In a period of high gas prices and industry overcapacity, Southwest Airlines' (NYSE:LUV) profitability remains a rarity. But Southwest shares are down 4% to $14.40 today after the company's fourth-quarter earnings disappointed.

Earnings for the quarter fell 15% to $56 million, or $0.07 per share, a penny short of the analyst estimate. Meanwhile, revenues also came up a little short of expectations, climbing 9% to $1.66 billion.

Despite the company's hedging program, fuel costs rose 20.1% to 89.1 cents per gallon. Still, Southwest did manage to cut overall unit costs by 1.3% as unit costs excluding fuel declined by 4.5%. The hedging program did result in fuel cost savings of $174 million during the quarter. The company also noted that it was 85% hedged for the current first quarter with prices capped at $26 per barrel.

On the operations side, revenue passenger miles increased 12.6% in the fourth quarter, outpacing the 10.5% increase in capacity. As a result, the company's load factor improved 1.2 percentage points to 65%.

Southwest sees its revenue challenges continuing this quarter, but the company also expects to remain profitable. Meanwhile, expansion will continue with the net addition of 29 new aircraft in 2005, the addition of service to Pittsburgh starting this May, and increased service at Chicago's Midway via six additional gates the company acquired from bankrupt ATA Airlines in December.

Southwest's stock does carry a relative premium, though deservedly so. The company finished the year by recording its 32nd consecutive year of profitability, setting it apart from the non-bankrupt legacy carriers Delta Airlines (NYSE:DAL), Northwest Airlines (NASDAQ:NWAC), American Airlines (NYSE:AMR), and Continental Airlines (NYSE:CAL). After all, Southwest is the only company mentioned here that even has a P/E ratio.

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Fool contributor Jeff Hwang owns none of the companies mentioned above.