Southwest Air ( LUV) said fourth-quarter earnings fell about 15% from a year ago, weighed down by soaring fuel costs.

The carrier earned $56 million, or 7 cents a share, in the three months to Dec. 31, including a penny charge related to an accounting change. That compared with $66 million, or 8 cents a share, last year. Revenue rose 9.1% from a year ago to $1.66 billion.

Analysts had been expecting earnings of 8 cents a share on revenue of $1.68 billion.

Net of hedging, Southwest said its cost of jet fuel rose 20.1% in the fourth quarter, even as overall unit costs declined 1.3%. Hedging also helped lower the overall fuel and oil expense by $174 million during the quarter. Southwest said it's 85% hedged for the current quarter but still sees its average jet fuel costs per gallon exceeding the fourth quarter's 89.1 cents.

"Barring any unforeseen events and assuming revenue trends somewhat improve throughout the quarter, as described above, we expect to be profitable again in first-quarter 2005," the company said. "While we are not immune to the challenging industry revenue environment, our low costs and energetic people have allowed Southwest to react quickly to market opportunities."

The stock closed up 2 cents at $15 Tuesday.

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