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.

Southwest Airlines Co. warned that costs will climb faster than expected as it grapples with heavy labor expenses, undercutting gains from strong demand for leisure travel.

Southwest Airlines (LVU) put in a solid performance in the fourth quarter and forecast above-consensus revenue per available seat mile for the current quarter as the carrier absorbed surplus capacity across the industry with greater aircraft efficiency and higher airfares.