Southwest Airlines was the third major airline to report earnings this quarter, as the airline rolled out their results this morning.

The verdict?

The airline posted its second quarterly loss in a row.

The reason? Just as we saw with American and United yesterday — getting caught on the wrong side of the hedges. Fuel hedges that is.

Including special items, the airline posted a loss of $56 million or $0.08 per share. Last year the airline posted a profit of $111 million or $0.15 a share. Excluding special items, the airline posted a profit of $61 million or $0.08 a share. This compares to last year when the airline posted a profit of $87 million or $0.12 a share.

For the year, the airline posted net income of $178 million. This compares to 2007, when the airline posted net profit of $645 million or $0.84 a share. Excluding special items, full year 2008 net income was $294 million or $0.40 per diluted share, compared to $471 million, or $0.61 per share in 2007.

While these numbers would not look like numbers that would push shares higher — shares in the airline are now up about 17% on the day. Why?

The quarterly numbers are not what is pushing the shares higher.

The fact that CEO Gary Kelly came out and said that growth at the airline has been “suspended indefinitely” is the reason the shares are up.

I know, it’s convoluted.

But in the world of Wall Street — the biggest fear was that Southwest would NOT make a serious attempt to cut back on growth. Since the airline now seems determined to do so — that is seen as a positive. It is anticipated that fewer ASMs will result in higher loads and better revenues in 2009.

“I definitely want Southwest Airlinesto grow,” CEO Gary Kelly said on the airline’s conference call today. “I believe we will be able to grow, but that is certainly a secondary objective in this kind of an economic environment.”

The airline has now reduced its 2010 Boeing delivery schedule of new aircraft down to 10. The airline previously had 16 aircraft on firm order and six options for the year.

Southwest ended December with 537 aircraft. It expects to end 2009 with 535 — as lease expirations and retirements cancel out the 13 new Boeing 737-700s now expected to be delivered during the year.