* Delta offering early retirement, severance programs

* Oil prices rise

March 13 (Reuters) - Southwest Airlines Co does not expect to report a profit for the current quarter because of high fuel prices, the company's finance chief said on Tuesday.

The carrier, which acquired AirTran last year, said it expects fuel costs of around $3.50 a gallon for the first quarter, about 15 cents higher than its prior forecast.

"For March, bookings remain good but we are cautious," Southwest Chief Financial Officer Laura Wright told a JPMorgan Aviation, Transportation and Defense conference that was broadcast over the Internet.

Southwest said passenger revenue per available seat mile, an important measure, rose a weaker-than-expected 4 percent after a 7 percent rise for January. Wright said bookings toward the end of February were weaker.

US Airways Group Inc said it saw weakness in bookings in early February but things had improved since.

"The last two weeks of February and the first two weeks of March have returned to the same bookings pace that we saw in January," US Airways President Scott Kirby told the JPMorgan conference. "So again, back to that very strong booking pace."

The airline industry has struggled to maintain stability after a years-long downturn exacerbated by volatile fuel prices. In the past year, carriers have raised airfares, retired less-fuel-efficient planes and cut capacity to try to blunt the effects of higher fuel.

Oil prices traded up on Tuesday, with Brent crude passing $126 a barrel, as U.S. retail sales spurred optimism about the economic outlook.

Delta Air Lines Inc said business travel continues to hold up, but it still expects pressure from fuel. It added that it has offered new early retirement and severance programs for employees in a bid to cut non-fuel costs.

Delta said it now expects a first-quarter operating margin of 1 percent to 3 percent, down from a prior view of 2 percent to 4 percent.

While fuel costs are expected to rise $250 million in the period, revenue should outpace that by rising $550 million, Delta said.

"We expect not only will fuel prices stay high, we expect they're going to continue to rise over time and we're building our model accordingly," Delta President Edward Bastian told the JPMorgan conference. He said Delta expects unit revenue to rise 11 to 12 percent for the month of March.

The first quarter is generally one of the weakest periods in terms of performance for airlines.

Analysts had expected a profit of 3 cents a share for Southwest in the first quarter, according to Thomson Reuters I/B/E/S.

A loss of 3 cents a share was expected for Delta, and United Continental Holdings Inc and US Airways were seen posting losses of 56 cents a share and 27 cents a share, respectively.

Jeff Smisek, chief executive of United Continental, said he, too, is comfortable with demand for March and the airline intends to respond to higher fuel prices.

United Continental is the parent of United Airlines, which was formed from the 2010 merger of United and Continental Airlines. The two carriers merged reservations systems on March 3, triggering technical glitches that resulted in flight delays, faulty kiosks and jammed phone lines.

The company says its performance is improving, although customers still are enduring long wait times to reach phone-contact centers.

"That was a huge project," Smisek said at the JPMorgan conference.

"Have we had some glitches? Of course, in a project of that size, you have to," he said. "But we're knocking those down one by one."

Shares of Southwest shrugged off earlier weakness and were up 1.1 percent to $8.37 in afternoon trading. Delta was up 1.1 percent at $9.29, and United Continental rose 16 cents to $19.78. US Airways was up 1 cent to $6.90.

• A Permanent Economic Emergency