Allegiant reports its second quarter results

Allegiant Air Airbus A320-214 WL N248NV (msn 7781) BWI (Brian McDonough). Image: 941699.

Allegiant Travel Company has reported the following financial results for the second quarter 2018, as well as comparisons to the prior year:

Three Months Ended
June 30,
Six Months Ended
June 30,
Unaudited 2018 2017 Change 2018 2017 Change
Total operating revenue (millions) $ 436.8 $ 401.8 8.7% $ 862.2 $ 781.9 10.3%
Operating income (millions) 74.2 85.8 (13.5) 154.2 159.5 (3.3)
Net income (millions) 50.0 49.0 2.0 105.2 91.4 15.1
Diluted earnings per share $ 3.10 $ 2.97 4.4 $ 6.52 $ 5.51 18.3

“We are proud to announce our 62nd consecutive profitable quarter,” stated Maurice J. Gallagher, Jr., chairman and CEO of Allegiant Travel Company. “This is the second consecutive quarter of EPS growth, despite seeing our fuel cost per gallon increase by over 39 percent in the second quarter. This is a wonderful testament to the hard work of our team members as we navigate another busy summer.

“We are continuing our transition to an all-Airbus fleet. We have done an excellent job year-to-date but this summer was the critical period in this transition, including the timely delivery and induction of fifteen Airbus aircraft, and retirement of six MD-80s.

Today we are on our schedule as planned, though some delayed deliveries in late May impacted our peak June period, in terms of top line and operations reliability.  Looking forward, we should complete our transition at the end of November as scheduled.

“Our CASM-ex fuel results came in nicely. Our improved operational results as well as efficiencies from the Airbus fleet are beginning to pay dividends, and we are pleased with where the cost trend line is headed. Additionally, fuel efficiency continues to improve with the transition, with 76 vs. 72 ASMs per gallon this year compared to the same period last year.

“The Sunseeker resort project continues to move ahead. We are closing in on a financing plan and hope to announce the specifics in the next 60 to 90 days. We continue to be impressed with the many synergies and business alignments between Sunseeker and our air service presence on the west coast of Florida. Our Punta Gordadestination – a 15 minute drive from our Sunseeker location, grew over 30 percent in capacity on a trailing twelve month basis. We are on a pace to carry over 1.5 million passengers in and out of Punta Gorda this year.”

Shareholder returns

  • 2018 shareholder returns – over $22 million in the first half of the year through dividends
    • Will pay dividends of $0.70 per share on August 31, 2018 to shareholders of record as of August 17, 2018
    • Current share repurchase authority of $100 million as of July 25, 2018

2018 outlook

  • Third quarter scheduled and system ASMs are expected to grow between thirteen and fifteen percent vs last year
  • 2018 full year ASM growth is expected to be between nine and eleven percent due to slower than expected aircraft deliveries
  • 2018 fuel cost is expected to be $2.35 per gallon using the forward curve as of July 24, 2018
  • 2018 EPS is expected to be between $9 and $10 per share due to the expected higher fuel cost
    • Fuel expense is expected to increase approximately $35 million from when guided in November 2017
Guidance, subject to revision
Full year 2018 guidance Previous* Current
Fuel cost per gallon $2.20 $2.35
Available seat miles (ASMs) / gallon 77.5 to 79.5 77.5 to 78.5
Interest expense (millions) $50 to $60 $50 to $60
Tax rate 21 to 22% 21 to 22%
Share count (millions) 15.9 15.9
Earnings per share $10 to $12 $9 to $10
System ASMs – year over year change 11 to 15% 9 to 11%
Scheduled service ASMs – year over year change 11 to 15% 9 to 11%
Depreciation expense / aircraft / month (thousands) $120 to $130 $115 to $120
Maintenance expense / aircraft / month (thousands) $95 to $105 $80 to $85
Full year 2018 CAPEX guidance
Capital expenditures (millions) ** $300 $300
Capitalized Airbus deferred heavy maintenance (millions) *** $45 $45
* – Previous guidance as of April 25, 2018
** – Excludes Sunseeker Resorts
*** – Not included in capital expenditure total
Aircraft fleet plan by end of period
Aircraft – (seats per AC) 1Q18 2Q18 3Q18 YE18
MD-80 (166 seats) 32 27 19
A319 (156 seats) 26 31 31 32
A320 (177/186 seats) 30 35 44 45
Total 88 93 94 77
Aircraft listed in table above include only in-service aircraft, planned retirements and future aircraft under contract (subject to change)

Top Copyright Photo: Allegiant Air Airbus A320-214 WL N248NV (msn 7781) BWI (Brian McDonough). Image: 941699.

Allegiant Air aircraft slide show:

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