Virgin America Inc. (NASDAQ:VA) observed a slight decrease in air traffic in the month of June. Traffic – measured in revenue passenger miles (RPMs) – came at 1.10 billion, up 18.7% from 933.7 million recorded in the comparable month a year ago. Also, on a year-over-year basis, consolidated capacity (or available seat miles/ASMs) increased 16.8% to 1.27 billion.
Meanwhile, the load factor or percentage of seats filled by passengers went up to 87% in June from 85.6% in the year-ago month as traffic growth outpaced capacity expansion. Additionally, passenger count in the month grew 17.4%.
In the first six months of 2016, Virgin America generated RPMs of 5.78 billion and ASMs of 6.95 billion. Meanwhile, load factor was 83.1% against 82.7% a year ago.
Virgin America is making constant efforts to expand its operations. We are also impressed by the disciplined cost structure implemented by the company. Furthermore, the carrier’s practice of flying a single aircraft type (Airbus A320 family), high asset utilization and outsourcing of activities like baggage delivery, heavy maintenance and reservations are encouraging.
However, even though we are positive on Virgin America’s impending acquisition by Alaska Air Group, Inc. (NYSE:ALK) , there is still doubt over operating the two as different brands.
Stocks to Consider
Virgin America currently carries a Zacks Rank #5 (Strong Sell). Better-ranked stocks in the same space include GOL Linhas (NYSE:GOL) and Cathay Pacific Airways Limited (OTC:CPCAY) . Both companies sport a Zacks Rank #1 (Strong Buy).
GOL LINHAS-ADR (GOL): Free Stock Analysis Report
CATHAY PAC AIR (CPCAY): Free Stock Analysis Report
ALASKA AIR GRP (ALK): Free Stock Analysis Report
VIRGIN AMERICA (VA): Free Stock Analysis Report
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