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Allegiant Delivers Higher September Traffic and Load Factor

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Allegiant Delivers Higher September Traffic and Load Factor

Solid demand for air travel boosts Allegiant's (ALGT) September traffic. Load factor improves on the back of traffic growth outweighing capacity expansion.

Allegiant Travel Company ALGT reported impressive traffic figures for September 2018. Traffic for the total system (including scheduled service and fixed fee contract), measured in revenue passenger miles (RPMs), increased 16.4% on a year-over-year basis to 699.08 million. System capacity, calculated in available seat miles (ASMs), expanded 11.2% to 888.48 million.

Owing to traffic growth outpacing capacity expansion, load factor (percentage of seats filled with passengers) improved 350 basis points (bps) year over year to 78.7%. Allegiant’s passenger count rose 17.4% in the month. The company’s system-wide average fuel cost per gallon was approximately $2.48.

In spite of reporting impressive traffic figures, the company has been struggling with rising fuel costs, which were roughly $2.48 per gallon (systemwide) in September. We expect high fuel costs to hurt the company’s bottom line in the third quarter of 2018. Detailed results are expected be released on Oct 24. This Las Vegas, NV-based company expects fuel cost per gallon of $2.41 in the soon-to-be-reported quarter.

Price Performance

Shares of Allegiant have performed disappointingly so far this year, mainly due to high fuel costs. The stock has lost more than 23% of its value year to date compared with the industry’s decline of 19.2%.

Zacks Rank & Key Picks

Allegiant carries a Zacks Rank #3 (Hold).

A few better-ranked stocks in the broader Transportation Sector are ArcBest Corporation ARCB, CSX Corporation CSX and Trinity Industries, Inc. TRN. While CSX carries a Zacks Rank #2 (Buy), ArcBest and Trinity sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Shares of ArcBest, CSX Corporation and Trinity have gained 29.8%, 35.6% and 22% in the past six months, respectively.

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