Southwest Airlines Co.
) posted a healthy rise in traffic for July 2014. The month's
traffic - measured in revenue passenger miles (RPMs) - came in at
10.6 billion, up 6.6% from almost 10 billion recorded in the
comparable period a year ago.
Meanwhile, on a year-over-year basis, consolidated capacity (or
available seat miles/ASMs) increased 2.6% to 12.3 billion. Load
factor came in at 86.7%, up 320 basis points (bps) from the
year-over-year equivalent of 83.5%. PRASM (passenger revenue per
available seat miles) went up approximately 4% in the reported
In the first seven months of 2014, Southwest Airlines generated
RPMs of 63.4 billion (up 2.8% year over year) and ASMs of 76.8
billion (down 0.2%), leading to a load factor of 82.5% (up 240
The company recently reported strong second-quarter 2014 results
with both its top and bottom line beating the respective Zacks
Consensus Estimate. Based on the current revenue and ticket booking
trend, the company's revenue outlook for the third quarter remains
Notably, after operating for several decades within the U.S.
domestic market, Southwest Airlines is finally flying into
international territory, with flights to the Caribbean. After the
initial round of flights, the carrier plans to expand its
international operations to 50 more destinations across the world,
with Mexico and Dominican Republic next in line.
Moreover, the slot wins at the LaGuardia (LGA) airport in New
York and at Reagan National Airport (DCA) in Washington, D.C., from
American Airlines Group Inc. (
), has widened Southwest Airlines' scope for expansion in the
Additionally, the carrier will be able to offer several domestic
non-stop services in and out of Dallas Love Field as flight
restrictions (Wright Amendment) therein will be removed in less
than three months' time from now. We believe such expansion
initiatives along with the slot wins will create tailwinds for the
company going forward.
Southwest Airlines currently sports a Zacks Rank #1 (Strong
Buy). Similar-ranked stocks worth considering within the sector are
Republic Airways Holdings Inc. (
) and Spirit Airlines Inc. (
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