2012 2013 2014 2015 2012 2013 2014 2015 27


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Our Culture Fuels Our Success Joanne Smith Chief Human Resources Officer


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Our Culture Fuels Our Success Our Rules of the Road is the foundation of what makes Delta unique and drives our culture of open and honest communication – it is our strategic competitive advantage. OUR FOUNDATION + + KEY PERFORMANCE INDICATORS = AMERICA’S MOST AWARD-WINNING AIRLINE = 29


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Balanced Investment Mindset Balanced approach to capital deployment has driven significant value for all stakeholders All Stakeholders Share In Our Success Employees • Receive competitive pay and benefits, in addition to profit sharing and retirement contributions Customers • Benefit from investment in our fleet, products, technology and facilities which improve the customer experience and build brand loyalty Investors • Benefit from increased shareholder value including debt reduction and cash returns Make Delta an airline CUSTOMERS want to fly - Reliable, customer-focused operation - High-quality products and service Make Delta a great place to work for EMPLOYEES - Job stability with solid wages, benefits and profit sharing - Engaged employees motivated to generate results Make Delta a great investment for SHAREHOLDERS - Solid returns on invested capital - Balanced capital deployment 30


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Engaged Employees Purposeful about Maintaining Culture Empower & Engage Annual Employee Survey Planned and organic engagement drives commitment with Delta’s: • Culture of Celebration - Profit Sharing & Chairman’s Club • Focus on developing business acumen – Speaker Series & Network Groups • Follow through on commitments and goals – we walk the talk • Servant leadership mindset that drives our team 88.3% 85.5% 84.3% 81.0% 2012 2013 2014 2015 2015 Employee Engagement scores at an all-time high 31


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Driving Our Revenue Momentum Glen Hauenstein Chief Revenue Officer


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Driving Our Revenue Momentum Leveraging our strengths to produce further revenue gains Making Targeted Network Investments • Focus domestically on large population centers representing rich revenue pools that can be served efficiently with larger aircraft • Internationally make investments in the most promising, highgrowth geographies with strong, aligned partners Upgauging Fleet for Efficient Domestic Growth • Continue upgauging the airline over the next five years to capture seat cost efficiencies • Maintain or grow relative unit revenue while upgauging • Use seat density projects as an opportunity to enhance the customer experience Expanding Ancillary Revenue Through a Tailored Customer Experience • Enhance segmentation through further product differentiation, customized messaging and monetizing willingness to pay • Invest to increase the range and quality of segmented products available to customers • Grow optional service revenue per passenger to capture a larger portion of travel spending 33


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Flying To The Right Destinations With The Right Product Optimize capacity by focusing on hub strengths to serve high-revenue markets over short, intermediate and long time horizons International Domestic • Over the short to intermediate term, capitalize on leading unit revenue position • Richest source of growth over the intermediate to long term • Focus on serving major population centers with the largest revenue pools using more efficient, larger-gauge aircraft • Largest opportunity for improvement given relative PRASM compared to domestic • Continue to develop Los Angeles, New York and Seattle as premiere domestic hubs and international gateways • Recent expansion with high-quality local partners in London, Mexico, Brazil and China Delta Passenger Unit Revenue versus A4A Average - YTD September 2015 114.4% 107.0% 101.2% Domestic Atlantic 98.2% 98.8% Latin Pacific System 34


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Unique Fleet Strategy Is Cornerstone To Successful Domestic Growth Domestic fleet initiatives producing a more cost effective fleet with higher customer satisfaction and lower capital cost • Larger aircraft allow for a better customer experience and drive higher customer satisfaction – More product differentiation with First Class and Delta Comfort+ products unlock value in Branded Fares $150 Unit Cost Upgauge Benefit 750 mi Stage | $2.25 Fuel Small RJ $125 Cost per Seat • Increasing average seats per departure by an additional 5-7% between 2015 and 2020 – more efficient capacity production drives margin expansion and unit cost productivity – Continued retirement of 50 seat aircraft – expect fleet to be at 125 aircraft by 2016 – Seat density projects on nearly 300 aircraft over next five years -12% -8% $100 -9% Large RJ 100-110 Seat $75 -8% Small Narrowbody $50 40 60 80 100 120 140 160 180 200 Aircraft Seat Count Aircraft Customer Satisfaction Scores (5 = Excellent) 4.30 • Mix of new and used aircraft keeps ownership costs low, allows flexibility to quickly and efficiently adjust capacity levels – Recent transaction for 20 737-900ER and 20 E190 aircraft is latest example of Delta’s unique approach Large Narrowbody 4.10 757-200 4.27 4.11 757-300 ~180 seats to 199 seats 224 seats to 234 seats Before Modification After Modification 35


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Driving Higher Revenue With Improved Customer Segmentation Branded Fares on track to reach 2018 revenue goal of $2.4 billion, $1.5 billion increase over 2014, with 2015 revenue up nearly 30% year over year • Completed the rebranding of Delta One, Delta Comfort+ and Main Cabin • Basic Economy being offered in more than 450 markets, including pilot testing in every international entity, compared to 53 markets at year-end 2014 • In November 2015, enabled Delta Comfort+ purchase as a distinct fare rather than an add-on, allowing its purchase earlier in the shopping process Future Initiatives Branded Fares Revenue: 2014-2018 • More seats – Over the next three years, Comfort+ seats will increase by ~30%, First Class by ~10% • More effective distribution – Full availability of branded products: – Initial shopping – Post purchase – Mileage redemption opportunities • Expanding Basic Economy – Continuing expansion of Basic Economy, including testing in longhaul markets $1.5B $2.4B $1.2B $0.9B 2014 2015E Branded Fares revenue expected to approach $2.5 billion by 2018 2018E 36


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Maximizing The Value Of Our Premium Cabins Since 2013, we have demonstrated significant progress increasing paid load factors and upsell revenue for First Class and Delta Comfort+ with more upside to come First Class Delta Comfort+ First Class Paid Load Factor Delta Comfort+ Paid Load Factor ~70% ~50% 57% 34% 45% 2013 2015E 2018 Goal 36% 2013 2015E First Class Seats ~10% 2018 Goal Delta Comfort+ Seats ~30% 21,000 18,600 19,300 28,000 21,500 18,200 2013 2015E 2018 Goal 2013 2015E 2018 Goal 37


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Creating Distinct Products That Are Easy To Understand And Buy Continued upsell revenue growth by defining clear product value propositions that are easy to purchase and segmenting customers into the products they value Product Availability Product Positioning and Visual Merchandising • Make products easier to buy across Delta rd • channels and Delta preferred 3 party channels Develop distinct value propositions • Actively market to specific customer segments for each product so customers have • Clearly display products and relative price • Introduce product modals that enable a clear understanding of value propositions a clear understanding of which product is best for their travel experience • Invest in core products to create high-value, differentiated experiences 38


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Opportunity To Capture A Greater Portion Of Travel Spend Delta will keep investing to further segment customers and continue to offer best in class products that are easy to purchase for our ~180 million customers Growth in Optional Service Revenue per Passenger Through Segmentation. . . Optional Service Revenue per Passenger . . . Enables Delta To Capture a Larger Portion of Travel Spend Business Travel Spend by Category $15.00 80% Airfare 18% Ground Transportation 15% 30% $8.30 Other 25% $6.35 Lodging 22% Food 20% 2013 2015E 2018 Goal Source: Global Business Travel Association Optional Service Revenue per Passenger includes First Class products, Delta Comfort+, Basic Economy, Preferred Seats, Sky Club, Buy on Board, Priority Boarding, Trip Insurance, Hotel/Rental Car Purchases. This revenue excludes baggage fees, cancellation/change fees, and any SkyMiles/loyalty revenue. 39


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Delivering Sustainable Financial Results Paul Jacobson Chief Financial Officer


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Delivering Sustainable Financial Results Strong cost execution and a disciplined capital strategy are driving sustainable financial results and will ensure Delta is well positioned throughout the business cycle Strong Cost Execution • Non-fuel unit cost growth is expected to remain below 2% over the long-term • Delta’s productivity pipeline remains robust Capital Efficient Investment Strategy • Capital expenditures at ~50% of operating cash flow annually support our fleet, product, facility and technology initiatives • Investments are high return opportunities to drive significant long-term value for shareholders Balanced Capital Deployment • Balance sheet de-risking has resulted in significant ratings improvement • Capital allocation strategy will continue to result in at least 50% of free cash flow being returned to investors 41


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Managing Business To Long-Term Goals • • Balanced, metric-driven approach producing strong results for shareholders that are consistent with high-quality industrial companies Since introducing goals in 2013, have consistently outperformed and then raised long-term targets at our May analyst meeting 2015E Results 2013 Goals 2014 Goals 2015 Goals 2015E Results Operating Margin 10-12% 11-14% 14-16% ~16% Operating Margin EPS Growth 10-15% 10-15% 15% + 35%+ EPS growth – Ranking Delta #4 among S&P Industrials ROIC 15% + 15-18% 20-25% 28% Return on Invested Capital – Top 25% among S&P Industrials Cash Flow $5B+ op cash flow $6B op cash flow; $3B FCF $7-8B op cash flow; $4-5B FCF Nearly $4B of Free Cash Flow #7 among S&P Industrials Balance Sheet $7B Adj. Net Debt by 2015 $6B Adj. Net Debt by 2016 $4B Adj. Net Debt by 2020 Adjusted Net Debt Below $7B All results exclude special items; Delta ROIC reflects benefits of NOLs 42


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Solid Cost Opportunity Pipeline The productivity pipeline remains robust and will allow Delta to maintain non-fuel unit cost growth below 2% annually • Delta expects non-fuel unit cost growth to remain below 2% including profit sharing at its base earnings per share growth target of 15% • Leading operational efficiency and reliability drives unit cost productivity • • • Upgauging and refleeting initiatives will continue to deliver benefits for several more years. – Upgauging: Modifications on ~20% of the fleet are in the early innings – Refleeting: Retirement of 747s, older 757s and domestic 767s continue and will drive an additional $350 million in savings in 2016 2016 maintenance benefit expected to be ~$400 million – Purchased 46 aircraft or engines for green time or part-out in 2015 and expect to materially expand this effort in 2016 – Payback on surplus aircraft / engine purchases is generally within 12 months Non-Fuel Unit Cost Growth 4.6% up ~1.5% with profit sharing 2.4% <2.0% 0.2% 2012 2013 2014 ~flat 2015E 2016E Continue to leverage technology investments as well as our scale with suppliers to drive cost productivity Excludes special items 43


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Fuel Tailwind To Continue In 2016 Delta expects financial momentum to continue, even assuming fuel prices above the forward curve • Second year of lower market fuel prices contributing to nearly $3 billion incremental fuel savings in 2016 • Hedge strategy focused on cost efficient opportunities to minimize volatility Delta Jet Fuel Prices $3.07 • Relative to prior years, hedges are now shorter in duration with a smaller percentage locked-in over the near-term – providing flexibility over the course of next year – Delta is currently 5% hedged with ~90%-100% downside participation to $40 per barrel $2.87 $2.23 ~$1.45 • The hedge loss for next year is currently expected to be ~$500 million 2013 YoY: 2014 (6%) (7%) 2015E (22%) 2016E ~(35%) • The refinery provides Delta with a competitive advantage and will contribute ~$300 million in profits in 2015 – Reduces our all-in jet fuel price relative to the market by ~5-10ȼ – Logistics expertise creates opportunities to drive efficiency and value through the fuel supply chain – Lower crack spreads are a net positive for Delta despite being a headwind for refinery profits Delta fuel prices include taxes and transportation costs, and the impact of hedges and the refinery 44


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Business Opportunities Will Reduce Cash Taxes Delta currently expects to fully utilize its $9 billion of NOLs and be a cash tax payer by early 2018 • Business initiatives will result in lower book and cash taxes – Excess pension funding reduces taxable income – Accelerated depreciation on long-lived assets will result in taxable income being below book income for several more years – Transatlantic business reorganization will lower the book tax expense and cash taxes • Delta should achieve its debt reduction target at roughly the same time it will begin paying cash taxes – Cash required for debt will largely be for interest payments by 2018 – Debt funding including interest and repayments will have been reduced by over $2 billion since 2014 Net Operating Loss Carry Forwards $15.3B $12.0B $9.3B 2013 2014 2015E • 2016 book tax rate is estimated at 35-36% 45


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Balanced Capital Deployment Drives Value Balanced approach to capital deployment is driving significant value for shareholders Reinvest In The Business • ~50% of operating cash flow to be reinvested in the business • Allows for replacement of ~20% of Delta’s mainline fleet from 2016-2018 • Strategic investments in international airlines allow for capital efficient growth Strengthen The Balance Sheet • More than $10 billion in debt reduction since 2009 • Progress toward investment grade metrics evident in four S&P upgrades and three Moody’s upgrades since May 2013 • Current S&P and Fitch ratings one notch away from investment grade • Committed to ~$1 billion per year in pension funding Return Cash To Shareholders • Announced $5 billion repurchase authorization through 2017 in May 2015 • Delta has now returned more than $4 billion and repurchased ~9% of the outstanding shares of the company since 2013 • Will return at least 50% of free cash flow to shareholders over the next two years Expect to produce over $20 billion in operating cash flow from 2015-2017 46


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Capital Efficient Investment Strategy Disciplined reinvestment in the business drives long-term growth opportunities and superior returns on invested capital 2015 Consensus Capex/Sales • Delta will spend $3 billion on core growth initiatives in 2016 including the capital investment it is making in Delta Material Services (DMS) – Allows for the replacement of 20% of the Delta mainline fleet between 2016-2018 - including widebodies needed for Pacific restructuring – DMS is a high return investment (historically partout transactions ROIC >30%) that will drive significant productivity savings • Delta will invest ~$750 million in Grupo Aeromexico in 2016, increasing its ownership stake in its Mexican partner to ~49% – Strategic investments in global partners allows for capital efficient expansion in high growth international markets • Maintain diversified fleet strategy consisting of new and opportunistic purchase of used aircraft – Lower aircraft ownership cost, combined with Delta’s leading reliability and our lower maintenance unit costs, drive strong ROIC Capital expenditures are a 2013-2015 average 14.8% 11.2% 6.2% Delta 6.0% High-Quality S&P Industrial Industrials Transports Airline Average LTM 3Q15 Pre-Tax ROIC 41.0% 26.3% UPS DAL 22.6% 20.5% UNP CNP 16.3% 16.3% 13.9% CSX FDX NSC 47


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Proactively Managing Our Pension Obligations Pension contributions are well above required levels and will allow for an 80% funded status in 2020 at current interest rates Pension Funding • Delta plans to continue contributing ~$1 billion annually to the pension plan through 2020 • Rising interest rates will allow Delta to achieve its pension targets sooner – A 50 basis point increase in the discount rate reduces the pension liability by $1.4 billion – Assuming discount rates rise 200 basis points, pension would be fully funded by 2020 • Funding pension at more than the required rate helps lower future mandatory contributions and pension expense – Required annual cash contribution of ~$500 million has declined by roughly $200 million over the last several years – 2016 pension expense estimated at ~$240 million and will decline at an accelerating pace before inflecting to income in 2020 – Unfunded liability estimated at ~$11.5 billion at 12/31/15 100% 80% Funded status at current discount rate Funded status assuming increased rates (+200bps) 60% 40% 2014 2017 2020 Pension Expense $300 $150 $0 2014 -$150 2017 2020 48


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Delta Committed To Consistent Shareholder Returns Using strong cash generation in a balanced, deliberate and sustainable manner to reinvest in the business, further strengthen the balance sheet and return increasing levels of cash to shareholders • Delta is returning in excess of its minimum target of 50% of free cash flow to shareholders with ~70% returned in 2015 – 2015 returns of $2.6 billion to shareholders, including $2.2 billion in repurchases and $360 million in dividends, are equal to ~7% of current market cap Capital Returns As A Percentage Of Market Cap 9.1% 7.0% 6.9% 6.6% 5.8% 5.5% 4.8% 3.4% 3.3% 2.2% – The Board has authorized two 50% increases to the dividend since original implementation UNP EXPD NSC DAL UPS CSX CHRW R KSU FDX – Delta has demonstrated a willingness to accelerate buybacks with excess free cash flow • Rating agency progress could result in an investment grade rating at a net debt level above $4 billion and could free up more cash 49


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Opportunity Ahead For Investors Delta’s stock represents an opportunity for investors to purchase a high-quality industrial at an attractive valuation Consistently producing highquality returns and cash flows… …While valuations remain at a discount ROIC - 3 Year Average Forward Price to Earnings 22.4% 14.3x 21.3% 15.6x 9.5x 18.9% Delta High-Quality Ind. S&P Industrials Transports Delta High-Quality Ind. S&P Industrials Transports Free Cash Flow - 3 Year Average Forward Price to Free Cash Flow $3.1B 19.5x $1.2B Delta $1.5B High-Quality Ind. S&P Industrials Transports 16.8x 8.2x Delta High-Quality Ind. S&P Industrials Transports High quality industrial transports are companies with similar index characteristics to Delta – part of S&P 500 and Dow Transportation Index (CHRW, CSX, EXPD, FDX, KSU, NSC, R, UNP, UPS); For both peer groups, ROIC and free cash flow are the 2013-15E (cons.) average. Data source is FactSet; Delta ROIC & P/E reflect benefit of NOLs; P/E is as of 12/15/15; Adjusted for Special Items 50


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Non-GAAP Reconciliations 51


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Non-GAAP Reconciliations Non-GAAP Financial Measures 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 Look ing Projections. Delta is unable to reconcile certain forward-looking projections to GAAP as the nature or amount of special items cannot be estimated at this time. Total Operating Revenue, Combined Delta presents total operating revenue, combined as if the company's merger with Northwest Airlines had occurred at the beginning of the period presented because management believes this metric is helpful to investors to evaluate the company's combined operating revenue and provide a more meaningful comparison to our post-merger results. Delta (in billions) Total operating revenue Year Ended December 31, 2008 $ 22.7 Northwest Period From January 1 to October 29, 2008 $ 11.6 Combined Year Ended December 31, 2008 $ 34.3 (Projected) Year Ended December 31, 2015 $ 40.8 (in billions) Total operating revenue Change ~20% Return on Invested Capital Delta presents 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 and as a measure against the industry. Return on invested capital is adjusted total operating income divided by average invested capital. (in billions, except % of return) Adjusted book value of equity Average adjusted net debt Average invested capital Adjusted total operating income Return on invested capital Year Ended December 31, 2009 $ 12.9 16.8 $ 29.7 $ 0.5 1.5% (Projected) Year Ended Year Ended Year Ended December 31, December 31, December 31, 2013 2014 2015 $ 15.4 $ 18.5 $ 17.6 10.5 8.2 7.0 $ 25.9 $ 26.7 $ 24.6 $ 3.9 $ 5.5 $ 6.9 15.1% 20.7% 28.2% Change in ROIC since the merger Change in ROIC since 2014 (in billions, except % of return) Adjusted book value of equity Average adjusted net debt Average invested capital Adjusted total operating income Return on invested capital Last Twelve Months Ended September 30, 2015 $ 17.6 7.1 $ 24.7 $ 6.5 26.3% 2013 - 2015 Three Year Average 21.3% ~27% 7.5% 52


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Non-GAAP Reconciliations Operating Margin, Adjusted We adjust for the following items to determine operating margin, adjusted for the reasons described below: Mark -to-mark et ("MTM") adjustments and settlements. 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. These items adjust fuel expense to show the economic impact of hedging, including cash received or paid on hedge contracts during the period. Adjusting for these items allows investors to better understand and analyze our core operational performance in the periods shown. Restructuring and other. Because of the variability in restructuring and other, the exclusion of this item is helpful to investors to analyze the company’s recurring core operational performance in the periods shown. Refinery Sales . Delta's refinery segment provides jet fuel to the airline segment from its own production and from jet fuel obtained through agreements with third parties. Activities of the refinery segment are primarily for the benefit of the airline. However, from time to time, the refinery sells fuel by-products to third parties. These sales are recorded gross within other revenue and other operating expense. We believe adjusting for refinery sales allows investors to better understand and analyze the impact of fuel cost on our results in the periods shown. Year Ended December 31, 2011 5.6% Operating margin Items excluded: MTM adjustments and settlements Restructuring and other Refinery sales Operating margin, adjusted Year Ended December 31, 2013 9.0% Year Ended December 31, 2014 5.5% 0.1% 0.9% -0.1% 1.6% 6.6% Operating margin Items excluded: MTM adjustments and settlements Restructuring and other Refinery sales Operating margin, adjusted Year Ended December 31, 2012 5.9% 7.4% -0.7% 1.1% 0.0% 9.4% 5.8% 1.7% 0.1% 13.1% (Projected) Year Ended December 31, 2015 19.5% -3.4% -0.1% 0.2% 16.2% (Projected) Three Months Ended December 31, 2015 18.0% - 19.0% -1.4% 0.0% -0.1% 16.5% - 17.5% Diluted EPS, Adjusted Delta adjusts net income to determine net income, adjusted, for MTM adjustments and settlements and restructuring and other for the same reasons as described in operating margin, adjusted above, and for loss on extinguishment of debt for the reason described below, to calculate diluted earnings per share. Loss on extinguishment of debt. Because of the variability in loss on extinguishment of debt, the adjustment for this item is helpful to investors to analyze the company’s recurring core financial performance in the periods shown. (in billions) Net Income Adjusted for: MTM adjustments and settlements Restructuring and other Loss on extinguishment of debt Total adjustments Net Income, adjusted for special items Weighted average diluted shares (in millions) Net income per diluted share $ Year Ended December 31, 2014 0.7 (Projected) Year Ended December 31, 2015 $ 5.1 $ 1.5 0.4 0.2 2.1 2.8 $ (1.4) (1.4) 3.7 $ 845 3.35 $ 804 4.57 Change 36% 53


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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: Hedge margin. Free cash flow is adjusted for hedge margin as we believe this adjustment removes the impact of current market volatility on our unsettled hedges and allows investors to better understand and analyze the company’s core operational performance in the period shown. Hedge deferral. During the March 2015 quarter, we effectively deferred settlement of a portion of our hedge portfolio until 2016 by entering into fuel derivative transactions that, excluding market movements from the date of the transactions, would provide approximately $150 million in cash receipts during the September 2015 quarter and $150 million in cash receipts for the December 2015 quarter. Additionally, these transactions will require approximately $300 million in cash payments in 2016 (excluding market movements from the date of the transactions). By effectively deferring settlement of a portion of the original derivative transactions, the restructured hedge portfolio provides additional time for the fuel market to stabilize while adding some hedge protection in 2016. Free cash flow is adjusted to include these deferral transactions in order to allow investors to better understand the net impact of hedging activities in the period shown. (in billions) Net cash provided by operating activities Net cash used in investing activities Adjustments: Hedge margin Hedge deferral Net purchases of short-term investments and other SkyMiles used pursuant to advance purchase under AMEX agreement and other Total free cash flow (Projected) Year Ended Year Ended Year Ended December 31, 2013 December 31, 2014 December 31, 2015 $ 4.5 $ 4.9 $ 7.6 (2.7) (2.5) (3.6) 0.3 2.1 $ $ Capital Returns Capital Returns as a % of free cash flow 0.9 0.4 3.7 $ $ Three Year Average (0.8) 0.3 0.2 3.7 $ 3.1 2.6 ~70% Adjusted Net Debt Delta uses adjusted total debt, including aircraft rent, in addition to long-term adjusted debt and capital leases, to present estimated financial obligations. Delta reduces adjusted debt by cash, cash equivalents and short-term investments, and hedge margin receivable, resulting in adjusted net debt, to present the amount of assets needed to satisfy the debt. Management believes this metric is helpful to investors in assessing the company’s overall debt profile. Management has reduced adjusted debt by the amount of hedge margin receivable, which reflects cash posted to counterparties, as we believe this removes the impact of current market volatility on our unsettled hedges and is a better representation of the continued progress we have made on our debt initiatives. (in billions) Debt and capital lease obligations Plus: unamortized discount, net from purchase accounting and fresh start reporting Adjusted debt and capital lease obligations Plus: 7x last twelve months' aircraft rent Adjusted total debt Less: cash, cash equivalents and short-term investments Less: hedge margin receivable Adjusted net debt (in billions) Debt and capital lease obligations Plus: 7x last twelve months' aircraft rent Adjusted total debt Less: cash, cash equivalents and short-term investments Less: hedge margin receivable Adjusted net debt Adjusted net debt reduction since the merger $ December 31, 2009 17.2 1.1 $ 18.3 3.4 21.7 (4.7) $ 17.0 December 31, 2013 $ 11.3 0.4 $ 11.7 1.5 13.2 (3.8) $ 9.4 December 31, 2014 $ 9.8 0.1 $ 9.9 1.6 11.5 (3.3) (0.9) $ 7.3 (Projected) December 31, 2015 $ 8.5 1.8 10.3 (3.4) (0.1) $ 6.8 $ 10.2 54


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Non-GAAP Reconciliations Pre-Tax Income, Adjusted Delta adjusts pre-tax income to determine pre-tax income, adjusted, for MTM adjustments and settlements, restructuring and other and loss on extinguishment of debt for the same reasons described above and Virgin Atlantic MTM adjustments for the reasons described below: Virgin Atlantic MTM adjustments. We record our proportionate share of earnings from our equity investment in Virgin Atlantic in other expense. We adjust for Virgin Atlantic's MTM adjustments to allow investors to better understand and analyze the company’s financial performance in the periods shown. Year Ended December 31, (Projected) (in billions) Pre-tax income Adjusted for: MTM adjustments and settlements Restructuring and other Loss on extinguishment of debt Virgin Atlantic MTM adjustments Pre-tax income, adjusted 2014 Increase Year-over-Year 2015 $ 1.1 $ 2.3 0.7 0.3 0.1 4.5 $4.4 - $4.5 1.4 $5.8 - $5.9 $1.3 - $1.4 Fuel Expense, Adjusted And Average Fuel Price Per Gallon, Adjusted The tables below show the components of fuel expense, including the impact of the refinery segment and hedging on fuel expense and average price per gallon. We then adjust for MTM adjustments and settlements for the same reasons described in operating margin, adjusted above. The benefit provided by lower fuel expense to pre-tax income, adjusted (reconciled above) also includes the impact lower fuel expense has on profit sharing. Fuel purchase cost Airline segment fuel hedge (gains) losses Refinery segment impact Total fuel expense MTM adjustments and settlements Total fuel expense, adjusted Change year over year Average Price Per Gallon Year Ended December 31, (Projected) 2012 2013 2014 2015 $ 3.23 $ 3.09 $ 2.91 $ 1.74 0.01 (0.12) 0.58 0.90 0.01 0.03 (0.02) (0.07) $ 3.25 $ 3.00 $ 3.47 $ 2.57 0.01 0.07 (0.60) (0.34) $ 3.26 $ 3.07 $ 2.87 $ 2.23 -6% -7% -22% Year Ended December 31, (Projected) 2014 2015 $ 11,350 $ 6,945 2,258 3,598 (96) (288) $ 13,512 $ 10,255 (2,346) (1,373) $ 11,166 $ 8,882 (in millions) Fuel purchase cost Airline segment fuel hedge losses Refinery segment impact Total fuel expense MTM adjustments and settlements Total fuel expense, adjusted (in billions, except % of benefit) Year-over-year increase in pre-tax income, adjusted (Projected) Three Months Ended December 31, 2015 $1.77 - $1.82 0.22 (0.01) $1.98 - $2.03 (0.16) $1.82 - $1.87 Change Year-over-Year $ 2,284 $1.3 - $1.4 Year-over-year decrease in total fuel expense, adjusted $ 2.3 Year-over-year increase in profit sharing resulting from lower fuel expense 0.5 Net year-over-year benefit provided to pre-tax income, adjusted from lower fuel expense 1.8 $ % of fuel benefit realized in pre-tax income, adjusted ~75% 55


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Non-GAAP Reconciliations Non-Fuel Unit Cost or Cost per Available Seat Mile (“CASM-Ex”) We adjust CASM for restructuring and other for the same reason described in operating margin, adjusted, above and the following items for the reasons described below to determine CASM-Ex: Aircraft fuel and related taxes. The volatility in fuel prices impacts the comparability of year-over-year non-fuel financial performance. The adjustment for aircraft fuel and related taxes (including our regional carriers) allows investors to better understand and analyze our non-fuel costs and our year-over-year financial performance. Profit sharing. We adjust for profit sharing because this adjustment allows investors to better understand and analyze our recurring cost performance and provides a more meaningful comparison of our core operating costs to the airline industry. Other expenses. Other expenses include aircraft maintenance and staffing services we provide to third parties, our vacation wholesale operations, and refinery cost of sales to third parties. Because these businesses are not related to the generation of a seat mile, we adjust for the costs related to these sales to provide a more meaningful comparison of the costs of our airline operations to the rest of the airline industry. CASM (cents) Adjusted for: Aircraft fuel and related taxes Profit sharing Restructuring and other Other expenses CASM-Ex Year-over-year change Year Ended December 31, 2011 14.12 (5.01) (0.11) (0.10) (0.37) 8.53 Year Ended December 31, 2012 14.97 (5.31) (0.16) (0.20) (0.38) 8.92 4.6% Excluding profit sharing CASM (cents) Adjusted for: Aircraft fuel and related taxes Profit sharing Restructuring and other Other expenses CASM-Ex Year-over-year change Year Ended December 31, 2013 14.77 (4.92) (0.22) (0.17) (0.32) 9.14 2.4% Year Ended December 31, 2014 15.92 (5.64) (0.45) (0.30) (0.37) 9.16 0.2% 9.61 Three Months Ended December 31, 2014 18.05 (7.64) (0.45) (0.12) (0.50) 9.34 (Projected) Year Ended December 31, 2015 13.88 (3.60) (0.60) (0.51) 9.17 ~flat 9.77 ~1.5% (Projected) Three Months Ended December 31, 2015 13.67 (3.00) (0.64) (0.52) 9.51 2.0% 56


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