07 November, 2023

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.