MINNEAPOLIS (AP) - Higher fares and growing traffic helped Delta Air Lines Inc. post a bigger-than-expected profit on Tuesday.
Delta's yield- a key measure of what each passenger pays to fly one mile- rose 4 percent for the quarter. Airlines tried about a dozen fare increases last year. While most failed after competitors didn't match them, airlines still boosted yields by an average 2 percent last year, according to the Airlines for America trade group.
Delta President Ed Bastian said demand for air travel is "solid," and Delta expects to see "significant margin expansion" in the current quarter.
Bastian also said the airline industry is showing restraint in how much flying it adds. The view on Wall Street has been that reining in growth will give airlines more power to raise fares. Delta expanded flying just 1 percent last year. It said it expects to grow 2 percent to 3 percent in the upcoming quarter.
Delta said it expects its new joint venture with Virgin Atlantic to be profitable this year. CEO Richard Anderson said bankers in New York are especially interested in the flights, because Delta and Virgin America together have a fuller schedule between New York and London.
Not counting a non-cash adjustment for taxes, Delta earned $558 million, or 65 cents per share, for the quarter that ended Dec. 31. Revenue rose 5.5 percent to $9.08 billion. Both figures were better than Wall Street analysts expected, not counting one-time items.
Including a one-time, $8 billion accounting benefit related to taxes, Delta's net income ballooned to $8.48 billion, or $9.89 per share.
After years of losses culminating in bankruptcy protection in 2005, Delta has posted four years of profits, including $2.7 billion in adjusted profits last year, not counting special items. Its past losses will cut its future tax bills, which amounts to an $8 billion asset being added to its balance sheet in the fourth quarter.
In the year-earlier quarter, Delta earned $7 million, or a penny per share, after Superstorm Sandy hurt profits.
Delta said its Trainer refinery near Philadelphia lost $46 million for the quarter because of tighter margins between the cost of crude oil and the market price for refined products like gasoline and diesel fuel. Delta said the same pricing issues helped reduce the price of jet fuel, though, reducing its overall fuel expense. The refinery should produce a "modest profit" this year as it shifts to using more U.S. crude oil, said Paul Jacobson, Delta's chief financial officer.
Shares of Atlanta-based Delta air Lines Inc. rose 94 cents, or 3 percent, to $32.01 in afternoon trading.
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