Allegiant Travel Company
has issued its latest figures for the first quarter of 2019, which saw it continue its long profitable run.
"I’m happy to report the first quarter of 2019 was Allegiant’s 65th consecutive profitable quarter," stated Maurice J. Gallagher, Jr. , chairman and CEO of Allegiant Travel Company . "This quarter demonstrated the earnings potential of our all-Airbus fleet"
| Consolidated | Three Months Ended March 31, | |||||||||
| (unaudited) | 2019 | 2018 | Change | |||||||
| Total operating revenue (millions) | $ | 451.6 | $ | 425.4 | 6.2 | % | ||||
| Operating income (millions) | 91.1 | 80.0 | 13.9 | |||||||
| Net income (millions) | 57.1 | 55.2 | 3.5 | |||||||
| Diluted earnings per share | $ | 3.52 | $ | 3.42 | 2.9 | |||||
| Airline only | Three Months Ended March 31, | ||||||||
| (unaudited) | 2019 | 2018 | Change | ||||||
| Airline operating revenue (millions) | $ | 448.3 | $ | 424.3 | 5.7 | % | |||
| Airline operating income (millions) | 98.5 | 82.0 | 20.1 | ||||||
| Airline operating margin | 22.0 | % | 19.3 | % | 2.7 | ||||
| Airline diluted earnings per share* | $ | 3.98 | $ | 3.54 | 12.4 | ||||
| Airline CASM ex fuel (cents) * | 6.40 | 6.35 | 0.8 | ||||||
*Denotes a non-GAAP financial measure. Refer to the Non-GAAP Presentation section within this document for further information.
"I’m happy to report the first quarter of 2019 was Allegiant’s 65th consecutive profitable quarter," stated Maurice J. Gallagher, Jr. , chairman and CEO of Allegiant Travel Company . "This quarter demonstrated the earnings potential of our all-Airbus fleet. Despite having eleven fewer aircraft compared to the same period last year, our airline’s operating income rose more than $16 million and we had a 22% margin. In addition, our operational performance was exceptional, with a controllable completion rate of 100 percent for the quarter. Our on-time performance for March - one of the busiest months of the year - was 85 %. These results were due to the exceptional work of our team.
“In March we broke ground on Sunseeker Resorts Charlotte Harbor in Southwest Florida , and also partnered with TPG Sixth Street Partners to finance some of the construction costs to build the project,” he continued. "We have an ideal location, a database of 16 million customers, and an infrastructure to feed customers to our property through Punta Gorda Airport (PGD) and St. Pete/Clearwater International Airport (PIE). This is a natural extension of our business model. These next two years will be investment years in our non-airline projects such as Sunseeker Resorts , the Allegiant Nonstop family entertainment centres and our golf offering. All of these products will enable us to interact with an ever-expanding universe of leisure customers, to offer more options under the Allegiant Travel Company umbrella.
“I want to thank all of our Allegiant team members for their excellent efforts the past quarter. The improvement in our operations, the reliability and the on-time performance could not have been achieved without their exceptional work. They are the most critical component in our continued financial success.”
2019 highlights and trends
- Maintaining EPS guide of
$13.25 to $14.75 increasing full year fuel cost to$2.26 from$2.10 per gallon - EPS in Q2 should exceed Q1 because of Easter and additional available aircraft
• Only happened twice before in past ten years - Easter shift expected to benefit TRASM for Q2 2019 between 2.0 and 2.5 percent
- Available seat mile (ASM) growth is expected to be lowest in Q1 and highest in Q2
• ASM growth in Q2 expected to be between 13 and 14 percent - Airline CASM ex fuel is expected to be down year over year in each remaining quarter with the largest decrease in Q4
- Submitted US DOT application for international flying into
Mexico and expect to begin selling flights by YE19
Airline only first quarter 2019 results
- Diluted earnings per share were
$3.98 , up$0.44 year over year - 22 percent operating margin for the airline
• Highest since the second quarter of 2017 when the fuel price per gallon was$1.71 - Despite an estimated 1.5 percent TRASM headwind due to Easter shift into Q2, (TRASM) increased by 1.8 percent year over year
- Better than expected improvement in salary expense and station operations resulted in unit costs excluding fuel (CASM-ex)increasing by only 0.8 percent year over year
Q1 2019 airline network and revenue highlights
- Ancillary air revenue per passenger highest in company history at
$53.10 up 12.5 percent year over year
• Total fare per passenger was$127.75 , up 2.9 percent year over year - Fixed fee flying revenue was
$10.6 million , flat year over year, despite a 6.5 percent decrease in fixed fee departures
• Government shutdown eliminated some expectedDepartment of Defense charters
• Airbus charter economics superior to the MD-80 - Announced two new operational bases
• Grand Rapids, MI
• Savannah, GA - 35 routes announced
• New service toAnchorage, AK
• Strong growth toDestin, FL ,Nashville, TN andSavannah, GA
Q1 2019 airline cost highlights
- Fuel benefits with Airbus continue - total fuel costs down by six percent
- Total gallons down 4.5 percent while block hours up 4.1 percent and ASMs up 4.9 percent
• Increase in ASMs per gallon of 9.6 percent to 84.1 ASMs per gallon
• Decrease in the price per gallon of 1.8 percent to$2.14 per gallon - Total operating costs excluding fuel were
$250.2 million , an increase of 5.8 percent year over year
• Depreciation costs increased 26.9 percent or$7.5 million
• Q1 2018 MD80s were fully depreciated; were 27.5 percent of ASMs - Total unit costs excluding fuel and depreciation were
5.5 cents , a decrease of 2.0 percent year over year $3.7 million of additional interest expense associated with the tender of our$450 million high yield bond
• Capitalized interest resulted in a$1.5 million reduction in interest expense primarily driven by the capex associated withSunseeker Resorts
• Expect the cadence of capitalized interest to increase in direct correlation with incremental Sunseeker capex
Q1 2019 airline operational highlights
- Departures up five percent despite eleven fewer average aircraft
• Average aircraft decreased from 91 last year to 80 this year
• Spare aircraft were reduced from eleven to four year over year - Controllable completion 100 percent on 24,300 departures
• Second most quarterly departures in company history
• Total completion factor 99.2 percent
• No maintenance cancellations for over 120 days sinceDecember 16th , record for the company
• On time performance (A-14) for the quarter was 79 percent
• March on time performance was 85 percent
• Third-highest versus domestic carriers per flightstats.com
• Company's busiest flying month of the year
Q1 2019 capital allocation highlights
- Capital expenditures:
• Airline -$108.9 million
• Heavy Maintenance -$10.0 million
• Sunseeker -$5.3 million
• Other -$8.4 million - Shareholder returns
• Returned$11 million in dividends in the first quarter
• Expect to pay dividends of$0.70 per share onJune 27, 2019 to shareholders of record as ofJune 14, 2019
Q1 2019 balance sheet highlights
- Ended with
$555 million in total cash and investments - Ended with
$1,236.6 million in debt and$121.1 million in capital lease obligations
• Refinanced$450 million unsecured bond with a five year$450 million term loan
• Secured by company assets excluding aircraft, engines and Sunseeker Resort - At the end of the quarter, we have 28 unencumbered aircraft
Q1 2019 non-airline highlights
- Non-airline businesses resulted in a combined operating loss of
$7.4 million
• Non-airline operating losses expected to be highest in Q1 due to one-time expensesassociated with opening of two Allegiant Nonstop family entertainment centers
• Allegiant Nonstop revenues are expected to be weakest in Q1
• Expect improvement in second half of year - Sunseeker Resorts
• Broke ground on resort inPunta Gorda
• Expect to include 500 hotel rooms, 189 long stay suites, restaurants, bars and other amenities
•TPG Sixth Street Partnersagreed to provide$175 million in two-thirds non-recourse construction financing
• TPG funds are last funds into the project and drawn monthly with interest paid only on drawn amounts - Allegiant Nonstop (family entertainment centers)
• Rebranded to Allegiant Nonstop for better tie-in to airline
• Opened first location,Clearfield, UT inJan 2019
• Opened second location,Warren, MI inApr 2019
| Guidance, subject to revision | |||
| Full year 2019 guidance | Previous | Current | |
| Fuel cost per gallon | $2.10 | $2.26 | |
| Available seat miles (ASMs) / gallon | 80.0 to 82.0 | 81.0 to 83.0 | |
| Interest expense (millions) | $70 to $80 | $70 to $80 | |
| Tax rate | 24 to 25% | 24 to 25% | |
| Share count (millions) | 15.9 | 15.9 | |
| Earnings per share | $13.25 to $14.75 | $13.25 to $14.75 | |
| System ASMs - year over year change | 7 to 9% | 7.5 to 9.5% | |
| Scheduled service ASMs - year over year change | 7 to 9% | 7.5 to 9.5% | |
| Depreciation expense (millions) | $150 to $160 | $150 to $160 | |
| Airline operating CASM excluding fuel - year over year change | (3.5) to (1.5)% | (3.5) to (1.5)% | |
| Non airline operating income (millions) | ($17) to ($12) | ($17) to ($12) | |
| Airline CAPEX - full year 2019 | |||
| Capital expenditures (millions) | $425 to 435 | $400 to 410 | |
| Capitalized Airbus deferred heavy maintenance (millions) * | $95 to 115 | $85 to 105 | |
| Sunseeker Resorts CAPEX | |||
| Project to date (millions) | $50 | $54 | |
| Expected 2019 spend (millions) | $250 to 300 | $250 to 300 | |
| Total project spend remaining ** | $420 | $416 | |
| Other CAPEX - full year 2019*** | |||
| Capital expenditures (millions) | $15 to 20 | $15 to 20 | |
Previous guidance as of January 30, 2019
* Not included in capital expenditure total
** Of the total remaining capex, expect to receive$175m in third party financing from TPG Sixth Street Partners as the last funds in the project, of which 2/3 is expected to be non-recourse to Allegiant Travel Company
*** Includes Allegiant Nonstop and Teesnap
* Not included in capital expenditure total
** Of the total remaining capex, expect to receive
*** Includes Allegiant Nonstop and Teesnap
| Aircraft fleet plan by end of period | ||||||||||
| Aircraft - (seats per AC) | YE18 | 1Q19 | 2Q19 | 3Q19 | YE19 | |||||
| A319 (156 seats) | 32 | 37 | 37 | 38 | 38 | |||||
| A320 (177/186 seats) | 44 | 47 | 51 | 53 | 55 | |||||
| Total | 76 | 84 | 88 | 91 | 93 | |||||
Aircraft listed in table above include only in-service aircraft and future aircraft under contract (subject to change)
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