Delta Air Lines showed growth in a key revenue metric for the first time in two and a half years but sharply higher labor and fuel costs cut into its bottom line.

For the second quarter, Delta’s passenger unit revenue — which compares sales to how many seats an airline flies and how far it flies them — increased 2.5%. But the No. 2 U.S. airline also reported a 21% drop in net income to $1.22 billion, or $1.68 per share.

On an adjusted basis, Delta earned $1.64 per share, missing analysts’ estimates of $1.67. In trading Thursday, the stock fell almost 1.8% to $54.50.

Delta’s expenses climbed during the quarter as aircraft fuel-related expenses rose 18% to $1.45 billion during the quarter, while salary costs were up 9% to $2.62 billion. “The June quarter represented the peak for non-fuel cost pressures this year,” CFO Paul Jacobson said in a news release.

The news on unit revenue, however, was something of a breakthrough. The closely-watched metric has been in negative territory for Delta and the rest of the U.S. airline industry in general since mid-2015 amid fare cuts and a stronger dollar.

Delta had expected a flat to 2% increase in the first quarter of 2017 but disappointed investors with a 0.5% decline.

“The June quarter marked Delta’s return to unit revenue growth after two and a half years,” Glen Hauenstein, Delta’s president, said. “This improvement resulted from a strengthening demand environment and our commercial initiatives to provide customers more choice, an innovative experience, and a broader global network.”

“We expect this momentum to continue in the September quarter, with passenger unit revenue growth of 2.5 to 4.5 percent as we focus on driving a sustainable revenue premium to the industry,” he added.

That growth is expected to boost Delta’s operating margins between 18% and 20% from the prior year.

According to Reuters, the increase in Delta’s labor expenses reflects in large part renegotiated contracts with carriers’ pilots, flight attendants and mechanics unions.

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