Southwest Airlines' November Traffic Up On Thanksgiving

Dallas, TX-based Southwest Airlines Co. LUV witnessed an increase in air traffic in the month of November. Traffic – measured in revenue passenger miles (RPMs) – came in at 10.90 billion, up 4.2% from 10.46 billion recorded in the comparable month a year ago. On a year-over-year basis, consolidated capacity (or available seat miles/ASMs) inched up 4% to 10.67 billion. Meanwhile, the load factor or percentage of seats filled by passengers increased to 80.1% from 78.6% in Nov 2013.

 

For the first eleven months of this year, Southwest Airlines generated RPMs of 98.8 billion (up 3.6% year over year) and ASMs of 119.85 billion (up 0.3% year over year). Load factor, however, moved down to 82.4%, reflecting a year-over-year decline of 260 basis points.

 

Notably, Southwest Airlines witnessed considerable growth in PRASM (passenger revenue per available seat mile) in the month mainly driven by significant increase in air travels during the Thanksgiving season. Airlines for America (A4A) predicted a 1.5% increase in the number of flyers during Thanksgiving this year. According to the forecast, U.S. airlines will transport 24.6 million passengers in the Nov 21–Dec 2 period. However, the rise in air traffic was slightly dampened by the Northeast snowstorm Cato, which disrupted air travels even during Thanksgiving as most flights were delayed or cancelled.

 

For Nov 2014, PRASM have increased in the band of 4 to 6% from Nov 2013. The company also expects PRASM for the fourth quarter to rise in the range of 1–2% from the prior-year quarter.

 

Recently, Southwest Airlines signed a four-year employee-friendly deal with its customer service agents and customer representatives. The new agreement is aimed at improving employee welfare by including provisions for pay raise and performance-related bonus payments. Southwest Airlines, which is highly unionized, has over 80% of its employees represented by labor unions. Hence, the successful implementation of the deal will help airline staff to improve performance.

 

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Southwest Airlines currently sports a Zacks Rank #1 (Strong Buy) while other stocks having the same Zacks Rank are American Airlines Group AAL, Alaska Air Group, Inc. ALK and Hawaiian Holdings Inc. HA.