NEW YORK (AP) -- Southwest Airlines Co. and JetBlue Airways Corp. are likely the only U.S. scheduled airlines that turned a profit in the first quarter.
Analysts expect all other major carriers and low-cost airlines to report losses, though regional carriers, which fly on behalf of other airlines for set fees, remain in the black.
What's special about Southwest and JetBlue? They've hedged more than half of their fuel needs. Hedging has kept Southwest in particular above break-even for several quarters running as fuel prices continue to rise.
But as fuel prices rise, Southwest's old hedges begin to expire, and the airline must replace them with more expensive hedges. Hedging fuel involves buying futures or other instruments that lock in particular fuel prices or insure against spikes.
Meanwhile, other airlines, like AMR Corp.'s American, are beginning to rebuild their hedging positions after financial troubles zapped their liquidity and hedging ability.
As fuel costs rose, the first quarter was dominated by concern that fares were declining. Delta Air Lines Inc. simplified its fare structure, eliminating some restrictions and cutting top fares in half, prompting rivals to match the lower fares.
But more recently, airlines have managed to boost fares, pushing through several fare hikes meant to cover rising fuel costs.
Still, fares haven't risen high enough to completely cover higher fuel costs, executives have said. Analysts have begun to calculate that if fuel remains as expensive as it is, Delta could face a cash crunch this autumn, and other major carriers may face liquidity concerns as well.
First-quarter results are scheduled to come out this week and next.
Elizabeth Souder is a correspondent of Dow Jones Newswires.