Shares of Allegiant Travel CompanyALGT gained 6.9% ever since it released impressive traffic numbers for December 2017, last week. Moreover, it unveiled an improved outlook on total revenue per available seat miles (TRASM: a key measure of unit revenue) for the fourth quarter of 2017. Detailed fourth-quarter results will be revealed on Jan 31.
Traffic for the total system including scheduled service and fixed fee contract - measured in revenue passenger miles (RPMs) - increased 11.4% on a year-over-year basis to 989.39 million in December. System capacity, calculated in available seat miles (ASMs), improved 9.2% to 1.23 billion in the same month. Allegiant's traffic data was aided by an increased demand for air travel.
With traffic growth outpacing capacity expansion, load factor (percentage of seats filled with passengers) improved 160 basis points year over year to 80.4%. Allegiant's passenger count also rose 10.6% in December. Its system-wide average fuel cost per gallon was approximately $2.09 in the month.
While RPMs increased 8%, ASMs expanded 10% in 2017. However, load factor declined 150 basis points to 81.6% in the same period.
Allegiant Travel Company Price
Improved Q4 Outlook
Allegiant revised its expectations for fourth-quarter TRASM ( projected in the range of down 0.3% to up 0.1%).This represents an improvement over the previous guidance, which projected the metric in the range of -1% to +1%.
The outlook for fourth-quarter not-fuel unit costs have also been improved at Allegiant. The metric is now expected to increase in the band of 5.3% to 5.7% (previous outlook: 7% to 9%).
Notably, Allegiant is not the only carrier to issue an improved fourth-quarter unit revenue outlook. Other players in the airline space like JetBlue Airways JBLU , American Airlines Group AAL and United Continental Holdings UAL have also done the same recently.
Allegiant carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
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