Dallas – Southwest Airlines Co. reported a 54 percent jump in fourth-quarter profit as the bets it made on fuel prices allowed it to dodge for a little longer the spiraling costs that led to a $604 million loss for the parent of American Airlines, the nation’s biggest carrier.
Revenue increased at both airlines, as planes were more crowded and average fares rose.
Airline stocks rallied, led by American’s parent, AMR Corp., which rose 47 cents, or 2.5 percent, to close at $19.33 in trading on the New York Stock Exchange. Southwest shares rose 89 cents, or 5.6 percent, to $16.76.
Ray Neidl, an analyst with Calyon Securities, said the stocks were lifted by a decline in oil prices but said AMR also may have been rewarded for the strength of American’s route network and a slightly smaller-than-expected loss.
Southwest said it earned $86 million, or 10 cents per share, in the fourth quarter, compared with $56 million, or 7 cents per share, a year earlier.
Excluding one-time items, net income was $98 million, or 12 cents per share. Analysts had expected a gain of 13 cents per share, according to a survey by Thomson Financial.
Revenue rose 20 percent, to $1.99 billion from $1.66 billion a year ago.
Southwest again cashed in on a winning bet it made several years ago on the direction of fuel prices. The carrier bought options that locked in prices on most of its fuel needs through 2009, softening the blow of higher fuel costs.
American Airlines was too weak financially to buy fuel options in recent years, and it paid the price in the fourth quarter – $2.02 per gallon.
