Southwest Airlines said Thursday that it faces higher costs in 2025 as inflation persists, but it managed to swing to a fourth-quarter profit due to a boost from lower fuel prices.

The airline also forecast better-than-expected unit revenue (RASM), a proxy for pricing power, for the first quarter. Airlines across the U.S. have cut seating to boost fares after a surplus capacity, introduced last summer in anticipation of a demand surge, forced airlines to offer discounts and sacrifice margins.

Southwest Airlines reports strong Q4 performance with record revenue but misses revenue expectations, plans $750M share repurchase program for Q1.

Southwest Airlines posted a profit in the fourth quarter as bookings during the holidays were better than expected.