Delta Air Lines plans to pay a shareholder dividend for the first time in a decade - a sign of its improved standing after years of financial struggles for the airline industry.
Delta said Wednesday it will begin with a dividend of 6 cents per share to be paid Sept. 10.
The company also plans to buy back $500 million of shares by June 30, 2016. Such buybacks can boost share prices. Delta said the two moves combined will return more than $1 billion to shareholders over the next three years, and are part of a five-year financial plan announced by the company.
“Delta’s financial performance and balance sheet have strengthened considerably over the past five years,” Delta board chairman Daniel Carp said in a statement released by the Atlanta-based airline.
In recent years, Delta had focused on cutting debt levels, from $17 billion at the end of 2009 to less than $12 billion at the end of 2012. But the investor community had been pressing Delta to return capital to shareholders.
Delta said it still aims to reduce debt eventually to $7 billion, as well as to invest $2 billion to $2.5 billion annually in the business and contribute $1 billion extra to its pension plans over the next five years.
S&P airline analyst Jim Corridore in a note to investors wrote that the move highlights how Delta “has somewhat reduced risk in the historical boom and bust airline industry, which we think is attracting increased investor interest.”
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