Northwest Airlines

(NWAC)

swung to a third-quarter loss but beat Wall Street's bottom-line estimate on stronger-than-expected revenue.

The company said its third-quarter net loss was $46 million, or 54 cents a share, much narrower than the 81-cent-a-share loss forecast by Wall Street. In the third quarter of 2003, Northwest logged a profit of $42 million, or 49 cents a share.

Northwest said total operating revenues in the latest quarter were $3.05 billion, up 13.4% from $2.69 billion a year earlier, and above the $2.89 billion analyst consensus.

Like its competitors, Northwest faces trying times, with crude oil prices remaining well above $50 a barrel, overcapacity and ruthless price competition. In contrast to rivals like

Delta Air Lines

(DAL) - Get Report

, though, Northwest kept losses lower than expected by pulling in more revenue per passenger.

"As in recent quarters, our operating performance was negatively impacted by record high fuel cost that continues to drive the dynamics of the airline industry," said Doug Steenland, who took over as Northwest's chief executive this month following the former CEO Richard Anderson's jump to

UnitedHealth Group

(UNH) - Get Report

. "Northwest continued to perform well against its major competitors by maintaining an industry-leading revenue premium and a strong cash balance."

Northwest shares were off 4 cents, or 0.5%, at $7.88 after the third-quarter announcement.

Operating expenses increased 16.8% from a year earlier to $2.97 billion, driven by higher fuel prices, which on average were up 64.6% year over year, Northwest said.

The airline managed to fill more seats on its flights, as demand increased more than capacity. Demand, as measured by revenue passenger miles, rose 4.2% from a year earlier, while capacity, as measured in available seat miles, increased 2.3% year over year. Northwest said its load factor, or the percentage of seats filled on its flights, was 82.9%, up 1.5 percentage points from 2003's third quarter.

Rising load factors don't always translate into better revenue, especially when price competition is as strong as it is now. But Northwest said passenger revenue per available seat mile, a key revenue metric known as RASM, rose to 9.64 cents in the latest quarter, up 6.8% from a year before.

Northwest also said it ended the third quarter with $2.68 billion in cash, of which $2.54 billion was unrestricted.