* Expects book tax rate of 35-36 pct in 2016
* 4th-qtr PRASM now expected to fall 2 pct
* Tightens operating margin forecast to 16.5-17.5 pct
* Sees $3 bln savings in 2016 from low fuel costs (Adds details from the call, updates share)
By Arunima Banerjee
Dec 17 (Reuters) - Delta Air Lines Inc said it expected its passenger revenue per available seat mile (PRASM) to decline about 2 percent in the current quarter, less than it had expected.
The No.3 U.S. airline by flight capacity had said that it expected the fall in PRASM to be at the higher end of a range of 2.5-4.5 percent in the fourth quarter ending December.
"We are going to see some choppiness in unit revenue in the first quarter but we expect to get back to flat to positive unit revenue trajectory by the summer of 2016," President Ed Bastian said at an investor conference in New York on Thursday.
PRASM, a key measure of an airline's performance, measures sales against flight capacity.
The company said it recorded a 1 percent impact to unit revenue in the quarter due to the Paris attacks in November.
Air France KLM SA, Delta's partner with which it shares revenue, and other airlines have reported a dip in traffic to Paris after the Nov. 13 attacks that killed 130 people.
Delta also tightened its operating margin forecast for the quarter to 16.5-17.5 percent from 16-18 percent.
The airline expects a book tax rate of 35-36 percent in 2016 and said business initiatives would result in lower book and cash taxes.
The airline has recently recorded income taxes on the books without paying a dime thanks to tax deferrals - some $12 billion left at last year's end - accrued in the last decade when it was losing money, known as net operating loss carryforwards.
But Delta expects to start paying taxes in cash in early 2018, leading to speculation that it would refine its tax strategy, especially as it hinted at its desire to pay less in taxes once the carryforwards run out.
Some analysts had speculated that Delta could create a foreign subsidiary to house income from its maintenance business and from equity shares in non-U.S. airlines, such as its 49-percent stake in Virgin Atlantic Airways Ltd.
Delta did not provide a profit forecast for 2016, but said it expected unit cost to be below 2 percent and forecast $3 billion in savings from lower fuel costs, setting the stage for the airline to increase its cash flow.
The company, however, said its international revenue in 2016 might come under pressure due to a strong dollar, competitive capacity growth and global economic uncertainty.
Delta shares were down about 0.8 percent at $51.68 in late morning trading on Thursday. (Reporting by Arunima Banerjee in Bengaluru and Jeffrey Dastin in New York; Editing by Sweta Singh and Kirti Pandey)