Delta Air Lines Inc
Revenues were a little bit higher than expected but expenses were definitely higher than expected, said Matthew Jacob, an airline analyst with ITG Investment Research.
The second-largest carrier behind United Continental Holdings Inc
Excluding items such as merger-related costs, profit was 19 cents a share. Analysts on average expected 24 cents, according to Thomson Reuters I/B/E/S.
Operating revenue rose 14 percent to $7.79 billion, compared with $7.74 billion expected by analysts.
Operating expenses increased 9 percent, or $644 million. Fuel costs rose 13 percent, and plane maintenance expenses were up 39 percent.
U.S. airlines have seen revenue and profit improve in the past year, recovering from the recession that sapped corporate and consumer demand for air travel.
But as fuel prices rise, Jacob said revenue growth rates were also starting to slow as airlines bump up against tougher year-earlier comparisons.
He also cited caution on plans by airlines to increase capacity this year. Capacity cuts a couple of years ago were a key factor that helped airlines bounce back from the downturn, Jacob added.
For example, Delta said its system capacity would rise 5 to 7 percent in the current first quarter from the year earlier, mainly driven by planned international increases.
Investors are starting to get a little bit nervous about the industry's overall ability to manage the capacity properly and not grow too quickly and put more pressure on recovery, Jacob said.
Delta has cut debt, added passenger amenities such as fully reclining seats, and expanded service to higher-growth markets since it bought Northwest Airlines in 2008.
Shares of Delta were down 3 percent at $12.40 in trading before the market opened.
(Reporting by Karen Jacobs; Editing by Lisa Von Ahn, Dave Zimmerman)