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Southwest Airlines (LUV) July Traffic Up, Load Factor Falls

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Southwest Airlines Co. (LUV - Free Report) reported mixed traffic numbers for July 2018. Traffic (measured in revenue passenger miles or RPMs) rose 2.1% to around 12.62 billion and capacity or available seat miles (ASMs) increased 3.2% to 14.62 billion.

However, load factor (percentage of seats filled by passengers) declined 100 basis points (bps) to 86.3% in the month as traffic growth was outpaced by capacity expansion. Additionally, passenger count grew 2.1% to 14,961,408.

In the first seven months of 2018, Southwest Airlines witnessed a 2.8% rise in RPMs to 78.2 billion. Also ASMs rose 2.7% to 93.48 billion. As a result, the load factor increased 10 bps to 83.7%.

The low-cost carrier, which is still reeling under the effects of the Flight 1380 incident in April, anticipates third-quarter revenue per available seat mile (RASM) between down 1% to up 1%. Moreover, the company expects operating expenses per available seat mile (CASM), excluding fuel and oil as well as profit-sharing expenses, to rise 2-3%. Additionally, third-quarter fuel costs are assumed at approximately $2.25 per gallon.


Zacks Rank & Key Picks

Southwest Airlines carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader Transportation Sector are SkyWest, Inc (SKYW - Free Report) , Old Dominion Freight Line, Inc (ODFL - Free Report) and GATX Corporation (GATX - Free Report) . While GATX carries a Zacks Rank #2 (Buy), SkyWest  and Old Dominion sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Shares of SkyWest, Old Dominion and GATX have gained 63.9%, 51.6% and 35.7%, respectively, in a year’s time.

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