Allegiant's August Traffic Rises But Load Factor Declines
Allegiant Travel Company ALGT reported a decline in load factor (% of seats filled by passengers) for August as traffic growth was outpaced by capacity expansion.
Backed by upbeat demand for air travel, system-wide traffic — measured in revenue passenger miles (RPMs) — improved 4% on a year-over-year basis to 1.07 billion. Notably, system-wide traffic includes scheduled service and fixed fee contract. System capacity, calculated in available seat miles (ASMs), expanded 5.2% to 1.31 billion in August. Meanwhile, load factor declined 100 basis points to 81.6%.
Notably, the carrier has been grappling with decrease in load factor so far this year. Evidently, the metric declined 130 basis points to 82.2% in second-quarter 2019.
Coming back to Allegiant’s August traffic report, departures increased 7.3%. Average stage length (average distance flown per aircraft departure) decreased 2.3% to 824 miles in the same month. The carrier was responsible for transporting approximately 1.26 million passengers during August.
The company’s system-wide average fuel cost per gallon was approximately $2.13 in the month, lower than $2.20 in May. Allegiant expects fuel cost per gallon of $2.15 for 2019.
Despite declining load factor, shares of Allegiant have charted a solid trajectory so far this year, courtesy of impressive top-line growth driven by strong passenger revenues. In the first half of 2019, passenger revenues increased 9%. The stock has gained 46.9% compared with its industry’s 4.5% growth.
Zacks Rank & Other Key Picks
Allegiant carries a Zacks Rank #2 (Buy). Some other top-ranked airline stocks are Controladora Vuela Compania de Aviacion, S.A.B. de C.V. VLRS, Copa Holdings, S.A. CPA and SkyWest SKYW. While Controladora Vuela and Copa sport a Zacks Rank #1 (Strong Buy), SkyWest carries the same Zacks Rank as Allegiant. You can see the complete list of today’s Zacks #1 Rank stocks here.
Shares of Controladora Vuela, Copa and SkyWest have rallied more than 93%, 26% and 33% so far this year, respectively.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>
Click to get this free report
SkyWest, Inc. (SKYW): Free Stock Analysis Report
Controladora Vuela Compania de Aviacion, S.A.B. de C.V. (VLRS): Free Stock Analysis Report
Copa Holdings, S.A. (CPA): Free Stock Analysis Report
Allegiant Travel Company (ALGT): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.