Delta Air beats second-quarter profit estimates, expects unit revenue drop

(Reuters) - Delta Air Lines Inc on Wednesday reported that second-quarter profit jumped 85 percent, topping expectations, but forecast a third-quarter drop in unit revenue as the carrier continued to see weaker demand abroad due to the strong U.S. dollar.

The Atlanta-based airline earned $1.49 billion in the last quarter versus $801 million a year ago. On an adjusted basis, profit was $1.03 billion, or $1.27 per diluted share, compared with the average analyst estimate of $1.21, according to Thomson Reuters I/B/E/S. Last year, Delta posted adjusted profit of $889 million, or $1.04 per share.

Despite the earnings beat, Delta's third-quarter outlook reflected a challenging revenue environment as the U.S. dollar weighed on foreign travelers' spending power and demand for flights to the United States.

The carrier forecast that passenger revenue per available seat mile (PRASM), which measures sales relative to capacity and the distance of flights, would decline between 4.5 percent and 6.5 percent in the third quarter.

It estimated that capacity would grow about 3 percent in third quarter but stay flat in the fourth period after the peak summer travel season ends.

"We believe this plan will allow us to get our unit revenue back on the right trajectory by the end of the year," Chief Financial Officer Paul Jacobson said in a memo to employees that was seen by Reuters.

Investors have called on U.S. airlines to restrain capacity growth to match lower demand. However, frequent talks with Wall Street about capacity, which has an impact on prices, have raised eyes at the U.S. Department of Justice and prompted an investigation into whether carriers have worked together to illegally keep airfares high.

(Reporting by Jeffrey Dastin in New York; Editing by Jeffrey Benkoe)