Growth in passenger traffic
In September, Southwest Airlines Co’s (LUV) RPM (or revenue passenger mile) increased by 5.1% to 8,267 million from 7,863 million in September 2013. This was led by a 5.9% rise in the number of revenue passengers. The trips flown fell by 5.1% year over year. Average length of haul also decreased by 0.7%. The year-to-date growth in passengers was 1.8%, driving RPM up by 3.3% to 81,268 million.
Capacity and capacity utilization
Southwest’s capacity remained flat in September, increasing only slightly year over year from 10,203 million to 10,274 million in September 2014. Capacity, however, declined by 0.1% to 98,357 million on a year-to-date basis.
Load factor during the month increased by 3.4% to 80.5%, up from 77.10% in September 2013. This was the highest increase for the month among the top six airlines. Southwest was followed by JetBlue Airways Corporation (JBLU) with a load factor increase of 1.4%, Delta Air Lines, Inc. with a 0.4% increase, and United Continental, Inc. (UAL) with 0.2%.
American Airlines Group Inc (AAL) and Alaska Air Group Inc. (ALK) reported a year-over-year decrease in load factor of 1.5% and 0.7%, respectively. The year-to-date load factor also increased by 2.7%. The increased load factor will result in higher margins as the company is able to generate more passenger revenue for the same fixed cost.
In September 2014, it’s estimated passenger revenue per available seat mile increased by 5% compared to the same month last year. Between this increase and an increase in load factor, another indicator of efficiency, the company’s performance reflects strong operational capabilities.
For a complete company overview of Southwest Airlines, read Market Realist’s series, Overview: Southwest Airlines.