Delta Air Lines, Inc. (NYSE:DAL) Q4 2019 Earnings Conference Call - Final Transcript

Jan 14, 2020 • 10:00 am ET

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Delta Air Lines, Inc. (NYSE:DAL) Q4 2019 Earnings Conference Call - Final Transcript

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Q & A
Operator
Operator

Certainly. [Operator Instructions] And our first question will come from David Vernon of Bernstein.

Analyst
David Vernon

Hey, good morning, guys. Thanks for the time. So as you think about the decision to sort of accelerate the investments in technology and experience, maybe even going after some adjacent revenues in rideshare through partnership and that kind of thing, is this -- are these activities going to be funded kind of within the existing capital envelope or do you expect Delta to kind of maybe spend a little bit more over the next couple of years as you look on kind of executing the vision you laid out at CES?

Executive
Ed Bastian

Hey, David, thanks. Yes, the capital that we spoke of at CES and the technology that we displayed is within the envelope that we've been working within in technology, but one of the things that we've done over the last several years is -- up to our investment in technology and we're now on our capital level, running at about $500 million a year in technology. However, for the first couple of years of that, a lot of it was just focused on infrastructure and resiliency and the data sets and data architecture that's now finally starting to be able to produce this type of technology and innovation that you're seeing. And so it's going to be more heavily weighed going forward towards business and commercial application as compared to infrastructure but it sits within the envelope we've been using.

Analyst
David Vernon

And maybe just as a quick follow-up, as you think about the return on this incremental investment, is this going to be sort of a gradual enhancement to the revenue premium that you earn or do you see some sort of step changes in opportunity along the way, whether it's material cost out or revenue opportunities, kind of, within the next three to five years?

Executive
Ed Bastian

I think it's both, David. Certainly the revenue opportunities are significant. We do go through in this past year, we looked at what we thought the -- our digital investments and new product offerings this year generated and we estimate about $200 million of incremental revenue, whether it be using SkyMiles as a currency to upsell the new generation shopping and booking tools that we have, opportunities also sit on the cost front with better decision support in high routes and optimizing the fleet and making certain that we're able to ensure that our crew are best utilized and any downtimes are minimized and I could go on. There is a long list of opportunities that we have.

So I think it's going to be both the cost opportunity as well as a strong enhancement to the brand as we build closer and closer digital connections with our customers. 204 million customers a year, the only way you can build that connection with them at the personal level that they choose is digital and we're off to a great start.

Analyst
David Vernon

All right. Thanks, guys.

Operator
Operator

Our next question will come from