Allegiant Travel Company today reported the following financial results for the fourth quarter and full year 2019, as well as comparisons to the prior year:

“I am very happy to report our 68^th consecutive profitable quarter and another profitable year,” stated Maurice J. Gallagher, Jr., chairman and CEO of Allegiant Travel Company. “The airline group successfully grew operating margin from 15 percent in 2018 to over 21 percent in 2019. Our success is very much tied to the efforts of our valued team members, who this year have also voted Allegiant as one of the Top 100 Best Places to Work according to Glassdoor’s national survey. We are committed to investing in our people and are happy to report that profit sharing payments to our employees company-wide are up nearly 80 percent from 2018. We could not achieve these outstanding financial and operational results without our dedicated team members, and I thank them for another truly extraordinary year.

“The highlights below show what a remarkable year we had in 2019, post our transition to our all-Airbus fleet. This transition is working as expected regarding both operations and profitability. We had an excellent operational quarter and year, averaging $6.3 million of EBITDA per aircraft this year, as predicted. We recently announced 44 new routes in the coming months – the largest network expansion in company history – which will bring us to more than 500 routes served. We truly are becoming a national brand as our reach stretches from coast to coast. Our non-competitive approach and limited-utilization model continues to work as it has for the past 18 years, allowing us to generate industry-leading profits.

“In closing, I would like to congratulate Scott DeAngelo on his promotion to executive vice president and chief marketing officer. In the nearly two years he has been with us, he has been the critical cog in our efforts to better understand our customers via a more data centric approach. This is a critical requirement in our Allegiant 2.0 evolution. He also led the negotiations in our recent efforts to obtain the Allegiant Stadium naming rights. We are fortunate to have Scott, with his talent and experience on the team as we evolve into a customer-centric travel company in the coming years.”

FY 2019 guidance recap

• Fuel cost per gallon for 2019 was $2.18, three cents higher than our expectation of $2.15
  • Expectation going into fourth quarter was $2.08, whereas actual cost was $2.18
    • Increase drove a $0.29 reduction in our expected fourth quarter EPS
• Sunseeker Resort project spend expected between $90 to $100 million with actual spend at $48 million
  • No change in anticipated second quarter 2021 opening
  • Lower spend resulted in reduced capitalized interest causing interest expense to be slightly higher than guidance
• Ended 2019 with 91 total A320 series aircraft, two fewer than expected
  • Incremental two aircraft have been placed in service in early 2020
    • Still expect to have 105 aircraft by end of 2020
• Airline capex spend exceeded guidance
  • Driven by opportunistic engine acquisitions and earlier than planned aircraft deliveries

Airline only fourth quarter 2019 results

• Diluted earnings per share were $4.04, an increase of over 40 percent versus last year
• 21.3 percent operating margin for the quarter, up 4.7 points year over year
• TRASM increased 2.5 percent despite capacity growth of 8.3 percent
  • Despite a 0.5 percent TRASM headwind from our initial co-branded credit card breakage revenue in fourth quarter 2018
• Average fare – air related charges (air ancillary) up 13.4 percent year over year
  • Four consecutive quarters of air ancillary in excess of $50 per passenger
• Third party products revenue up 17.4 percent versus last year
  • Hotel net revenue grew 22 percent and car rental net revenue grew 16 percent, far exceeding passenger growth
• Operating CASM, excluding fuel, declined 1.5 percent
  • Efficiencies in maintenance along with more targeted marketing spend were the largest drivers of improvement
  • Year over year decrease is less than initial expectations due to higher than expected profit sharing payments to employees and unplanned line maintenance events

Airline only full year 2019 highlights

• Industry-leading controllable completion of 99.96 percent, up versus prior year
• On time performance (A-14) for the year was 78.7 percent, up 1.8 points year over year
• Average fare – third party products revenue up 10.5 percent year over year on a per passenger basis
  • Driven by higher rental car net revenue and increased activity from our co-branded credit card
• Fixed fee contract revenue of $65 million
  • Highest annual total in the company’s history
• Operating CASM, excluding fuel, declined 3.3 percent
  • Reduction on a unitized basis in every operating expense line item with the exception of depreciation
  • CASM, excluding fuel and profit sharing would have declined 4.4 percent
• ASMs per gallon up 5.8 percent in 2019 versus 2018
• EBITDA of $536.9 million, up 40 percent over the prior year
  • Average airline EBITDA per aircraft of $6.3 million

Liquidity and shareholder returns

• Total cash and investments at December 31, 2019 were $473 million
• Total debt of $1.4 billion
• We have 27 unencumbered aircraft
• Returned $11 million in dividends in the fourth quarter
  • Expect to pay dividend of $0.70 per share on March 12, 2020 to shareholders of record as of March 2, 2020
• Currently have approximately $85 million in share repurchase authority
• Drew down $81 million from the revolving credit facility to facilitate aircraft and engine acquisitions
  • Intend to raise long-term financing on these assets individually and use the proceeds to pay down the facility