Updated from 3:40 p.m. EDT

In spite of skyrocketing jet fuel costs, two of the country's top airlines on Tuesday reported unexpectedly strong quarterly earnings, with

Continental Airlines

(CAL) - Get Report

topping Wall Street estimates by a whopping 20%.

The Houston-based airline's second-quarter earnings rose to $2.46 per share, the highest diluted earnings per share in company history, and significantly higher than the analyst consensus of $2.05 per share, according to

First Call/Thomson Financial

. Continental, the country's fifth-largest carrier, earned $1.73 per share in the same period a year ago.

For the quarter that ended June 30, Continental brought in revenue of $2.57 billion, a 17.9% increase from $2.18 billion in revenue generated in last year's second quarter. Profits rose 12.9%, to $149 million from $132 million.

Investors snapped up the stock on the news, sending shares of Continental to a new 52-week high of 54 13/16. Continental finished up 13/16, or 1.5%, at 53 13/16.

Shares of Dallas-based

Southwest Airlines

(LUV) - Get Report

also soared after the low-cost carrier reported second-quarter earnings of 36 cents per share - a nickel higher than estimates by analysts surveyed by First Call. Southwest Airlines closed up 13/16, or 3.9%, at 21 15/16.

The low-cost carrier's total operating revenues for the second quarter jumped nearly 20% to $1.46 billion from $1.22 billion for the same period a year ago.

Meanwhile, though

America West Holding

,

(AWA)

which operates

America West Airlines

, fell far short of Wall Street earnings-per-share estimates. America West Holding closed down 1/2, or 2.7%, at 17 3/4.

Phoenix-based America West reported net income of $33.5 million, with diluted earnings per share of 91 cents, a cent higher than the consensus estimate among analysts surveyed by First Call. But earnings fell from year-ago levels and, excluding a 17-cent gain, latest-quarter earnings fell far short of estimates.

While the company's second-quarter revenue grew to $604.8 million, up about 9% from $554.2 million in the year-ago period, and operating revenue per available mile jumped 8.86 cents, officials said operating costs per available mile also grew 10% to 8.14 cents - primarily due to higher fuel prices.

"But for the sharp increase year over year in jet fuel prices, this would have been the best financial quarter in America West's history," said William Franke, America West's chairman and CEO, in a prepared statement Tuesday. "We remain encouraged by our continued improvement in unit revenues, which reflects the success of our growth strategy."

All three airlines cited rising fuel costs - nearly 100% higher than prices a year ago, by some analysts estimates - as weighing heavily on operational costs during the second quarter, but that was offset by record or near-record growth in revenues per available seat mile, a key airline statistic.

Continental's passenger capacity grew 6%, helping to increase revenue per available seat mile by 10% from the year before - the carrier's first double-digit jump since 1996.

"Record traffic and yields have more than offset fuel increases," said Gordon Bethune, Continental's chairman and CEO, in a prepared statement

Continental Airlines, the fifth-largest U.S. air carrier, serves 135 U.S. cities and another 90 cities overseas with 2,200 daily flights. America West Airlines, also one of the country's 10 largest carriers, serves nearly 90 North American destinations, including nine in Mexico and two in Canada. Southwest Airlines offers flights to more than 55 cities in 29 states.

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