Flying High: Delta Air Lines Hikes Dividend And Buybacks In An Update To Investors
Delta Air Lines (NYSE: DAL) announced on Tuesday morning the next phase of its plans to return cash to shareholders.
Delta's board of directors authorized a 50 percent increase to its quarterly dividend and shareholders will receive $0.09 per share beginning the September 2014 quarter. Delta's board also authorized a new $2 billion share repurchase program with an expiration date of December 31, 2016.
Delta estimates that the combination of a dividend hike and share buyback will result in $2.75 billion returned to shareholders through 2016.
"Delta has deployed its strong cash flows to drive value for owners by strengthening its balance sheet through debt and pension reductions while also returning a significant amount of cash back to shareholders," said Daniel Carp, chairman of Delta's Board of Directors in a company press release.
"The Board is furthering our long-term commitment to Delta shareholders by substantially increasing our dividend and also providing a flexible vehicle to return additional cash to shareholders through the $2 billion share repurchase program. This next phase of our shareholder return program reflects the Board's confidence in Delta's ability to sustain and improve upon its already strong financial performance."
Delta ended the March 2014 quarter with $9.1 billion of adjusted net debt, having paid off $8 billion in debt since 2009. The company is guiding towards lowering its debt load to $7 billion in 2015 and $5 billion by the end of 2016.
Delta plans to continue funding its defined benefit pension plans and contributed nearly $1 billion a year in 2013 and 2014. Delta is seeing higher interest rates and returns on assets, helping lower the company's unfunded pension liability by 25 percent.
Shares of Delta hit new 52-week highs of $38.64 Tuesday morning. Shares are currently trading at $38.16, up 1.65 percent from Monday's close.
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