Alaska Air (ALK) Gains As December Traffic, Capacity Rise

Alaska Air Group, Inc. ALK witnessed a 5.18% increase in its share price at close of business on Jan 10. The stock price appreciation was driven by the company’s impressive traffic results, which were released earlier that day.

The company included the performance of Virgin America, which it acquired on Dec 14, 2016, in its results. The company also provided the prior-year period details of Virgin America for comparison.  

We note that the stock has been performing well over the past few months. Shares of the company comfortably outperformed the Zacks categorized Transportation-Airline industry over the last three months. The stock has gained over 30.63% compared with the industry, which has advanced just 19.42% over the same period.

Alaska Air posted a significant rise in air traffic for the month of December. Traffic – measured in revenue passenger miles (RPMs) – came in at 4.13 billion, up 5.6% from 3.9billion a year ago.

On a year-over-year basis, consolidated capacity (or available seat miles/ASMs) rose 5% to 4.96 billion. Load factor – the percentage of seats filled by passengers – improved to 83.1% from 82.6% in Dec 2015 as traffic growth far exceeded capacity expansion.

For the year 2016, Alaska Air Group recorded a 10.8% increase in RPMs to 48.75 billion and 10.2% rise in ASMs to 57.95 billion, both on a year-over-year basis. Load factor was 84.1% compared with 83.7% for the full year.

The company’s traffic growth can be attributed to new routes and focus on enhancing customer service. Also, passenger count in December and at the end of 2016 grew 4.4% and 7.8%, respectively.

The company has been consistently posting impressive traffic results despite intense competition from peers like JetBlue Airways Co. JBLU, United Continental Holdings Inc. UAL and Delta Air Lines Inc. DAL.

Zacks Rank

Alaska Air Group currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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