With the intent to expand capacity in popular tourist spots, Southwest Airlines Co. (LUV Quick QuoteLUV - Free Report) plans to launch new flights to Mexico this year. The flights will operate between Los Angeles and three Mexican resort towns – Cancun, San Jose del Cabo and Puerto Vallarta. The flights are expected to start from Dec 4, subject to approval from the government of Mexico.

To promote the new routes, Southwest Airlines is offering special fares for travel between Dec 4, 2016 and Mar 2, 2017. The seats are available for booking up till Aug 21, 2016.

MexicoExpansion

Southwest Airlines received approval from the U.S. Department of Transportation (DOT) last month to fly from Oakland International Airport to Los Cabos and Puerto Vallarta. Dependent on approval from the Mexican government, the flights from northern California is expected to be flagged off on Feb 12, 2017. In addition to the new flights, Southwest Airlines operates daily flights between Los Angeles and Liberia/Guanacaste, Costa Rica.

The expansion into Mexico may prove beneficial for Southwest Airlines as the country continues to gain popularity as a holiday destination. The airline also plans to increase capacity by 5%–6% in 2016.

July Traffic

Southwest Airlines recently reported traffic details for the month of July wherein traffic (measured in revenue passenger miles, RPMs) increased 1.4% while capacity measured in available seat miles (ASMs) rose 2.3%.

The company suffered a technology outage in July which led to cancellation and delays of several flights. As a result, operating revenue per available seat mile (RASM) in the third quarter has been impacted by 50 basis points and is expected to decline in the range of 3.5% to 4.5% instead of the 3% to 4% decline projected earlier.

SOUTHWEST AIR Price

 

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Zacks Rank and Stocks to Consider

Southwest Airlines currently holds a Zacks Rank #5 (Strong Sell). Better-ranked stocks in the transportation sector include Copa Holdings SA (CPA Quick QuoteCPA - Free Report) with a Zacks Rank #1 (Strong Buy), and Star Bulk Carriers Corp. (SBLK Quick QuoteSBLK - Free Report) and SkyWest Inc. (SKYW Quick QuoteSKYW - Free Report) with a Zacks Rank #2 (Buy).

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