AirTran Holdings Inc, which has agreed to be acquired by low-cost rival Southwest Airlines Co, said higher fuel costs led to a lower quarterly profit.

The company said aircraft fuel costs rose 16 percent in the quarter.

Net income for the Orlando, Florida, parent of AirTran Airways was $1.9 million, or 1 cent a share, for the fourth quarter, compared with $17.1 million or 11 cents a share a year earlier.

Quarterly revenue rose 8 percent to $645.5 million. Overall operating expenses were up about 13 percent, as fuel costs rose and marketing and advertising expenses increased 43 percent.

Oil prices rose sharply on Friday amid signs that U.S. economic growth was accelerating.

Shares of major U.S. airlines sold off as the broader market went lower. Industry leader United Continental Holdings was down 4.3 percent, US Airways Group off more than 6 percent and Southwest was down 2.8 percent. The Arca Airline index was down 3.4 percent.

I believe the stocks are down because of concerns in the Middle East about unrest and instability and what could possibly happen over the weekend from a macro level, Helane Becker, an airline analyst with Dahlman Rose & Co, said in an email.

AirTran, which flies to the United States and the Caribbean, said it expected its acquisition by Southwest to be completed in the second quarter, should it be approved by regulators and shareholders.

Shares of AirTran were down 5 cents or 0.7 percent at $7.41 near midday.

(Reporting by Karen Jacobs, editing by Matthew Lewis)

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