Delta Air Lines Inc. (NYSE: DAL) reported second-quarter 2015 results before markets opened Wednesday morning. The airline reported adjusted diluted quarterly earnings per share (EPS) of $1.27 on revenues of $10.71 billion. In the same period a year ago, Delta reported $1.02 EPS on revenues of $10.62 billion. Second-quarter results also compare to the consensus estimates for EPS of $1.21 and revenue of $10.65 billion.

On a GAAP basis, the company reported quarterly EPS of $1.83, which includes a year-over-year reduction of $1.18 billion in fuel costs. Adjustments to income totaled $726 million, which included a mark-to-market hedging loss of $720 million. Fuel costs declined 41% in the company’s regional carrier service.

Adjusted to include mark-to-market impacts, fuel averaged $2.47 a gallon for the company’s mainline fleet, a drop of $0.43 a gallon year-over-year.

The less-good news for Delta is that unit revenues declined by 4.4% on its mainline flights and 1.6% on its regional carriers. The consolidated decline totaled 4.6%. Unit revenues suffered from a 2% decline due to foreign currency translation. Total revenues rose by just 0.8% year-over-year in the quarter.

The company’s president said:

[U]nit revenue growth is an important component of our long-term plan to expand margins. We continue to project flat system capacity growth for the fourth quarter of 2015 – a level in line with current demand expectations, which should put the business on the right trajectory to stem the erosion in unit revenues by the end of the year.

For the third quarter of 2015, Delta expects to post an operating margin of 19% to 21% on fuel prices of $1.90 to $1.95 per gallon. Seat capacity is expected to be up by about 3% compared with the third quarter of 2014. The consensus analysts’ estimates call for EPS of $1.64 on revenues of $11.2 billion. Delta did not provide revenue or EPS estimates.

Shares traded down about 2% at $42.80 in premarket trading Wednesday, in a 52-week range of $30.12 to $51.06. Prior to this release, Thomson/Reuters had a consensus price target of around $59.40 on the company’s shares.

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