The airline also forecast better-than-expected unit revenue (RASM), a proxy for pricing power, for the first quarter. Airlines across the U.S. have cut seating to boost fares after a surplus capacity, introduced last summer in anticipation of a demand surge, forced airlines to offer discounts and sacrifice margins.

Southwest Airlines said Thursday it swung to a fourth-quarter profit of 42 cents a share from a year-ago loss of 42 cents a share, as overall expenses fell on lower fuel costs.

Southwest Airlines Co. warned that costs will climb faster than expected as it grapples with heavy labor expenses, undercutting gains from strong demand for leisure travel.