Delta says demand 'solid'

Associated Press
FILE - In this July 22, 2011 file photo, Delta airlines baggage handlers service a plane at the boarding gate at the Detroit Metropolitan Airport in Romulus, Mich. Delta Air Lines Inc. said on Tuesday, March 13, 2012, that demand remains "solid" even though fuel prices are forcing it to raise fares. (AP Photo/Carlos Osorio, File)

NEW YORK (AP) — Delta Air Lines Inc. said on Tuesday that demand remains "solid" even though fuel prices are forcing it to raise fares.

Delta said a key measure of passenger revenue will grow 12 percent to 13 percent during the first quarter. That increase in per-seat passenger revenue is largely because Delta, like other airlines, has been raising fares to offset higher fuel prices.

The increase in revenue slowed as the quarter went on, from a 14.5 percent jump in January, to an estimated 11.5 percent increase this month, according to an investor presentation by the company on Tuesday.

The Transportation Department released data Tuesday that showed airlines on average paid 12 percent more for a gallon of jet fuel in January than they did in the same month of 2011 as oil prices rose.

Delta said it will cut flying capacity by 3 percent to 4 percent during the first quarter. It said previously that it would reduce capacity 3 percent to 5 percent.

Even with the cut in flying capacity, Delta said revenue from corporate contracts has risen 10 percent so far during the first quarter. That's a key customer base for airlines, because business travelers tend to pay more than leisure travelers.

Passenger revenue rose in 10 out of 11 industries that Delta tracks. Spending by travelers in the defense industry fell 2 percent as that sector shrinks because of less military spending in the U.S. and overseas.

Shares of Atlanta-based Delta rose 19 cents, or 2.1 percent, to $9.38 in midday trading.