Southwest Airlines Co. (LUV), the top U.S. carrier by market value, Thursday said earnings rose 41 percent, beating forecasts, as fare hikes boosted revenue and hedges eased the impact of record oil prices.

The low cost airline kept its profit streak alive even as surging jet fuel costs (search) have pushed rivals deep into the red. Second-quarter profit rose to $159 million, or 20 cents a share, from $113 million, or 14 cents a share, a year earlier.

The results exceeded Wall Street expectations of 18 cents a share, according to Reuters Estimates.

"This is now the 57th quarter of profitability since 1991, a pretty strong story," said Rick Applegate, president of First Commonwealth Financial Advisors. "They are doing what they can do keep their unit costs down as much as possible with careful growth."

Operating revenue rose 13.3 percent to $1.94 billion from $1.72 billion.

Even as rivals post billions of dollars in losses, Southwest has managed to stay profitable because of its extensive purchasing of contracts that lock in prearranged prices of crude and heating oil.

Those hedges — which cut operating costs by $196 million in the quarter — have made Southwest a favorite with investors. It is the most valuable U.S. airline even though it ranks only No. 6 by revenue passenger miles, the industry's usual yardstick.

"The fuel into the future is going to be the big issue," Applegate said, adding that he views the stock as undervalued. "It's not the same detriment to their survival that oil prices will be to these other airlines."

Southwest said third-quarter bookings look strong so far. That bolsters its confidence that revenue per passenger, another key measure, would rise in the quarter even as it boosts available seats by 12 percent, pursuing a growth plan that calls for 34 new Boeing 737 (search) planes next year.

Third-quarter costs should be in line with the second quarter, excluding jet fuel, which for now is higher, the Dallas-based company said.

The discount carrier said cash on hand — a key measure of health for airlines — stood at $2.3 billion at the end of the quarter, plus a $575 million unsecured revolving credit line.