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Alaska Air (ALK) Announces Solid June Traffic Statistics

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Alaska Air Group, Inc. (ALK - Free Report) reported robust traffic results for June. Traffic, measured in revenue passenger miles (RPMs), increased 7.3% to 5.05 billion.

On a year-over-year basis, consolidated capacity (or available seat miles/ASMs) rose 6.1% to 5.72 billion. Also, load factor or percentage of seats filled by passengers expanded 100 basis points (bps) to 88.3% as traffic growth outpaced capacity expansion.

In the first six months of 2018, the carrier generated RPMs of 26.89 billion (up 6.4% year over year) and ASMs of 32.31 billion (up 7.7% year over year). However, load factor declined 100 bps to 83.2%.

Q2 Outlook

For the second quarter of 2018, the carrier expects capacity to increase approximately 8% while cost per ASM excluding fuel and special items is projected to rise around 3.5%. Meanwhile, fuel cost per gallon is anticipated to increase nearly 35% to $2.31. Additionally, revenue per ASM is estimated to decline in the 4-5% range.

Detailed results will be available on Jul 26.

Full-Year Outlook

For 2018, Alaska Air forecasts capacity to expand approximately 6.2-6.5% whereas unit costs, excluding fuel and special items, are projected to rise nearly 3.5%.

Zacks Rank & Key Picks

Alaska Air holds a Zacks Rank #5 (Strong Sell).

Some better-ranked stocks in the broader Transportation sector are Expeditors International of Washington, Inc. (EXPD - Free Report) , Atlas Air Worldwide Holdings and Ryder System, Inc. (R - Free Report) . While Atlas Air Worldwide sports a Zacks Rank #1 (Strong Buy), Expeditors and Ryder carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Shares of Expeditors and Atlas Air Worldwide have rallied more than 22% and 16%, respectively, in a year. While Ryder boasts an impressive earnings history, having outperformed the Zacks Consensus Estimate in each of the trailing four quarters with an average beat of 3.9%.

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