WRAPUP 2-Delta, US Air post profits, see better revenue trends

* Delta a penny shy of estimates as US Airways beats

* Third-quarter revenue softer than analysts expected

* Delta shares slide 1.6 pct; US Airways up 2.3 pct

Oct 24 (Reuters) - U.S. carriers Delta Air Lines and US Airways Group turned in higher quarterly profits on Wednesday and indicated revenue trends looked to be improving following a soft September.

Delta's profit was a penny shy of analysts' average estimates, excluding special items, while US Airways topped estimates. Revenue at both carriers was lower in the quarter than analysts expected.

Shares of Delta slid 1.6 percent to $9.99 in afternoon trading, while US Airways was up 2.3 percent at $12.37.

Delta said unit revenue - a measure of pricing power and how full planes are - would likely rise 4 percent to 5 percent in October after a 3 percent increase in the third quarter, driven by strength in business travel. The carrier added that it expects ``robust'' leisure traffic for the Thanksgiving and Christmas holidays.

US Airways said it was ``cautiously optimistic'' about demand, and forecast monthly revenue rises for October through December.

Performance in unit revenue weakened at many U.S. airlines toward the end of the third quarter, which is a traditionally strong period that usually benefits from some summer travel.

Given the September softness, the reports are ``very much in line'' with expected results, said Bill Swelbar, a research engineer at MIT's international center for air transportation.


Delta said it would undertake cost-cutting to hold down non-fuel expenses, which have risen in recent quarters. The carrier said it planned a $1 billion program over the next two years that will include replacing 50-seat jets with larger aircraft that will cost less to operate, and shifting more business to its website.

Southwest Airlines last week also stressed a need to cut costs, saying it would control hiring over the next year in a bid to reduce overhead by $100 million. Excluding items, Southwest's third-quarter profit beat analysts' average forecast but was down from a year earlier on flat revenue.

Costs are ``a continuing battle'' for airlines, Swelbar said. ``I would imagine these companies will continue to manage capacity and do anything and everything they can to remove fixed costs from the operation.''

U.S. carriers have merged, stopped flying unprofitable routes and raised ticket prices to recover from the 2008-09 downturn. Carriers have also cut back flying to match demand and created new revenue streams with baggage and food fees, moves that have helped keep profits coming in the face of volatile fuel prices.

Delta had net income of $1.05 billion, or $1.23 a share, for the third quarter, compared with $549 million, or 65 cents a share, a year earlier.

Results included special items, such as a $440 million gain tied to fuel hedges that together added up to a $279 million gain. Excluding items, Delta earned 90 cents a share, compared with 91 cents expected by analysts, according to Thomson Reuters I/B/E/S.

Revenue at Delta rose 1 percent to $9.92 billion, just missing the analyst estimate of $9.96 billion.

At US Airways, which is in talks with AMR Corp's American Airlines about a potential merger, third-period net income was $245 million, or $1.24 a share, compared with $76 million, or 41 cents a share, a year earlier.

Excluding one-time items, profit was 98 cents a share, compared with 92 cents expected by analysts on average. US Air said revenue rose 2.8 percent to $3.53 billion, compared with $3.55 billion expected by analysts.