EFTA Document EFTA01479641

Subject: Airlines stocks weak [C] From: Tazia Smith sz: > Date: Wed, 02 Jul 2014 11:56:37 -0400 To: Cc: Paul Morris < Vahe Stepanian Nav Gupta Classification: Confidential Hi Rich - I'll let you decide whether you want to highlight to Jeffrey. Airline stocks are down today (American is off over 3% and Delta is down —4.75% right now). This is driven by Delta's traffic and margin commentary (see below). I spoke with our Airline analyst team and bottom line, they believe near-term pressure is an entry point for clients to buy for the long-term. They point to continuing improving business trends (even at the low-end of estimates, Delta's margins will be up 300bps (-14% vs. 11%) year over year), continued stock buy-backs, and continued additions back to indices etc as additional tailwinds for the shares. Jeffrey is clearly already long the AAL, which DB has a 12mo target of $45 on. DB likes DAL shares here with an implied —26% upside to their $48 target. I don't know that Jeffrey needs/wants to add to his airline exposure, but a similar risk reversal set up in DAL prices as follows: DAL spot ref 38.45 S DAL Jan15 38 put —3.70 B DAL Jan15 38 call —4.15 I actually like just selling puts too: S DAL Jan15 37 puts —3.20 (collect —8% for limos, or create the stock at 33.80) And of course could do something with AAL on weakness too. All My Best, Tazia (See attached file: Delta.pdf)(See attached file: Airline Weekly 6.26.pdf) Forwarded by Tazia Smiaon 07/02/2014 11:28 AM EFTA01479641 From: "Tazia Smith (DEUTSCHE ASSET MANAG)" To: undisclosed- recipients:;, Date: AM C 07/02/2014 11:26 Subject: (BFW) Delta Sell-Off 'Seems Aggressive' Given Margin Guidance: (BFW) Delta Sell-Off 'Seems Aggressive' Given Margin Guidance: C owen This has been prepared solely for informational purposes. It is not an offer, recommendation or solicitation to buy or sell, nor is it an official confirmation of terms. It is based on information generally available to the public from sources believed to be reliable. No representation is made that it is accurate or complete or that any returns indicated will be achieved. Changes to assumptions may have a material impact on any returns detailed. Past performance is not indicative of future returns. Price and availability are subject to change without notice. Additional information is available upon request. --+ Delta Sell-Off 'Seems Aggressive' Given Margin Guidance: Cowen 2014-07-02 15:06:16.177 GMT EFTA01479642 By Libby Sallaberry McGowan July 2 (Bloomberg) -- Delta June traffic was in-line, while unit rev. was lower, driven by lower intl yields, Cowen analyst Helane Becker says in a note. * Says weakness specifically came from Brazil, where World Cup has caused decline in business traffic; expects situation to improve once World Cup ends * Reiterates outperform rating and 2Q EPS est. $1 (vs Bloomberg consensus $1.03) * DAL reiterated qtr margin guidance of 14%-16% * DAL down as much as 5.7%, UAL down as much as 6.5%, AAL down as much as 5.6% after Delta guidance earlier For Related News and Information: First Word scrolling panel: FIRST<GO> First Word newswire: NH BFW<GO> To contact the reporter on this story: • 'n New York at To contact the editors res onsible for this story: Brad Skillman at or i y a aerry cowan (Embedded image moved to file: pic02210.gif) Tazia Smith Director I Key Client Partners - US DB Securities Inc Deutsche Asset & Wealth Management 345 Park 10154-0004 New York, NY, USA Tel. Fax Mobile Email or (Embedded image moved to file: pic31281.gif) EFTA01479643