Southwest Airlines yesterday underlined the strength of its low-cost model, as it reported a 41 per cent rise in net profit to $106 million (€90 million) and brought forward orders for five Boeing 737-300 aircraft to 2004.

Southwest said it planned to add a net 30 new aircraft next year - close to its peak additions in 2000 - representing an annual capacity increase of about 7 per cent. For 2005, if Southwest exercises all its 34 total options and firm aircraft orders, capacity could rise by 10 per cent.

Gary Kelly, finance director, acknowledged that the decision to accelerate the orders had been driven by the rise of low-fare rivals.

"Having more low-fare competition meeting us head on is potentially a different ball game... We can't be complacent about growth. There is a risk of being pre-empted in some markets. We sense some urgency to get there first [with low fares]."

Operating revenues for the third quarter rose 11.6 per cent to $1.55 billion, against $1.39 billion a year ago, driven by pent-up demand for leisure travel. Mr Kelly said: "We are pretty pleased with revenue trends so far in the fourth quarter."

Southwest said the percentage of tickets sold at full fares rose to 36 per cent.

"It was a much better performance than last year. It does suggest that demand for business travel is strengthening," he added.

However, third-quarter operating expenses rose 5.2 per cent to $1.37 billion, driven by higher labour and fuel costs.