AirTran ( AAI) posted a profit for the ninth straight quarter, but high fuel costs and a tough competitive environment resulted in weaker second-quarter results than last year's.

AirTran on Tuesday announced second-quarter net income of $16.8 million, or 18 cents a share, topping the 16-cent analyst estimate but down sharply from the $57.2 million, or 74 cents a share it had last year. Results in 2003 were boosted by a $37.1 million government reimbursement for security fees. That said, the carrier's second-quarter earnings were still below the $21.9 million it had in the year-ago period, excluding all items.

In response to the upside surprise, shares of AirTran rose 21 cents, or 1.8%, to $11.74.

Revenue at the rapidly-expanding low-cost carrier, which competes with Delta Air Lines ( DAL) in its Atlanta hub, came in at $275 million, topping the $273.6 million expected by analysts and up 17.6% year over year. The company said that traffic, a demand metric measured in revenue passenger miles, rose 21.4% year over year, while capacity, a supply metric measured in available seat miles, increased 17.9%.

Expenses continued to rise, prompting AirTran to note that it needs to work harder to retain its competitive edge over rivals. Total costs came in at $244 million, up 20.1% year over year, driven by a 33.8% jump in fuel costs and a 15.2% increase in labor costs. Cost per available seat mile, a key metric called CASM, came in at 8.46 cents, up 1.9% year over year.

"While we achieved a reduction in non-fuel-unit costs for the quarter, the impact of high fuel prices offset these gains," said Stan Gadek, CFO. "We must continue to focus on reducing all costs and improving productivity throughout the company."

If you liked this article you might like

Check the Math on Air Fares

Check the Math on Air Fares

US Airways Circles as Pilots Bicker

US Airways Circles as Pilots Bicker

Departure of Delta's Song Unit Boss Stirs Questions

Departure of Delta's Song Unit Boss Stirs Questions

Boeing Boosts Jet Deliveries

Boeing Boosts Jet Deliveries

CEO Gilmartin Will Survive Recall

CEO Gilmartin Will Survive Recall