In sync with its international plans, low-cost carrier Southwest Airlines Co. LUV decided to flag off daily non-stop flights between Los Angeles International Airport (LAX) and Daniel Oduber Quiros International Airport in Liberia/Guanacaste, Costa Rica. The flights will be operational from the beginning of April next year.
In order to expand outside the U.S., Southwest Airlines has been serving a dozen destinations in Latin America and the Caribbean since Jul 2014. In fact, starting next summer, the company plans to operate around 678 flight departures every week to location across the U.S., Mexico and Costa Rica from nine of its California-based airports.
We believe that increased number of flights coupled with low fares will enhance travel options during busy periods, which will in turn boost revenues for Southwest Airlines.
Meanwhile, the company unveiled a disappointing outlook with respect to its operating revenue per available seat miles (RASM: a measure of unit revenue) for the fourth quarter of 2015. Southwest Airlines expects the key metric to be approximately flat to down 1% on a year-over-year basis in the final quarter of 2015.
Zacks Rank & Other Key Picks
Currently, Southwest Airlines carries a Zacks Rank #2 (Buy). Other favorably ranked stocks in the same space are SkyWest Inc. SKYW, Hawaiian Holdings, Inc. HA and Delta Air Lines Inc. DAL. Both SkyWest and Hawaiian Holdings sport a Zacks Rank #1 (Strong Buy) while Delta Air Lines carries a Zacks Rank #2.
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