* Southwest, United results top estimates
* JetBlue profit of 5 cents/shr vs. estimate 10 cents
* Airlines stress need to end air traffic control furloughs
April 25 (Reuters) - Southwest Airlines and JetBlue Airways on Thursday reported profits for the first quarter, long the weakest period for carriers, but industry leader United Continental posted a loss, as operating costs rose.
Revenue for the quarter rose at the three carriers, but the numbers were a mixed bag as far as Wall Street was concerned, with Southwest and United beating estimates but JetBlue falling short.
Jim Corridore, an equity analyst with S&P Capital IQ, viewed the revenue numbers positively. "It's clear that the revenue environment is still healthy and companies are getting a bit of an advantage from lower fuel expenses which is more than offsetting any weakness," he said.
Still, Corridore cut his rating on JetBlue to "sell" from "hold," citing its rising maintenance costs and slower growth. JetBlue shares sank 4.6 percent.
The airlines, with an eye on the current quarter, expressed concern about the effect of federal budget cuts known as sequestration on passenger demand, and they stressed the need to end U.S. air traffic staff cuts that began this week and have caused flight delays at airports.
"This is government not working - capital letters exclamation point - when we're sitting here holding the traveling public hostage in the midst of sequestration," JetBlue Chief Executive Dave Barger said during an earnings conference call.
U.S. Senate leaders, concerned about sour public sentiment over the flight delays, on Thursday worked on a plan to try to resolve the furlough issue.
The Federal Aviation Administration started furloughing air traffic controllers on Sunday. The trade group for U.S. airlines has filed suit seeking a halt to the furloughs, which carriers have estimated could lead to hundreds of millions of dollars in lost revenue.
"We are disappointed that the FAA chose this path, that maximizes customer disruptions and damage to airlines, instead of choosing a less disruptive method to comply with the budget obligations," United Continental Chief Executive Jeff Smisek said during a conference call.
REVENUE GAINS IN SEASONALLY WEAK PERIOD
Net income at Southwest was $59 million, or 8 cents a share, for the first quarter, down 40 percent from $98 million, or 13 cents a share, a year earlier.
The traditional low-fare leader had profit-sharing expense and special items including acquisition charges in the quarter. Year-earlier results were also aided by gains of $170 million, mainly tied to fuel-hedge contracts, compared with gains of $46 million in the latest period.
Excluding items, profit was 7 cents a share, compared with 2 cents a share expected by analysts, according to Thomson Reuters I/B/E/S. Its revenue rose 2 percent to $4.1 billion.
Southwest is looking to raise revenue by more than $1 billion this year.
On Thursday, for instance, Southwest announced details of a new policy designed to cut the number of empty seats. Under the initiative, which will start with bookings next month for flights taking place in September, passengers who don't show up will forfeit certain restricted fares if they failed to cancel their reservations before departure.
United Continental, currently the world's biggest carrier, posted a loss of $417 million, or $1.26 per share. Adjusted for merger-related and other charges, the loss was 98 cents a share, compared with a loss of $1.10 expected by analysts. Revenue rose 1.4 percent to $8.7 billion, but operating costs came to nearly $9 billion, as expenses for salaries climbed 12 percent.
Higher costs hurt JetBlue's profit, which came to $14 million, or 5 cents a share, compared with 10 cents expected by analysts. JetBlue's revenue rose 8 percent to $1.3 billion.
Southwest and JetBlue cautioned that a key revenue measure, unit revenue, would weaken in April, but both added May was looking stronger.
"We do expect the economy is going to recover from the soft patch it's currently in and continue to grow," Corridore said. "It should be a nice summer period for the industry."
Other airlines have noted weaker near-term revenue trends. Delta Air Lines said this week that U.S. government spending cuts and lighter demand from leisure travelers would hurt unit revenue in April, while US Airways said demand from business passengers had been pressured since the start of sequestration.
Earlier this week, Delta and US Air reported higher-than-expected earnings.
Shares of Southwest ended unchanged at $13.42 on Thursday, while of United Continental fell 1.6 percent to $30.89. JetBlue share shed 4.6 percent to $6.85.