Delta Air Lines' captured more revenue from passengers in the first quarter, but the airlines' costs are also on the rise.
The second-largest U.S. airline on Thursday reported first-quarter net income of $547 million, or 77 cents a share, down from $561 million, or 77 cents a share, in the year-earlier period.
On an adjusted basis, the company earned 74 cents a share, a penny above expectations of analysts polled by Thomson Reuters.
The airline posted record revenues in the quarter. Its adjusted operating revenue in the first three months of 2018 was $9.76 billion, slightly below Wall Street's estimate of $9.85 billion. That figure strips out third-party sales from its refinery.
Delta's shares were up 2 percent in early trading Thursday.
Higher costs may make airlines think twice about growing aggressively since doing so becomes more expensive. Delta said its first-quarter fuel prices were 20 percent higher than during the year-earlier period.
"It forces discipline," CEO Ed Bastian told CNBC. "When you think about fuel at $70 a barrel you've got think about the long-term implications of the supply you're putting into the market."
Bastian said there is about a six-to-nine month lag between an increase in the price of fuel and when the airline can price for it. It's a challenge because raising fares from higher costs could also crimp demand, and failing to expand could also be a boon to bolder airlines.
Delta and other airlines are hoping strong demand will help them weather those costs.
Its trans-Atlantic routes performed particularly well, with revenue from those routes up 15 percent from a year earlier, more than any other region.
Delta, its European partners, and their rivals are adding no-frills fares that charge passengers to check luggage, an effort to compete with low-cost competitors such as Norwegian Air Shuttle.
Executives have said that the success of the so-called basic economy fares, which several U.S. airlines already offer in the U.S., is based on how many passengers pay up to avoid the class of service. Delta said up-sell revenue in the quarter totaled $421 million, a 23 percent increase from the year before.
Earlier Thursday, British Airways' parent International Consolidated Airline Group said it had bought a
Looking ahead to the second quarter, Delta said it expects per-share earnings of $1.80 to $2, and unit revenue growth of 3 percent to 5 percent, excluding refinery sales. For the full year, Delta said it expects revenue growth of 4 to 6 percent.