(Adds background on profit drop, details on quarter)
July 13 (Reuters) - Delta Air Lines Inc on Thursday reported an increase in quarterly passenger unit revenue, a closely watched metric, but higher costs weighed on its bottom line.
Breaking a losing streak that has plagued much of the industry for the last two years, Delta posted a 2.5 percent increase in passenger unit revenue, which measures sales relative to flight capacity, on 0.4 percent higher capacity in the second quarter of 2017.
But the company's net income fell 20.8 percent to $1.22 billion, or $1.68 per share, in the quarter ended June 30, from $1.55 billion, or $2.03 per share, a year earlier.
On an adjusted basis, the No. 2 U.S. airline by passenger traffic earned $1.64 per share, compared to the analyst consensus forecast of $1.67, according to Thomson Reuters I/B/E/S.
Shares of the No. 2 U.S. airline by passenger traffic fell as much as 2.4 percent to $54.13 in early trading.
Delta said operating expenses climbed during the quarter on higher salaries and fuel costs, its two biggest components. The airline paid an additional $338 million towards 2017 profit sharing with employees.
"The June quarter represented the peak for non-fuel cost pressures this year and we expect our CASM (cost per available seat mile) trajectory to moderate to approximately 2 percent for the September quarter," Delta Chief Financial Officer Paul Jacobson said in a statement.
Aircraft fuel related expenses rose 18 percent to $1.45 billion during the quarter, while salary costs were up 9 percent to $2.62 billion.
Delta said the June quarter marked a return to quarterly unit revenue growth after two and a half years, and it expects continued positive growth in the September quarter.
Delta's operating margin, excluding special items, rose slightly to 18.4 percent, compared to 17.4 percent last year.
Total operating revenue rose 3.3 percent to $10.79 billion. (Reporting by Alana Wise in New York and Arunima Banerjee in Bengaluru; Editing by Bernard Orr and Saumyadeb Chakrabarty)