WRAPUP 2-Airline results cloud recovery outlook

* US Airways narrows loss

* JetBlue swings to profit

* S&P upgrades US Airways, shares jump

* Concerns about revenue hit airline index

(Updates shares, adds analyst comment)

By Kyle Peterson and Deepa Seetharaman

CHICAGO/FORT LAUDERDALE, Jan 28 (Reuters) - U.S. airlines offered mixed quarterly results on Thursday, raising concerns about the industry's recovery after being clobbered in recent months by the recession.

US Airways Group (LCC.N) and JetBlue Airways Corp (JBLU.O) surpassed estimates, with US Airways narrowing a fourth-quarter loss and JetBlue reporting a profit.

Alaska Air Group (ALK.N) also swung to a profit, but it missed estimates and its shares fell.

"People are concerned about the economy and whether or not it's truly recovering," said Helane Becker, analyst with Jesup & Lamont.

Fuel costs are projected to rise and airlines will have to spend more to accommodate more traffic, Becker said. Meanwhile, the industry has been unable to lift fares in 2010, she said.

"How fast can revenue come back?" Becker said. "That's really the issue."

The Arca Airline Index .XAL fell 1.8 percent, outpacing a drop in the broader stock market. JetBlue shares fell 4.5 percent to $5.30, while Alaska Air's stock sank more than 8 percent to $33.47.

But US Airways shares jumped 4 percent to $5.06 in afternoon trading on the New York Stock Exchange.

"We see cash levels as adequate, and think (US Airways) has done a good job reducing cash outlays for 2010," Standard & Poor's analyst Jim Corridore wrote. Corridore raised his rating on the stock to a "buy" on Thursday afternoon.

The airline industry suffered in 2009 under the weight of the recession, which caused businesses to cut their travel budgets. Airline executives have expressed cautious optimism that business travelers are returning to the skies.

US AIRWAYS LOSS SHRINKS

US Airways said its fourth-quarter net loss was $79 million, or 49 cents per share, compared with a loss of $543 million, or $4.76 a share, a year earlier.

Excluding $47 million in one-time items, US Airways lost $32 million, or 20 cents per share. On that basis, Wall Street expected the company to lose 50 cents per share, according to Thomson Reuters I/B/E/S.

Fourth-quarter revenue was $2.63 billion, down 4.9 percent from a year ago.

US Airways ended the quarter with $2 billion in cash and investments, of which $500 million was restricted.

JETBLUE SWINGS TO PROFIT

JetBlue's profit topped Wall Street estimates as unit cost decreases outpaced revenue declines, the airline said.

Fourth-quarter net income was $11 million, or 4 cents per diluted share, compared with a net loss of $58 million, or 25 cents per share, a year earlier.

Analysts expected a profit of 3 cents per share, according to Thomson Reuters I/B/E/S.

JetBlue ended the year with $1.1 billion in unrestricted cash and short-term investments. The airline generated positive free cash flow for the first time in its history.

JetBlue expects higher costs in the first half of 2010 from because it is adopting a new customer service system and because of aircraft maintenance. It plans to offset those costs in the second half with higher revenues from product and network initiatives.

ALASKA MISSES EXPECTATIONS

Alaska Air Group, the parent of Alaska Airlines and regional carrier Horizon Air, reported a fourth-quarter net profit helped by lower fuel costs.

Net income was $24.1 million, or 67 cents per share, compared with a year-earlier net loss of $75.2 million, or $2.08 per share. Excluding items, the carrier earned 12 cents a share, while analysts expected 32 cents a share.

Alaska Air Group ended the year with $1.2 billion in unrestricted cash and marketable securities. (Reporting by Kyle Peterson, Deepa Seetharaman and John Crawley. Editing by Dave Zimmeran and Robert MacMillan)