Allegiant reports 4Q and 2020 financial results

Allegiant Travel Company issued this report:

Allegiant Travel Company today reported the following financial results for the fourth quarter and full year 2020, as well as comparisons to the prior year:

Consolidated Three Months Ended
December 31,
Percent
Change
Twelve Months Ended
December 31,
Percent
Change
(unaudited) (in millions, except per
share amounts)
2020 2019 2020 2019
Total operating revenue $ 246.6 $ 461.1 (46.5) $ 990.1 $ 1,841.0 (46.2)
Operating income (loss) (23.6) 92.7 (125.5) (281.0) 364.0 (177.2)
Income (loss) before income taxes (39.2) 78.6 (149.9) (361.1) 301.2 (219.9)
Net income (loss) (28.8) 60.5 (147.6) (184.1) 232.1 (179.3)
Diluted earnings (loss) per share $ (1.79) $ 3.72 (148.1) $ (11.53) $ 14.26 (180.9)

 

Consolidated – adjusted Three Months Ended
December 31,
Percent
Change
Twelve Months Ended
December 31,
Percent
Change
(unaudited) (in millions, except per
share amounts)
2020 2019 2020 2019
Adjusted operating income (loss) (1) (2) $ (7.8) $ 92.7 (108.4) $ (140.1) $ 364.0 (138.5)
Adjusted income (loss) before income
taxes(1) (2)
(23.4) 78.6 (129.8) (193.6) 301.2 (164.3)
Adjusted net income (loss)(1) (2) (18.0) 60.5 (129.8) (149.1) 231.9 (164.3)
Adjusted diluted earnings (loss) per
share (1) (2)
$ (1.12) $ 3.72 (130.1) $ (9.33) $ 14.42 (164.7)
(1) Adjusted numbers exclude COVID related special charges, the benefit from the CARES Act payroll support program (as applicable), the benefit from the Employee Retention Credit (as applicable) and the portion of the tax benefit attributable to the CARES Act (as applicable).
(2) Denotes a non-GAAP financial measure. Refer to the Non-GAAP Presentation section within this document for further information.

“With the close of the fourth quarter, we completed the most challenging year the industry has faced in its history,” stated Maurice J. Gallagher, Jr., chairman and CEO of Allegiant Travel Company. “We still have a long road ahead to a full recovery, but we are gaining momentum and moving in the right direction. We finished the quarter with an adjusted loss per share of $1.12 – an improvement of 81 percent when compared to our second quarter lows. The fourth quarter continued the trend of sequential improvement to total revenue, which came in at $247 million, up 85 percent from the second quarter. Similar improvements were seen in load factor at 58.2 percent. Booking trends suggest we will continue to see both revenue and load improvements into the first quarter.

Although the exact timing of a full recovery is unknown, the improvements observed in the fourth quarter coupled with the vaccine rollout suggest recovery is on the horizon. Furthermore, our internal weekly tracking surveys indicate customer travel intention has been improving for the last several weeks. Our 100 percent domestic network focusing on the leisure traveler and predicated around a low cost, low utilization model positions us favorably for a quick recovery.

From the onset of the pandemic, we have worked diligently to strengthen the balance sheet and improve cash balances. Arguably, our balance sheet is stronger today than a year ago. We are well positioned to be opportunistic related to our network and fleet as conditions improve. In early January, we announced service on 21 new routes, including three new cities. Preliminary booking trends on those routes have exceeded our expectations. Our current runway to grow the network has expanded to include over 1000 incremental routes. The flexibility of our model along with structural cost savings will enable us to continue improving the network in the months ahead.

The last ten months have been challenging, but I remain optimistic about 2021. I have been continually reminded of the quality of our team members throughout the pandemic. They have executed flawlessly, enabling us to lead the industry in the percentage of our schedule made available for sale and flown in 2020, with some of the highest load factors in the industry. They have assisted in removing structural costs from the business, enabling us to improve upon our already industry leading cost structure. Because of their efforts, I believe we will be among the first to return to profitability. I am very proud of the work they have done.”

Fourth Quarter 2020 Results

  • Adjusted loss per share(1) of $1.12, an improvement of 81 percent versus the second quarter and 74 percent as compared with the third quarter
  • Total revenue for the quarter was $246.6 million, down 47 percent versus the prior year, the lowest year over year reduction since the onset of the pandemic
    • Sequential quarterly improvement in total revenue with fourth quarter total revenue up 85 percent from the second quarter and 23 percent from the third quarter
    • Completed the quarter with a load factor of 58.2 percent, the highest quarter since the onset of the pandemic
    • Average total ancillary revenue per passenger (includes air-related and third party products) continues to remain strong at $57.18, nearly flat from prior year
  • Adjusted Operating CASM, excluding fuel(1) of 6.07 cents, down 10 percent from the prior year, on capacity reductions of 16 percent
  • Recognized total one-time, non-recurring, special charges related to COVID-19 of $25.4 million during the fourth quarter
  • Recognized a CARES Act employee retention credit of $9.6 million, which is recorded as an offset to salary and benefits expense
  • Announced 15 new non-stop routes including two new cities during the fourth quarter and another 21 new non-stop routes including three new cities in early January bringing total routes served to 543 and 129 cities

Full Year 2020 Update

  • Reported total revenue of $990.1 million, down 46 percent versus prior year, among the lowest revenue reductions in the industry
    • Reduced full year capacity by 19 percent, the smallest reduction in the industry, with reported load factors of 59.5 percent
    • Average total ancillary revenue per passenger (includes air-related and third party products) increased 3 percent versus 2019 to $58.46
  • Adjusted Operating CASM, excluding fuel(1) of 6.92 cents, up 7 percent from prior year on capacity reductions of 19 percent.
  • Employed a surgical approach to marketing efforts, which resulted in a full year decrease in cost per booking of 46 percent

(1) Adjusted numbers exclude COVID related special charges, the benefit from the CARES Act payroll support program (as applicable), the benefit from the Employee Retention Credit (as applicable) and the portion of the tax benefit attributable to the CARES Act (as applicable).

Balance Sheet, Cash and Liquidity

  • Total cash and investments at December 31, 2020 were $685 million
  • Total sources of liquidity received during the fourth quarter were $160 million
    • Issued $150 million of senior secured notes backed by same collateral package pledged to existing Term Loan
    • Received remaining $10 million related to a sale leaseback transaction that closed during the third quarter
  • Total sources of liquidity received during full year 2020 were $724 million
    • Includes $177 million related to the CARES Act payroll support program, $150 million in senior secured notes, $115 million in secured financings backed by aircraft and engines, $100 million upsize of Term Loan B, $94 million in tax refunds related to net operating loss carry backs, and $88 million in proceeds from sale leasebacks
    • Repaid $182 million in net principal payments during full year 2020
    • Total debt increased $237 million versus year end 2019 with debt, net of liquidity, as of December 31, 2020 at $974 million, roughly unchanged from December 31, 2019
  • Fourth quarter interest expense of $16 million, down 11 percent from prior year
  • $268 million in additional liquidity expected to be received during 1H21, none of which will increase debt balances
    • $92 million related to the extension of the CARES Act payroll support program, of which $45.9 million has been received
      • Entire $92 million will be recognized as a payroll expense offset during the first quarter of 2021
    • $147 million in federal income tax refunds related to 2019 and 2020 net operating losses
    • $29 million in various other tax refunds
  • Air traffic liability at December 31st was $308 million
    • Balance related to future scheduled flights is $86 million
    • Balance related to travel vouchers issued for future use is $222 million

Capital Expenditures

  • Fourth quarter spend was $105 million, which included $94 million for the acquisition of three aircraft and three engines along with induction costs, $6 million in other airline capital expenditures and $5 million in deferred heavy maintenance
    • Two aircraft initially intended to be purchased during the fourth quarter were delayed until the first quarter of 2021
  • Full year 2020 capital expenditures were $335 million, comprised of $206 million in aircraft and engine purchases, $45 million in deferred heavy maintenance, $38 million in other airline capital expenditures, and $46 million in non-airline projects
  • Full year 2021 capital expenditures, including deferred heavy maintenance, expected to be roughly $200 million
  • Includes two outstanding purchase agreements, two aircraft initially planned to be purchased during the fourth quarter of 2020, and newly signed purchase agreements for two aircraft
Guidance, subject to revision
First Quarter 2021 guidance
System ASMs – year over year change(1) 0.5 to 5.5%
Scheduled Service  ASMs – year over year change(1) 0.5 to 5.5%
Full year 2021 guidance
CAPEX
Aircraft, engines and induction costs (millions) $115 to $125
Capitalized Airbus deferred heavy maintenance (millions) $50 to $60
Other capital expenditures (millions) $20 to $30
Interest expense $50 to $55
Principal payments(2) $170 to $180
(1) Year over year percentage changes compare 2021 to 2019
(2) Excludes $46 million repayment of revolving credit facility as we expect to enter into an agreement for a new facility during 2021

Aircraft Fleet Plan by End of Period

Aircraft – (seats per AC) YE20 1Q21 2Q21 3Q21 YE21
A319 (156 seats) 34 35 35 35 35
A320 (177 seats) 25 27 23 20 19
A320 (186 seats) 36 39 47 53 54
Total 95 101 105 108 108
Aircraft listed in table above include return to service aircraft previously in storage and future purchase and lease aircraft under contract (subject to change)