UPDATE 1-JetBlue profit beats expectations on cost cuts

* Q4 shr $0.04 vs est $0.03

* JetBlue generates first positive free cash flow

WASHINGTON Jan 28 (Reuters) - JetBlue Airways Corp's (JBLU.O) profit topped Wall Street estimates as unit cost decreases outpaced revenue declines, the airline said on Thursday.

Fourth-quarter net income of $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 the transition to a new customer service system and certain aircraft maintenance to be offset in the second half by higher revenues from product and network initiatives. (Reporting by John Crawley; Editing by Derek Caney)