It's playoff time, and the little guys are still outflanking the big, bad giants.

This time around, our lovableSouthwest Airlines (NYSE:LUV) earned 10 times the combined profits of Northwest (NASDAQ:NWAC), Continental (NYSE:CAL), andDelta (NYSE:DAL).

Marking its 50th consecutive profitable quarter, Southwest grew third-quarter net income 41% year over year to $106 million, or $0.13 per share. Meanwhile, operating income more than doubled to $185 million, as passenger revenue gained a healthy 11.8% to $1.5 billion during a strong summer travel season.

"But, Jeff, that's not impressive!"

OK. Last week, Northwest, Continental, and Delta reported a combined profit of $11 million. Consider two other things: that those three carriers also combine for about five times Southwest's revenues and that Continental gained $100 million from the sale of part of its stake in ExpressJet (NYSE:XJT).

During the quarter, Southwest continued to benefit from a cost-cutting program. It also gained $30 million from its hedge program against rising fuel prices.

As a result of its cost advantages and profitable low fares, Southwest remains optimistic going forward. This is reflected in the company's move to exercise an option on four additional 737-700s in 2004, rather than 2006, bringing its total order for deliveries of new aircraft next year to 47.

Contrast this with Delta's sale last week of 11 options on 737-800 aircraft for 2005, and it's apparent who is gaining ground.

Jeff Hwang can be reached at