The low-cost US airline JetBlue reported a jump in profits and doubling of passengers during its latest quarter.

Defying the current gloom in the US airline sector, JetBlue reported profits of $12.2m (�7.8m), compared with $10.1m a year ago.

People are paying up to fly JetBlue and it is still a low fare

Jim Parker Airline analyst

Most major US airlines have seen their revenues dip, as ticket prices stay low and business travel remains weak.

Also on Thursday, AMR, the parent of the largest US carrier American Airlines, announced cost reductions that should produce $2bn savings per year.

But despite the increase in profits, which were in line with expectations, JetBlue saw its shares fall by more than 7% as investors became concerned about a rise in the airline's costs.

Cost fears

Budget airlines maintain their edge on the more traditional airlines by keeping costs down and margins razor-sharp.

Passenger traffic more than doubled

The airline blamed rising fuel prices, a build-up of operations at Long Beach airport in California and a spate of credit card fraud for an 82% spike in costs.

"We were up a little bit on our cost side," said chief executive David Neeleman.

"But there's nothing endemic about those costs."

He added that JetBlue's costs would drop down to second-quarter levels in the fourth quarter.

'Paying up'

JetBlue's operating revenue rose to $165.3m from $82.7m a year ago.

Passenger traffic rose 118.6% in the quarter from a year ago, while capacity rose nearly 97%.

"One thing that stands out about the airline business is how weak airfares are, that is not the case for JetBlue," said Jim Parker, an airline analyst at Raymond James.

"People are paying up to fly JetBlue and it is still a low fare."

JetBlue is one of a few discount airlines to successfully launch in the north-eastern US, with a base at New York's John F Kennedy airport, where it does much of its business.

The airline, which launched in February 2000, keeps its costs low by eliminating costly in-flight meals and by encouraging customer fliers to book over the internet.