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Delta expects slightly lower fourth quarter unit revenue

Delta Air Lines has further trimmed its fourth quarter unit revenue expectation amid weaker-than-expected yields.

The Atlanta-based airline now predicts fourth quarter unit revenue per available seat mile will increase roughly 3% year-on-year, according to a filing with the Securities and Exchange Commission.

The carrier in December had estimated the figure would increase 3.5% year-on-year for the period, and in October Delta predicted a 3-5% fourth quarter unit revenue jump.

"The overall demand environment remains healthy with strength in both business and leisure segments," says Delta's financial filing. "While close-in yield momentum continues, the pace of improvement in late December was more modest than anticipated."

Delta has not yet reported its fourth quarter and full-year 2018 results.

But the company expects fourth quarter operating revenue increased 7% year-on-year, down from a previously estimated 7.5% gain. Fourth quarter capacity in available seat miles likely jumped 4%, in line with previous estimates, Delta says.

Delta anticipates that its fourth quarter cost per available seat mile (CASM), excluding fuel and profit sharing expenses, declined about 0.5% year-on-year. That figure is also in-line with Delta's previous estimates. Non-fuel expenses declined about 0.5% year-on-year in the fourth quarter due to cost-control efforts, Delta says.

The company's fourth quarter financial results will also benefit from $100 million in non-operating revenue generated largely by Delta's sale of majority ownership in maintenance company Delta Global Services to Argenbright Holdings I. That deal closed on 21 December 2018, leaving Delta with 49% ownership of the services company.

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