Chief Executive Officer Richard Anderson said during the carrier's investor meeting webcast that Delta, the No. 2 U.S. airline behind United Continental Holdings Inc (UAL.N), expected a profit of $1.6 billion excluding items for this year, up about 30 percent from the year before. He said 2013 will bring "really solid improvement" over 2012.

Anderson said Delta was looking to build a model of sustainable profitability and differentiate itself with great customer service in order to be "a really good place" for shareholders to invest.

"As the industry consolidates, we can't be a commodity," he told investors.

Product improvements and competitive advantages in markets such as New York and Atlanta would help drive revenue improvement next year even as capacity growth stays flat, the company said. Delta has been upgrading plane seats, refurbishing airport lounges and expanding in-flight entertainment options to win new passengers and entice existing ones to spend more.

The carrier said it expected fourth-quarter earnings of $200 million to $250 million, excluding items, despite disruptions caused by superstorm Sandy. The storm barrelled through the U.S. Northeast in late October and led airlines to cancel thousands of flights as major New York area airports shut down.

CAPITAL DEPLOYMENT PLAN

Delta also said it expected to outline a capital deployment strategy at its June annual meeting, with the program starting in January 2014. While Delta said it would analyze the business with its board next year to determine that strategy, some analysts who follow the company have raised the possibility of share buybacks or a dividend.

Delta said net debt would come down to $10 billion next year, compared with a level of $17 billion in 2009.

U.S. carriers have merged, stopped flying unprofitable routes and raised ticket prices to recover in recent years. Airlines have also created new revenue streams with baggage and food fees, moves that have helped deliver profits in the face of volatile fuel prices.

Delta supports industry consolidation, Anderson said, predicting that AMR Corp's (AAMRQ.PK) American Airlines and US Airways Group Inc (LCC.N) will conclude a deal "shortly." The two airlines are in talks on a potential merger.

Delta, which acquired Northwest Airlines in 2008, has cut costs while inking partnerships with non-U.S. airlines to position itself for growth. Just on Tuesday, it announced the purchase of a 49 percent stake in British carrier Virgin Atlantic for $360 million and plans for a joint venture that will give it expanded access at London's Heathrow Airport .

The Virgin partnership will help Delta make the most of its expansion in the New York market, where it is overhauling its facilities at John F. Kennedy International Airport and this summer expanded flights out of LaGuardia after a swap of gates with US Airways in the Washington, DC, market. Delta said it expected LaGuardia to be a profitable centre for the company next year.

The carrier is also retiring smaller, less efficient planes from its fleet, and earlier this year took the unusual step of buying a refinery to help reduce its overall fuel bill.

Bombardier Inc (BBDb.TO), which last week won an order valued at up to $3.29 billion from Delta for 40 CRJ900 jets and an option to buy an added 30, will assist the carrier in removing some 50-seat planes from its fleet. (Reporting by Karen Jacobs; Editing by Lisa Von Ahn and Bob Burgdorfer)

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