In three of the past four quarters, Delta Air Lines (DAL -0.58%) spent exactly $425 million on share buybacks. On Delta's earnings call last month, CFO Paul Jacobson stated that the company planned to spend roughly the same amount on share repurchases in Q1.

Delta's share buyback pace has been pretty consistent recently. Image source: The Motley Fool.

On Wednesday, Delta announced that it had entered into a $350 million accelerated share repurchase agreement as part of its larger $5 billion share buyback program. This is in addition to the $425 million already planned. However, the increased share buyback isn't a sign of Delta suddenly copying American Airlines (AAL 0.64%) by being extremely generous toward investors.

American Airlines has been the buyback leader
In recent years, American Airlines and Delta Air Lines have pursued starkly different strategies. American Airlines has spent freely to upgrade its fleet, while Delta has kept older planes flying longer to cut back on capital spending. American has shied away from hedging its fuel costs, while Delta has tended to hedge quite aggressively.

In 2015, a new strategic difference emerged. Even as Delta's free cash flow soared last year due to low fuel prices, the company maintained a disciplined approach to share buybacks, using a portion of its windfall for debt reduction and pension funding. Meanwhile, American Airlines -- which produced less free cash flow -- spent $3.6 billion on share buybacks.

American Airlines spent heavily on share repurchases last year. Image source: American Airlines.

Delta's conservative capital allocation policies paid off last week as the company snagged an investment-grade credit rating from Moody's. In the long run, this should allow Delta to devote more of its free cash flow to buybacks to reward investors. However, its recent accelerated share repurchase serves a much different purpose.

This isn't really a share buyback
Delta's $350 million accelerated share repurchase comes at the same time that the company contributed $350 million in stock -- 7.85 million shares -- to its pension plans.

Thus, depending on how Delta stock performs over the next few months, the accelerated share repurchase will more or less offset the shares that Delta contributed from its treasury. The net impact on its share count will be roughly zero.

In addition to this $350 million of stock, Delta has also contributed $825 million in cash to its pension plans since the beginning of 2016. It's not clear why it wanted to issue shares to the pension plan rather than just making a pure cash contribution. Perhaps Delta hopes the pension fund will hold more of its stock, but the investments are managed by an independent trustee who is free to sell the Delta shares immediately.

A buyback increase is still likely
This week's $350 million accelerated share repurchase thus represents a continuation of Delta's strategy of reducing its debt and pension liabilities -- not an incremental return of capital to shareholders. In fact, since the $350 million comes out of Delta's $5 billion repurchase program, it leaves less available for buybacks that would actually reduce the share count.

That said, Delta has already made 90% of its planned pension contribution for the year and it has made strong progress on debt reduction since the end of 2009. With free cash flow likely to exceed $5 billion in 2016, the company clearly has room to spend more on buybacks.

For the past several years, Delta has held an analyst meeting each May to discuss its capital allocation plans. This year, I expect it to reveal a big increase to its buyback authorization. That should enable it to start making real progress on reducing its share count.