The board of directors of Delta Air Lines, Inc. (NYSE:DAL) approved a new $2 billion shares buyback program, and a 50% increase in its quarterly dividend.

Delta Air Lines

According to the company, the new $2 billion share repurchase authorization shall be completed no later than December 31, 2016, and it will begin paying a quarterly dividend of $0.09 per share on September this year. Its previous quarterly dividend was $0.06 per share.

Delta Air Lines, Inc (NYSE:DAL) expected to return a total of $2.75 billion capital to shareholders through the stock buyback and dividend payment by 2016.

Strengthening balance sheet

In a statement, Daniel Carp, chairman of the board of Delta Air Lines, Inc. (NYSE:DAL) said the company is furthering its commitment to its shareholders by substantially increasing its dividend, and providing a flexible vehicle to return cash through the $2 billion stock buyback 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,” said Carp.

He added that Delta Air Lines, Inc. (NYSE:DAL) “deployed its strong cash flows to drive value for owners by strengthening its balance sheet through debts and pension reductions” while returning significant amount of cash to shareholders.

Balanced approach to capital deployment

Delta Air Lines, Inc. (NYSE:DAL) emphasized that its financial performance and cash flow exceeded its target under its previously announced balanced capital deployment plan in May 2013. The company implemented new plans to further boost shareholder value by accelerating its initiatives to reduce debt, address pension obligations, and return cash to shareholders.

The company ended the first quarter with $9.1 billion adjusted debt, a $2.6 billion reduction since the end of 2012. Delta Air Lines, Inc. (NYSE:DAL) expected its adjusted debt to decline to $7 billion by 2015, and $5 billion by the end of 2016.

With regard to its pension obligations, the company contributed almost $1 billion for each of the year 2013 and 2014 through a combination of $700 million required minimum funding and $250 million incremental funding. Its unfunded pension liability was reduced by 25% and plans to maintain its current $1 billion annual funding level until 2020 to achieve its objective of 80% funded status.

Delta Air Lines, Inc. (NYSE:DAL) is on schedule to return $700 million cash to shareholders by early June this year—a combination of $200 dividend and completion of its original $500 million stock buyback authorization (two years ahead of its June 30, 2016 expiration date).

New Standard

Delta Air Lines CEO Richard Anderson said they are setting a new standard, which is” building a company that is producing strong improvements to earnings and cash flow while also investing billion of dollars” to its people, fleet and products, and strengthening its balance sheet.

“Our strategy is producing the industry’s best employee relations, customer service and financial performance as we strive toward our goal of becoming a consistently high performing S&P 500 company,” said Anderson.