The airline industry is expected to lose $1.5 billion in the first quarter, but Southwest Airlines ( LUV) won't be contributing to the red ink -- the low-cost carrier posted its 52nd consecutive quarterly quarter.

The carrier announced that first-quarter net income came in at $26 million, or 3 cents a share, a marginal improvement from last year's quarterly profit of $24 million, which was also 3 cents a share. Analysts were expecting a profit of 4 cents a share, but Southwest said the estimate was not comparable to its quarterly results, which include an $18 million charge for the consolidation of its reservation operation.

Total operating revenue came in at $1.5 billion, up 9.8% over last year's $1.35 billion, but expenses are rising equally fast. The company said that expenses came in at $1.44 billion, up 10.2% from last year, boosted by the consolidation of reservation centers and $18 million in costs related to severance and relocation packages.

"Considering record high energy costs and the challenging revenue environment our industry faced in first quarter 2004, we are grateful to report our 52nd consecutive quarterly profit," said James Parker, CEO. "Although our revenue recovery has been inconsistent, currently we are encouraged by the tremendous customer response to our first quarter 2004 fare sales."

Southwest's cost per available seat mile, or CASM, came in at 7.83 cents, up 4.3% from 7.5 cents a year ago, driven by the rising price of fuel. While this is high, it's still better than rival legacy carriers, which have CASM near 10 cents.

Part of the cost advantage is because of Southwest's efficient operating structure, but in the first quarter, Southwest's ability to hedge its fuel needs also helped defray some of the 6.4% rise in the price of jet fuel. According to the company, it saved $63 million in first-quarter fuel expenses by hedging and has 80% of its fuel needs hedged for 2004 and 2005.

Southwest said second-quarter CASM will be in line with the 7.8 cents seen in the first quarter, but said the cost pressures will abate in the second half of the year.