DALLAS — Cheaper jet fuel thanks to falling oil prices helped Delta Air Lines earn $980 million in the fourth quarter despite lower revenue than a year ago.
Those savings are unlikely to be passed on to consumers, however.
While Delta forecast that the cost per mile to travelers — a closely watched indicator of demand and average fares — would fall by between 2.5% and 4.5%, that could be misleading because airlines made a pact to raise fares this year.
The company also made no mention of extensive fees for checked baggage and other services, which frequently pad the cost of flights for consumers.
The upshot: the savings on fuel probably won't translate to noticeable discounts for travelers.
"The airlines will continue to benefit from lower jet fuel costs as they were profitable with oil up to $114 per barrel and are clearly quite profitable at current levels, even with (fare) discounting," Helane Becker, an analyst with Cowen and Co., said in a note to clients.
Delta expects to pay about $1.20 to $1.25 per gallon for fuel in the first quarter, an even better deal than the $1.85 it paid in the fourth quarter.
Including Delta Connection regional flights, the company saved nearly $2.8 billion or nearly 65% on fuel, compared with late 2014. The airline now spends less on fuel than it does on labor — the cost of salaries and benefits rose 9% to become Delta's largest single expense.
Atlanta-based Delta's net income for the fourth quarter contrasted with a loss of $712 million a year earlier, when the airline took a $1.2 billion write-down in the value of fuel hedges, which provide insurance against rising energy prices but cost money when oil prices fall.
Delta's fuel-hedging loss was a far smaller $54 million in the fourth quarter of 2015.
Some analysts believe airlines will try to reassure worried investors by curtailing growth plans for 2016 rather than use cheap fuel to flood the market with more flights.
For all of 2015, Delta earned $4.5 billion on revenue of $40.7 billion. It paid employees $1.5 billion in profit sharing and gave shareholders $360 million in dividends and spent $2.2 billion to buy back its own stock -- a technique that companies use to raise the price of their shares.