Alaska Air Group November Traffic Rises on Higher Demand

Alaska Air Group (ALK), the parent company of Alaska Airlines, reported impressive traffic data for Nov 2014 buoyed by strong demand.

The company’s consolidated airline traffic – measured in revenue passenger miles or RPMs, which imply revenue generated per mile per passenger – moved up 9.4% year over year to 2,475 million. Consolidated capacity (available seat miles/ASMs) for the month increased 8.7% from Nov 2013 to 3,009 million. Load factor (percentage of seats filled by passengers) for the company improved 60 basis points (bps) from Nov 2013 to 82.3%.

For the first eleven months of 2014, Alaska Air Group generated RPMs of 28,011 million (up 6.3% from the corresponding period last year) and ASMs of 32,894 million (up 6.7% year over year). The load factor declined 30 bps year over year to 85.2%. After the traffic numbers, focus now shifts to Alaska Air Group’s investor day presentation, scheduled to be held later in the day.

We note that Alaska Air Group’s rival Delta Air Lines, Inc. (DAL) recently reported modest November traffic numbers which resulted in a decline in its share price. Strong domestic performance and the shift of the Sunday following Thanksgiving (the busiest travel day) to November this year, pulled passenger revenue per available seat mile up by 4.5% year over year. Load factor improved to 80.6% from 79.4% recorded in Nov 2013 (read more: Delta Reports Modest November Traffic Data, Shares Down).

We expect other companies like United Continental Holdings Inc. (UAL) to release their November traffic numbers in the coming days.

Alaska Air Group currently carries a Zacks Rank #1 (Strong Buy). Another equally well ranked stock in the airline space is Southwest Airlines Co. (LUV).

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