Updated from 8:39 a.m. EDT

Delta Air Lines

(DAL) - Get Report

reported a small third-quarter loss due to high fuel costs, but said it is now benefitting from a sharp decline in crude.

"With fuel dropping the way it's dropping, we're somewhat hedged against the economic downturn," said CEO Richard Anderson, on an earnings conference call Wednesday. "We were looking at a $4 billion year-over-year increase in the cost of fuel. Having fuel drop like a rock is a big offset to what happens in the economy. You would rather deal with demand cessation than $150 fuel."

For the third quarter, Delta reported a loss of $26 million, or 7 cents a share, excluding special items. A final tally of analysts surveyed by Thomson Reuters put the per-share estimate at break-even, although the consensus expectation stood at a profit of 1 cent on Tuesday.

Revenue rose 9% to $5.7 billion, in line with estimates. With items, the carrier lost $50 million, or 13 cents a share, in the quarter.

Delta had been one of the few airlines expected to report a third-quarter profit, albeit a slight one, after excluding items. However, Delta said fuel costs were $800 million higher than a year earlier.

Looking ahead, the company expects to "post a modest loss in the fourth quarter, along the lines of what we did in the current quarter," said President Ed Bastian.

"Near-term demand remains strong," Bastian said. Domestically, "we're seeing some pressure," he said, but load factors are higher because capacity has been reduced. Internationally, bookings have declined two to four points, though yields are strong, he said.

Delta expects that it can effectively manage any decline because it has a continuing flexibility to further reduce capacity.

The carrier also benefits from a broad international route structure and from a minimal presence in the New York-London Heathrow market, which has been hit by financial market turmoil, said Executive Vice President Glenn Hauenstein. "Delta has by far the most diverse

international portfolio," he said. "We are largest to the Mideast, largest to Africa. Those economies are quite robust right now."

During the quarter, passenger revenue per available seat mile rose 9%, as capacity fell by 1%. Looking ahead, Delta projected a fourth-quarter operating margin of 1% to 3%, with revenue per available seat mile up 8% to 10%.

As of Sept. 30, Delta had $3.1 billion in cash and cash equivalents. The carrier had $818 million in the troubled Reserve Primary Fund: it has taken a $13 million impairment charge, but expects a full recovery of its money.