AP Airlines Writer
MINNEAPOLIS (AP) -- Delta Air Lines will start paying a quarterly dividend and buy back some of its shares -- investor-friendly moves that are common in other industries but rare for airlines.
Delta said on Wednesday that it will pay a quarterly dividend of 6 cents per share starting Sept. 10 for people who own the stock on Aug. 9. A quarterly dividend of that size would yield 1.3 percent per year compared with Tuesday's closing stock price.
The airline also plans to buy back $500 million of its stock by mid-2016. Buybacks have the effect of returning cash to shareholders because the remaining shares they own represent a bigger slice of the company and its profits.
Of the large U.S. airlines, only Southwest Airlines Co. pays a dividend -- it is one penny per share per quarter.
Delta last paid a dividend in 2003. Airlines then were reeling from a slow economy, travel worries because of wars in Iraq and Afghanistan, and high costs left over from better times.
Delta went through bankruptcy protection from 2005 to 2007, and its shareholders from that period were wiped out. United, US Airways, and Northwest all went through bankruptcies in the 2000s, too. American Airlines is in bankruptcy protection now, and plans to emerge as part of a merger with US Airways.
Delta bought Northwest in an all-stock deal in 2008, and it has posted annual profits for three years in a row. It has been using the money to pay down debt. It said its adjusted debt was just $11.7 billion at the end of last year, down from $17 billion at the end of 2009.
Delta said it's on track to owe $10 billion by the end of this year. That's a goal it had originally set for late 2012, before moving the target date back to early this year, and now by the end of this year.
The carrier said its five-year plan calls for it to "achieve and maintain" adjusted debt of $7 billion.
The company measures its adjusted debt by adding up what it owes, plus rent for airplanes and other items, and then subtracts its cash. It reported $3.4 billion in cash at the end of 2012.
Delta has hinted since last year that it was considering a dividend as a next step after it pays down debt, and it said last month that it would have an announcement around this time.
Delta Air Lines Inc. is based in Atlanta. Its shares rose 52 cents, or 2.9 percent, to $18.60 in morning trading after rising as high as $18.73 earlier in the day. FactSet says that is its highest level since February 2008.
Copyright 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.