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Southwest Airlines August Traffic Up, Q3 RASM View Bearish

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Southwest Airlines Co. (LUV - Free Report) has reported traffic numbers for August. Traffic (measured in Revenue Passenger Miles or RPMs) rose 5.3% to around 11.28 billion in the month from 10.71 billion a year ago. Meanwhile Available Seat Miles (ASMs) increased 4.9% to 13.28 billion from 12.67 billion in the same month last year. Load factor (the percentage of seats filled by passengers) improved 30 basis points (bps) to 84.9% in August as traffic growth outpaced capacity expansion.

On a year-to-date basis, Southwest Airlines witnessed a 4.6% rise in RPMs to 87.36 billion. Also, ASMs grew 4.8% to 104.31 billion. As a result, the load factor decreased 10 bps to 83.7%. Additionally, passenger count in the first eight months of 2017 rose 4.6% to 105.32 billion from 100.66 billion in the same period in 2016.

The company’s third-quarter 2017 operating revenue per ASM (RASM) is expected in the band of down one percent to slight upward, year over year, inclusive of the estimated impact from Harvey and soft revenue passenger yields. Previous guidance had called for a rise of around 1% in the metric.


Zacks Rank & Key Picks

Southwest Airlines currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in airline space are Deutsche Lufthansa AG , SkyWest, Inc. (SKYW - Free Report) and Air France-KLM SA (AFLYY - Free Report) . While Deutsche Lufthansa and SkyWest sport a Zacks Rank #1 (Strong Buy), Air France-KLM carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Shares of Deutsche Lufthansa and Air France-KLM have gained more than 100% in a year, while SkyWest shares have surged 24.1% over the same time frame.

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