Upgraded from 9:21 a.m. EDTLow-cost carriers JetBlue Airways ( JBLU) Southwest Airlines ( LUV) rode improving revenue trends to better-than-expected profits in the third quarter. Southwest's fuel hedges, which significantly reduce the price of about 85% of its current fuel needs, shield it from a lot of the pain sky-high jet fuel prices are inflicting on airlines. Profitability allows Southwest to continue expanding even as larger rivals cap or cut back domestic capacity, and on Thursday it said it would start flights to and from Denver next year. But fuel is catching up with JetBlue, which had hedged about 25% of its fuel needs for the second half of this year. The carrier, which has posted 19 profitable quarters in a row even as many airlines lost money, said it would record a fourth-quarter loss big enough to put it in the red for all of 2005. That worrisome announcement prompted Calyon Securities analyst Ray Neidl to cut his investment rating on JetBlue shares to reduce from neutral. Southwest said Thursday it earned $227 million, or 28 cents a share, in the latest quarter, compared with $119 million, or 15 cents a share, in the third quarter of 2004. Excluding $87 million of unrealized gains associated with fuel-hedge derivative contracts, the Dallas-based airline earned $174 million, or 21 cents a share. That beat the average Wall Street EPS estimate of 18 cents, according to Thomson First Call. After rising at the start of the session, Southwest shares sold off and were recently down 18 cents, or 1.2%, at $15.40. Revenue increased 19% to $1.99 billion from $1.67 billion a year before. The figure was slightly ahead of the $1.96 billion analyst consensus. "The third quarter 2005 earnings growth was driven by record passenger revenues and load factors," said Southwest CEO Gary Kelly. "We also benefited from strong performances in freight, charters, and business partner commissions."