Equity Research Presentation – Delta Airlines, Inc.

1. Equity Research Presentation – Delta Airlines, Inc. Price as of 10/30/2015: Target Price: $73.00 Potential Return: 42.8% Daniel Brenner Senior Analyst daniel.brenner@orangevaluefund.com Anisa Khalouf Junior Analyst anisa.khalouf@orangevaluefund.com

2. Table of Contents • Investment Thesis • Business Overview • Growth Catalysts • Strategy • Safety • Appendix

3. Investment Thesis DAL is differentiating itself in a commoditized industry through strategic alliances and investments, has a strong balance sheet , and is trading at a steep discount on various multiples. • Trading at a 30% discount based on simplified discounted cash flow • Discounted cash flow model implies a conservative 5% growth in EBITDA • PEG ratio of .45x, industry average PEG is 1.06x • Trading at a 8.97x 2 year Price to Earnings, industry average is 18.93x or a 47% discount • Investment grade balance sheet • Net debt/EBITDAR of 0.7x • Debt/Assets ratio of .15x • Shareholder friendly management gives stock support • Stock repurchase of $5 billion through 2017 • Plans to return 50% of cash flows in next 3 years • Increasing dividends • In 2013 DAL acquired wholly owned subsidiary Monroe, LLC • DAL is the only airline that owns its own refinery • Enables DAL to have the lowest fuel price/gallon within the industry • The refinery has generated significant profit for the first time since purchasing it • DAL has joint ventures with 6 airlines and equity investments in 4 international airlines • DAL is the only airline to have equity investments and strategic alliances with international airlines • This will allow DAL to be more efficient than its competitors in expanding to international markets Trading at Discount Strategic Alliances and Equity Investments Safety In-House Refinery

4. Table of Contents • Investment Thesis • Business Overview • Growth Catalysts • Strategy • Safety • Appendix

5. Business Overview Delta Airlines provides air transportation for passengers and cargo worldwide operating on its global route network. Overview Revenue by Geography • Founded in 1928 in Monroe, Louisiana and headquartered in Atlanta, GA. • DAL operates in two segments: Airlines and Refinery • Mainline fleet: more than 700 aircraft • Serves more than 170 million customers each year • DAL Global Network: • Offers 334 destinations • Service to 64 countries on 6 continents • Domestic Market Share: 17% • Airport Market Share in Top 5 Trafficked Airports: • ATL 74.11% • DTW 48.33% • LAX 14.89% • JFK 26.48% • LGA 21.78% Market Share Financial Snapshot

6. Table of Contents • Investment Thesis • Business Overview • Growth Catalysts • Strategy • Safety • Appendix

7. Growth Catalyst International Equity Investments • DAL has 4.24% equity stake in AeroMexico, largest airline in MEX, and an enhanced operating agreement • Potential to own up to 8.27% from derivatives • DAL, has received a seat on the board of AeroMexico • Expected within a few months to receive antitrust immunity and establish a joint venture (“JV”) • After “JV:”DAL will have largest market share in Mexico • China Eastern is 2nd largest airline in China • Owns 3.5% of outstanding common stock and has a exclusive partnership • Interest are aligned to expand into international market by feeding passengers to each other • Plans to build Shanghai hub • DAL owns a 49% stake in parent company Virgin Atlantic Limited and JV agreement • Codeshare agreement across 108 routes; 66 destinations • $13M in profit from MTM adjustments in Q315 • Enhances DAL’s access to London-Heathrow • Makes DAL a competitor across the Atlantic • DAL has 9.5% stake in GOL by owning conditional voting preferred shares • Second largest airline in Brazil with 40% market share • Plans to file antitrust immunity and establish a JV by end of next year • Once JV is secured, DAL will have profit sharing agreements with two leading airlines within Latin America AeroMexico GOL China Eastern Airlines Virgin Atlantic

8. Growth Catalyst Operational Efficiency • Leading the industry in: • Load Factor • Price per gallon of jet fuel • Far above the industry average in: • ASM • Yield Per RPM • Weak performance in CASM • Expected increase in Yield Per RPM because of “Branded Fares Program” • Expected decrease in CASM due to purchasing new and more efficient aircraft • Price/Gallon expected to decrease to 1.75 for Q4 due to refinery increasing operational efficiency • ASM to increase from 0% to 2% • Relatively flat change in ASM due to international restructuring Peer Analysis Plans For Improvements

9. Growth Catalyst Refinery- Monroe Energy, LCC • Operates in Pennsylvania as wholly-owned subsidiary of Delta • Produces 200,000 barrels a day • Produces 40,000 barrels of jet fuel • Monroe Energy will either exchange other products for jet fuel or sell it to the market • This refinery differentiates DAL from every other airline in terms of safety • Increase in jet fuel prices would allow refinery to become more profitable • Ensures the lowest in the industry jet fuel prices • Purchased in 2013 for $180 million • By end of 2015 will generate $350 dollars in profit • For year 2014, fuel expense was 42% of revenue • Lower fuel expense will significantly increase margins • DAL has lowest cost per barrel of jet fuel at 1.8 • Projected to be at 1.75 per barrel in Q4 • Produces roughly 30% of the daily jet fuel for New York Hubs • DAL used to have highest jet fuel prices per barrel in the industry before refinery Production Details Effect on Fuel Price Natural Hedge Impact on Cash Flows

10. Growth Catalyst Branded Fares Program • DAL revamped product offerings and classes of service to target customers more effectively • Includes customer upgrades in: Basic Economy, Main Cabin, Delta Comfort+, First Class, and Delta One • Each category permits specialized amenities • Serves as a driver of value for DAL customers, offering more choices • U.S. Airlines are moving in direction of branded fares • American Airlines and Frontier spearheaded program popularity • DAL offers more options and specialized perks than co competitors • DAL classifies 5 service classes where as others only offer 3 • Proven success model for other airlines • Drives revenue and overall passenger traffic • Projected to generate an annual $1.5 billion annually in incremental revenue by 2018 • Implemented in 462 markets since launch in Q215 • Generated $75 million in high margin revenue in Q315 • Sales in Comfort+ class increased 42% • Increased paid first class load factor to 56% on basis of 5% more first class seats • DAL plans to generate $350 million in “cost benefits” in 2015 – CFO Jacobson Terms of DAL Branded Fares Revenue Driver Combatting Competition

11. Table of Contents • Investment Thesis • Business Overview • Growth Catalysts • Strategy • Safety • Appendix

12. Strategy Domestic vs. International • Invest heavily in various hubs to consume as much market share as possible • Planning a conservative 3% in domestic market • Recent investment in Seattle hub yielded a 24% increase in RASM from that hub • JFK and LAX hubs saw a 3% increase in capacity • Domestic alliances with Hawaiian Airlines and Alaska Airlines • Code sharing and frequent flyer participation • Delta Connection, DAL’s regional carrier program • Involves contractual agreements with 7 regional airlines • “Capacity purchase agreements” • 18% of passenger revenue was from regional carriers for year end 2014 • JV Agreements: transatlantic and transpacific • Air France-KLM and Alitalia, Virgin Atlantic Airways, Virgin Australia Airlines • JVs allow commercial operations in respective geographic regions • Complete sharing of bottom line amongst JVs • GOL Enhanced Commercial Agreements gives elements of control • DAL has seat on the Board of Directors • Reducing international capacity by 4.5% with cuts of 20% or more in places like Japan, Brazil, Russia, and Middle East • JV Model: most capital efficient method of accessing international market • Possible airline consolidation in China will benefit DAL Domestic Strategy International Strategy Domestic Partnerships International Partnerships

13. Strategy Fleet Composition • Own 76% of their aircraft • Both operating and capital leases make up 24% of DAL’s fleet • Above industry average age at 17.1 years • Airbus aircraft make up 42% of Delta’s fleet • Boeing aircraft make up 58% of Delta’s fleet • DAL TechOps is a division of Delta which does aircraft maintenance, repair, and overhaul (“MRO”) • DAL’s elite MRO division allows older aircraft to operate at higher efficiencies despite being old • DAL TechOps excellent overhaul program will refurbish the used aircraft to like-new conditions • Industry average of Maintenance Expense/Sales is 9.88% and DAL is 4.53% • CEO, Richard Anderson, is intent on competitive pricing for new aircraft • Strategically pits Airbus and Boeing against each other • DAL used to be only Boeings but recently have been buying Airbus • Richard Anderson believes there is an “Aircraft Bubble” • Plans to buy used aircraft at a steep discount • Commitment to purchase 178 aircraft within the next 5 years • 43% are Boeing while 57% are Airbus • Retiring older aircraft such as Boeing 747 • Replacing with Boing 737 and Airbus 330-900neo • DAL is not looking for huge growth in their fleet but rather better utilization of their current fleet Current Fleet Pricing Competition Changes to Fleet Delta TechOps

14. Strategy Fleet Composition

15. Table of Contents • Investment Thesis • Business Overview • Growth Catalysts • Strategy • Safety • Appendix

16. Safety Capital Returns to Shareholders • Plans to return 50% of all cash flows back to the shareholders • Authorized a stock repurchase program through 2017 of $5 billion • Estimated repurchase of 14% of shares outstanding • In 2015, it is expected to buy $2.5 billion of share repurchases • 8% of current shares outstanding • Last quarter DAL increased their dividend to $.135 • 50% increase from their previous dividend Stock Repurchase Program Stock Dividend

17. Safety Debt Composition • As of Q3, DAL has $8.9 billion of debt outstanding • Plans to reduce net debt to $4 billion by 2017 • Cash position of $2.4 billion • Net Debt to EBITDAR is .7x • Debt to Asset .15x • Debt is evenly distributed over the upcoming years • Debt Composition is: 44.48% bonds, 23.38% term loans outstanding, 17.75% revolver outstanding, and 8.70% municipal bonds Manageable Debt

18. Table of Contents • Investment Thesis • Business Overview • Growth Catalysts • Strategy • Safety • Appendix

19. Appendix Income Statement

20. Appendix Balance Sheet

21. Appendix Simplified Discounted Cash Flow