Alaska Air Group's February Traffic Up, Load Factor Down

Alaska Air Group, Inc. (NYSE:ALK) reported traffic results for February. Traffic, measured in revenue passenger miles (RPMs) increased 7.9% to 3.78 billion.

On a year-over-year basis, consolidated capacity (or available seat miles/ASMs) rose 9% to 4.76 billion. However, load factor or percentage of seats filled by passengers contracted 80 basis points to 79.4% as capacity expansion outpaced traffic growth.

In the first two months of 2018, the carrier generated RPMs of 7.75 billion (up 5.6% year over year) and ASMs of 9.99 billion (up 7.7% year over year). Load factor was pegged at 78% compared with 79.4% in the first two months of 2017.

For the first quarter of 2018, the carrier expects cost per available seat mile (CASM) excluding fuel and special items to rise approximately 6% year over year. While economic fuel cost per gallon is anticipated to grow 18% in the first quarter. Meanwhile, capacity is anticipated to expand around 8% in the quarter.

We note that the bottom line had contracted significantly in the fourth quarter of 2017. The cost projections imply that the bottom line will remain under pressure in the first quarter as well.

Zacks Rank & Key Picks

Alaska Air Group carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the airline space are International Consolidated Airlines Group (LON:ICAG) SA (OTC:ICAGY) , American Airlines Group, Inc. (NASDAQ:AAL) and Delta Air Lines, Inc. (NYSE:DAL) . While International Consolidated Airlines sports a Zacks Rank #1 (Strong Buy), American Airlines and Delta Air Lines carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Shares of International Consolidated Airlines, American Airlines and Delta Air Lines have rallied more than 28%, 36% and 22%, respectively, in a year.

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