Alaska Air Group's Traffic & Load Factor Dips In November

Alaska Air Group, Inc. (NYSE:ALK) reported disappointing traffic statistics for November. Traffic, measured in revenue passenger miles (RPMs), slipped 1.2% to 4.39 billion.

On a year-over-year basis, consolidated capacity (or available seat miles/ASMs) rose 2.3% to 5.4 billion. With traffic declining and capacity increasing, load factor or percentage of seats filled by passengers deteriorated 290 basis points (bps) to 81.2%.

In the first 11 months of 2019, the carrier generated RPMs of 51.13 billion (up 1.9% year over year) and ASMs of 60.94 billion (up 1.8% year over year). With traffic growth outpacing capacity expansion, load factor inched up 10 basis points to 83.9%.

Apart from capacity overexpansion woes (load factor declined in October as well), the carrier is witnessing some cost pressure due to escalating non-fuel unit costs. Evidently, non-fuel unit costs (excluding special items) grew 2.9% in the first nine months of 2019. The same is projected to rise 0.5% year over year in the fourth quarter (against the previous expectation of 1.2% decline). For 2019, non-fuel unit costs are predicted to increase nearly 2.2%.

Zacks Rank & Key Picks

Alaska Air Group carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the same space are Allegiant Travel Company (NASDAQ:ALGT) , Ryanair Holdings plc (NASDAQ:RYAAY) and Controladora Vuela Compania de Aviacion, S.A.B. de C.V. (NYSE:VLRS) . While Allegiant and Ryanair sport a Zacks Rank #1 (Strong Buy), ControladoraVuela carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Shares of Allegiant, Ryanair and ControladoraVuela have rallied more than 74%, 22% and 97%, respectively, so far this year.

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