Markets
UAL

Full Flights Aid Aug Traffic Growth for Southwest Airlines - Analyst Blog

Dallas, TX-based Southwest Airlines Co. ( LUV ) recorded a healthy rise in traffic in Aug 2014. The month's traffic - measured in revenue passenger miles (RPMs) - came in at 9.62 billion, up 4.9% from 9.17 billion recorded in the comparable period a year ago.

Meanwhile, on a year-over-year basis, consolidated capacity (or available seat miles/ASMs) decreased a mere 0.2% to 11.25 billion leading to a load factor of 85.5%, up 420 basis points year over year. PRASM (passenger revenue per available seat miles) went up approximately 5-6% in the reported month.

In the first eight months of 2014, Southwest Airlines generated RPMs of 73 billion (up 3.1% year over year) and ASMs of 88.1 billion (down 0.2%), leading to a load factor of 82.9% (up 260 bps).

Southwest Airlines' August traffic numbers outperformed that of two of its traditional rivals, namely Delta Air Lines, Inc. ( DAL ) and United Continental Holdings, Inc. ( UAL ). While Delta's traffic grew a little over 3%, United Continental reported near-flat results.

2014 is deemed a vital year for Southwest Airlines. After operating for several decades within the U.S. domestic market, Southwest Airlines has finally begun flying into international territory, with flights to the Caribbean. The carrier also expects to complete the integration of its subsidiary AirTran with itself by the end of this year.

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. ( AAL ), has widened Southwest Airlines' scope for further expansion in the cities.

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 on and from Oct 14.

We believe such expansion initiatives along with the key slot wins will create tailwinds for the company, going forward.

More recently, Southwest Airlines announced a facelift with a fresh modern look for its jets along with a refurbished logo, website and airport counters.

Southwest Airlines currently sports a Zacks Rank #1 (Strong Buy).

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

SOUTHWEST AIR (LUV): Free Stock Analysis Report

DELTA AIR LINES (DAL): Free Stock Analysis Report

UNITED CONT HLD (UAL): Free Stock Analysis Report

AMER AIRLINES (AAL): 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.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

UAL LUV AAL DAL

Other Topics

Stocks