Oct. 15--Southwest Airlines Co. kicks off the earnings season for U.S. airlines today with more suspense than usually accompanies the release of the carrier's financial results.

Will the Dallas-based airline make money again as it has for most of its history? Or will it report a loss, as it has for three of the last four quarters?

If Wall Street analysts are to be believed, Southwest should eke out a small profit. The consensus estimate is for net income of a penny per share, or about $7 million.

In fact, the gloom hanging over the airline industry seems to be lessening as carriers prepare to report their results over the next week.

Overall, analysts are expecting five of the nation's nine biggest carriers to report profits excluding special items, and the earnings outlook has improved for most over the last month.

The consensus view is that in addition to Southwest's razor-thin profit, investors will see profits from AirTran Holdings Inc., Alaska Air Group Inc., Continental Airlines Inc., and JetBlue Airways Corp.

Expected to post losses are American Airlines Inc.'s parent, AMR Corp.; Delta Air Lines Inc.; United Airlines Inc.'s parent, UAL Corp.; and US Airways Group Inc.

Seven of the nine airlines have seen their consensus estimates improve over the past month, including the movement of Continental and Southwest from small losses to small profits. Only AMR and AirTran saw their estimates deteriorate in the past month.

A month ago, the consensus pointed to a 5-cent loss for Southwest. However, the carrier cheered up investors last week with projections that its unit revenue increased about 3 percent in September over a year earlier.

Analyst Michael Derchin of FTN Equity Capital Markets Corp. cited the improving revenue picture as evidence that Southwest's "strategy of not charging for first and second bags is finally paying off in terms of incremental market share gains."

He projected that the industry overall will see an 18 percent decline in unit revenue, or revenue per seat mile flown, in the third quarter, compared to Southwest's 3 percent increase.

"According to LUV [Southwest], recent market research points to greater awareness by consumers of the difference between LUV's no-fee checked bag policy and that of other airlines," Derchin wrote. "This may reflect, in part, LUV's hard-hitting advertising campaign this fall and consumer backlash to the rash of fees other airlines have adopted."

Analyst Helene Becker of Jesup & Lamont Securities last week raised her estimate on Southwest from an 8-cent loss to a 2-cent gain, largely because of the improving unit revenue picture. However, she has maintained her "sell" recommendation on the company's stock.

Analyst James Parker of Raymond James raised his estimates for Southwest last week to a 5-cent loss rather than 10 cents a share, but he downgraded the airline's shares from "outperform" to "market perform."

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