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Top notch passenger airline Southwest Airlines Co. (LUV - Analyst Report) witnessed a drop in traffic and capacity for Jan 2013, reflecting lesser passengers traveled and trips undertaken.

The company’s traffic – measured in revenue passenger miles (RPMs) – was 7.25 billion for Jan 2013, down 1.7% from 7.37 billion recorded a year ago. On a year-over-year basis, consolidated capacity (or available seat miles/ASMs) went up marginally by 0.5% to 9.98 billion.

The load factor or percentage of seats filled by passengers fell to 72.7% from 74.3% in Jan 2012. Passenger revenue per available seat mile (PRASM), however, improved about 2.0% year over year.

Another leading U.S. passenger carrier Delta Air Lines (DAL - Analyst Report) displayed flat traffic growth for the same period with RPMs at 13.9 billion.

Dallas, Texas Southwest Airlines – operating along with other prominent players such as United Continental Holdings Inc. (UAL - Analyst Report) and JetBlue Airways Corporation (JBLU - Analyst Report) – currently holds a Zacks Rank #2, implying a Buy rating.

The U.S. low-cost carrier reported its fourth quarter financial results on Jan 24. Quarterly adjusted earnings of 9 cents per share slivered past the Zacks Consensus Estimate of 7 cents.    The results remained at the same level with that of the prior-year quarter. Revenues moved up 1.6% year over year to $4,173 million but missed the Zacks Consensus Estimate of $4,214 million.

Looking ahead, we believe that the company remains committed to sustain its brand and operational excellence via its cost-cutting measures, fleet rightsizing, and the addition of new and attractive destinations. Delta’s Evolve retrofit program, steady capacity growth, All-New Rapid Rewards and several steps to enhance ancillary revenues will position it advantageously in the coming days.

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