Budget airline Allegiant reports first quarter loss before income taxes of $10.6 million

The U.S. budget airline Allegiant has reported its latest results which show for the first three months of the year its loss before taxes was $10.6million, despite revenues of over $500 million. The firm saw improvement in load factor, with March loads exceeding March of 2019, the first load factor improvement over 2019 since the onset of the pandemic.

 Maurice J. Gallagher, Jr., chairman and CEO of Allegiant Travel Company said: "The first quarter marked a sizable shift in the demand environment," stated "For the first time since the onset of the pandemic, we observed both load factor and TRASM improvements over 2019 during the month of March. Despite a nearly 40 percent increase in the cost per fuel gallon throughout the quarter, we recognized a more than 21 percent operating margin during March. These demand trends have persisted, and we now expect second-quarter total revenue to be up as much as 30 percent compared to 2019 revenue.

"We continue making progress on further expanding our Allegiant 2.0 strategy. We are awaiting DOT approval for our joint venture with Viva Aerobus and are on track to begin selling flights to Mexico by the end of the year. Our Allways Allegiant World Mastercard continues to exceed expectations. New cardholders were up 99 percent compared to the first quarter of 2019. During 2021 we averaged 10,000 new cardholders per month while in this most recent quarter we added 45 thousand (March was the first month with more than 18 thousand cardholders acquired). Our Allways Rewards program now has more than one million active members. Rewards members average more total itineraries annually as well as higher ancillary and third-party take rates compared to non-members. Overall our total ancillary fare per passenger was nearly $68 for the quarter. During the quarter we began accepting reservations for our Sunseeker Resort which is due to open this time next year. Although too early to determine trends, the average daily rate for bookings to date is more than 50 percent higher than the average daily rate we used in our model.

"We have adjusted our growth rate for the second quarter to better align with the high fuel cost environment and prioritize operational performance. We now expect capacity to increase roughly 12 percent a year-over-three year. We expect these capacity adjustments will help drive TRASM increases of nearly 20 percent during the second quarter. Additionally, I have been encouraged by improvements in operational performance the past several weeks. While we are mindful of future slowdowns in the economy as the Fed begins its necessary tightening, we are bullish our historic industry-leading performances in difficult times will continue as well as the substantial opportunities we see for new routes and continued growth in the coming years.

"In closing, I want to thank our more than five thousand team members for their efforts throughout the quarter. The operating environment continues to be a challenge. In recognition of their hard work, we approved a special bonus accrual consistent with levels paid to our team members during 2019, despite not meeting internal profit-sharing targets during the quarter."

First Quarter 2022 Results

• Loss before income taxes of $10.6 million
• GAAP operating income of $7.2 million, yielding an operating margin of 1.4 percent
• Achieved a 21 percent operating margin during the month of March, despite a more than 40 percent increase in the average fuel cost per gallon throughout the quarter
• Consolidated EBITDA(2) of $53.5 million, yielding an EBITDA margin of 10.7 percent
• Total operating revenue was $500.1 million, up 10.7 percent year over three-year
• Scheduled capacity up 18.7 percent year over three-year
• The continued sequential improvement in load factor, with March loads exceeding March of 2019, the first load factor improvement over 2019 since the onset of the pandemic
• Fixed fee revenue of $13.4 million, up 26.6 percent year over three-year, with March being the third-highest performing month for fixed-fee revenue in company history
• TRASM down 6.3 percent for the quarter versus 2019, but March TRASM in excess of March of 2019 on capacity growth of 14.4 percent
• Total average fare of $131.15, up 2.7 percent from the first quarter of 2019
• Total average fare - third party products of $6.06, up 21.0 percent year over three-year driven by Allways Allegiant World Mastercard strength
• 131 percent growth in Allways Allegiant World Mastercard cash compensation during the quarter, as compared with 2019
• 11 of the past 12 months have been top-performing months for new cardholder acquisitions with March activity a program record of 18 thousand new cardholders
•  Operating CASM, excluding fuel and recognition bonus (1) (2) of 6.95 cents, up 4.2 percent when compared with the first quarter of 2019, driven primarily by costs related to increased irregular operations
• Expanded the network by announcing 12 new routes and one new aircraft base in Provo, Utah, bringing total routes served to 617 and 132 cities

(1)	Recognition bonus awarded despite not meeting internal profit-sharing targets
(2)	Denotes a non-GAAP financial measure. Refer to the Non-GAAP Presentation section within this document for further information

Balance Sheet, Cash and Liquidity

• Total cash and investments at March 31, 2022 were $1.2 billion
• $176.0 million in total operating cash inflow for the first quarter 2022
• Total debt at March 31, 2022 was $1.8 billion
• Net debt at March 31, 2022, was $563.0 million, a more than 40 percent reduction from pre-pandemic levels
• Debt principal payments of $37.3 million during the quarter
• Air traffic liability at March 31, 2022, was $453 million
• Balance related to future scheduled flights is $394 million
• The balance related to travel vouchers issued for future use is $59 million

Airline Capital Expenditures

• First quarter capital expenditures of $74 million, which included $56 million for aircraft pre-delivery deposits, used aircraft induction costs, and other related costs, as well as $18 million in other airline capital expenditures
• First quarter deferred heavy maintenance spend was $7 million

Sunseeker Resort

• Updated budget to $618 million, primarily due to inflationary pressures on materials as well as supply chain delays
• Anticipated opening second quarter 2023
• Total project spend as of March 31, 2022, was $275 million with $87 million funded by debt and the remaining $188 million funded by Allegiant
• First quarter capital expenditures were $64 million, of which 100 percent was funded by debt

Allegiant Travel Company Consolidated Statements of Income (in thousands, except per share amounts) (Unaudited)
	Three Months Ended March 31,						Percent Change
	2022		2021		2019		YoY		Yo3Y
OPERATING REVENUES:
Passenger	$      463,961		$      256,695		$      419,977		80.7%		10.5%
Third party products	22,480		13,622		17,141		65.0		31.1
Fixed fee contracts	13,386		7,692		10,575		74.0		26.6
Other	282		1,115		3,929		(74.7)		(92.8)
Total operating revenues	500,109		279,124		451,622		79.2		10.7
OPERATING EXPENSES:
Salaries and benefits	134,010		117,950		119,411		13.6		12.2
Aircraft fuel	164,137		82,848		99,682		98.1		64.7
Station operations	65,744		43,094		38,965		52.6		68.7
Depreciation and amortization	46,343		43,174		36,182		7.3		28.1
Maintenance and repairs	27,820		23,371		22,824		19.0		21.9
Sales and marketing	22,350		11,609		20,926		92.5		6.8
Aircraft lease rental	6,132		4,720		—		29.9		—
Other	26,202		17,776		22,554		47.4		16.2
Payroll Support Programs grant recognition	—		(91,758)		—		100.0		—
Special charges	142		1,738		—		(91.8)		—
Total operating expenses	492,880		254,522		360,544		93.6		36.7
OPERATING INCOME	7,229		24,602		91,078		(70.6)		(92.1)
OTHER (INCOME) EXPENSES:
Interest expense	19,791		16,788		18,083		17.9		9.4
Interest income	(773)		(463)		(3,201)		67.0		(75.9)
Capitalized interest	(1,216)		—		(1,503)		—		(19.1)
Loss on extinguishment of debt	—		—		3,677		—		(100.0)
Other, net	(6)		(393)		103		(98.5)		105.8
Total other expenses	17,796		15,932		17,159		11.7		3.7
INCOME (LOSS) BEFORE INCOME TAXES	(10,567)		8,670		73,919		(221.9)		(114.3)
INCOME TAX PROVISION (BENEFIT)	(2,686)		1,801		16,795		(249.1)		(116.0)
NET INCOME (LOSS)	$         (7,881)		$           6,869		$        57,124		(214.7)		(113.8)
Earnings (loss) per share to common shareholders:
Basic	($0.44)		$0.42		$3.52		(204.8)		(112.5)
Diluted	($0.44)		$0.42		$3.52		(204.8)		(112.5)
Weighted average shares outstanding used in computing earnings per share attributable to common shareholders(1):
Basic	17,954		16,167		16,011		11.1		12.1
Diluted	17,954		16,167		16,013		11.1		12.1

(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 March 31,						Percent Change(1)
	2022		2021		2019		YoY		Yo3Y
OPERATING STATISTICS
Total system statistics:
Passengers	3,734,262		2,334,503		3,450,278		60.0 %		8.2 %
Available seat miles (ASMs) (thousands)	4,620,144		4,013,989		3,910,239		15.1		18.2
Operating expense per ASM (CASM) (cents)(5)	10.67		6.34		9.22		68.3		15.7
Fuel expense per ASM (cents)	3.55		2.06		2.55		72.3		39.2
Operating CASM, excluding fuel (cents)(5)	7.12		4.28		6.67		66.4		6.7
ASMs per gallon of fuel	86.5		90.4		84.1		(4.3)		2.9
Departures	28,494		25,684		25,200		10.9		13.1
Block hours	69,655		60,373		59,819		15.4		16.4
Average stage length (miles)	920		898		904		2.4		1.8
Average number of operating aircraft during period	109.5		97.3		79.6		12.5		37.6
Average block hours per aircraft per day	7.1		7.4		8.3		(4.1)		(14.5)
Full-time equivalent employees at end of period	4,728		3,998		4,067		18.3		16.3
Fuel gallons consumed (thousands)	53,438		44,426		46,474		20.3		15.0
Average fuel cost per gallon	$           3.07		$           1.86		$           2.14		65.1		43.5
Scheduled service statistics:
Passengers	3,709,104		2,323,302		3,421,538		59.6		8.4
Revenue passenger miles (RPMs) (thousands)	3,558,045		2,166,417		3,191,045		64.2		11.5
Available seat miles (ASMs) (thousands)	4,512,315		3,921,090		3,802,132		15.1		18.7
Load factor	78.9 %		55.3 %		83.9 %		23.6		(5.0)
Departures	27,637		24,947		24,344		10.8		13.5
Block hours	67,829		58,851		57,963		15.3		17.0
Average seats per departure	175.6		173.6		171.4		1.2		2.5
Yield (cents) (2)	6.59		6.26		7.47		5.3		(11.8)
Total passenger revenue per ASM (TRASM) (cents)(3)	10.78		6.89		11.50		56.5		(6.3)
Average fare - scheduled service(4)	$        63.22		$        58.38		$        69.64		8.3		(9.2)
Average fare - air-related charges(4)	$        61.87		$        52.11		$        53.10		18.7		16.5
Average fare - third party products	$           6.06		$           5.86		$           5.01		3.4		21.0
Average fare - total	$      131.15		$      116.35		$      127.75		12.7		2.7
Average stage length (miles)	926		902		908		2.7		2.0
Fuel gallons consumed (thousands)	52,110		43,306		45,068		20.3		15.6
Average fuel cost per gallon	$           3.01		$           1.82		$           2.13		65.4		41.3
Percent of sales through website during period	96.0 %		93.3 %		93.6 %		2.7		2.4
Other data:
Rental car days sold	367,094		275,584		471,598		33.2		(22.2)
Hotel room nights sold	72,539		56,208		105,015		29.1		(30.9)

(1)	Except load factor and percent of sales through website, which is percentage point change
(2)	Defined as scheduled service revenue divided by revenue passenger miles.
(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
(5)	2021 operating CASM includes the benefit from the PSP2 and PSP3

 

Summary Balance Sheet
Unaudited (millions)	March 31, 2022 (unaudited)		December 31, 2021		Percent Change
Unrestricted cash and investments
Cash and cash equivalents	$                           403.1		$                  363.4		10.9%
Short-term investments	808.9		819.5		(1.3)
Total unrestricted cash and investments	1,212.0		1,182.9		2.5
Debt
Current maturities of long-term debt and finance lease obligations, net of related costs	140.5		130.1		8.0
Long-term debt and finance lease obligations, net of current maturities and related costs	1,634.5		1,612.5		1.4
Total debt	1,775.0		1,742.6		1.9
Debt, net of liquidity	563.0		559.7		0.6
Total Allegiant Travel Company shareholders' equity	1,222.3		1,223.6		(0.1)

 

EPS Calculation
The following table sets forth the computation of net income (loss) per share, on a basic and diluted basis, for the periods indicated (share count and dollar amounts other than per-share amounts in table are in thousands):
	Three Months Ended March 31,
	2022		2021
Basic:
Net income (loss)	$             (7,881)		$              6,869
Less income allocated to participating securities	—		(103)
Net income (loss) attributable to common stock	$             (7,881)		$              6,766
Earnings (loss) per share, basic	$               (0.44)		$                0.42
Weighted-average shares outstanding	17,954		16,167
Diluted:
Net income (loss)	$             (7,881)		$              6,869
Less income allocated to participating securities	—		(103)
Net income (loss) attributable to common stock	$             (7,881)		$              6,766
Earnings (loss) per share, diluted	$               (0.44)		$                0.42
Weighted-average shares outstanding (1)	17,954		16,167

(1)	Dilutive effect of common stock equivalents excluded from the diluted per share calculation is not material.