Somebody has figured out a way to make money in the crummy economy.

That somebody is AirTran ( AAI), which on Wednesday reported a record first-quarter profit and said it will make money in every quarter this year. The carrier earned 21 cents a share, blowing out the consensus estimate of 4 cents. AirTran shares were up 24% to $6.92 just before the market closed.

"Fuel savings alone are not enough to produce this type of earnings," CEO Bob Fornaro said Wednesday, on an earnings conference call. "We made some of the most dramatic moves to (improve) our business and as a result we are among the first airlines to show recovery.

The principal move came last spring when AirTran, which had grown at a 20% rate for five years, slammed on the capacity brakes. In April, it said it would stop growing in September and keep capacity flat throughout 2009. Then in May, it pushed 18 Boeing ( BA) does deliveries from 2009 through 2012 into 2013 through 2014.

"I would not be considering adding capacity this year because we have a weak revenue environment," Fornaro said Wednesday. "When you start growing and taking airplanes, that requires deposits and the like. Our priority is to strengthen the balance sheet."

Besides halting capacity growth, AirTran took a series of other steps, including raising cash and reallocating aircraft. "All airlines are shrinking now, but we came to grips early with the fact that the world was going to get much more difficult and we went at it very hard," said CFO Arnie Haak in an interview. "We went out and raised money in April, which a lot of people questioned when we did it." An April sale of stock and debt raised $150 million.

AirTran also reallocated assets, focusing aircraft on new routes from Milwaukee and Orlando. And Haak noted that the carrier "went to Boeing and deferred deliveries when there wasn't a line around the block." It has also sold 11 aircraft.

Although it is a low-fare carrier, AirTran is also benefitting from fee revenue, including a $15 first bag charge. In this regard, it stands apart from its peers: JetBlue ( JBLU) does not charge for the first bag and Southwest ( LUV) has embraced a "no fees" strategy.

Looking ahead, AirTran does face a potentially troubling inevitability: rising costs. At the moment, the carrier has the industry's lowest costs, with first-quarter cost per available seat mile of 6.73 cents. But the history of the airline industry is that low-fare carriers start out with new airplanes and new employees. Eventually, aging airplanes require more maintenance and aging employees require more health care, higher salaries and more days off.

The situation is exacerbated when an airline stops growing, because it also stops bringing on new airplanes and new employees. That's why AirTran's CASM excluding fuel grew 6.8% in the first quarter and slated to grow by 8.5% to 9.5% in the second quarter.

In the first quarter, AirTran reported net income of $28.7 million. Revenue was $542 million. Analysts had estimated $535 million. In the same period a year earlier, AirTran lost $35.3 million or 38 cents a share.

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