Higher fares lift Southwest Airlines' profit

Southwest Airlines passenger planes are seen at Chicago's Midway Airport in Illnois May 31, 2012. AFP PHOTO / Karen BLEIER (Photo credit should read KAREN BLEIER/AFP/GettyImages)

DALLAS Higher fares are helping Southwest Airlines make more money than Wall Street expected, but the company says automatic federal spending cuts could hurt revenue in April.

The average passenger fare on Southwest is now more than $150 one-way, 4 percent higher than a year ago.

Southwest said Thursday that first-quarter net income was $59 million, or 8 cents per share. That's down from earnings of $98 million, or 13 cents per share, a year ago.

Without gains from fuel-hedging contracts, Southwest would have earned 7 cents per share, topping analysts' forecast of 2 cents per share.

"The significant year-over-year improvement in our first quarter results (excluding special items) was driven by record first quarter revenues and a better-than-expected cost performance," said Southwest CEO Gary Kelly in a statement.

The airline says revenue was weaker than expected in March and that's continuing in April. The company says it's "cautious" because of the effect of federal spending cuts, but that recent bookings for May and June are solid.