Updated from 10:02 a.m. EST

Low-fare carrier JetBlue ( JBLU) reported a fourth-quarter profit, reversing a loss in the year-earlier period, but said it would likely lose money in the first quarter.

Fourth-quarter results benefited from "a better price environment and better revenue management," CEO David Neeleman said on a conference call. While "very upbeat about 2007," Neeleman said he expects a first-quarter loss, with pretax margins of negative 2% to negative 4%.

The expected loss reflects JetBlue's move from its past reliance on Florida flights to increased shorthaul Northeast flights using Embraer E190s. Also, in February, JetBlue will complete the job of taking out five seats on each of its 96 A320 jets.

The reduction to 150 seats per aircraft reduces flight attendant staffing levels by one per aircraft, cutting costs by $30 million over five years but requiring short-term spending for scheduling changes and aircraft reconfiguration.

Some revenue will also be lost, but the impact could be mitigated by increased comfort as JetBlue increases the pitch between its seats.

During the current quarter, revenue per available seat mile will grow by 13% to 15% as stage lengths decrease and revenue is spread over fewer seats. Additionally, New York-Florida capacity has declined. But cost per available seat mile will increase by 4% to 6%, as expenses are also spread over fewer seats.

JetBlue earned $17 million, or 10 cents a share, in the fourth quarter. Revenue rose 42.1% to $633 million. Analysts surveyed by Thomson Financial were looking for a profit of 11 cents and a top line of $631.9 million. In the 2005 quarter, JetBlue lost $42 million, or 25 cents a share.

Fourth-quarter load factor declined 1.4 points to 79.7%, while capacity rose 14.5%. RASM rose 24.1% to 8.71 cents. Yield rose 25% on stronger ticket prices. CASM, excluding fuel, increased 2.3% to 5.24 cents.

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