NEW YORK (TheStreet) -- Delta (DAL - Get Report) set a high bar for an industry beset by capacity discipline fervor, saying it will cut back on international flying because of the strong dollar.

The carrier, which reported earnings on Wednesday, said it plans a 3% international capacity cut for the winter schedule, with capacity reductions "focused on markets that have been most affected by the strong dollar and markets where demand has been negatively impacted by the decline in oil prices," the carrier said.

"Key actions for the December quarter will include a 15-20% reduction in service from Japan, a 15% reduction to Brazil, a 15-20% reduction to Africa, India and the Middle East, and suspension of service to Moscow for the winter season," the carrier said in its earnings release.

The 3% international reductions combined with 2% domestic growth will result in flat capacity for the December quarter.

In a note, Cowen & Co. analyst Helane Becker called the move "music to the ears of many investors who believe Delta should not over-grow capacity" and said Delta's passenger revenue per available seat mile should benefit.

"The international markets have been a drag on results recently," Becker wrote. "This reduction in capacity should benefit (passenger revenue per available seat mile) and reduce the negative foreign currency effect."

During the first quarter, consolidated PRASM decreased 1.7%, primarily driven by 1.5 points of negative foreign exchange impact. Domestic PRASM gained 2.1%, but PRASM fell in every other region. It was down 9.2% in the Pacific, down 4.2% in Latin America and down 2.9% in the Atlantic.

Delta narrowly beat first-quarter Wall Stret estimates, reporting adjusted net income of $372 million, or 45 cents a share. Consensus was 44 cents. Per share earnings rose 36%. Revenue rose 5% to $9.4 billion. Foreign exchange pressured revenue by $105 million during the quarter.

"Delta's business is performing well, producing the best March quarter, both operationally and financially, in Delta's history," said CEO Richard Anderson in a prepared statement. "While the strong dollar is creating headwinds with international revenues, it also contributes to the lower fuel prices which will offset those headwinds with over $2 billion in fuel savings this year."

Looking ahead, Anderson projected current quarter operating margins of 16% to 18% with more than $1.5 billion of free cash flow. "These record results and cash flows show that the strong dollar is a net positive for Delta," he said.


President Ed Bastian said, "The substantial benefit from lower fuel prices will again more than offset the unit revenue decline of 2 to 4 % for the June quarter to produce operating margins north of 20% at market fuel prices."

In a note, JPMorgan analyst Jamie Baker wrote: "Delta is guiding to a 2Q outcome softer than consensus, though accompanied by better-than-feared RASM and off-peak capacity cuts. While the former matters most to us, we expect the market to significantly focus on the latter, potentially limiting incremental equity pain and lifting shares near term."

Shortly after the opening bell, Delta shares traded at $44.78, up $1.70 or nearly 4%.

During the first quarter, Delta had a 7% domestic capacity increase, a 4.1% trans-Atlantic capacity increase and a 13.2% capacity increase in Latin America. Pacific capacity fell by 1.4%.

On the cost side, cost per available seat mile fell 1.4% due to higher capacity, foreign exchange and the benefit of fleet adjustments and other cost initiatives. "With nearly 10% of our expenses non-dollar denominated, we are seeing cost tailwinds from the strong dollar which should benefit our non-fuel unit costs by 1 point in the June quarter," said Chief Financial Officer Paul Jacobson.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.