Shares of American Airlines Group Inc. (AAL) and Southwest Airlines Co. (LUV) declined 4.69% and 1.32% respectively on Jan 12, following the disclosure of their individual traffic data for Dec 2014.
On comparison, the numbers revealed by American Airlines were more disappointing. Revenue passenger miles (RPMs) came in at 18.1 billion for the month, down 0.4% year over year. Weakness in traffic in the Latin American and Atlantic divisions hurt results. Capacity increased 3.7% to 22.5 billion. Load factor (% of seats filled) came in at 80.4%, down 3.4% from the year-ago figure.
The carrier projects consolidated passenger revenue per available seat mile or PRASM (a measure of unit revenue) for the final quarter of 2014 to be approximately flat to down 2%. The weak forecast coupled with the below par traffic numbers for December clearly failed to please investors. For 2014, RPMs improved 1.1% to 217.9 billion. Load factor for the year declined 0.9% from 2013 to 82%.
Shares of Southwest Airlines too fell albeit marginally after the company declared that its PRASM for December declined in the range of 4% to 5% on a year-over-year basis. The metric is however estimated to increase in the range of 1% to 2% in the final quarter of 2014.
Load factor for the month of December declined 10 basis points to 82.7%. RPMs came in at 9.2 billion, up 2.8% year over year. Capacity of this low-cost carrier also increased 2.9% to 11.2 billion.
Zacks Rank
Both Southwest Airlines and American Airlines Group carry a Zacks Rank #1 (Strong Buy). Equally well-ranked stocks worth considering in the airline space are Delta Air Lines (DAL) and Ryanair Holdings plc (RYAAY).
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