Delta Air Lines Inc. said its fourth-quarter earnings soared on a $8 billion gain related to the reversal of a tax-valuation allowance.

Delta reported a profit of $8.48 billion, or $9.89 a share, up from $7 million, or a penny a share, a year earlier. Excluding the tax benefit, restructuring-related charges and other items, adjusted earnings were 65 cents. Revenue increased 5.5% to $9.08 billion.

Analysts polled by Thomson Reuters expected per-share profit of 63 cents and revenue of $9.04 billion.

The Atlanta-based carrier said it expects to increase capacity by 2% to 3% in the current quarter.

Passenger unit revenue--a key measure of performance for the airline industry--rose 6.1%. Traffic increased 2% on a 2.9% increase in capacity.

Write to Tess Stynes at tess.stynes@wsj.com

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