Updated from 1:36 p.m. EDT

The earnings performance of U.S. airlines varied more than normal during the third quarter, as the carriers struggled to hedge against surging fuel costs and to hold onto passengers frustrated with the unusually high number of flight disruptions from bad weather and air traffic control back-ups this summer.

While some airlines benefited from strong jet-fuel hedging programs and an influx of new passengers angered by delays or cancellations on other carriers, those airlines that didn't hedge enough against skyrocketing fuel costs or lost passengers from delays and other flight disruptions saw profits drop in the third quarter.

Southwest Airlines

,

(LUV) - Get Report

the nation's seventh-largest airline carrier, was one of the winners. The Dallas-based, low-fare air carrier reported Tuesday that its third-quarter earnings were up more than 45%, beating Wall Street estimates, on strong passenger revenues and a fuel-hedging program that saved the carrier $43.1 million.

Meanwhile, the world's third-largest carrier,

Delta Air Lines

(DAL) - Get Report

, reported its third-quarter net income had fallen 3%, excluding unusual items, as growth in passenger demand was not enough to offset rising fuel, administrative and maintenance costs.

Still, the airline's earnings per share rose 9% to $2.08 a share in the third quarter, which ended last month, narrowly beating analysts' expectations of $2.06, according to

First Call/Thomson Financial

. Earnings per share rose even as net income fell since there were fewer shares outstanding in the third quarter.

Alaska Airlines

(ALK) - Get Report

fared the worst, as it was hurt by lower passenger revenues and a less effective fuel hedging program than its major competitors.

John Kelly, Alaska Airlines' chairman and chief executive, said higher fuel costs accounted for half the decline in its profits. The airline's profits were also affected by a 3.2% reduction in capacity, and a 1.2% drop in passenger traffic during the quarter.

Seattle-based Alaska Airlines earned $15.9 million or 60 cents a share in the third quarter, which ended in September, down 71% from $54.9 million for the same quarter a year ago. In the third quarter of 1999, Alaska Airlines had reported $2.07 earnings a share.

Shares of Alaska Air Lines finished down 13 cents at $21, after hitting a 52-week low of $20.50.

Shares of Delta Airlines were also hovering near their 52-week low, finishing Tuesday regular trading down $2.06, or 5%, at $40.88. The carrier also reported a decline in earnings for the third quarter, with net income of $273 million, compared with $282 million in the same year-ago period. With one-time items, including charges to reflect the declining value of equity instruments and premiums paid on fuel hedge contracts, it earned $133 million, or $1.01 a share.

Delta's operating revenues rose to $4.35 billion, from $3.83 billion a year earlier. But the Atlanta-based airlines' expenses also grew sharply with fuel costs climbing 45% and salaries and related costs climbing 16% from the same year-ago quarter.

Those declines came in sharp contrast to the increase posted by Southwest Airlines, which reported its third-quarter net income rose to $184.3 million, up 45.1% from $127 million in the year-earlier period. It earned 35 cents a share in the quarter ending in September, up from 24 cents a share in the third quarter of 1999.

"There is no doubt our revenues were augmented due to operating problems experienced by several airline competitors," said Herb Kelleher, Southwest's president, chairman, and chief executive.

Still, Kelleher pointed out that, excluding fuel, the carrier's unit costs were down 1.2% during the third quarter. The low-fare airline had a 71.6% passenger load factor, the highest in its history, and a 5.3% increase in its passenger revenue yield. Its operating revenues grew 19.7% in the quarter, to $1.48 billion.

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Southwest Airlines gained 94 cents, or 4%, at $25.50.

On Monday,

Continental Airlines

(CAL) - Get Report

, the nation's fifth-largest airline, announced that its third-quarter

net income rose 32%, beating Wall Street expectations on strong ticket sales and a hedging program that offset rising fuel costs. The Houston-based carrier said it earned $137 million, or $2.24 a share, excluding a $2 million one-time charge for early debt repayment.

On Tuesday, Continental Airlines finished up 38 cents or 1%, at $43.06.

AMR's

(AMR)

American Airlines

and

US Airways

(U) - Get Report

report their earnings Wednesday.

TWA

(TWA)

,

Northwest

(NWAC)

, and

United Airlines

, which is owned by

UAL

(UAL) - Get Report

, are slated to report earnings on Thursday.