Airline Mergers Good for Industry: Southwest CEO Kelly

The United Airlines-Continental merger is good for the industry and also for Southwest, its CEO and chairman Gary Kelly, told CNBC Thursday.

“It combines their route networks and they reduce flights and that creates opportunities for us to add flights,” said Kelly. “On the other hand, we are a growth company : We will be adding flights in the next several years, adding airplanes and adding jobs, so that’s absolutely an opportunity for us.”

Kelly spoke to CNBC after Southwest Thursday reported record third-quarter earnings.

Kelly noted that competing with merged United and Continental , now the world's largest air carrier, also is a challenge. Regulators approved the deal in September. Northwest and Delta merged in 2008.

Going forward, Kelly said that he’s concerned about rising fuel costs. He also expects demand for Southwest flights to continue, but at a modest pace, due to the slow economic recovery.

The industry is enjoying its best profits in a decade.