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November: Alaska Air reports highest capacity growth among peers

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Growth in passenger traffic

Alaska’s revenue passenger mile (or RPM) increased by 9.4% to 2,475 million in November 2014 from 2,263 million in November 2013. This was driven by an 8.9% rise in revenue passengers. The year-to-date growth in passengers was 6.6%, driving RPM up by 6.3% to 28,011 million from 26,352 million in the previous year. Alaska Airlines’s mainline on-time arrival rate declined from 87.7% to 84.6% during November.

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Capacity and capacity utilization

Alaska’s capacity increased by 8.7% year-over-year in November, increasing from 2,769 million to 3,009 million in November 2014. On a year-to-date basis, capacity increased by 6.7% to 32,894 million ASMs. Alaska had the highest year-over-year growth in capacity of 10.9% in October and continues to report the highest growth in November as well. Alaska Airlines was followed by JetBlue’s (JBLU) 6%, Southwest’s (LUV) 4%, Delta’s (DAL) 3.6%, and American Airlines’s (AAL) 0.9%. United (UAL) was the only carrier to report a decline in capacity.

In spite of an increase in capacity due to strong growth in demand, load factor also improved from 81.7% to 82.3%  However, the year-to-date load factor decreased by 0.3% to 85.2%. For a complete company overview of Alaska Airlines, read Market Realist’s series, An investor’s guide to Alaska Airlines’s operations.

Investors can gain exposure to airline stocks by investing in ETFs that hold airline stocks such as the iShares Transportation Average ETF (IYT) and the SPDR S&P Transportation ETF (XTN).

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