Alaska Air ( ALK) said its fourth-quarter loss increased, and it indicated that the dynamics of the airline industry point to a difficult 2008. "We are frustrated with the yield side and with the prospect of a softening economy here in '08," said CEO Bill Ayer, on a conference call with reporters. For the quarter and the full year 2007, Alaska failed to meet its goals due to fuel cost increases "combined with our inability to recoup the added costs through higher fares in the current competitive and economic environment," he said. This year, Alaska expects to benefit from completion of its transition to an all-Boeing fleet and from a strong fuel-hedging position. Advanced bookings are strong, with 3% growth in January and February and slightly higher growth in March. In the fourth quarter, excluding special items, the company lost $17.9 million, or 46 cents a share. Analysts had estimated a loss of 32 cents. Revenue rose 8% to $853 million, ahead of the consensus estimate of $845 million. A year earlier, the loss excluding items was $3.4 million. Mainline revenue per available seat mile grew 2.7%. The increase would have been greater, the carrier said, but capacity gains in six long-haul markets reduced per-mile revenue growth. Capacity was up 4.6%. Costs per available seat mile before fuel and special items decreased 3%. At subsidiary Horizon, RASM grew 3.9%, capacity rose 10.3%, and CASM excluding fuel fell by 0.8%. For the full year, excluding special items, Alaska had net income of $92.3 million, down from $137.7 million in the same period a year earlier.