Southwest earned 94 cents a share on an adjusted basis and widened its margin despite an $889m fuel increase

Fuel cost Southwest Airlines $889m more than it did a year earlier. The airline widened its margin anyway.

Operating revenue was a record $8.4bn, up 16.4 percent, and adjusted operating revenue was $8.7bn, up 20.3 percent. Net income came to $233m, or $0.47 a diluted share. On an adjusted basis Southwest earned $465m, or $0.94 a share, ahead of the roughly $0.51 analysts had expected.

The margin is the part that stands out. Adjusted operating margin rose 3.3 points from a year earlier, to 6.7 percent, through the fuel increase rather than around it. Adjusted unit revenue climbed 20.1 percent, above the company's own prior guidance.

Chief Executive Bob Jordan said this was the first full quarter with all of the airline's transformational initiatives in place, and pointed to managed business revenue at an all-time record, up 30 percent, and to accelerating growth on its Chase co-branded credit card. Southwest returned $88m to shareholders in dividends and guided to full-year adjusted earnings of $3.25 to $4.25 a share.