Alaska Air Group, parent of Alaska Airlines, reported a third-quarter profit on Thursday but forecast a loss for the fourth quarter and weaker year-end results than last year.

For the quarter ended September 30, Alaska reported net income of USD$85.8 million, compared with a net loss of $17.4 million a year earlier.

Air Group operating revenue from passenger service, which also includes regional carrier Horizon Air, rose 6 percent to USD$926.5 million. Operating expenses fell 11 percent to USD$851.8 million although labor and maintenance costs were higher.

Last year's quarterly results included USD$86 million in fleet transition costs as well as restructuring and other charges.

The airline's stock closed up 44 cents, or 1.72 percent, to end the day at USD$26.01 a share on the New York Stock Exchange.

Airline officials cited high fuel prices and seasonal fluctuations in travel demand for their quarterly estimate, but did not offer specifics.

"We're quite concerned about the effect of rising fuel costs and how damaging those increases can be on our results," Bill Ayer, the company's chief executive, said.

Alaska Air Group spent USD$243 million on fuel in the third quarter despite hedging contracts that partly insulated the company from price premiums.

Alaska has hedges in place for the fourth quarter for about half its fuel requirements at USD$62 per barrel of oil. Light crude was trading at USD$90.35 on the New York Mercantile Exchange late in the day.

Fuel represents more than 30 percent of mainline operating expenses.

The fourth quarter is typically the weakest period for US carriers, especially Seattle-based Alaska. The company posted a net loss of USD$11 million in the October-December period last year.

For the full year in 2007, Alaska expects an adjusted profit but said the figure would probably be less than earnings of USD$137 million reported for 2006, excluding charges for fleet transition and severance packages.

Calyon Securities analyst Ray Neidl said he still assumed Alaska would "do OK" in the quarter and "may even dig out a small profit" if a fare increase implemented Monday sticks.

"Just because they said there would be a loss doesn't mean there will be," Neidl said.