ATLANTA Delta Air Lines Inc (DAL.N) reported a smaller-than-expected quarterly loss and expects fare increases and capacity cuts to help offset higher fuel costs.
Chief Financial Officer Hank Halter told staff in a memo on Tuesday that Delta was adjusting fares "with a goal of recapturing the full cost of fuel on every flight, every day."
He also said Delta would also look to pare fixed costs as it curbs capacity in the fall.
Airlines have boosted fares this year as rising oil prices threaten to wipe out the industry's recovery from the 2008 and 2009. Airlines are seeing better passenger demand, but costs are also rising.
Delta, the second-biggest carrier behind United Continental Holdings (UAL.N), is also being hit by weakness from Japan in the wake of the March earthquake.
The Atlanta-based airline's net loss came to $318 million, or 38 cents a share, ahead of the average analyst forecast of a loss of 50 cents a share, according to Thomson Reuters I/B/E/S. A year earlier, its loss was $256 million, or 31 cents a share.
Quarterly revenue rose 13 percent to $7.75 billion, compared with $7.61 billion expected by analysts. Operating expenses rose 16 percent, with fuel costs spiking 29 percent.
Passenger revenue per available seat mile, an important measure, gained 7 percent in the quarter, and the company said it expected "double-digit growth" in that measure in the current quarter.
Shares of Delta were up 2.6 percent to $9.23 in premarket trade.
Delta has been retiring less fuel-efficient planes and has shifted most of its fuel-hedge positions to Brent crude from West Texas Intermediate.
(Reporting by Karen Jacobs; Editing by Derek Caney)