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Southwest Airlines' September Traffic Up, Load Factor Down

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Southwest Airlines' September Traffic Up, Load Factor Down

Rising demand for air travel lifts Southwest Airlines' (LUV) traffic in September. However, load factor declines as capacity expansion exceeds traffic growth.

Southwest Airlines Co. LUV has reported traffic figures for September. Traffic (measured in revenue passenger miles or RPMs) rose 5.3% to around 9.99 billion, while capacity or available seat miles (ASMs) expanded 6.8% to 12.41 billion.

Load factor (percentage of seats filled by passengers) contracted 120 basis points (bps) to 80.5% in the month as traffic growth was outpaced by capacity expansion. Meanwhile, passenger count grew 4.8% to 12.5 million.

In the first nine months of 2018, Southwest Airlines witnessed a 2.8% rise in RPMs to 99.61 billion. Also, ASMs inched up 3% to 119.43 billion. As a result, load factor slid 10 bps to 83.4%. However, passenger count increased 4% to 121.9 million in the period.

Southwest Airlines Co. Price


Southwest Airlines Co. Price | Southwest Airlines Co. Quote


With the earnings season approaching, let’s take a look at some of Southwest Airlines’ projections for third-quarter 2018, set to be released on Oct 25.

The airline anticipates ASM to rise in the range of 3.5-4%, while unit costs (CASM) — excluding fuel and oil expenses and profit-sharing expenses (including 0.5 to 1 point year-over-year adversity from the cancellations) — are estimated to increase between 3% and 3.5%. Additionally, unit revenues (RASM) are expected to improve 1-1.5% year over year. Also, fuel costs are expected at $2.25 per gallon in the quarter.

Zacks Rank & Other Key Picks

Southwest Airlines carries a Zacks Rank #2 (Buy). Some other top-ranked stocks in the broader Transportation sector are Spirit Airlines, Inc. SAVE, Trinity Industries, Inc. TRN and Werner Enterprises, Inc. WERN, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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Werner Enterprises has an impressive earnings history, having outperformed the Zacks Consensus Estimate in three of the preceding four quarters, with an average beat of 7.3%.

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