Boston, MA 05/30/2014 (wallstreetpr) – Delta Air Lines, Inc. (NYSE:DAL)’s Board updated the plan to return capital to its shareholders. It includes 50% increase in dividend to $0.09 per share and share repurchase program of $2 billion by the end of 2016. So, the Company expects to return and additional $2.75 billion to its shareholders by 2016.
As per the previous plan, Delta will return $700 million to its shareholders by June 2014, which includes dividend of $200 million and share repurchase of $500 million.
Factors to drive strong cash flow
Delta Air Lines, Inc. (NYSE:DAL) intends to generate strong cash flows by strengthening the financial position through debt and reduction in pension obligations that will help the airline to return considerable amounts to its shareholders.
Factor 1:
Delta continues to reduce the debt so to reduce the cash outflows related to external funding so that Delta Air Lines, Inc. (NYSE:DAL) has sufficient cash flows to return to its shareholders. As of march 31, 2014, Delta has adjusted net debt of $9.1 billion and the Company expects to reduce the adjusted net debt further to $7 billion by 2015 and $5 billion by 2016
Factor 2:
Similarly, Delta contributed ~$1 billion each year towards pension benefit plans in 2013 and 2014 and reduced the pension liability by 25%. Delta Air Lines, Inc. (NYSE:DAL) continues to maintain a level of funding $1 billion till 2020 so to reduce 80% of total pension liability and avail more cash for distribution.
Conclusion
As of now, Delta and its subsidiary Delta Connection carriers together operates with more than 700 aircrafts and offer services to ~370 destinations across six continents. The airline serves ~165 million customers per year annually.
Delta continues to produce positive growth in profitability and cash flow performance while investing more on expansion, including destinations, as well as fleet size.
In addition, Delta Air Lines, Inc. (NYSE:DAL) intends to strengthen the balance sheet to make the fund available for the investment and drive to become a high performing airline.
