Oct 25 (Reuters) - Southwest Airlines Co posted a forecast-beating rise in quarterly profit on Thursday and said it would expand margins next year, when it plans to add flights to Hawaii, thanks to a healthy revenue outlook.
The fourth-largest U.S. airline by passenger traffic said net income rose to a record $615 million, or $1.08 per share, in the third quarter to Sept. 30 from a year ago, beating a Wall Street consensus forecast of $1.06.
Total operating revenues rose 5.1 percent year-on-year to $5.57 billion, also a record for the quarter.
"As we finish the year, our revenue momentum has continued into fourth quarter 2018, thus far," Chief Executive Officer Gary Kelly said.
Kelly said Southwest was "well-positioned" to drive revenue and margin growth next year despite a rise in costs as the carrier, with a recently launched 737 MAX fleet, continues to invest in new operations, technology, and airport infrastructure.
Fourth-quarter unit revenue - a closely watched performance measure that compares sales to flight capacity - to rise one to two percent.
Dallas-based Southwest, which has built a reputation for offering lower fares than its rivals and not charging bag or change fees, said it still planned to increase capacity by no more than five percent next year.
Despite a rise in global travel demand, airlines are trying to avoid adding too many seats to a competitive market, particularly as high fuel prices eat into profits.
Southwest's fuel cost rose 16.2 percent during the quarter.
No. 1 U.S. carrier American Airlines Group Inc, Alaska Air Group Inc and low-cost Spirit Airlines Inc are also reporting on Thursday, where investors will continue to scrutinize how well airlines are countering fuel bills with higher ticket prices and fees. (Reporting by Rachit Vats in Bengaluru and Tracy Rucinski in Chicago, Editing by Supriya Kurane, William Maclean)