Southwest Airlines Co.
) witnessed higher traffic and capacity in May 2013. The results
were supported by an increased number of passengers traveled and
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The company's traffic - measured in revenue passenger miles
(RPMs) - was 9.34 billion for the reported month, up 4.2% from
8.97 billion recorded a year ago. On a year-over-year basis,
consolidated capacity (or available seat miles/ASMs) moved up
3.4% to 11.41 billion. The load factor or percentage of seats
filled by passengers improved marginally to 81.9% from 81.3% in
For the first five months of this year, Southwest generated RPMs
of 41.84 billion (up 1.4% year over year) and ASMs of 53.44
billion (up 1.9% year over year). Load factor was 78.3%,
reflecting a decline of 40 basis points.
We believe that Southwest remains committed to sustain its brand
and operational excellence based on five major strategic actions.
The company unveiled an aircraft purchase order restructuring
initiative that is expected to induce cost savings in the coming
five years. The company switched five orders for
The Boeing Company
) 737-700 into 737-800s and abandoned a set of five purchase
orders of Boeing Next Generation jets each in 2014 and 2015.
In an attempt to enhance shareholder value, Southwest announced a
400% hike in quarterly dividend to 4 cents per share from a penny
per share. On an annualized basis, the total amount of dividend
payout is expected to be more than $100 million. Additionally,
the company also raised its stock repurchase plan to $1.5 billion
from the existing program of $1 billion.
Southwest - which operates along with other prominent players
United Continental Holdings
) - currently holds a Zacks Rank #2, implying a Buy rating.