Allegiant reports a loss in the first quarter

First quarter 2022 GAAP diluted (loss) per share of $(0.44)

First quarter 2022 diluted (loss) per share, excluding recognition bonus(1) of $(0.12)(1)(2)

Allegiant Travel Company has reported the following financial results for the first quarter 2022, as well as comparisons to prior years:

Consolidated Three Months Ended March 31, Percent Change
(unaudited) (in millions, except per share amounts) 2022 2021 2019 YoY Yo3Y
Total operating revenue $           500.1 $           279.1 $            451.6 79.2% 10.7%
Total operating expense 492.9 254.5 360.5 93.6 36.7
Operating income 7.2 24.6 91.1 (70.6) (92.1)
Income (loss) before income taxes (10.6) 8.7 73.9 (221.9) (114.3)
Net income (loss) (7.9) 6.9 57.1 (214.7) (113.8)
Diluted earnings (loss) per share $            (0.44) $              0.42 $              3.52 (204.8) (112.5)
(1) Recognition bonus awarded despite not meeting internal profit-sharing targets
(2) Denotes a non-GAAP financial measure. Refer to the Non-GAAP Presentation section within this document for further information

The first quarter marked a sizable shift in the demand environment,” stated Maurice J. Gallagher, Jr., chairman and CEO of Allegiant Travel Company. “For the first time since the onset of the pandemic, we observed both load factor and TRASM improvements over 2019 during the month of March. Despite a nearly 40 percent increase in the cost per fuel gallon throughout the quarter, we recognized a more than 21 percent operating margin during March. These demand trends have persisted, and we now expect second quarter total revenue to be up as much as 30 percent compared to 2019 revenue.

“We continue making progress on further expanding our Allegiant 2.0 strategy. We are awaiting DOT approval for our joint venture with Viva Aerobus and are on track to begin selling flights to Mexico by the end of the year. Our Allways Allegiant World Mastercard continues to exceed expectations. New cardholders were up 99 percent compared to the first quarter of 2019. During 2021 we averaged 10,000 new cardholders per month while in this most recent quarter we added 45 thousand (March was the first month with more than 18 thousand cardholders acquired). Our Allways Rewards program now has more than one million active members. Rewards members average more total itineraries annually as well as higher ancillary and third-party take rates compared to non-members. Overall our total ancillary fare per passenger was nearly $68 for the quarter. During the quarter we began accepting reservations for our Sunseeker Resort which is due to open this time next year. Although too early to determine trends, the average daily rate for bookings to date is more than 50 percent higher than the average daily rate we used in our model.

“We have adjusted our growth rate for the second quarter to better align with the high fuel cost environment and prioritize operational performance. We now expect capacity to increase roughly 12 percent year-over-three year. We expect these capacity adjustments will help drive TRASM increases of nearly 20 percent during the second quarter. Additionally, I have been encouraged by improvements in operational performance the past several weeks. While we are mindful of future slowdowns in the economy as the Fed begins its necessary tightening, we are bullish our historic industry leading performances in difficult times will continue as well as the substantial opportunities we see for new routes and continued growth in the coming years.

“In closing I want to thank our more than five thousand team members for their efforts throughout the quarter. The operating environment continues to be a challenge. In recognition of their hard work, we approved a special bonus accrual consistent with levels paid to our team members during 2019, despite not meeting internal profit-sharing targets during the quarter.”

First Quarter 2022 Results
  • Loss before income taxes of $10.6 million
  • GAAP operating income of $7.2 million, yielding an operating margin of 1.4 percent
  • Achieved a 21 percent operating margin during the month of March, despite a more than 40 percent increase in the average fuel cost per gallon throughout the quarter
  • Consolidated EBITDA(2) of $53.5 million, yielding an EBITDA margin of 10.7 percent
  • Total operating revenue was $500.1 million, up 10.7 percent year over three-year
  • Scheduled capacity up 18.7 percent year over three-year
  • Continued sequential improvement in load factor, with March loads exceeding March of 2019, the first load factor improvement over 2019 since the onset of the pandemic
  • Fixed fee revenue of $13.4 million, up 26.6 percent year over three-year, with March being the third highest performing month for fixed fee revenue in company history
  • TRASM down 6.3 percent for the quarter versus 2019, but March TRASM in excess of March of 2019 on capacity growth of 14.4 percent
  • Total average fare of $131.15, up 2.7 percent from the first quarter of 2019
  • Total average fare – third party products of $6.06, up 21.0 percent year over three-year driven by Allways Allegiant World Mastercard strength
  • 131 percent growth in Allways Allegiant World Mastercard cash compensation during the quarter, as compared with 2019
  • 11 of the past 12 months have been top performing months for new cardholder acquisitions with March activity a program record of 18 thousand new cardholders
  •  Operating CASM, excluding fuel and recognition bonus (1) (2) of 6.95 cents, up 4.2 percent when compared with the first quarter of 2019, driven primarily by costs related to increased irregular operations
  • Expanded the network by announcing 12 new routes and one new aircraft base in Provo, Utah, bringing total routes served to 617 and 132 cities
(1) Recognition bonus awarded despite not meeting internal profit-sharing targets
(2) Denotes a non-GAAP financial measure. Refer to the Non-GAAP Presentation section within this document for further information
Balance Sheet, Cash and Liquidity
  • Total cash and investments at March 31, 2022 were $1.2 billion
  • $176.0 million in total operating cash inflow for the first quarter 2022
  • Total debt at March 31, 2022 was $1.8 billion
  • Net debt at March 31, 2022 was $563.0 million, a more than 40 percent reduction from pre-pandemic levels
  • Debt principal payments of $37.3 million during the quarter
  • Air traffic liability at March 31, 2022 was $453 million
  • Balance related to future scheduled flights is $394 million
  • Balance related to travel vouchers issued for future use is $59 million
Airline Capital Expenditures
  • First quarter capital expenditures of $74 million, which included $56 million for aircraft pre-delivery deposits, used aircraft induction costs, and other related costs, as well as $18 million in other airline capital expenditures
  • First quarter deferred heavy maintenance spend was $7 million
Sunseeker Resort
  • Updated budget to $618 million, primarily due to inflationary pressures on materials as well as supply chain delays
  • Anticipated opening second quarter 2023
  • Total project spend as of March 31, 2022 was $275 million with $87 million funded by debt and the remaining $188 million funded by Allegiant
  • First quarter capital expenditures were $64 million, of which 100 percent was funded by debt

 

Guidance, subject to revision Previous Current
Second Quarter 2022 guidance
System ASMs – year over three-year change(1) 9.0 to 13.0%
Scheduled Service  ASMs – year over three-year change(1) 10.0 to 14.0%
Total operating revenue – year over three-year change(1) 28 to 32%
Operating CASM, excluding fuel – year over three-year change(1) 12.0 to 16.0%
Fuel cost per gallon $4.00
Full year 2022 guidance
Airline CAPEX
    Aircraft, engines, induction costs, and pre-delivery deposits (millions) $255 to $265
    Capitalized deferred heavy maintenance (millions) $85 to $95
    Other airline capital expenditures (millions) $95 to $105
Interest expense (millions) (2) $85 to $95
Recurring principal payments (millions) $150 to $160
Sunseeker Resorts – Charlotte Harbor Project  (millions)
Total projected project spend $618
Allegiant contributions through March 31, 2022 $188
Allegiant contributions remaining to be spent $80
Project spend funded by debt through March 31, 2022 $87
Remaining project spend expected to be funded by debt $263
(1) Year over three-year percentage changes compare 2022 to 2019
(2) Includes capitalized interest related to pre-delivery deposits on new aircraft as well as the construction of Sunseeker Resorts – Charlotte Harbor

Aircraft Fleet Plan by End of Period

  • Updated fleet count shifting three aircraft inductions into 2023 due to labor and supply chain constraints
Aircraft – (seats per AC) 1Q22 2Q22 3Q22 YE22
A319 (156 seats) 35 35 35 35
A320 (177 seats) 22 22 22 22
A320 (186 seats) 55 58 64 67
Total 112 115 121 124

The table above is provided based on the company’s current plans and is subject to change

Allegiant Air aircraft photo gallery: