Southwest Airlines had an increase of 41 percent in net profits despite the increase in oil prices, and it has set a target of an additional increase of 15 percent for next year’s earnings.

Net profits increased in the second quarter to $159 million, up from $113 million.

Southwest, the largest US air carrier when determined by market capitalization, has achieved this through an aggressive program to hedge fuel requirements that resulted in a savings of $196 million in fuel and oil costs in the second quarter.

It has hedged 85 percent of its fuel requirements for the second half of this year at $26 per barrel and over half of its fuel needs for 2006 at $32 per barrel.

It has also hedged various proportions of its fuel needs till 2009 for prices between $31 and $35 per barrel.

Another factor in Southwest’s excellent performance was the continuing recovery in the demand for air travel.

Unit costs fell by 3.5 per cent in the quarter despite a 25 percent increase in per gallon cost of jet fuel, according to Southwest’s chief executive.

He said that unit costs would remain about the same in the third quarter, but that fuel costs would be higher.

This was the 57th quarter in a row that Southwest has recorded a profit.