Third quarter results for budget airline Allegiant.....

The U.S. budget airline Allegiant has just reported the following financial results for the third quarter 2023, as well as comparisons to the prior year.  The carrier,  back under the control of its former leader,  Maurice J. Gallagher, reported operational revenues that were fairly static at $565.4 million. 

"I am excited to be back in the role of CEO, particularly as the team continues to deliver strong operational and financial performance", stated Maurice J. Gallagher, Jr., chairman and CEO of Allegiant Travel Company. "The third quarter marked another quarter of airline operating profits, excluding special charges. Year to date we have delivered industry-leading financial performance yielding an adjusted airline-only operating margin of 13 percent. These accomplishments are directly attributable to Team Allegiant. You are the best in the industry, and I thank you for all your hard work and dedication. 

"As we move into the fourth quarter, we are all but done with the completion of Sunseeker Resort. Construction crews are wrapping up the last details, and we expect the property to open on December 15. A main driver behind my endorsement of this property was the quality of the management team. They have navigated the project from its inception nearly five years ago and they are world renowned. My conviction around the success of the property remains strong, and I am thrilled to begin realizing the benefits that Sunseeker Resort will provide.

"One of our primary focuses remains on enhancing our brand. The Allegiant credit card continues to materially impact the bottom line through new cardholder acquisitions and continued increases in cardholder spend. Year to date, we have received $88 million in remuneration from our partner, Bank of America. We expect this number to continue growing. Our investment in the Allegiant Extra product also continues to surpass our expectations. Currently 14 aircraft have been retrofitted with this product and we expect roughly one-third of the fleet to be retrofitted by the end of 2024. These diversified revenue streams, coupled with our unique, low-utilization model will continue to differentiate us from our peers."

"I am proud of the teams' efforts to deliver another profitable quarter in what is historically our weakest quarter of the year," stated Gregory Anderson, president of Allegiant Travel Company. "Despite fuel costs rising nearly 30 percent intra-quarter, the team delivered an airline-only adjusted earnings per share of $0.31 driven by an increase in TRASM of 1.4 percent over the prior year. This increase in unit revenue was extra impressive given the unprecedented strength of off-peak leisure demand during the same period last year. While leisure demand during our peak periods continues to outperform pre-pandemic levels, we experienced a return of normalization during the off-peak periods. Our ability to match capacity with leisure demand trends was nicely put on display as we reduced capacity by 45 percent during the off-peak period of September versus the peak season of July.

"We are continuing to strengthen our foundation by reinvesting back into the airline's future. During the third quarter, we successfully launched SAP and Navitaire – technology enhancements that will support our planned growth for years to come. Furthermore, we have readied ourselves for the delivery of our first Boeing 737 MAX aircraft in early 2024. This aircraft will strengthen our flexibility by providing more diversity in fleet composition further enabling us to deploy the right gauge aircraft in the right markets at the right times.

"It's an exciting time to be part of Team Allegiant. Several of our major initiatives will take shape in the coming months. These initiatives, coupled with our differentiated model, will help drive the long-term success of the company. This could not be achieved without the dedication and efforts of our team members throughout the organization. You are inspiring, and I extend my sincerest thanks."

Third Quarter 2023 Results and Highlights

Income before income tax, excluding specials(1)(3)(4) of $2.7M, yielding a pre-tax margin of 0.5% 

Airline-only income before income tax, excluding specials(1)(5) of $7.9M, yielding a pre-tax margin of 1.4%

Operating income, excluding specials(1)(3)(4) of $14.7M, yielding an operating margin of 2.6%

Airline-only operating income, excluding specials(1)(5) of $21.0M, yielding an airline-only operating margin of 3.7%

Consolidated EBITDA, excluding specials(1)(3)(4) of $70.3M, yielding an EBITDA margin of 12.4%

Airline-only EBITDA, excluding specials(1)(5) of $76.6M a 13.5% margin

Total operating revenue of $565.4M, up 0.9% over the prior year and the highest third-quarter total in company history

Total fixed fee contracts revenue of $17.7M, up 11.7% year-over-year

TRASM(2) of 12.78 ¢, up 1.4% year-over-year on scheduled service capacity decrease of 0.8% year-over-year

When compared to 2019, we are the only US carrier, among carriers having reported third quarter results, to be up more than 10 percent in both system available seat miles (ASMs) and TRASM(2) during the quarter as well as year to date

Total average fare of $129.23, up 2.6% year-over-year

Total average ancillary fare of $71.80, up 11.0% year-over-year

$88 million in year-to-date remuneration received from Bank of America, up 26% from the prior year

Announced a collaboration with global entertainment icon Carrie Underwood in support of the company's Allways Rewards Visa® card and loyalty program

Allways Rewards program enrolled 478K new members during the quarter, bringing total members to 16.7M

Airline-only operating CASM, excluding fuel and special charges(3), of 8.49 ¢, up 9.5% year-over-year

Includes $18.7M in incremental cost related to accrual of pilot retention bonuses

Excludes $15.2M in accelerated depreciation related to the early retirement of 21 airframes to be retired between 2023 through 2025

Year to date 2023 Results

Income before income tax, excluding specials(1)(3)(4) of $180.6M yielding a pre-tax margin of 9.5% 

Operating income, excluding specials(1)(3)(4) of $230.2M, yielding an operating margin of 12.1%

Consolidated EBITDA, excluding specials(1)(3)(4) of $394.4M, yielding an EBITDA margin of 20.8%

 

(1)

Denotes a non-GAAP financial measure. Refer to the Non-GAAP Presentation section within this document for further information and for calculation of per share figures.

(2)

TRASM represents total passenger revenue per scheduled service available seat mile.

(3)

In 2023 and 2022, we recognized as special charges the full amount of estimated property damage to Sunseeker Resort due to weather and other insured events less the amount of recognized insurance recoveries through the end of the applicable period. In 2023 we also recognized accelerated depreciation as special charges related to our revised fleet plan.

(4)

Adjusted to exclude the impacts of property damage to Sunseeker Resort, net of recoveries, and aircraft accelerated depreciation charges resulting from our revised fleet plan, as described above.

(5)

Adjusted to exclude accelerated depreciation charges related to our revised fleet plan, as described above.

Balance Sheet, Cash and Liquidity

Total available liquidity at September 30, 2023 was $1.3B, which included $1.0B in cash and investments, and $279.9M in undrawn revolving credit facilities and PDP facilities 

$24.5M in cash from operations during the third quarter 2023

Total debt at September 30, 2023 was $2.3B

Net debt at September 30, 2023 was $1.3B

Secured $412M in financing commitments during the quarter of which $196M was used to refinance seven Airbus A320 aircraft and $216M is committed to finance four Boeing 737 MAX aircraft to be delivered in 2024

Debt principal payments of $143.5M during the third quarter

Includes $113M prepayment of aircraft-secured facilities during the quarter

Year-to-date principal payments of $293M, including a total of $174M in prepayments

Issued notice to call $150M, 8.5% senior secured notes with the balance to be paid during the fourth quarter

Returned $11M in dividends during the third quarter

Air traffic liability at September 30, 2023 was $395.8M

Airline Capital Expenditures

Third quarter capital expenditures of $157.6M, which included $112.1M for aircraft purchases and inductions, pre-delivery deposits, and other related costs, and $45.5M in other airline capital expenditures

Third quarter deferred heavy maintenance spend was $13.8M

Sunseeker Resort Charlotte Harbor

Total capital expenditures(1) as of September 30, 2023 were $653M

Third quarter capital expenditures(1) were $71.6M

Recorded a special charge, net of insurance recoveries, of $17.4M during the third quarter 2023 related to estimated property damages at Sunseeker Resort resulting from various weather events, including Hurricane Idalia

Consolidated	Three Months Ended September 30,				Percent Change
(unaudited) (in millions, except per share amounts)	2023		2022		YoY
Total operating revenue	$                        565.4		$                        560.3		0.9 %
Total operating expense	583.2		591.2		(1.4) %
Operating loss	(17.9)		(30.9)		42.1 %
Loss before income taxes	(29.9)		(56.2)		46.7 %
Net loss	(25.1)		(46.5)		46.0 %
Diluted loss per share	(1.44)		(2.58)		44.2 %
Sunseeker special charges, net of recoveries (4)	17.4		35.0		(50.3) %
Airline special charges (4)	15.2		0.1		NM
Diluted earnings (loss) per share excluding special charges net of recoveries(1)(5)	0.09		(0.96)		109.4 %

 

Airline only	Three Months Ended September 30,				Percent Change(2)
(unaudited) (in millions, except per share amounts)	2023		2022		YoY
Airline operating revenue	$                     565.4		$                     560.3		0.9 %
Airline operating expense (1)	559.5		553.5		1.1 %
Airline operating income	5.8		6.8		(14.7) %
Airline loss before income taxes (1)	(7.4)		(17.3)		57.2 %
Airline net loss (1)	(5.6)		(15.2)		63.2 %
Airline special charges (4)	15.2		0.1		NM
Airline net income (loss), excluding special charges (1)(3)(6)	5.9		(15.1)		NM
Airline operating margin, excluding special charges (1)(6)	3.7 %		1.2 %		2.5
Airline diluted earnings (loss) per share, excluding special charges (1)(6)	0.31		(0.84)		136.9 %

Allegiant Travel Company
Consolidated Statements of Income
(in thousands, except per share amounts)
(Unaudited)
	Three Months Ended September 30,				Percent Change
	2023		2022		YoY
OPERATING REVENUES:
Passenger	$                516,251		$                516,476		— %
Third party products	30,944		27,132		14.0
Fixed fee contracts	17,741		15,881		11.7
Other	423		836		(49.4)
Total operating revenues	565,359		560,325		0.9
OPERATING EXPENSES:
Aircraft fuel	167,861		208,175		(19.4)
Salaries and benefits	163,004		137,336		18.7
Station operations	64,630		66,302		(2.5)
Depreciation and amortization	55,816		50,092		11.4
Maintenance and repairs	35,477		32,177		10.3
Sales and marketing	28,468		25,815		10.3
Aircraft lease rentals	5,906		5,905		—
Other	29,432		30,292		(2.8)
Special charges, net of recoveries	32,648		35,142		(7.1)
Total operating expenses	583,242		591,236		(1.4)
OPERATING LOSS	(17,883)		(30,911)		42.1
OTHER (INCOME) EXPENSES:
Interest expense	39,233		34,242		14.6
Interest income	(12,444)		(4,918)		(153.0)
Capitalized interest	(14,888)		(4,296)		(246.6)
Other, net	135		223		(39.5)
Total other expenses	12,036		25,251		(52.3)
LOSS BEFORE INCOME TAXES	(29,919)		(56,162)		46.7
INCOME TAX BENEFIT	(4,853)		(9,703)		50.0
NET LOSS	$                 (25,066)		$                 (46,459)		46.0
Loss per share to common shareholders:
Basic	($1.44)		($2.58)		44.2
Diluted	($1.44)		($2.58)		44.2
Weighted average shares outstanding used in computing earnings per share attributable to common shareholders(1):
Basic	17,721		18,014		(1.6)
Diluted	17,721		18,014		(1.6)

(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 reduced basic and diluted earnings per share by $0.03 for 2023 and did not have a significant impact on the basic and diluted earnings per share for 2022.

 

Allegiant Travel Company
Airline Operating Statistics
(Unaudited)
	Three Months Ended September 30,				Percent Change(1)
	2023		2022		YoY
AIRLINE OPERATING STATISTICS
Total system statistics:
Passengers	4,292,031		4,359,417		(1.5) %
Available seat miles (ASMs) (thousands)	4,433,767		4,450,595		(0.4)
Airline operating expense per ASM (CASM) (cents)	12.62 ¢		12.43 ¢		1.5
Fuel expense per ASM (cents)	3.79 ¢		4.68 ¢		(19.0)
Airline operating CASM, excluding fuel (cents)	8.83 ¢		7.75 ¢		13.9
Departures	29,251		29,432		(0.6)
Block hours	67,312		67,277		0.1
Average stage length (miles)	858		857		0.1
Average number of operating aircraft during period	126.8		115.1		10.2
Average block hours per aircraft per day	5.8		6.4		(9.4)
Full-time equivalent employees at end of period	5,578		5,285		5.5
Fuel gallons consumed (thousands)	54,320		54,044		0.5
ASMs per gallon of fuel	81.6		82.4		(1.0)
Average fuel cost per gallon	$                   3.09		$                   3.85		(19.7)
Scheduled service statistics:
Passengers	4,234,196		4,316,163		(1.9)
Revenue passenger miles (RPMs) (thousands)	3,744,225		3,820,339		(2.0)
Available seat miles (ASMs) (thousands)	4,280,034		4,315,984		(0.8)
Load factor	87.5 %		88.5 %		(1.0)
Departures	28,040		28,436		(1.4)
Block hours	64,857		65,182		(0.5)
Average seats per departure	176.8		175.8		0.6
Yield (cents) (2)	6.49 ¢		6.92 ¢		(6.2)
Total passenger revenue per ASM (TRASM) (cents)(3)	12.78 ¢		12.60 ¢		1.4
Average fare - scheduled service(4)	$                 57.43		$                 61.26		(6.3)
Average fare - air-related charges(4)	$                 64.50		$                 58.40		10.4
Average fare - third party products	$                   7.31		$                   6.29		16.2
Average fare - total	$               129.23		$               125.95		2.6
Average stage length (miles)	864		860		0.5
Fuel gallons consumed (thousands)	52,491		52,491		—
Average fuel cost per gallon	$                   3.07		$                   3.84		(20.1)
Percent of sales through website during period	95.1 %		96.1 %		(1.0)
Other data:
Rental car days sold	335,542		364,481		(7.9)
Hotel room nights sold	54,447		71,205		(23.5)

(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.

 

Allegiant Travel Company
Consolidated Statements of Income
(in thousands, except per share amounts)
(Unaudited)
	Nine Months Ended September 30,				Percent Change
	2023		2022		YoY
OPERATING REVENUES:
Passenger	$             1,768,274		$             1,573,041		12.4 %
Third party products	85,886		77,399		11.0
Fixed fee contracts	43,599		38,186		14.2
Other	1,096		1,654		(33.7)
Total operating revenues	1,898,855		1,690,280		12.3
OPERATING EXPENSES:
Aircraft fuel	520,018		629,600		(17.4)
Salaries and benefits	499,798		411,027		21.6
Station operations	192,864		198,954		(3.1)
Depreciation and amortization	164,430		145,618		12.9
Maintenance and repairs	95,553		91,120		4.9
Sales and marketing	85,265		75,462		13.0
Aircraft lease rentals	18,973		17,489		8.5
Other	91,757		83,137		10.4
Special charges, net of recoveries	19,828		35,426		(44.0)
Total operating expenses	1,688,486		1,687,833		—
OPERATING INCOME	210,369		2,447		8,497.0
OTHER (INCOME) EXPENSES:
Interest expense	112,707		78,530		43.5
Interest income	(34,418)		(7,909)		(335.2)
Capitalized interest	(28,949)		(7,594)		(281.2)
Other, net	185		318		(41.8)
Total other expenses	49,525		63,345		(21.8)
INCOME (LOSS) BEFORE INCOME TAXES	160,844		(60,898)		364.1
INCOME TAX PROVISION (BENEFIT)	41,292		(10,916)		478.3
NET INCOME (LOSS)	$                119,552		$                 (49,982)		339.2
Earnings (loss) per share to common shareholders:
Basic	$6.44		($2.78)		331.7
Diluted	$6.43		($2.78)		331.3
Weighted average shares outstanding used in computing earnings per share attributable to common shareholders(1):
Basic	17,879		17,985		(0.6)
Diluted	17,913		17,985		(0.4)

(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 reduced earnings per share by $0.25 for basic and diluted earnings per share for 2023, and it did not have a significant impact on the basic and diluted earnings per share for 2022.

 

Allegiant Travel Company
Operating Statistics
(Unaudited)
	Nine Months Ended September 30,				Percent Change(1)
	2023		2022		YoY
OPERATING STATISTICS
Total system statistics:
Passengers	13,196,465		12,834,078		2.8 %
Available seat miles (ASMs) (thousands)	14,164,936		14,060,825		0.7
Airline operating expense per ASM (CASM)(cents)	11.78  ¢		11.70  ¢		0.7
Fuel expense per ASM (cents)	3.67 ¢		4.48 ¢		(18.1)
Airline operating CASM, excluding fuel (cents)	8.11  ¢		7.22 ¢		12.3
Departures	90,792		90,064		0.8
Block hours	215,716		212,403		1.6
Average stage length (miles)	883		885		(0.2)
Average number of operating aircraft during period	124.7		112.7		10.6
Average block hours per aircraft per day	6.3		6.9		(8.7)
Full-time equivalent employees at end of period	5,578		5,285		5.5
Fuel gallons consumed (thousands)	170,271		167,070		1.9
ASMs per gallon of fuel	83.2		84.2		(1.2)
Average fuel cost per gallon	$               3.05		$                   3.77		(19.1)
Scheduled service statistics:
Passengers	13,076,015		12,736,268		2.7
Revenue passenger miles (RPMs) (thousands)	11,947,986		11,646,212		2.6
Available seat miles (ASMs) (thousands)	13,778,994		13,716,838		0.5
Load factor	86.7 %		84.9 %		1.8
Departures	87,800		87,475		0.4
Block hours	209,468		206,868		1.3
Average seats per departure	176.1		175.7		0.2
Yield (cents) (2)	7.55 ¢		6.94 ¢		8.8
Total passenger revenue per ASM (TRASM) (cents)(3)	13.46 ¢		12.03 ¢		11.9
Average fare - scheduled service(4)	$             68.95		$                 63.44		8.7
Average fare - air-related charges(4)	$             66.28		$                 60.07		10.3
Average fare - third party products	$               6.57		$                   6.08		8.1
Average fare - total	$           141.80		$               129.59		9.4
Average stage length (miles)	889		889		—
Fuel gallons consumed (thousands)	165,599		162,933		1.6
Average fuel cost per gallon	$               3.05		$                   3.77		(19.1)
Percent of sales through website during period	95.3 %		96.2 %		(0.9)
Other data:
Rental car days sold	1,081,483		1,161,579		(6.9)
Hotel room nights sold	193,643		222,334		(12.9)

(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.

 

Summary Balance Sheet
Unaudited (millions)	September 30, 2023 (unaudited)		December 31, 2022		Percent Change
Unrestricted cash and investments
Cash and cash equivalents	$                        284.2		$                     230.0		23.6 %
Short-term investments	651.2		725.1		(10.2)
Long-term investments	71.6		63.3		13.1
Total unrestricted cash and investments	1,007.0		1,018.4		(1.1)
Debt
Current maturities of long-term debt and finance lease obligations, net of related costs	266.0		152.9		74.0
Long-term debt and finance lease obligations, net of current maturities and related costs	2,020.0		1,944.1		3.9
Total debt	2,286.0		2,097.0		9.0
Debt, net of unrestricted cash and investments	1,279.0		1,078.6		18.6
Total Allegiant Travel Company shareholders' equity	1,343.1		1,220.7		10.0

EPS Calculation

The following table sets forth the computation of net income 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 September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Basic:
Net income (loss)	$          (25,066)		$          (46,459)		$         119,552		$          (49,982)
Less income allocated to participating securities	(452)		—		(4,397)		—
Net income (loss) attributable to common stock	$          (25,518)		$          (46,459)		$         115,155		$          (49,982)
Earnings (loss) per share, basic	$              (1.44)		$              (2.58)		$                6.44		$              (2.78)
Weighted-average shares outstanding	17,721		18,014		17,879		17,985
Diluted:
Net income (loss)	$          (25,066)		$          (46,459)		$         119,552		$          (49,982)
Less income allocated to participating securities	(452)		—		(4,389)		—
Net income (loss) attributable to common stock	$          (25,518)		$          (46,459)		$         115,163		$          (49,982)
Earnings (loss) per share, diluted	$              (1.44)		$              (2.58)		$                6.43		$              (2.78)
Weighted-average shares outstanding (1)	17,721		18,014		17,879		17,985
Dilutive effect of stock options and restricted stock	—		—		238		—
Adjusted weighted-average shares outstanding under treasury stock method	17,721		18,014		18,117		17,985
Participating securities excluded under two-class method	—		—		(204)		—
Adjusted weighted-average shares outstanding under two-class method	17,721		18,014		17,913		17,985

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