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Southwest Airlines May Traffic Up 3.5%, Load Factor Rises - Update

Airline operator Southwest Airlines Co. (LUV: Quote) reported Friday a 2.6 percentage points increase in load factor, and a 3.5% rise in traffic for the month of May, while capacity remained flat with last year. The company also noted that passenger revenue per available seat mile for May is estimated to have increased in the 19% to 20% range from last year.

Airline industry as a whole has been flying through turbulent economic weather, created essentially by the aftermath of global economic recession. The distress was further augmented by the most recent snag in the form of the volcanic ash spewed over the Icelandic mountains.

The airline industry was tormented further with low fare competition, volatility in fuel prices, and declining travel demand, which forced some of the players to downsize and remove travel perks. Nevertheless, with the economy now seeming to return to some form of stability, the airline industry is also witnessing encouraging signs as customers have started returning.

The Dallas, Texas-based airline's load factor for the month of May rose 2.6 percentage points to 77.2% from the year-ago period's 74.6%. Traffic, measured in revenue passenger miles or RPMs, increased 3.5% to 6.66 billion from 6.43 billion in the same month last year. Capacity, measured in available seat miles or ASMs, remained nearly flat with last year at 8.63 billion.

Enplaned passengers for the month of May grew 4.5% to 9.08 million from 8.69 million in the comparable period last year. Revenue passengers carried totaled 7.64 million, up 2.3% from 7.47 million in the year-ago month. Total trips flown in the month of May edged down 0.5% to 96,750 from 97,273 in the prior-year month.

For May 2010, passenger revenue per ASM is estimated to have increased in the 19% to 20% range as compared to May 2009.

Among Southwest's peers, Houston, Texas-based Continental Airlines, Inc. (CAL: Quote) reported Tuesday a 3.7% growth in its consolidated traffic for May 2010 to 7.81 billion RPMs, consolidated capacity edged up 0.2% to 9.32 billion ASMs, and passenger load factor grew by 2.9 percentage points to 83.8% over last year.

Another peer, American Airlines, Inc., a subsidiary of Fort Worth, Texas-based AMR Corp. (AMR: Quote), reported that its traffic for the month of May increased 4.1% to 10.81 billion RPMs from a year ago, while capacity slipped 0.4% to 13.06 billion ASMs from last year. Load factor for the month increased 3.6 percentage points to 82.8% over last year.

For the preceding month of April, Southwest Airlines reported that load factor grew 1.8 percentage points to 78.8% from the same period last year. Traffic edged down 0.6% to 6.48 billion RPMs, and capacity declined 2.9% to 8.22 billion from the April 2009 level.

For the year-to-date period, Southwest Airlines' load factor for the five-month period increased 4.5 percentage points to 76.8% from 72.3% posted in the in the year-ago period. Traffic edged up 1.5% to 30.30 billion RPMs from 29.84 billion RPMs in the same period last year. Capacity for the year declined 4.4% to 39.46 billion ASMs from 41.26 billion ASMs in the prior-year period.

Southwest Airlines reported in April a profit for the first quarter compared to a loss last year, reflected strong unit revenue gains. Net income was $11 million or $0.01 per share, compared to a net loss of $91 million or $0.12 per share in the prior-year quarter. Adjusted net income was $24 million or $0.03 per share, compared to an adjusted net loss of $20 million or $0.03 per share in the year-ago quarter. Quarterly operating revenues increased 11.6% to $2.63 billion from $2.36 billion last year. The company also witnessed a 1.6% increase in traffic and 6.0 percentage points rise in load factor, while capacity declined 6.4% for the first quarter.

While reporting first-quarter results, the discount carrier said network optimization and revenue management efforts continue to contribute significantly to its industry-leading revenue performance. The airline added that it remains focused on improving productivity to combat cost pressures and higher energy prices, with a 3% reduction in headcount per aircraft over first quarter last year. It anticipates year-over-year nonfuel cost pressures will be more in the first half of 2010, but should ebb, somewhat, in the second half of the year with modest capacity additions.

In Friday's regular trading session, LUV is currently trading at $12.30, down $0.32 or 2.50% on a volume of 1.45 million shares. In the past 52-week period, the stock has been trading in a broad range of $6.14 to $13.97.

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by RTT Staff Writer

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