Allegiant Travel Company (Allegiant Air) (Las Vegas) is steady profit machine finding profits in its underserved small markets. It really has no competition in these markets.
The travel group reported its second quarter net profit increased over 110 percent to $25.2 million.
Here is the full company statement:
“Allegiant Travel Company reported the following financial results for the second quarter 2012 as well as comparisons to prior year equivalents:
| Unaudited | 2Q12 | 2Q11 | Change |
| Total operating revenue (millions) | $231.2 | $200.4 | 15.3% |
| Operating income (millions) | $41.9 | $20.7 | 102.1% |
| Operating margin | 18.1% | 10.3% | 7.8pp |
| EBITDA (millions) | $54.9 | $30.9 | 77.9% |
| EBITDA margin | 23.8% | 15.4% | 8.4pp |
| Net income (millions) | $25.2 | $11.9 | 110.8% |
| Diluted earnings per share | $1.30 | $0.62 | 109.7% |
“We are very proud to report our 38th consecutive profitable quarter,” stated Maurice J. Gallagher, Jr., Chairman and CEO of Allegiant Travel Company. “I’d like to thank our Team Members for their great efforts and contributions to another successful quarter.”
Notable company highlights
- CASM ex-fuel declined 13.9 percent to 5.1 cents, cost per passenger ex-fuel decreased 11.4 percent to $52.98
- Announced acquisition of 19 A319 aircraft
- Announced retirement of two MD-87s by the second quarter of 2013
- Currently testing new website. Only a limited portion of web traffic is pointed to the new site. We expect to have 100 percent of traffic on it by the fourth quarter
- Instituted new boarding process to support carry-on bag policy
- Initiated service to Honolulu from Las Vegas and Fresno, Calif
- Announced service to Honolulu from Bellingham, Wash, Eugene, Ore, Santa Maria, Monterey, and Stockton, Calif to begin in mid November
- Announced service to Maui from Bellingham, Wash to begin in mid-November
- As of Aug 1, we have 30 MD-80s with 166 seats. Expect all west coast scheduled MD-80s to have 166 seats by end of the third quarter of 2012.
- Received ETOPS certification and Flag Carrier Status – permits international scheduled flying
- Since July 2, operating four 757s
- Started Oakland and Punta Gorda bases, currently serving eight markets and seven markets, respectively
Revenue performance
- Average fare — ancillary air-related revenue per passenger grew 7.8 percent
- Ancillary revenues per passenger were $39.67 in the second quarter, highest in the company’s history
| 2Q12 | 2Q11 | Change | ||||
| Scheduled Service: | ||||||
| Average fare – scheduled service | $89.43 | $91.17 | (1.9)% | |||
| Average fare – ancillary air-related charges | $33.90 | $31.45 | 7.8% | |||
| Average fare – ancillary third party products | $5.77 | $5.68 | 1.6% | |||
| Average fare – total | $129.10 | $128.30 | 0.6% | |||
| Scheduled service passenger revenue per ASM (PRASM) (cents) | 8.75 | 9.27 | (5.6)% | |||
| Total scheduled service revenue* per ASM (TRASM) (cents) | 12.63 | 13.04 | (3.1)% | |||
| Load factor | 90.1% | 92.0% | (1.9)pp | |||
| Passengers (millions) | 1.7 | 1.5 | 16.0% | |||
| Average passengers per departure | 140 | 136 | 2.9% | |||
| * Total scheduled service revenue includes scheduled service, ancillary air-related, and ancillary third party revenue. | ||||||
Cost performance
- Cost per ASM excluding fuel decreased 13.9 percent to 5.1 cents, total cost per ASM decreased 10.9 percent to 10.16 cents
- Aircraft fuel expense per gallon declined 2.5 percent or $.08 per gallon
- Fuel cost per passenger was $52.50, a $2.93 decrease or a 5.3 percent drop from the second quarter 2011
- Salary and benefit expense per passenger declined 3.4 percent primarily due to outsourcing of station personnel in Las Vegas in the second quarter of 2011 and continued productivity gains
- Sales and marketing expense per passenger decreased 11.7 percent primarily due to an 8 percent decline in payment processing cost per passenger resulting from increased debit card usage
- Maintenance and repairs expense per passenger decreased 34.9 percent due primarily to a 64 percent decline in engine overhaul expenses
- Station operations expense per passenger increased 2.8 percent primarily due to outsourcing Las Vegas station personnel
| 2Q12 | 2Q11 | Change | ||||
| Total System*: | ||||||
| Operating expense per passenger | $105.48 | $115.24 | (8.5)% | |||
| Operating expense per passenger, excluding fuel | $52.98 | $59.81 | (11.4)% | |||
| Operating expense per ASM (CASM) (cents) | 10.16 | 11.40 | (10.9)% | |||
| Operating expense, excluding fuel per ASM (CASM ex fuel) (cents) | 5.10 | 5.92 | (13.9)% | |||
| * Total system includes scheduled service, fixed-fee contract and non-revenue flying. | ||||||
Third party products performance
- Ancillary revenue — third party products per passenger increased 1.6 percent, our ninth consecutive quarter of year over year increases
- Third party ancillary gross margin improved to 29.7 percent versus 28.1 percent last year
- 41 percent of hotel room night growth occurred outside of Las Vegas
- Rental car days grew 28.4 percent year over year
| Supplemental Ancillary Revenue Information Unaudited (millions) |
2Q12 | 2Q11 | Change | |||
| Gross ancillary revenue – third party products | $32,909 | $29,547 | 11.4% | |||
| Cost of goods sold | ($21,909) | ($20,046) | 9.3% | |||
| Transaction costs* | ($1,218) | ($1,210) | 0.7% | |||
| Ancillary revenue – third party products | $9,782 | $8,291 | 18.0% | |||
| As percent of gross | 29.7% | 28.1% | 1.6pp | |||
| As percent of income before taxes | 24.5% | 43.9% | (19.4)pp | |||
| Ancillary revenue – third party products/scheduled passenger | $5.77 | $5.68 | 1.6% | |||
| Hotel room nights (thousands) | 204.3 | 186.2 | 9.8% | |||
| Rental car days (thousands) | 201.6 | 157.0 | 28.4% | |||
| * Includes payment expenses and travel agency commissions. | ||||||
Balance sheet highlights
- Financed two 757s in the quarter for $14 million
- $33 million of total debt secured by six 757 aircraft
- Currently have $45 million in share repurchase authority
| Unaudited (millions) | 6/30/12 | 12/31/11 | Change | |||
| Unrestricted cash* | $390.1 | $319.5 | 22.1% | |||
| Unrestricted cash net of air traffic liability | $232.4 | $200.8 | 15.8% | |||
| Total debt | $156.2 | $146.1 | 6.9% | |||
| Total stockholders’ equity | $403.0 | $351.5 | 14.6% | |||
| Six months ended June 30, | ||||||
| Unaudited (millions) | 2012 | 2011 | Change | |||
| Capital expenditures | $61.1 | $51.2 | 19.2% | |||
| * Unrestricted cash includes investments in marketable securities. | ||||||
At this time, Allegiant Travel Company provides the following guidance to investors, subject to revision.
| Guidance, subject to revision | ||||
| Revenue guidance | July 2012 | 3Q12 | ||
| Estimated PRASM year-over-year change | (3) to (1)% | (9) to (7)% | ||
| Fixed fee and other revenue guidance | 3Q12 | |||
| Fixed fee and other revenue (millions) | $10 to $12 | |||
| Aircraft guidance | 3Q12 | |||
| Number of MD-80s to be converted to 166 seats* | 37 to 39 | |||
| Capacity guidance | ||||
| System | 3Q12 | 4Q12 | ||
| Departure year-over-year growth | +2 to 6% | +5 to 9% | ||
| ASM year-over-year growth | +14 to 18% | +19 to 23% | ||
| Scheduled | ||||
| Departure year-over-year growth | +3 to 7% | +6 to 10% | ||
| ASM year-over-year growth | +15 to 19% | +22 to 26% | ||
| Cost guidance | 3Q12 | FY12 | ||
| CASM ex fuel — year-over-year change | (2) to 0% | (10) to (5)% | ||
| CAPEX guidance | FY12 | |||
| Capital expenditures (millions) | $105 to $115 | |||
| Full year capacity guidance | FY12 | FY13 | ||
| Scheduled ASM year-over-year growth | +20 to 25% | +20 to 25% | ||
| CASM ex fuel — cost per available seat mile excluding fuel expense | ||||
| * Number of aircraft expected to be completed by end of the quarter | ||||
Copyright Photo: Stephen Tornblom.McDonnell Douglas DC-9-83 (MD-83) N865GA at Long Beacg shows off the updated 2010 livery.
Allegiant: 