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April Traffic Grows at Southwest Airlines

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Dallas, TX-based Southwest Airlines Co. (LUV - Free Report) recently posted a rise in traffic for April 2014. The month’s traffic – measured in revenue passenger miles (RPMs) – came in at 9.11 billion, up 4.4% from 8.73 billion recorded in the comparable period a year ago. Meanwhile, on a year-over-year basis, consolidated capacity (or available seat miles/ASMs) decreased 0.6% to 11.17 billion. The load factor or percentage of seats filled by passengers increased to 81.7% from 77.8% in April 2013. PRASM (passenger revenue per available seat miles) went up approximately 7-8% in the reported month.
In the first four months of 2014, Southwest generated RPMs of 33.27 billion (up 2.4% year over year) and ASMs of 41.64 billion (down 0.9% year over year) leading to a load factor of 79.9%, from the year-ago figure of 77.3%.
Southwest Airlines acquired 12 pairs of slots at the LaGuardia (LGA) airport in New York and has won bids to purchase 27 pairs of slots at Reagan National Airport (DCA) in Washington, D.C. This is part of U.S. Airways Group’s merger with American Airlines to form American Airlines Group Inc. (AAL - Free Report) . Southwest Airlines aims to initiate services at LGA in the second quarter of 2014.
Southwest Airlines’ slot win at New York has widened its scope for expansion in the city, besides consolidating its foothold against peers like JetBlue Airways Corp. (JBLU - Free Report) and Delta Air Lines Inc. (DAL - Free Report) . Further, the company has decided to extend daily departures from DCA to 44 from the current 17, thus increasing its operations from the airport by more than 2.5 times. Apart from expanding Southwest’s reach to 14 destinations, the new low-fare, non-stop services from DCA will strengthen the carrier’s operations in the capital city as well.
With its cost-efficient business model, the company Southwest Airlines’ eyes network expansion through the integration of AirTran aircraft and the addition of domestic and international destinations. Further, the company announced its intention to target those markets where rivals have trimmed their operations.
The carrier also announced that it will now offer non-stop services to domestic destinations from Dallas Love Field airport, wherein flight limitations will finally be lifted. We believe these initiatives along with the slot wins will create tailwinds for the company going forward. 
Southwest Airlines currently holds a Zacks Rank #1 (Strong Buy).

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