ATLANTA TheStreet) -- Delta ( DAL - Get Report) said net income fell by 58% as higher fuel prices added $1 billion in costs, and it boosted its planned fourth-quarter capacity cuts.

The carrier said second-quarter net income excluding items was $366 million, or 43 cents a share. Analysts surveyed by Thomson Reuters had estimated 44 cents. Revenue rose 12% to $9.15 billion, in line with estimates.

Including items, net income was $198 million, or 23 cents a share. In the same quarter a year earlier, net income was $467 million, or 55 cents a share. Special items of $168 million included $80 million in severance and related costs, and $64 million for facilities consolidation and fleet reduction.

"High fuel prices are putting significant pressure on the industry, but the benefits of Delta's strategic actions and the dedication of Delta employees are evident in the solid profit we produced despite more than $1 billion in higher fuel expense," said CEO Richard Anderson, in a prepared statement.

Delta said it is adopting to "a permanent high fuel price environment" by using fare increases, fare surcharges and revenue initiatives to recover fuel cost increases through ticket prices. Additionally, the carrier said it will reduce fourth-quarter capacity by between 4% and 5%, an incremental one point reduction from previous guidance.

Domestic capacity will decline between 1% and 3%, while international capacity will decline 4% to 6%. In the trans-Atlantic, Delta and its partners will implement a combined reduction of 7% to 9%.

The carrier said it will retire 140 aircraft by the end of 2012, including the entire DC9 fleet and Saab turboprop fleet as well as sixty 50-seat regional jets. Half of the aircraft will exit the fleet this year, resulting in an estimated $250 million in maintenance savings. Also, more than 2,000 employees have accepted voluntary layoffs, Delta said.

During the quarter, passenger revenue per available seat mile rose 10%. PRASM increases ranged from 6% in the Pacific, where capacity grew by 7.8%, to 14% in Latin America. Passenger revenue grew 13% or $882 million, despite a $125 million negative impact from the earthquake and tsunami in Japan.

Looking ahead, President Ed Bastian cited "a strong demand environment" and said "right-sizing our capacity, coupled with pricing initiatives and revenues from new products and services, position us well to continue to generate solid unit revenue improvements for the September quarter."

On the cost side, cost per available seat mile excluding fuel and special items rose 4.8%. "We have seen unit cost growth from not only high fuel prices, but also maintenance volumes and revenue-related expenses," said Chief Financial Officer Hank Halter. "We are moving aggressively to stem this cost growth with a target of bringing our non-fuel unit costs to 2010 levels by the end of the year."

Previously, American ( AMR) said its fuel costs rose by $524 million during the quarter, while US Airways' ( LCC) fuel costs rose by $424 million and United' ( UAL - Get Report) fuel costs rose by $1.1 billion. Except for American, all the major carriers have reported profits, albeit smaller than a year earlier due to the fuel cost surge.

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

>To contact the writer of this article, click here: Ted Reed

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