Delta Air Lines Inc. said on Thursday it expected a smaller-than-estimated decline in fourth-quarter passenger unit revenue, a closely watched revenue measure.

The No. 2 U.S. airline said passenger unit revenue, which compares sales to flight capacity, is expected to be down 3 percent for the current quarter, compared with its previous forecast of a decline of 3-5 percent.

Delta Air Lines' shares were up 2.6 percent at $51.11 in premarket trading.

Delta Air Lines also said it now expects operating margin of 10.5-11 percent for the quarter, compared with the 9.5-10.5 percent range it forecast earlier this month.

Delta Air Lines said in December it would take a $475 million hit in the fourth quarter from a new contract that hikes pilots' pay retroactively to the beginning of 2016.

The company said on Thursday it expects passenger unit revenue to be flat in the first quarter of 2017.

Up to Wednesday's close, Delta's stock had fallen 1.7 percent this year, compared with a 8.2 percent increase in the Dow Jones U.S. Travel & Leisure index.