Allegiant Travel Company this week reported the following financial results for the second quarter 2019, as well as comparisons to the prior year:
Consolidated | Three Months EndedJune 30, | Percent | Six Months Ended June 30, | Percent | |||||||||||||||
(unaudited) | 2019 | 2018 | Change | 2019 | 2018 | Change | |||||||||||||
Total operating revenue (millions) | $ | 491.8 | $ | 436.8 | 12.6 | % | $ | 943.4 | $ | 862.2 | 9.4 | % | |||||||
Operating income (millions) | 108.1 | 74.2 | 45.7 | 199.2 | 154.2 | 29.2 | |||||||||||||
Net income (millions) | 70.5 | 50.0 | 41.0 | 127.7 | 105.2 | 21.3 | |||||||||||||
Diluted earnings per share | $ | 4.33 | $ | 3.10 | 39.7 | % | $ | 7.84 | $ | 6.52 | 20.2 | % |
Airline only | Three Months Ended June 30, | Percent | Six Months Ended June 30, | Percent | |||||||||||||||
(unaudited) | 2019 | 2018 | Change | 2019 | 2018 | Change | |||||||||||||
Airline operating revenue (millions) | $ | 486.8 | $ | 434.6 | 12.0 | % | $ | 935.1 | $ | 858.9 | 8.9 | % | |||||||
Airline operating income (millions) | 115.5 | 76.1 | 51.8 | 214.0 | 158.0 | 35.4 | |||||||||||||
Airline operating margin(2) | 23.7 | % | 17.5 | % | 6.2 | 22.9 | % | 18.4 | % | 4.5 | |||||||||
Airline diluted earnings per share(1) | $ | 4.81 | $ | 3.21 | 49.8 | $ | 8.80 | $ | 6.75 | 30.4 | |||||||||
Airline CASM ex fuel (cents)(1) | 5.65 | 6.02 | (6.1 | ) | 6.00 | 6.17 | (2.8 | ) |
(1) Denotes a non-GAAP financial measure. Refer to the Non-GAAP Presentation section within this document for further information.
(2) Percent point change
(2) Percent point change
"I’m happy to report the second quarter of 2019 was Allegiant’s 66th consecutive profitable quarter," stated Maurice J. Gallagher, Jr. , chairman and CEO of Allegiant Travel Company . "We commented last quarter about the benefits of our all Airbus fleet. These benefits are continuing and increasing. We led the industry in Q1 with a 22 percent airline operating margin; this quarter the airline generated a 24 percent operating margin, a six percentage point increase from the previous year. And we accomplished these results with seven fewer aircraft this year compared to 2018. The fuel efficiencies of the Airbus continue to impress. We consumed 4.9 percent more fuel in Q2 compared to last year but produced 13.4 percent more ASMs. Correspondingly, our CASM ex-fuel declined 6.1 percent year over year. I’m comfortable stating we believe we will be the only carrier this quarter who had lower unit costs this year versus last year.
"On the revenue front, scheduled service revenue was $11 million per aircraft during the first six months of the year, over $2 million more than last year’s per aircraft revenue during the same period. Additionally, we generated approximately $3.5 million of EBITDA per aircraft in the same period or about $1.1 million greater per aircraft than the same period last year.
"Our operations continue to excel. We have solely led or tied for the industry lead in completion factor every month in 2019. One of our challenges in the past few years has been our ability to scale our operations during our peak periods in the summer months and maintain a high completion rate. In June 2018 , we were number five in completion rate; this year we were number one. I’m happy to report we have had only ten days where we have had a mechanical cancellation since the beginning of the year.
"This combination of superior financial results and industry-leading operational performance, along with the proprietary model we have developed and continue to operate is a tribute to our excellent team members. Looking forward, we are excited about the opportunities in front of us including our ability to operate our leisure model to Mexico and the Caribbean in the coming years."
Airline operational highlights
• Departures in the second quarter up 13.8 percent year over year despite seven fewer average aircraft in service
• Average number of aircraft in service decreased 7.6 percent from 92 to 85 year over year
• Spare aircraft reduced from twelve down to four spares year over year
• Block hour utilization increased by 20.5 percent to 8.8 block hours per aircraft per day
• Led industry in completion every month in 2019
• Maintenance cancellations down 87.6 percent year over year
• On time performance (A-14) for the quarter was 77.7 percent up 2.8pts year over year
• Net promoter score is up an average of 8pts year over year
• Irregular operation costs - second quarter down$7.2 million or 57.6 percent
• Average number of aircraft in service decreased 7.6 percent from 92 to 85 year over year
• Spare aircraft reduced from twelve down to four spares year over year
• Block hour utilization increased by 20.5 percent to 8.8 block hours per aircraft per day
• Led industry in completion every month in 2019
• Maintenance cancellations down 87.6 percent year over year
• On time performance (A-14) for the quarter was 77.7 percent up 2.8pts year over year
• Net promoter score is up an average of 8pts year over year
• Irregular operation costs - second quarter down
Airline only second quarter 2019 results
• Diluted earnings per share were $4.81 , up 49.8 percent year over year
• 23.7 percent operating margin for the quarter and 22.9 percent year to date
• TRASM decreased 1.6 percent on capacity growth of 13.6 percent
• May TRASM grew 2.4 percent on 11 percent growth in ASMs
• June TRASM grew 0.7 percent on 13.5 percent growth in ASMs
• Total fare is down only 0.5 percent despite increasing aircraft utilization by 20.5 percent
• Year-to-date average total fare has increased 1.0 percent to$120.49
• Fixed fee flying revenue increased 63.2 percent
• Fuel gallons used increased only 4.9 percent on ASM growth of 13.4 percent
• Increase in ASMs per gallon of 8.1 percent to 82.3
• Airline unit cost excluding fuel decreased by 6.1 percent
• Maintenance and operational improvements were the largest drivers
• 23.7 percent operating margin for the quarter and 22.9 percent year to date
• TRASM decreased 1.6 percent on capacity growth of 13.6 percent
• May TRASM grew 2.4 percent on 11 percent growth in ASMs
• June TRASM grew 0.7 percent on 13.5 percent growth in ASMs
• Total fare is down only 0.5 percent despite increasing aircraft utilization by 20.5 percent
• Year-to-date average total fare has increased 1.0 percent to
• Fixed fee flying revenue increased 63.2 percent
• Fuel gallons used increased only 4.9 percent on ASM growth of 13.4 percent
• Increase in ASMs per gallon of 8.1 percent to 82.3
• Airline unit cost excluding fuel decreased by 6.1 percent
• Maintenance and operational improvements were the largest drivers
Liquidity and shareholder returns
• Total cash and investments at June 30 were $695 million
• Paid off high yield bond balance of$102 million in July
• Currently, we have 26 unencumbered aircraft
•$81 million available under the revolving credit facility
• Returned$11 million in dividends in the second quarter
• Expect to pay dividend of$0.70 per share on September 27, 2019 to shareholders of record as of September 20, 2019
• Paid off high yield bond balance of
• Currently, we have 26 unencumbered aircraft
•
• Returned
• Expect to pay dividend of
Non-airline highlights
• Non-airline businesses resulted in a combined operating loss of $7.4 million during second quarter
• Evaluating strategic alternatives for Teesnap
• Triggered the business classification of an entity held for sale inJuly 2019
• SunseekerResorts FY19CAPEX reduced to a range between $150 and $175 million
• Operated two family entertainment centers (FEC's) during second quarter
• Rebranded FEC’s from G4CE to Allegiant Nonstop effectiveJune 1, 2019
• Evaluating strategic alternatives for Teesnap
• Triggered the business classification of an entity held for sale in
• SunseekerResorts FY19
• Operated two family entertainment centers (FEC's) during second quarter
• Rebranded FEC’s from G4CE to Allegiant Nonstop effective
Guidance, subject to revision | ||||||
Full year 2019 guidance | Previous | Current | ||||
Fuel cost per gallon | $ | 2.26 | $ | 2.15 | ||
Available seat miles (ASMs) / gallon | 81.0 to 83.0 | 82.0 to 83.0 | ||||
Interest expense (millions) | $70 to $80 | $75 to $80 | ||||
Tax rate | 24 to 25% | 23 to 24% | ||||
Share count (millions) | 15.9 | 15.9 | ||||
Earnings per share | $13.25 to $14.75 | $13.50 to $14.25 | ||||
System ASMs - year over year change | 7.5 to 9.5% | 8 to 9% | ||||
Scheduled service ASMs - year over year change | 7.5 to 9.5% | 8 to 9% | ||||
Depreciation expense (millions) | $150 to $160 | $155 to $160 | ||||
Airline operating CASM excluding fuel - year over year change | (3.5) to (1.5)% | (4) to (3)% | ||||
Non airline operating income (millions) | ($17) to ($12) | **** | ||||
Airline CAPEX - full year 2019 | ||||||
Capital expenditures (millions) | $400 to 410 | $385 to 390 | ||||
Capitalized Airbus deferred heavy maintenance (millions) * | $85 to 105 | $85 to 95 | ||||
Sunseeker Resorts CAPEX | ||||||
Project to date (millions) | $ | 54 | $ | 67 | ||
Expected 2019 spend (millions) | $250 to 300 | $150 to 175 | ||||
Total project spend remaining ** | $ | 416 | $ | 403 | ||
Other CAPEX - full year 2019*** | ||||||
Capital expenditures (millions) | $15 to 20 | $15 to 20 |
Previous guidance as of April 24, 2019
* Not included in capital expenditure total
** Of the total remaining capex, expect to receive$175m in third party financing from an affiliate of TPG Sixth Street Partners as the last funds in the project, of which 2/3 will be non-recourse to Allegiant Travel Company
*** Includes Allegiant Nonstop
**** With Teesnap entity being held for sale, suspending guidance
* Not included in capital expenditure total
** Of the total remaining capex, expect to receive
*** Includes Allegiant Nonstop
**** With Teesnap entity being held for sale, suspending guidance
Aircraft fleet plan by end of period | |||||||||||||||
Aircraft - (seats per AC) | YE18 | 1Q19 | 2Q19 | 3Q19 | YE19 | ||||||||||
A319 (156 seats) | 32 | 37 | 37 | 37 | 38 | ||||||||||
A320 (177/186 seats) | 44 | 47 | 49 | 53 | 55 | ||||||||||
Total | 76 | 84 | 86 | 90 | 93 |
Aircraft listed in table above include only in-service aircraft and future aircraft under contract (subject to change)
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