January 15, 2019 / 6:06 PM / 9 months ago

UPDATE 4-Delta Air warns of slowing revenue growth as gov't shutdown weighs

(Adds details on aircraft certification, travel demand, updates shares, background on Airbus planes)

By Ankit Ajmera and Tracy Rucinski

Jan 15 (Reuters) - Delta Air Lines Inc posted a slight beat in fourth-quarter profit on Tuesday but warned of a decline in revenue growth this quarter and difficulties in introducing new aircraft because of the U.S. partial government shutdown.

As the shutdown entered its 25th day on Tuesday, non-essential work at the Federal Aviation Administration was on hold, delaying the certification of new aircraft.

Delta, the No. 2 U.S. carrier, said it may delay the Jan 31 start date for its Airbus 220 airplanes, and the commercial use of other jets such as the Airbus A330neos.

The A220 is a small, single-aisle aircraft that Airbus is producing in partnership with Bombardier. The A330neo sports a newer cabin and larger engines than existing A330 long-haul jets.

Delta Chief Executive Officer Ed Bastian said the shutdown will cost about $25 million per month due to reduced government travel and related effects. He said the company has not seen any impact on corporate travel or bookings.

Still, the carrier sees unit revenue, a closely watched metric of revenues per mile flown, ranging between flat to 2 percent higher in the first quarter, compared with 3.2 percent growth in the fourth quarter. It cited the timing of when Easter falls this year and increasing foreign exchange headwinds as negative factors.

JP Morgan analyst Jamie Baker warned that Delta’s first-quarter target for unit revenue could be at risk if the shutdown drags on past January.

Delta operates about 86 daily flights from Washington-area airports, less than rivals like United Airlines Holdings inc , which has a hub at Washington Dulles and has about 264 Washington-area flights per day.

United is due to report fourth-quarter results on Tuesday after the markets close.

Beyond the shutdown, which has been causing long airport lines as more security screeners, who are not being paid, fail to show up for work, Delta said leisure and corporate travel demand remained healthy, with strong bookings through the U.S. spring break period.

Delta forecast first-quarter earnings between 70 cents and 90 cents per share, below analysts’ estimate of 94 cents, according to IBES data from Refinitiv.

Both Delta and larger rival American Airlines Inc lowered estimates earlier this month for fourth-quarter unit revenue, raising concerns about airlines’ ability to raise fares in an uncertain global economy. The forecasts sent their shares sharply lower.

On an adjusted basis, Delta earned $1.30 per share in the fourth quarter, above the $1.27 per share expected by analysts.

Total operating revenue rose 5 percent to $10.74 billion, in line with the Wall Street estimate.

Shares rose 0.3 percent to $47.89. (Reporting by Ankit Ajmera in Bengaluru and Tracy Rucinski in Chicago; Editing by James Emmanuel and Jeffrey Benkoe)

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