US major pays dividend – I nearly fell off my chair

Victoria
By Victoria May 9, 2013 14:05

US major pays dividend – I nearly fell off my chair

By the time you read this it is old news, but still Delta Air Lines paying a dividend is worthy of nothing less than the editorial section. Delta initiated a 6-cent quarterly dividend yesterday and said its board has authorized a $500m share buyback program as part of a five-year financial plan aimed at shoring-up pension contributions to well above the minimum requirement at $1bn over the next five years and cutting debt.

On the news Delta shares rose 3.5% to a 52-week high of $18.84 before falling back to close at $18.71.

The dividend is part of Delta’s balanced capital deployment program, which includes returning more than $1bn in cash to shareholders over the next three years. The strategy puts the focus on generating free cash flow through earnings improvements and a “disciplined approach to capital investment.”

Delta is doing well, no doubt there. Debt has been cut down from $17bn to $12bn in under five years and it is hoped this will fall below $10bn by the close of this financial year. Delta plans to reinvest 50% of cashflow annually, some $2bn to $2.5bn into fleet and facilities with the remaining cash flow funding share buyback programs and dividends.

Long may the legacy airline rehabilitation process continue. More news such as this from other airlines will aid the re-emergence of interested investors.

Look to the May/June issue of Airline Economics for more on this story within the 2013 investing in airlines feature which has over the past three years been uncannily accurate in its calls.

Victoria
By Victoria May 9, 2013 14:05
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