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SEATTLE - Alaska Air Group Inc. on Thursday said its second-quarter profit rose 37 percent despite rising fuel prices, as it accounted for fuel hedges that will close in future quarters. The operator of Alaska Airlines and Horizon Air also said it will cut capacity, and suggested job losses are coming in the fall.

The company said it made $63.1 million, or $1.74 per share, during the quarter that ended June 30. That was up from $46.1 million, or $1.13 per share, that Alaska made during the corresponding period last year.

Revenue rose 3 percent to $930.8 million, from $904.4 million during the 2007 quarter.

Alaska Air said without the fuel hedge gain, it would have lost $14.1 million, or 39 cents per share. On that basis, analysts surveyed by Thomson Financial expected the company to lose 40 cents per share on revenue of $937 million.

The hedging gain is a result of the company's financial maneuvers betting on rising oil prices. The value of those transactions rises along with oil prices. The hedges have not closed yet, but accounting rules require Alaska to value the hedge as of the close of the quarter, resulting in a paper gain of $155.3 million, or $2.69 per share.

Like other airlines, Alaska Air is cutting capacity and raising fares to try to cope with rising fuel prices. On Thursday it said it would cut Alaska Airlines' fourth-quarter mainline capacity by 5 percent versus 2007, and that 2009 capacity will decrease 5 percent to 10 percent from this year.

Alaska Air said it was "determining the full effect of the schedule reductions on work groups and expects to have more information in early September." The company said it would cut the number of Alaska Airlines managers by 5 percent beginning Sept. 1. Horizon Air cut management ranks by 13 percent earlier this year "and will further reduce operational and management positions in connection with capacity cuts," the company said.

"Skyrocketing fuel prices have eclipsed the improvements we've worked so hard to achieve in every area of our business," said Bill Ayer, Alaska Air chairman and chief executive officer. "Decisive action, an excellent operation, and the genuine, caring service our employees provide will help us survive what is shaping up to be the most difficult period in commercial aviation history."