Being a writer, I think I can lend the airline industry a hand: Specifically, I could formulate a template for each airline to report their quarterly results. It would have the basic three components of every airlines earnings report: net income/loss, total revenue, and a statement detailing just how high fuel costs surged this quarter.

OK, perhaps that was a little facetious, but honestly, it's growing tiresome that no matter what these airlines do to hedge their fuel bets, the bottom line is that the price of jet fuel is making it increasingly hard for them to remain profitable.

Yesterday a trio of earnings reports crossed the wire and, not surprisingly, all three shared a similarity -- rising fuel costs.

Alaska Air (NYSE: ALK) continued to show why it's flying above the competition when it reported that occupancy rates actually rose 180 basis points from the year-ago period. This is impressive because ticket prices for the airline actually rose, bucking the industry-wide trend of falling ticket prices in the third quarter. Still, the fuel bug bit Alaska hard as well, with costs rising 31% and the airline coming in $0.13 light on EPS estimates and just a tad light on revenue. 

United Continental Holdings (NYSE: UAL) recorded a profit that flew past Wall Street estimates, but that was only after excluding a hefty one-time merger-related expense that resulted in a $138 million quarterly loss. Like much of the airline sector, United grew sales, but it did so at the expense of capacity. United actually shrank its available seat count by 2.5% over the year-ago period. As with Alaska, United's fuel costs soared 26% to $3.1 billion over last year.

On a smaller scale, JetBlue (Nasdaq: JBLU) provided one of the few highlights for the airline sector. JetBlue was the only airline that I've witnessed this earnings season that has managed to combine higher operating capacity with an earnings beat. Even with fuel costs rising 31%, JetBlue's passenger revenue miles jumped 11% and its load factor increased 30 basis points. JetBlue is also forecasting a 5.5% to 7.5% increase in capacity this year. But, before you get too excited, management also cautioned that maintenance costs are expected to rise dramatically in 2012 because of its aging fleet.

Earlier in the week US Airways (NYSE: LCC) and Delta Air Lines (NYSE: DAL) both reported better-than-expected results. Despite the earnings beats, US Airways sported an industry-high 40% rises in fuel costs while Delta came in with a not-too-shabby 5% uptick in fuel costs. Despite having what appears to be an industry-best performance for Delta, let's not forget that capacity was down 3.5% in 2011 and is expected to fall another 3% to 5% in 2012.

All told, aside from JetBlue continuing to add capacity and Alaska cleaning up as usual, it appears investors are once again cheering on the "less bad" rally – only now it's migrated over to the airline sector, too! Ticket prices are indeed up over the year-ago period, but they've fallen by 2.4% over the prior quarter. As fuel prices rise, major carriers like United, Delta, US Airways, and the now-bankrupt American Airlines are going to feel the pinch. With the airline sector remaining very hit-or-miss going forward, I continue to see a very select group of regional carriers as the only potential values in the sector. Until fuel costs stabilize, the rest of this sector is running on fumes.

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