Delta shares jump on healthy outlook for quarter

March 4 (Reuters) - Shares of Delta Air Lines Inc (NYSE: DAL - news) surged almost 5 percent in morning trading on Tuesday after it gave a healthy outlook for the first quarter despite a harsh winter that was expected to hurt airlines.

The company said it plans to announce an update to its dividend policy by June.

Delta, the third-largest U.S. airline after American Airlines Group Inc and United Continental Holdings Inc , said unit revenue for February grew 4 percent over last year.

An unexpectedly cold winter has taken a toll on many airlines as cancellations have meant higher operational costs.

Still, at an industry conference on Tuesday, Chief Financial Officer Paul Jacobson hinted at a good first quarter, saying the company did a "tremendous job despite the weather."

Delta canceled about 4000 flights in January and 8000 flights in February due to winter storms.

This was considerably less than rival United Airlines, which said in February it expects first-quarter consolidated unit revenue to drop by 1.5 percent from a year earlier after it canceled more than 22,500 flights in the first two months of 2014 - about four times the usual number.

Atlanta (BSE: ATLANTA.BO - news) -based Delta has outperformed most peers of late. The airline posted a rise of 4.3 percent in unit revenue in the fourth quarter, before the winter storms hit. For that quarter, United's unit revenue rose 3.2 percent from last year.

Delta shares were trading up 4.6 percent at $34.08 on the New York Stock Exchange, after earlier jumping nearly 5 percent to their highest in a decade.

The carrier has also reduced debt and formed partnerships with non-U.S. airlines including Britain's Virgin Atlantic Airways to increase traffic in those higher-growth markets - a move the financial officer said was giving the airline a good boost in the corporate travel market.

These moves also let Delta to pay its first dividend in a decade last year and start a $500 million share buyback program to boost shareholder returns. Jacobson said the company expects to announce more on buybacks and an updated dividend policy by June.

(Reporting by Nivedita Bhattacharjee in Chicago; Editing by Bernadette Baum)