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swung to a fourth quarter profit and said the current quarter also will be profitable.

The first carrier to report fourth-quarter results said it earned $158 million, or 19 cents a share, excluding items. Analysts surveyed by Thomson Reuters estimated earnings of 24 cents a share. Revenue rose 14% to $7.8 billion; analysts had estimated $7.7 billion.

In the same quarter a year earlier, the carrier lost 27 cents a share.

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"Our 2010 results are among the best in Delta's history," said CEO Richard Anderson, in a prepared statement. "These results are a direct reflection of the success of our merger, cost discipline and debt reduction strategy and give us momentum to deal with the rising fuel prices we face in 2011."

Looking ahead, Delta said it expects a profitable first quarter.

"Through the momentum we built in 2010, we expect to maintain our March quarter margins year over year despite more than $350 million in higher costs from the recent steep run-up in fuel prices," said President Ed Bastian, in a prepared statement. Delta expects a first-quarter operating margin of 1% to 3%, with system capacity up 5% to 7%.

During the quarter, passenger revenue per available seat mile rose 8%, led by Pacific PRASM, which grew 24%, and Latin America RASM, which grew 19% despite a 5% reduction in capacity. Consolidated PRASM grew 8%.

On the cost side, consolidated cost per available seat mile excluding fuel, profit sharing and special items, fell by 2% on 7% higher capacity. Consolidated CASM including fuel and items increased 2$, as operating expenses rose $644 million. Delta hedged 58% of fourth quarter fuel costs and 49% of current quarter fuel cost.

As of Dec. 31, Delta had $5.2 billion in unrestricted liquidity including $3.6 billion in cash and short-term investments.

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

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Ted Reed