Delta Air Lines (DAL) announced its plan of returning more than $1 billion to shareholders over the next three years. The company announced a balanced capital deployment that creates up to $5 billion of value for shareholders through further debt reduction, return of cash to shareholders, and management of pension liability.
As part of this program, the company's board has initiated a quarterly dividend and declared a $0.06 per share dividend for shareholders of record as of August 9, 2013. This dividend will be paid on September 10, 2013.
In addition, the board has authorized a $500 million share repurchase program, to be completed no later than June 30, 2016.
Delta also outlined a comprehensive, five-year financial plan that focuses on free cash flow generation through a combination of expected earnings improvements and a disciplined approach to capital investment. Over the next five years, the company plans to reinvest $2.0 billion to $2.5 billion annually into improving its fleet, facilities, products and technology.
As part of this plan, Delta expects to achieve and maintain an adjusted net debt level of $7 billion, a $5 billion reduction over 2012. By meeting the $7 billion target, Delta will have reduced its adjusted net debt by $10 billion since 2009.
The company also plans to make up to $1 billion of incremental contributions to its defined benefit pension plans over the next five years. These contributions would be in addition to the $650 - $700 million annual required minimum contribution.
Daniel Carp, chairman of Delta's Board, said, "Delta's financial performance and balance sheet have strengthened considerably over the past five years and the Board believes the company is now in a position to begin returning cash to our shareholders,"
DAL closed Wednesday's regular session at $18.66.
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