Southwest Airlines Up on Positive February Traffic Data

Shares of low-cost carrier Southwest Airlines Co. climbed 2.1% to $43.84 on Mar 11, 2015 following impressive traffic data revealed by the company for the month of February. The company said that air traffic, measured in revenue passenger miles (RPMs), was up 6% year over year at 7.9 billion. Capacity (available seat miles or ASMs) of this Dallas, TX-based low-cost carrier increased 3.6% in the month to 9.5 billion.

Another important metric, load factor (% of seats filled by passengers) improved 180 basis points to 79.9%. Furthermore, passenger revenue per available seat mile (a measure of unit revenue) increased 1% for the month on a year-over-year basis.

In the first two months of 2014, Southwest Airlines generated RPMs of 16.1 billion (up 5.4% year over year) and ASMs of 20.2 billion (up 7%), leading to a load factor of 77.4% (up 20 bps).

Southwest Airlines’ impressive February traffic data was a welcome change from the disappointing numbers witnessed by fellow carriers American Airlines and United Continental.

Of late, Southwest Airlines has been in the news for its strategic expansion activities. The airline recently announced the launch of two new routes from Aruba to Houston's Hobby Airport and from Baltimore/Washington to San Jose, Costa Rica. Southwest Airlines has been constantly introducing new routes to expand operations.

 A few days ago, Southwest announced non-stop flights to 8 new cities out of Dallas Love Field. The carrier will start operating these flights from Aug 9. Following the expansion, Southwest Airlines’ home base will become relatively busier with 180 departures a day from Dallas Love Field to 50 destinations across the globe.

We believe increased flight frequencies coupled with low fares will not only enhance travel options for fliers but will also boost passenger revenues for Southwest Airlines going forward.

(Zacks)