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AAA  May. 15, 2013
Delta delivers dividends
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Delta Air Lines is giving shareholders something they want. Cash.

Delta plans to buy back $500 million of its stock and will begin paying a 6-cent-per-share quarterly dividend this fall, enough for a yield of 1.3 percent. It hasn't paid a dividend in 10 years.

Management has slashed the airline's debt burden by $5 billion since the end of 2009. That has significantly reduced Delta's interest bill, leaving more money for shareholders. The airline has booked three profitable years in a row.

For years, the knock on the airline industry is that it offered too many seats, chasing too many passengers who paid reduced fares, often on new planes. It's tough to make money that way. The current batch of airline CEOs say they're focused on profits rather than market share.

They've made tremendous progress in paying off debt, setting fares profitably, and being disciplined with the number of flights they offer. Cowen Securities analyst Helane Becker wrote on Monday: "The turnaround of the airlines is truly remarkable."

Investors seem to agree. The NYSE Arca Airline Index, a measure of the largest companies in the industry, is up 29 percent this year.

Associated Press
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