Delta Air Lines ( DAL) reported a fourth-quarter loss due to higher fuel prices, but it said recent efforts to pass cost increases on to consumers have been largely successful.

Delta became the fourth straight legacy carrier to post a fourth-quarter loss and a full-year profit. Its quarterly loss was $70 million, or 18 cents a share, in line with estimates. Revenue rose 10% to $4.7 billion, slightly exceeding the consensus expectation.

For the full year, excluding reorganization items, Delta reported a profit of $418 million. "The results demonstrate both the momentum in the business and the significant challenge we face from higher fuel prices," said CEO Richard Anderson on a conference call with analysts.

Looking ahead, Delta is targeting "flat earnings for 2008," despite needing to cover an estimated $1.3 billion in fuel-cost increases, said President Ed Bastian. Revenue is expected to grow by 8%.

This month, Bastian said, advance bookings have run ahead of last year's pace. For February and March, advance bookings are slightly behind as the carrier focuses on ensuring yield premiums rather than filling seats.

Executive Vice President Glen Hauenstein said higher fuel surcharges and fares have been successfully passed through, with "the most traction in lower-end fare buckets, where consumers seem to be absorbing a significant portion."

Additionally, in trans-Atlantic markets, he said, more than 50% of revenue is now generated offshore because "with currency exchange where it is today, we see incredible demand coming this way."

Anderson said Delta's review of strategic options, including mergers, is ongoing, but he declined to comment specifically.

During the quarter, consolidated passenger revenue per available seat mile rose 6%. International PRASM rose 14%, led by the Atlantic with a gain of 15.2%, while domestic PRASM climbed 4%. Delta said 32% of capacity operated in international markets, up from 23% in the fourth quarter of 2005.

On the cost side, operating expenses rose 10% to $445 million, including $370 million for increased fuel costs. Mainline CASM rose 4% to 10.79 cents, while mainline CASM, excluding fuel, fell 6% to 6.79 cents.

In the current quarter, Delta will reduce domestic capacity by 2% to 3%, while increasing international capacity by 10% to 12%. Overall, capacity will rise 1% to 2%. Hauenstein said the carrier is intent on preserving its international feed, so that future capacity reductions would most likely occur in Cincinnati and Salt Lake City, which are primarily domestic hubs.

Based on Transportation Department data, Delta ranked first among network carriers in on-time performance in 2007.