Alaska Air Group (ALK) August Traffic And Capacity Increase

Alaska Air Group, Inc. (NYSE:ALK) posted a significant rise in air traffic for the month of August. Traffic – measured in revenue passenger miles (RPMs) – came in at 3.4 billion, up 9% from 3.1 billion a year ago.

On a year-over-year basis, consolidated capacity (or available seat miles/ASMs) rose 10.3% to 3.9 billion. Load factor – the percentage of seats filled by passengers – declined to 85.8% from 86.7% in Aug 2015 as capacity expansion exceeded traffic growth.

At the end of the first eight months of 2016, Alaska Air Group generated a 10.4% increase in RPMs to 24.7 billion and 11.5% rise in ASMs to 29.4 billion, both on a year-over-year basis. Load factor was 84.2% compared with 85.1% in the first eight months of 2015.

The company’s traffic growth can be attributed to new routes and focus on enhancing customer service. Also, passenger count in August and at the end of the first eight months of 2016 grew 6% and 6.7%, respectively.

Cuba Approval

Notably, Alaska Airlines received official approval from the United States Department of Transportation (DOT) to begin flight services to Havana, the capital of Cuba. The airline, however, needs approval from the Cuban government prior to selling tickets. The flight, once approved, is expected to start its journey from Seattle to Los Angeles and then fly to Havana. Alaska Airlines is the only U.S. carrier to have received approval for daily non-stop flights between Havana and the U.S. West Coast.

Zacks Rank and Stock to Consider

Alaska Air Group currently carries a Zacks Rank #3 (Hold). Investors interested in the airline sector can consider better-ranked stocks like Copa Holdings SA (NYSE:CPA) , SkyWest Inc. (NASDAQ:SKYW) and ANA Holdings Inc. (OTC:ALNPY) . All the stocks hold a Zacks Ranks #2 (Buy).

Confidential from Zacks

Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>