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Alaska Air Group's (ALK) Load Factor Declines in October

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Alaska Air Group, Inc. ALK reported traffic statistics for October. Traffic, measured in revenue passenger miles (RPMs), increased 3.4% to 4.63 billion.

Also, on a year-over-year basis, consolidated capacity (or available seat miles/ASMs) rose 3.6% to 5.53 billion. However, with capacity expansion outpacing traffic growth, load factor or percentage of seats filled by passengers contracted 10 basis points (bps) to 83.7%.

In the first 10 months of 2019, the carrier generated RPMs of 46.74 billion (up 2.2% year over year) and ASMs of 55.53 billion (up 1.7% year over year). With traffic growth outpacing capacity expansion, load factor increased 40 bps to 84.2%.

Although the carrier’s load factor declined in October, we expect solid travel demand to drive this key metric going forward. Evidently, strong air travel demand boosted passenger revenues (contributing more than 90% to the top line) by 8% in the third quarter. Additionally, total revenue per available seat mile (RASM: a key measure of unit revenues) increased 4.5% year over year in the period.

Zacks Rank & Key Picks

Alaska Air Group carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the same space are Allegiant Travel Company ALGT, Controladora Vuela Compania de Aviacion, S.A.B. de C.V. VLRS and Hawaiian Holdings, Inc. (HA - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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