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Southwest Airlines (LUV) August Traffic Grows; Stock Up
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Low-cost carrier Southwest Airlines Co. (LUV - Free Report) announced modest traffic numbers for Aug 2016, with revenue passenger miles or RPMs (a measure of air traffic) improving 3.6% on a year-over-year basis to 10.3 billion. Available seat miles or ASMs (a measure of capacity) also improved 4.6% to 12.7 billion.
Another important metric – load factor (percentage of seats filled by passengers) – deteriorated 80 basis points (bps) to 84.6% during the month as capacity expansion outpaced traffic growth.
In the first eight months of 2016, Southwest Airlines reported 6.3% rise in RPMs to 83.5 billion and5.9% increase in ASMs to 99.6 billion, both a year-over-year basis. The total load factor increased 20 bps to 83.8%.
The passenger count in August and at the end of the first eight months of 2016 grew 4.1% and 5.3%, respectively.
The company’s stock was up 4.68% as a result of the traffic growth and a positive sentiment emerging in the airline sector after months of dull growth. The increase was driven by the bullish forecast for capacity in 2017.
RASM Guidance Maintained
Southwest has maintained its operating revenue per ASM (RASM) guidance for the third quarter of 2016. RASM is expected to decline in the range of 3.5% to 4.5% from the third quarter of 2015. The company had faced a technology outage issue in July this year. Hence, the guidance had been trimmed from an expected decline of 3% to 4% projected before the issue.
This apart, Southwest recently signed in-principal agreements with its employees. Two recently signed tentative deals include those with its technicians and pilots. Moreover, the company reached a deal with its ground staff earlier this year.
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Southwest Airlines (LUV) August Traffic Grows; Stock Up
Low-cost carrier Southwest Airlines Co. (LUV - Free Report) announced modest traffic numbers for Aug 2016, with revenue passenger miles or RPMs (a measure of air traffic) improving 3.6% on a year-over-year basis to 10.3 billion. Available seat miles or ASMs (a measure of capacity) also improved 4.6% to 12.7 billion.
Another important metric – load factor (percentage of seats filled by passengers) – deteriorated 80 basis points (bps) to 84.6% during the month as capacity expansion outpaced traffic growth.
In the first eight months of 2016, Southwest Airlines reported 6.3% rise in RPMs to 83.5 billion and5.9% increase in ASMs to 99.6 billion, both a year-over-year basis. The total load factor increased 20 bps to 83.8%.
The passenger count in August and at the end of the first eight months of 2016 grew 4.1% and 5.3%, respectively.
The company’s stock was up 4.68% as a result of the traffic growth and a positive sentiment emerging in the airline sector after months of dull growth. The increase was driven by the bullish forecast for capacity in 2017.
RASM Guidance Maintained
Southwest has maintained its operating revenue per ASM (RASM) guidance for the third quarter of 2016. RASM is expected to decline in the range of 3.5% to 4.5% from the third quarter of 2015. The company had faced a technology outage issue in July this year. Hence, the guidance had been trimmed from an expected decline of 3% to 4% projected before the issue.
This apart, Southwest recently signed in-principal agreements with its employees. Two recently signed tentative deals include those with its technicians and pilots. Moreover, the company reached a deal with its ground staff earlier this year.
SOUTHWEST AIR Price
SOUTHWEST AIR Price | SOUTHWEST AIR Quote
Zacks Rank and Stock to Consider
Southwest Airlines currently carries a Zacks Rank #5 (Strong Sell). Investors interested in the airline sector can consider better-ranked stocks like Copa Holdings SA (CPA - Free Report) , SkyWest Inc. (SKYW - Free Report) and ANA Holdings Inc. (ALNPY - Free Report) . All the stocks hold a Zacks Ranks #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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