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Delta Profits Despite Rising Costs

ATLANTA ( TheStreet) -- Delta (DAL - Get Report) produced a fourth-quarter profit despite $577 million in additional expenses, and forecast current quarter unit revenue growth of 4% to 6%.

Net income excluding items was $238 million, or 28 cents a share, a penny ahead of estimates. Revenue rose 3% to $7.4 billion; analysts had estimated $8.6 billion.

Including items, Delta earned $7 million, down from $425 million in the same quarter a year earlier.

Delta was the first airline to report fourth-quarter results.

"Our December quarter profit caps off a successful 2012 for Delta with strong financial results, industry-leading operational performance, and across the board improvements in customer satisfaction," said CEO Richard Anderson, in a prepared statement.

The carrier said Hurricane Sandy had a $100 million negative impact on airline and refinery operations: the Trainer refinery produced a $63 million net loss, but it is expected to produce a modest profit in the current quarter. Additionally, Delta took a one-time charge of $231 million for special items including domestic fleet restructuring and debt refinancing. Meanwhile, higher fuel costs and wages added $577 million in operating expenses.

During the quarter, cost per available seat mile excluding fuel and special items rose 5.7%, driven by the impact of capacity reductions, wage increases and operational and service investments.

Meanwhile, passenger revenue per available seat mile rose 4.3%. Unit revenue improvements were led by a 7.9% gain in the Atlantic and a 5.3 domestic gain; mainline unit revenue grew 4.7%. The only regional decline was a 1.4% drop in Latin America.

"Our investments in Delta's network, products and operations, combined with our capacity discipline, have produced unit revenue growth that has outpaced the industry for 21 consecutive months," said President Ed Bastian. He projected a PRASM increase of 4% to 6% in the current quarter.

For the full year, excluding items, Delta earned $1.6 billion. As of Dec. 31, Delta had $5.2 billion in unrestricted liquidity including $3.4 billion in cash and short-term investments, and adjusted net debt of $11.7 billion. Delta has achieved more than $5 billion in debt reduction since 2009.

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