Allegiant Travel Company releases its third quarter 2021 financial results

This week the Las Vegas based Allegiant Travel Company has reported its latest financial results for the third quarter of 2021, as well as comparisons to the prior years. 

The latest results show that the airline was one of the first U.S. domestic carriers to achieve year over two-year revenue increases since the onset of the pandemic and the carrier's average fare was just $116.91. The continued sequential improvement in load factor, which came in at 76.6 percent, up 6 percentage points from the second quarter, although third-quarter peak period load factor exceeded 80 percent.

Maurice J. Gallagher, Jr., chairman and CEO of Allegiant Travel Company said: "We finished the quarter with earnings per share of $2.18, our second consecutive quarter of profitability since the onset of the pandemic. Third-quarter total operating revenue was up 5.3 percent year over two-year making us one of the only domestic carriers to grow revenue from pre-pandemic levels. While demand was strong during our peak summer travel period, we experienced a slowdown as the delta variant spiked, but have since seen the demand curve ramp back up. Yields held up nicely, considering the effects of the delta variant, down less than six percent on scheduled service capacity increases of 17 percent. Third-party revenue continues to outperform, up 32.0 percent on a per passenger basis compared with 2019."

Maurice J. Gallagher continued: "Despite the favourable revenue environment, the operation continues to present challenges, as noted by several of our peers as well. Prior to COVID, the operation was a well-oiled machine - things ran smoothly. Fast forward to today, and we are operating in a different environment. The over-heated economy, continuing impacts of COVID, plus difficult labour environment created a perfect storm of challenges, including cancellations and delays over the past several months. We have a strong compensation approach for our interrupted passengers. We reimburse our customers for the inconvenience we have caused via prepaid credit cards or ACH deposits. Given the volume of our interruptions this past quarter, this was a meaningful amount. As a result, our third quarter adjusted CASM, excluding fuel, was 6.97 cents, 4.3 percent higher year over two-year. Excluding these costs for irregular operations, I was pleased that our adjusted CASM, excluding fuel was below the third quarter of 2019. As we head into the holiday season, job one is managing our operational integrity. We've scaled back on some peak day travel to mitigate the risk of cancellations. We now expect fourth-quarter capacity to be up 12 percent from 2019.

"In regards to 2022 growth plans, it's too early to provide specific numbers. At a minimum, growth will mirror our historical low, double-digit rate. However, if fuel continues to increase, we will moderate capacity accordingly. Uncertainty around the labour market is another growth factor we are watching. In the coming months, we will closely monitor the operational environment and our personnel availability. The flexibility of our model will continue to be vital as we respond to these differing environmental factors. We will have more insights at our next call.

"Although we have faced recent operational challenges, the business is in great shape. The balance sheet is stronger than ever with total liquidity of $1.1 billion and net debt of roughly $500 million. We've proven the resiliency of the model in both good times and bad, including high fuel cost environments. I am optimistic about the future. Our runway of potential routes continues to exceed 1,000. We've identified untapped revenue potential within third-party sales and are pleased to see positive trends from our newly launched loyalty program, Allways Rewards - both will contribute bottom-line results in the coming years. Additionally, we resumed construction on Sunseeker Resorts with an anticipated opening date during the first quarter of 2023 as well as closed on $350 million of construction financing. We are excited to see this project come to fruition.

"The last several months have been challenging for our team members. The operational environment has created added stress, yet they have continued to work hard, putting our customers' needs and safety first. I cannot thank them enough for their efforts. Relief is on the horizon as we are aggressively hiring more frontline employees. The future for Allegiant is very bright. We would not be in the favourable position we find ourselves in today without our team members' hard work and dedication."

Allegiant Travel Company
Consolidated Statements of Income
(in thousands, except per share amounts)
(Unaudited)
	Three Months Ended September 30,												Percent Change
	2021				2020				2019				YoY			Yo2Y
OPERATING REVENUES:
Passenger	$	423,796			$	181,916			$	391,222			133.0	%		8.3	%
Third party products	24,541				11,337				18,207				116.5			34.8
Fixed fee contracts	11,117				5,284				19,797				110.4			(43.8)
Other	15				2,447				7,283				(99.4)			(99.8)
Total operating revenues	459,469				200,984				436,509				128.6			5.3
OPERATING EXPENSES:
Salary and benefits	125,799				95,829				107,586				31.3			16.9
Aircraft fuel	118,370				52,540				104,583				125.3			13.2
Station operations	70,943				39,954				43,522				77.6			63.0
Depreciation and amortization	46,399				45,291				39,436				2.4			17.7
Maintenance and repairs	30,451				14,038				24,768				116.9			22.9
Sales and marketing	22,047				7,967				17,591				176.7			25.3
Aircraft lease rental	5,670				3,015				—				88.1			—
Other	22,379				19,755				26,907				13.3			(16.8)
Payroll Support Programs grant recognition	(49,210)				(77,909)				—				36.8			—
Special charges	332				33,585				—				(99.0)			—
Total operating expenses	393,180				234,065				364,393				68.0			7.9
OPERATING INCOME (LOSS)	66,289				(33,081)				72,116				300.4			(8.1)
OTHER (INCOME) EXPENSES:
Interest expense	16,595				11,943				19,506				39.0			(14.9)
Interest income	(375)				(868)				(3,335)				56.8			88.8
Capitalized interest	(401)				—				(903)				—			55.6
Other, net	239				552				(57)				(56.7)			519.3
Total other expenses	16,058				11,627				15,211				38.1			5.6
INCOME (LOSS) BEFORE INCOME TAXES	50,231				(44,708)				56,905				212.4			(11.7)
INCOME TAX PROVISION (BENEFIT)	10,977				(15,565)				12,976				170.5			(15.4)
NET INCOME (LOSS)	$	39,254			$	(29,143)			$	43,929			234.7			(10.6)
Earnings (loss) per share to common shareholders:
Basic	$2.18				($1.82)				$2.70				219.8			(19.3)
Diluted	$2.18				($1.82)				$2.70				219.8			(19.3)
Weighted average shares outstanding used in computing earnings per share attributable to common shareholders(1):
Basic	17,766				16,006				16,037				11.0			10.8
Diluted	17,767				16,006				16,039				11.0			10.8

(1) The Company's unvested restricted stock awards are considered participating securities as they receive non-forfeitable rights to cash dividends at the same rate as common stock. The Basic and Diluted earnings per share calculations for the periods presented reflect the two-class method mandated by ASC Topic 260, "Earnings Per Share." The two-class method adjusts both the net income and the shares used in the calculation. Application of the two-class method did not have a significant impact on the Basic and Diluted earnings per share for the periods presented.

 

Allegiant Travel Company
Operating Statistics
(Unaudited)
	Three Months Ended September 30,												Percent Change(1)
	2021				2020				2019				YoY			Yo2Y
OPERATING STATISTICS
Total system statistics:
Passengers	3,872,651				2,016,241				3,806,369				92.1	%		1.7	%
Available seat miles (ASMs) (thousands)	4,441,201				3,521,508				3,888,400				26.1			14.2
Operating expense per ASM (CASM) (cents)	8.85				6.65				9.37				33.1			(5.5)
Adjusted operating expense per ASM (CASM) (cents)(2)	9.64				7.91				9.37				21.9			2.9
Fuel expense per ASM (cents)	2.67				1.49				2.69				79.2			(0.7)
Operating CASM, excluding fuel (cents)	6.19				5.15				6.68				20.2			(7.3)
Adjusted operating CASM, excluding fuel (cents)(2)	6.97				6.41				6.68				8.7			4.3
ASMs per gallon of fuel	82.5				88.5				80.3				(6.8)			2.7
Departures	30,663				24,365				27,707				25.8			10.7
Block hours	67,398				52,238				59,678				29.0			12.9
Average stage length (miles)	829				834				823				(0.6)			0.7
Average number of operating aircraft during period	105.6				90.7				87.6				16.4			20.5
Average block hours per aircraft per day	7.0				6.3				7.4				11.1			(5.4)
Full-time equivalent employees at end of period	4,246				4,275				4,267				(0.7)			(0.5)
Fuel gallons consumed (thousands)	53,850				39,786				48,443				35.3			11.2
Average fuel cost per gallon	$	2.20			$	1.32			$	2.16			66.7			1.9
Scheduled service statistics:
Passengers	3,834,956				2,003,648				3,753,611				91.4			2.2
Revenue passenger miles (RPMs) (thousands)	3,302,519				1,714,622				3,170,826				92.6			4.2
Available seat miles (ASMs) (thousands)	4,312,893				3,449,339				3,687,473				25.0			17.0
Load factor	76.6		%		49.7		%		86.0		%		26.9			(9.4)
Departures	29,593				23,710				26,238				24.8			12.8
Block hours	65,296				51,057				56,576				27.9			15.4
Average seats per departure	174.3				173.2				170.8				0.6			2.0
Yield (cents)	6.04				4.76				6.42				26.9			(5.9)
Total passenger revenue per ASM (TRASM) (cents)(3)	10.40				5.60				11.10				85.7			(6.3)
Average fare - scheduled service(4)	$	52.05			$	40.75			$	54.20			27.7			(4.0)
Average fare - air-related charges(4)	$	58.45			$	50.04			$	50.03			16.8			16.8
Average fare - third party products	$	6.40			$	5.66			$	4.85			13.1			32.0
Average fare - total	$	116.91			$	96.45			$	109.08			21.2			7.2
Average stage length (miles)	834				839				824				(0.6)			1.2
Fuel gallons consumed (thousands)	52,249				38,853				46,038				34.5			13.5
Average fuel cost per gallon	$	2.20			$	1.32			$	2.17			66.7			1.4
Percent of sales through website during period	95.4		%		92.3		%		93.1		%		3.1			2.3
Other data:
Rental car days sold	366,407				255,800				482,944				43.2			(24.1)
Hotel room nights sold	66,626				44,655				99,991				49.2			(33.4)

(1) Except load factor and percent of sales through website, which is percentage point change.

(2) Adjusted numbers exclude COVID related special charges, the net benefit from the payroll support programs, and bonus accruals

(3) Various components of this measurement do not have a direct correlation to ASMs. These figures are provided on a per ASM basis to facilitate comparison with airlines reporting revenues on a per ASM basis.

(4) Reflects division of passenger revenue between scheduled service and air-related charges in Company's booking path.

 

Allegiant Travel Company
Consolidated Statements of Income
(in thousands, except per share amounts)
(Unaudited)
	Nine Months Ended September 30, 2021												Percent Change
	2021				2020				2019				YoY			Yo2Y
OPERATING REVENUES:
Passenger	$	1,124,237			$	677,347			$	1,265,978			66.0	%		(11.2)	%
Third party products	61,164				35,756				53,557				71.1			14.2
Fixed fee contracts	23,943				17,440				42,859				37.3			(44.1)
Other	1,682				12,969				17,498				(87.0)			(90.4)
Total operating revenues	1,211,026				743,512				1,379,892				62.9			(12.2)
OPERATING EXPENSES:
Salary and benefits	365,655				303,264				340,589				20.6			7.4
Aircraft fuel	310,674				168,711				324,253				84.1			(4.2)
Station operations	171,246				108,359				128,357				58.0			33.4
Depreciation and amortization	134,095				132,285				114,112				1.4			17.5
Maintenance and repairs	76,419				48,866				68,470				56.4			11.6
Sales and marketing	51,288				35,331				59,057				45.2			(13.2)
Aircraft lease rental	15,507				5,404				—				187.0			—
Other	55,655				70,225				73,756				(20.7)			(24.5)
Payroll Support Programs grant recognition	(202,181)				(152,448)				—				(32.6)			—
Special charges	2,924				280,852				—				(99.0)			—
Total operating expenses	981,282				1,000,849				1,108,594				(2.0)			(11.5)
OPERATING INCOME (LOSS)	229,744				(257,337)				271,298				189.3			(15.3)
OTHER (INCOME) EXPENSES:
Interest expense	50,103				44,149				58,531				13.5			(14.4)
Interest income	(1,338)				(4,596)				(10,038)				70.9			86.7
Capitalized interest	(401)				(4,067)				(3,444)				90.1			88.4
Loss on extinguishment of debt	71				1,222				3,677				(94.2)			(98.1)
Special charges	—				26,632				—				(100.0)			—
Other, net	(164)				1,173				(41)				(114.0)			(300.0)
Total other expenses	48,271				64,513				48,685				(25.2)			(0.9)
INCOME (LOSS) BEFORE INCOME TAXES	181,473				(321,850)				222,613				156.4			(18.5)
INCOME TAX PROVISION (BENEFIT)	40,323				(166,595)				51,017				124.2			(21.0)
NET INCOME (LOSS)	$	141,150			$	(155,255)			$	171,596			190.9			(17.7)
Earnings (loss) per share to common shareholders:
Basic	$8.18				($9.75)				$10.55				183.9			(22.5)
Diluted	$8.18				($9.75)				$10.54				183.9			(22.4)
Weighted average shares outstanding used in computing earnings per share attributable to common shareholders(1):
Basic	17,005				15,953				16,037				6.6			6.0
Diluted	17,015				15,953				16,045				6.7			6.0

(1) The Company's unvested restricted stock awards are considered participating securities as they receive non-forfeitable rights to cash dividends at the same rate as common stock. The Basic and Diluted earnings per share calculations for the periods presented reflect the two-class method mandated by ASC Topic 260, "Earnings Per Share." The two-class method adjusts both the net income and the shares used in the calculation. Application of the two-class method did not have a significant impact on the Basic and Diluted earnings per share for the periods presented.

 

Allegiant Travel Company
Operating Statistics
(Unaudited)
	Nine Months Ended September 30, 2021												Percent Change(1)
	2021				2020				2019				YoY			Yo2Y
OPERATING STATISTICS
Total system statistics:
Passengers	9,906,371				6,464,949				11,426,183				53.2	%		(13.3)	%
Available seat miles (ASMs) (thousands)	13,049,732				9,809,934				12,245,704				33.0			6.6
Operating expense per ASM (CASM) (cents)	7.52				10.20				9.05				(26.3)			(16.9)
Adjusted operating expense per ASM (CASM) (cents)(2)	8.77				8.89				9.05				(1.3)			(3.1)
Fuel expense per ASM (cents)	2.38				1.72				2.65				38.4			(10.2)
Operating CASM, excluding fuel (cents)	5.14				8.48				6.41				(39.4)			(19.8)
Adjusted operating CASM, excluding fuel (cents)(2)	6.39				7.17				6.41				(10.9)			(0.3)
ASMs per gallon of fuel	85.6				87.6				82.2				(2.3)			4.1
Departures	87,854				65,766				83,454				33.6			5.3
Block hours	197,581				147,350				187,829				34.1			5.2
Average stage length (miles)	852				862				858				(1.2)			(0.7)
Average number of aircraft during period	101.6				92.1				84.1				10.3			20.8
Average block hours per aircraft per day	7.1				5.8				8.2				22.4			(13.4)
Full-time equivalent employees at end of period	4,261				4,275				4,267				(0.3)			(0.1)
Fuel gallons consumed (thousands)	152,464				111,929				148,980				36.2			2.3
Average fuel cost per gallon	$	2.04			$	1.51			$	2.18			35.1			(6.4)
Scheduled service statistics:
Passengers	9,838,512				6,424,331				11,307,004				53.1			(13.0)
Revenue passenger miles (RPMs) (thousands)	8,657,151				5,747,639				9,964,948				50.6			(13.1)
Available seat miles (ASMs) (thousands)	12,739,769				9,588,031				11,800,788				32.9			8.0
Load factor	68.0		%		59.9		%		84.4		%		8.1			(16.4)
Departures	85,303				63,877				80,149				33.5			6.4
Block hours	192,481				143,651				180,674				34.0			6.5
Average seats per departure	173.8				172.7				171.0				0.6			1.6
Yield (cents)	6.53				5.83				6.85				12.0			(4.7)
Total passenger revenue per ASM (TRASM) (cents)(3)	9.30				7.44				11.18				26.9			(16.8)
Average fare - scheduled service(4)	$	57.48			$	52.12			$	60.40			10.3			(4.8)
Average fare - air-related charges(4)	$	56.79			$	53.32			$	51.56			6.5			10.1
Average fare - third party products	$	6.22			$	5.57			$	4.74			11.7			31.2
Average fare - total	$	120.49			$	111.00			$	116.70			8.5			3.2
Average stage length (miles)	857				867				861				(1.2)			(0.5)
Fuel gallons consumed (thousands)	148,578				109,082				143,433				36.2			3.6
Average fuel cost per gallon	$	2.01			$	1.50			$	2.17			34.0			(7.4)
Percent of sales through website during period	93.8		%		93.2		%		93.4		%		0.6			0.4
Other data:
Rental car days sold	1,046,751				872,382				1,495,502				20.0			(30.0)
Hotel room nights sold	195,535				149,431				319,197				30.9			(38.7)

(1) Except load factor and percent of sales through website, which is percentage point change.

(2) Adjusted numbers exclude COVID related special charges, the net benefit from the payroll support programs, and profit sharing bonus accruals

(3) Various components of this measurement do not have a direct correlation to ASMs. These figures are provided on a per ASM basis to facilitate comparison with airlines reporting revenues on a per ASM basis.

(4) Reflects division of passenger revenue between scheduled service and air-related charges in Company's booking path.

 

Summary Balance Sheet
Unaudited (millions)	September 30, 2021 (unaudited)				December 31, 2020				Percent Change
Unrestricted cash and investments
Cash and cash equivalents	$	193.6			$	152.8			26.7	%
Short-term investments	877.3				532.5				64.8
Total unrestricted cash and investments	1,070.9				685.3				56.3
Debt
Current maturities of long-term debt and finance lease obligations, net of related costs	139.6				217.2				(35.7)
Long-term debt and finance lease obligations, net of current maturities and related costs	1,434.6				1,441.8				(0.5)
Total debt	1,574.2				1,659.0				(5.1)
Debt, net of liquidity	503.3				973.7				(48.3)
Total Allegiant Travel Company shareholders' equity	1,191.1				699.4				70.3

 

Summary Cash Flow
	Nine Months Ended September 30,								Percent
Unaudited (millions)	2021				2020				Change
Cash provided by operating activities	$	373.6			$	276.7			35.0	%
Changes in air traffic liability	44.0				84.1				(47.7)
Changes in working capital, ex air traffic liability	24.6				(152.9)				116.1
Purchase of property and equipment	166.5				198.6				(16.2)
Cash dividends paid to shareholders	—				11.4				(100.0)
Proceeds from the issuance of long-term debt	106.7				272.5				(60.8)
Principal payments on long-term debt & finance lease obligations	239.6				146.4				63.7
Proceeds from issuance of common stock	335.1				—				100.0

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