Delta Air Lines Inc. (NYSE: DAL) reported third-quarter 2012 results before markets opened this morning. The airline posted adjusted diluted earnings per share (EPS) of $0.90 on revenues of $9.92 billion. In the same period a year ago, the company reported EPS of $0.91 on revenues of $9.82 billion. Third-quarter results compare to the Thomson Reuters consensus estimates for EPS of $0.91 and $9.97 billion in revenues.

Delta’s GAAP fully diluted EPS totaled $1.23, which included a mark-to-market gain of $440 million on fuel hedges. In the third quarter of 2011, Delta took a $216 million charge for special items, with GAAP EPS coming in at $0.63.

Excluding the effects of fuel costs, profit sharing and other items, Delta’s consolidated unit costs rose 5.6% year-over-year for the third quarter.

Delta’s CFO said:

With consistent investment in the business, our non-fuel costs have grown in the past few quarters and we expect that trend to continue into the first half of next year. However, we are in the process of implementing a $1 billion program of structural initiatives that we anticipate will generate significant savings in the second half of 2013, while maintaining the high quality product, network and operation we have built.

The company expects its wholly-owned crude oil refinery in Pennsylvania to generate a contribution of breakeven to $25 million in the fourth quarter. The refinery started up in the third quarter and is expected to be fully operational this quarter.

Delta offered fourth-quarter guidance on several items. The company expects fuel costs of $3.15 to $3.20 per gallon, up from $3.14 in the third quarter. The operating margin is forecast in the range of 4% to 6%, a sharp drop from the 13.2% mark posted this quarter.

Delta’s shares are inactive in premarket trading this morning, having closed at $10.15 last night, in a 52-week range of $7.08 to $12.25. The consensus target price for the shares was around $15.30 before today’s report.

Paul Ausick

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