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Higher fuel costs weighed down

Southwest Airlines'

(LUV) - Get Free Report

first-quarter earnings, but

Delta Air Lines

(DAL) - Get Free Report

remained unscathed, posting quarterly earnings on Tuesday that handily beat Wall Street's estimates.

Atlanta-based Delta, the nation's third-largest airline, said its net earnings for the fiscal third quarter rose 4%, to $223 million, or $1.67 a diluted share, compared with $216 million, or $1.42 a diluted share in the year-earlier period.

Excluding one-time gains, earnings for the quarter totaled $179 million, or $1.33 a diluted share, compared with $201 million, or $1.31 a diluted share in the corresponding period last year.

Analysts had expected Delta to earn $1.10 a share, according to a survey conducted by

First Call/Thomson Financial


Revenues for the quarter jumped 13%, to $3.96 billion, from $3.5 billion a year ago.

"Despite the increase in fuel prices and lower traffic and capacity early in the quarter due to the millennium and weather, disciplined cost control and rebounding traffic and yields contributed to a year-over-year increase in earnings per share," Edward West, Delta's executive vice president for finance and chief financial officer, said in a statement.

With hedges on about 70% of its fuel contracts, Delta was partially insulated from rising oil prices, which hit nine-year highs of $34.13 a barrel back in March. Hedges allow airlines to buy fuel at preset prices based on crude prices per barrel. Since March, crude oil has slipped and was lately trading at $26.11 a barrel.

In midday trading Tuesday, Delta was up 2 1/8, or 4%, at 51 1/8. (Delta finished up 1 3/16, 2.4%, at 50 3/16.)

Meanwhile, Dallas-based Southwest, the nation's largest low-cost airline, reported that its first-quarter net income slipped 23%, to $73.5 million, or 14 cents a diluted share, from $95.8 million, or 18 cents a diluted share, in the year-earlier period. The first-quarter 2000 earnings reflect a change in the accounting procedure for Southwest's frequent flier program.

Under the previous accounting method, Southwest would have recorded net income of 16 cents a share.

Wall Street had expected earnings of 16 cents a share, according to First Call/Thomson Financial survey.

Revenues for the quarter rose 15.5%, to $1.24 billion, compared with $1.08 billion a year ago.

The positive impact of the higher revenues was partially offset by an increase in overall unit costs, which rose 4.8% due to jet fuel prices, the company said.

Southwest said that it now has hedges in place for the majority of its anticipated fuel needs for the rest of the year.

Shares of Southwest were up 5/8, or 3%, at 19 3/4 around midday Tuesday. (Southwest closed up 11/16, 3.6%, at 19 13/16.)