DALLAS (CBSDFW.COM) – For the 40th consecutive year, Southwest Airlines posted an annual profit, reporting a net income of $417 million in 2012.

This represents a 26 percent increase over 2011, when the company posted a net income of $330 million.

“2012 was a year of tremendous progress,” said Gary C. Kelly, Chairman of the Board, President, and Chief Executive Officer in a statement. “Our profits (excluding special items) of $417 million grew 26 percent as compared to 2011 and represented our 40^th consecutive year of profitability.  Without a doubt, this is a remarkable feat and a record unmatched in the airline industry.”

The airline did report that fourth-quarter earnings fell by nearly 50 percent on higher spending for fuel, labor and maintenance. But higher costs were offset by rising revenue, as 4Q average fares rose $7.64 over the same period last year.

Fourth quarter 2012 net income was $78 million, or $.11 per diluted share, which included $13 million (net) of favorable special items.  This compared to net income of $152 million, or $.20 per diluted share, in fourth quarter 2011, which included $86 million (net) of favorable special items.

“Our economic fuel costs, including fuel taxes, were $3.32 per gallon for fourth quarter 2012, and $3.28 per gallon for full year 2012, compared to $3.29 per gallon and $3.19 per gallon for the respective year-ago periods,” said Kelly.

The airline also reported a flight on-time performance of 83.1 percent.

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