Allegiant reports a net loss of $46.5 million in the third quarter

Allegiant Travel Company reported on its third quarter:

Allegiant Travel Company (Allegiant Air) reported the following financial results for the third quarter 2022, as well as comparisons to prior years:

Consolidated Three Months Ended September 30, Percent Change
(unaudited) (in millions, except per share amounts) 2022 2021 2019 YoY Yo3Y
Total operating revenue $           560.3 $           459.5 $            436.5 22.0 % 28.4 %
Total operating expense 591.2 393.2 364.4 50.4 62.3
Operating income (loss) (30.9) 66.3 72.1 (146.6) (142.9)
Income (loss) before income taxes (56.2) 50.2 56.9 (211.8) (198.7)
Net income (loss) (46.5) 39.3 43.9 (218.4) (205.8)
Diluted earnings (loss) per share (2.58) 2.18 2.70 (218.3) (195.6)
Hurricane Ian special charge 35.0 NM NM
Diluted earnings (loss) per share excluding Hurricane
Ian special charge (2) (3)
$            (0.97) $              2.18 $              2.70 (144.5) (135.9)

 

Nine Months Ended September 30, Percent Change
(unaudited) (in millions, except per share amounts) 2022 2021 2019 YoY Yo3Y
Total operating revenue $        1,690.3 $        1,211.0 $        1,379.9 39.6 % 22.5 %
Total operating expense 1,687.8 981.3 1,108.6 72.0 52.2
Operating income 2.4 229.7 271.3 (98.9) (99.1)
Income (loss) before income taxes (60.9) 181.5 222.6 (133.6) (127.4)
Net income (loss) (50.0) 141.2 171.6 (135.4) (129.1)
Diluted earnings (loss) per share (2.78) 8.18 10.54 (134.0) (126.4)
Hurricane Ian special charge 35.0 NM NM
Diluted earnings (loss) per share excluding Hurricane
Ian special charge (2) (3)
$            (1.18) $              8.18 $            10.54 (114.4) (111.2)
(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
(3) Adjusted to exclude estimated loss from property damage to Sunseeker Resort related to Hurricane Ian. The amount of the loss will be offset in future periods by amounts to be recovered under the company’s insurance policies

“I am proud of the team for the strong operational performance delivered in the third quarter,” stated John Redmond, CEO of Allegiant Travel Company. “We completed the quarter with a controllable completion of 99.4 percent, a significant improvement from the first half of the year. This was achieved on 17.0 percent more scheduled capacity than 2019. In addition, we saw another sequential improvement in load factors, with loads at nearly 89 percent for the quarter. The demand environment remained strong throughout the quarter, resulting in a total operating revenue increase of more than 28 percent as compared with 2019.

“Demand continues to outpace 2019. Forward bookings into the upcoming holiday season are tracking at higher loads and significantly higher yields than at this point in 2019. A new trend we are beginning to observe post-COVID is the increase in passengers combining business and leisure trips. A recent survey showed that nearly 15 percent of respondents were traveling for both business and leisure. Much of this travel happened in the traditional off-peak period of September, resulting in September TRASM1 20 percent higher than September of 2019 on 30 percent more capacity and a load factor improvement of 4.7 percentage points. As we move through the remainder of the year, this is a trend we will watch closely.

“Looking ahead to the fourth quarter, we tapered capacity a bit as a result of the impacts from Hurricane Ian. We expect scheduled capacity to increase roughly 15 percent year over three-year. Given the strong demand environment coupled with improvements in operations, we expect to expand margins, delivering a profitable fourth quarter. From a balance sheet perspective, we have total liquidity of roughly $1.2 billion. During the quarter, the team executed on the issuance of $550 million in senior secured notes, utilizing the proceeds to repay the Term Loan B. Additionally, we repaid the emergency relief loan received under the Coronavirus Aid, Relief and Economic Security (CARES) Act. Furthermore, our board of directors voted to remove the suspension on existing share repurchase authority with $54 million in authority remaining.

“In closing, I would like to thank our team members for all their hard work this quarter, particularly in regards to Hurricane Ian. The team swiftly came together to reposition aircraft, secure the operation, re-accommodate customers, and secure the property at Sunseeker Resort. As a result, we safely navigated the event and returned operations to normal as quickly as possible. Although we do expect a headwind to revenue resulting from Hurricane Ian during the fourth quarter, the impact was minimized due to the efforts of our team.”

(1) Total passenger revenue per available seat mile

Third Quarter 2022 Results

  • Loss before income tax of $56.2 million
    • Includes a $35 million special charge related to the estimated loss from property damage at Sunseeker Resort caused by Hurricane Ian – insurance recoveries will offset the special charge in subsequent quarters when recoveries can be estimated and are approved for payment
    •  Loss before income tax (1)(2)(3) of $11.9 million, excluding 2022 employee recognition bonus and Hurricane Ian special charge
  • Operating income, excluding 2022 recognition bonus and Hurricane Ian special charge (2),of $13.4 million, yielding an operating margin of 2.4 percent
  • Consolidated EBITDA, excluding recognition bonus and Hurricane Ian special charge (2), of $63.2 million, yielding an EBITDA margin of 11.3 percent
  • Total operating revenue was $560.3 million, up 28.4 percent year over three-year
    • Total system capacity up 14.5 percent year over three-year
    • Load factor of 88.5 percent, a 2.5 percentage point increase from the third quarter of 2019, and the best third quarter load factor since 2014
    • September load factor of 87.1 percent, the highest September since 2011
    • TRASM up 13.5 percent for the quarter versus 2019, despite a 17.0 percent increase in scheduled service capacity
  • Total average fare of $125.95, up 15.5 percent from the third quarter of 2019
    • Total average ancillary of $64.69, up 17.9 percent from 2019, driven predominantly by strength in bundled ancillary and the Allways Allegiant World Mastercard
    • Acquired 38 thousand new Allways Allegiant World Mastercard holders during the quarter, the strongest third quarter acquisition since the program’s inception
  •  Operating CASM, excluding fuel, recognition bonus, and Hurricane Ian special charge (1) (3), of 7.61 cents, up 13.9 percent when compared with the third quarter of 2019
  • Added 1.7 million members to the Allways Rewards program during its first year
  • Allegiant World Mastercard® and Allegiant Allways Rewards® were voted as the No. 1 Best Airline Credit Card and Best Frequent Flyer Program in USA Today’s 10 Best 2022 Loyalty/Rewards Readers’ Choice Awards
  • In October, named to Newsweek’s Top 100 Most Loved Workplaces® list for the second consecutive year
  • Donated $100,000 to the American Red Cross for critical disaster relief to communities in the aftermath of Hurricane Ian
(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
(3) Adjusted to exclude estimated loss from property damage to Sunseeker Resort related to Hurricane Ian. The amount of the loss will be offset in future periods by amounts to be recovered under the company’s insurance policies

Balance Sheet, Cash and Liquidity

  • Total available liquidity at September 30, 2022 of $1.2 billion, which includes $1.0 billion in cash and investments, and $225 million in undrawn revolving credit facilities
  • Board of directors removed suspension on existing share repurchase authority with $54 million in authority remaining
  • $221.8 million in cash from operations year-to-date
  • Total debt at September 30, 2022 was $2.0 billion
    • Net debt at September 30, 2022 was $990.7 million
  • Secured financing commitments for $200 million to support 737 MAX pre-delivery deposits – facility is currently undrawn
  • Issued $550 million 7.25% senior secured notes due in 2027, with proceeds used to prepay $533 million Term Loan B, previously due February 2024
  • Other Debt principal payments of $63 million during the quarter
    • Repaid $25 million dollar emergency relief loan received under the Coronavirus Aid, Relief and Economic Security (CARES) Act
    • Scheduled debt principal payments of $38 million
  • Air traffic liability at September 30, 2022 was $429.9 million
    • Balance related to future scheduled flights is $367.8 million
    • Balance related to travel vouchers issued for future use is $62.1 million

Airline Capital Expenditures

  • Third quarter capital expenditures of $84 million, which includes $46 million for aircraft pre-delivery deposits, aircraft induction costs, and other related costs, and $38 million in other airline capital expenditures
    • Third quarter deferred heavy maintenance spend was $12.3 million
  • Full-year 2022 capital expenditures expected to be roughly $325 million, which includes $195 million for aircraft purchases and inductions, pre-delivery deposits, and other related costs, and $130 million in other airline capital expenditures
    • Full-year 2022 deferred heavy maintenance spend expected to be $55 million, a slight reduction from initial expectations

Sunseeker Resort Charlotte Harbor

  • Total project spend as of September 30, 2022 was $437 million with $249 million funded by debt and the remaining $188 million funded by Allegiant
    • Third quarter capital expenditures were $88 million relating to the Sunseeker Resort Charlotte Harbor and $3 million related to other Sunseeker capital expenditures
  • Recorded a $35 million special charge during the quarter related to estimated property damages at Sunseeker Resort resulting from Hurricane Ian, most of which was attributable to subcontractor cranes collapsing onto the buildings
    • Insurance recoveries to offset this charge will be recorded in subsequent quarters when recoveries can be estimated and are approved for payment
Guidance, subject to revision Current
Fourth Quarter 2022 guidance
System ASMs – year over three-year change(1) ~13.5%
Scheduled Service  ASMs – year over three-year change(1) ~15%
Total operating revenue – year over three-year change(1) 26.5% to 28.5%
Operating CASM, excluding fuel – year over three-year change(1) (4) 13% to 15%
Fuel cost per gallon $3.75
Full year 2022 guidance
Airline CAPEX
Aircraft, engines, induction costs, and pre-delivery deposits (millions) $190 to $200
Capitalized deferred heavy maintenance (millions) $50 to $60
Other airline capital expenditures (millions) $125 to $135
Interest expense (millions) (2) (5) $100 to $105
Recurring principal payments (millions) $150 to $160

 

Sunseeker Resort Charlotte Harbor Project (millions) 
Total projected project spend(3) $618
Allegiant contributions through September 30, 2022 $188
Allegiant contributions remaining to be spent $80
Project spend funded by debt through September 30, 2022 $249
Remaining project spend expected to be funded by debt $101
(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 Resort Charlotte Harbor
(3) Amounts do not contemplate physical damage and remediation to the property resulting from Hurricane Ian
(4) Excludes any hurricane damage and insurance recoveries
(5) Interest expense includes loss on debt extinguishment of $7 million

Aircraft Fleet Plan by End of Period

Aircraft – (seats per AC) 1Q22 2Q22 3Q22 YE22
A319 (156 seats) 35 35 35 35
A320 (177 seats) 22 22 22 21
A320 (186 seats) 55 58 59 67
Total 112 115 116 123

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

Top Copyright Photo: Allegiant Air Airbus A320-214 N288NV (msn 4537) AZA (Jarrod Wilkening). Image: 957850.

Allegiant Air aircraft photo gallery: