Jan 30 (Reuters) - U.S. budget carrier Southwest

Airlines' ( LUV ) fourth-quarter profit surpassed Wall Street

estimates on Thursday, helped by robust travel demand and

improved airfares.

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.

Airfares in December rose at their fastest pace in 21

months.

This helped Southwest ( LUV ) report an adjusted profit of 56 cents

per share for the fourth quarter ended Dec. 31, compared with

analysts' average estimate of 44 cents, according to data

compiled by LSEG.

Its operating revenue rose 1.6% to $6.93 billion from a year

earlier.

At its investor day in September, the airline unveiled plans

including vacation packages and aircraft sale-leasebacks to

enhance its revenue and liquidity, at a time when the industry

struggles with inflated labor and aircraft maintenance expenses.

"While we still have much work to do, we are pleased that

the improvements from our tactical initiatives are materializing

faster than expected, and our progress continues to be further

supported by a constructive demand environment and industry

backdrop," CEO Bob Jordan said.

The company expects first-quarter RASM to grow about 5% to

7%, compared with analysts' expectation of a 2.62% increase.

It sees cost per available seat mile, excluding fuel, to be

up 7% to 9% as it bears the brunt of expensive labor contracts.

Southwest ( LUV ), which has an all Boeing ( BA ) fleet and has been

hit hard by the planemaker's jet delivery delays, expects to

receive 38 737 MAX 8 aircraft from the planemaker in 2025.