Southwest Airlines Co.
) posted a nominal rise in traffic for May 2014. The month's
traffic - measured in revenue passenger miles (RPMs) - came in at
9.40 billion, up 0.6% from 9.35 billion recorded in the comparable
period a year ago.
Meanwhile, on a year-over-year basis, consolidated capacity (or
available seat miles/ASMs) decreased 1.5% to 11.23 billion. Load
factor came in at 83.7%, up 180 basis points (bps) from the
year-over-year figure of 81.9%. PRASM (passenger revenue per
available seat miles) went up approximately 8-9% in the reported
In the first five months of 2014, Southwest Airlines generated
RPMs of 42.68 billion (up 2.0% year over year) and ASMs of 52.88
billion (down 1.1% year over year) leading to a load factor of
80.7% (up by 240 bps).
Several strategies have been adopted by the carrier to boost
revenues and reduce expenses over the next three years. With a
cost-efficient business model, Southwest Airlines eyes network
expansion through the integration of the AirTran aircraft and the
addition of domestic and international destinations. Notably,
AirTran will be fully integrated with Southwest Airlines by the end
of this year.
The company has also acquired 12 pairs of slots at the LaGuardia
(LGA) airport in New York and has won bids to purchase 27 pairs of
slots at Reagan National Airport (DCA) in Washington, D.C. These
slot wins were part of U.S. Airways Group's merger with American
Airlines to form
American Airlines Group Inc.
Notably, Southwest Airlines' slot win at New York has widened
its scope for expansion in the city, besides consolidating its
foothold against peers like
JetBlue Airways Corp.
Delta Air Lines Inc.
Further, the company has decided to extend daily departures from
DCA to 44 from the current 17, thus increasing its operations from
the airport by more than 2.5 times. Further, Nov 2 onward, the
passenger carrier plans to start daily non-stop flights to
Arkon-Canton and Indianapolis from DCA and to Las Vegas and San
Diego from Washington Dulles International Airport. These new
services will strengthen the carrier's operations in the capital
city as well.
The carrier also announced that it will now offer non-stop
services to domestic destinations from Dallas Love Field airport,
wherein flight limitations will finally be lifted. We believe these
initiatives along with the slot wins will create tailwinds for the
company going forward.
Southwest Airlines currently holds a Zacks Rank #1 (Strong
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