Delta says earnings will jump again in 2015 on cheaper fuel; airline stocks resume their rally

Shares of major U.S. airlines rose Thursday amid more signs that cheaper fuel will turn into a windfall for the carriers.

Delta Air Lines Inc. said that its pretax income will jump to more than $5 billion in 2015, up from an estimated $4.5 billion this year and nearly double the 2013 gain. At current fuel prices, the airline expects to save $1.7 billion at the pump next year.

Leaders of Delta and other big U.S. airlines have said they won't use cheaper fuel to cut passenger prices — fares are being set by strong travel demand, they say. At an investor event in New York, Delta executives weren't immediately asked directly about cutting fares, but CEO Richard Anderson said that fuel prices are too volatile to use the current decline as an opportunity to buy more planes.

"When it comes in lower," Anderson said of fuel prices, "hang on to all of it. That's kind of our philosophy."

Delta executives said that airlines are keeping the supply of flights in line with travel demand except in Asia. Too many flights would drive down fares and hurt profits. Delta expects to increase its capacity 2 percent next year.

Airline stocks have surged this year, with several hitting all-time records. They slumped on Tuesday after Spirit Airlines Inc. warned that it saw signs that prices on last-minute tickets were easing because of lower fuel prices. That concern seemed to be forgotten by Thursday.

In morning trading, Delta shares rose $1.01, or 2.2 percent, to $47.23; American Airlines Group Inc. gained $1.28, or 2.6 percent, to $50.22; United Continental Holdings Inc. rose $1.57, or 2.5 percent, to $65.26; and Southwest Airlines Co. rose 70 cents, or 1.7 percent, to $42.18.