DALLAS (AP) -- Southwest Airlines Co. on Thursday reported its third-quarter profit almost doubled as the low-cost carrier relied on fuel hedging to offset the rising price of oil that has hurt the industry.
Quarterly profit rose to $227 million, or 28 cents per share, from $119 million, or 15 cents per share, last year. Profit included $87 million in one-time gains from Southwest's hedging strategy, in which it locks in jet-fuel prices months in advance to protect it from price spikes, is considered to be among the best within the airline industry.
Without that gain, the Dallas-based company reported earnings of $174 million, or 21 cents per share. The results surpassed Wall Street projections for earnings of 18 cents per share, according to a Thomson Financial survey of analysts.
''We continue to mitigate record-high jet fuel prices with our successful hedging program, which resulted in a $295 million benefit from settled contracts in third quarter 2005,'' said Chief Executive Gary C. Kelly in a statement.
However, he said escalating fuel prices following hurricanes Katrina and Rita could push prices past $1.25 per gallon during the fourth quarter, well above third quarter costs of 95 cents per gallon. Southwest is more than 70 percent hedged for 2006.
Total operating revenues increased 19 percent to $1.99 billion, compared with $1.67 billion last year. Operating income rose to $273 million from $191 million a year ago.
Quarterly traffic increased 15.5 percent to 16.37 billion revenue passenger miles, which is one paying passenger flown one mile. Capacity grew 12.1 percent, and load factor, or the percentage of seats filled, rose 2.2 points to 74.9 percent.
Shares of Southwest fell 41 cents, or 2.6 percent, to $15.17 in early trading on the New York Stock Exchange.