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) --


(DAL) - Get Delta Air Lines, Inc. Report

provided one half of the airline industry's total profit in 2012 and is looking ahead to more gains, a result of its New York buildup, fleet strategy and 2012 investments in an oil refinery and

Virgin Atlantic


"We are on track to deliver our best March quarter in over a decade," said President Ed Bastian, speaking at the JP Morgan investor conference on Monday morning.

The last time Delta had a first-quarter profit, Bastian said, was in 2000, when fuel cost 62 cents a gallon. The cost now is $3.25 a gallon, accounting for more than $2 billion in higher fuel costs during the quarter.

But revenue is rising too. Bastian said February passenger revenue per available seat mile will rise 5%. For the first quarter, PRASM is expected to gain 4.5% to 5.5%.

A New York buildup is fueling the revenue gains. Bastian said. Delta has gained over seven points of corporate market share in New York over the past three years, leading to a margin gain of more than 300 basis points in New York, he said, noting "We're still in the building phase."

The carrier has boosted its capacity at LaGuardia Airport by 45% in the past year, a result of an asset trade with

US Airways


, and it will open a new Kennedy terminal on May 24. Later this year, it will begin a new trans-Atlantic joint venture with

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Virgin Atlantic

after buying 49% of the carrier. That will enable growth in the Kennedy-London Heathrow market, which Bastian said has historically been "our single biggest challenge in corporate customer negotiations" in New York.

According to a chart Delta compiled, Kennedy/Heathrow is the No. 1 U.S. international route, accounting for 2.7 million passengers a year. It dwarfs every other route. No. 2 is Los Angeles/Heathrow, accounting for 1.4 million passengers. The next three routes, with 1.2 million passengers annually, are Chicago/Heathrow, New York/Paris and Newark/Heathrow. Interestingly, US Airways does not fly a single one of the top 10 U.S. international routes, largely explaining why it could use a merger with




Bastian said the route "is the driving force behind our investment decision at Virgin Atlantic." American currently has 23% of the traffic on the route, while its partner

British Airways

has 39%. Delta has 14%, but its new partner Virgin Atlantic as 22%. "Four years ago Delta was legally restricted from serving Heathrow," Bastian reminded the conference.

Delta also sees gains coming from its investment in the Trainer oil refinery, which should produce $75 million in profit in the second quarter. Bastian called the refinery investment a "game changing innovation," but noted that "running an oil refinery, much like running an airline, is not for the faint of heart."

Additionally, Delta expects both fuel efficiency and customer satisfaction gains from its ongoing move to reduce the number of 50-seat jets in its fleet. By 2015, Delta will have the same capacity with 200 fewer aircraft. "Any way you look at it, this is a home run," Bastian said.

Asked about the impact of the US Airways/American merger, Bastian said: "We believe that mergers in this industry generally are a good thing if done well. For us, it's going to be a positive. It's just another form of continuing to maintain discipline in a business that will continue to be as competitive as ever." He hinted at a possible benefit, saying that some airline mergers have gone well, and some have not gone so well and said he does not know what impact the merger will have on American and US Airways passengers.

One other plus for Delta shareholders: Bastian said the carrier is reviewing a "return of capital to shareholders," and expects to make an announcement in the coming months. Delta suspended its dividend in 2003.

In 2012, Delta earned $1.6 billion in pretax income, followed by


(LUV) - Get Southwest Airlines Co. Report

with $679 million,


(UAL) - Get United Airlines Holdings, Inc. Report

with $599 million, US Airways with $537 million and


(JBLU) - Get JetBlue Airways Corporation Report

with $209 million.

In late morning trading Friday, Delta shares were up 65 cents, or nearly 5%, to $15.47.

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-- Written by Ted Reed in Charlotte, N.C.

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Ted Reed