Southwest Airlines Co reported a higher quarterly profit on Thursday on better passenger revenue, even as rising fuel costs boosted operating expenses.

Southwest's shares rose in premarket trading.

The discount carrier, which plans to acquire rival AirTran Holdings Inc to challenge bigger carriers in U.S. East Coast markets, said net income was $131 million, or 18 cents a diluted share in the fourth quarter. That compared with a year-earlier profit of $116 million, or 16 cents a share.

Excluding the effect of fuel contracts, profit came to 15 cents a share, in line with average analyst expectations, according to Thomson Reuters I/B/E/S.

Revenue rose nearly 15 percent to $3.11 billion, compared with $3.08 billion expected by analysts. Passenger revenue was up 14 percent.

Total expenses were up 14 percent as fuel and oil costs spiked 18 percent. Costs tied to maintenance and repairs were 20 percent higher.

Many U.S. airlines have seen revenue and profits improve in the past year after the 2008-09 economic downturn affected travel demand. Earlier this week, Delta Air Lines Inc posted a fourth-quarter profit against a year-ago loss and American parent AMR Corp delivered a smaller-than-expected quarterly loss.

But spiking oil prices have renewed worries about the strength of the airline industry's recovery.

Southwest shares were $12.90 in premarket trading, up from Wednesday's close of $12.83 on the New York Stock Exchange.

(Reporting by Karen Jacobs; Editing by Gerald E. McCormick and Maureen Bavdek)