Delta Air Lines posted a $712 million loss in the fourth quarter, mainly due to the falling value of its fuel hedging contracts.
The Atlanta-based airline reported a $1.2 billion charge on its future fuel hedging contracts. Delta aggressively hedges its fuel costs, with the hedging contracts acting as an insurance against rising oil prices. However, when oil prices fall, the value of the contracts are lowered.
Revenues at the carrier grew 6 percent to $9.6 billion as it increased its passenger traffic by 4 percent and grew its network by 3.7 percent in the fourth quarter.
"As we begin 2015, we have a significant opportunity from lower fuel prices, which will drive more than $2 billion in fuel savings over 2014. Through our capacity discipline, pricing our product to demand, and the fuel savings, we expect to drive double-digit earnings growth, along with increased free cash flow and a higher return on invested capital in the upcoming year."
Excluding one-time accounting charges, Delta beat Wall Street analysts estimates for its quarterly earnings. Shares of Delta were up about 3 percent, trading at $47.43 around 9 a.m. CDT on the New York Stock Exchange.