Allegiant reports a third quarter net loss of $25.1 million

Allegiant Travel Company (Allegiant Air) has reported the following financial results for the third quarter 2023, as well as comparisons to the prior year:

Consolidated	Three Months Ended September 30,		Percent Change
(unaudited) (in millions, except per share amounts)	2023	2022	YoY
Total operating revenue	$ 565.4	$ 560.3	0.9 %
Total operating expense	583.2	591.2	(1.4) %
Operating loss	(17.9)	(30.9)	42.1 %
Loss before income taxes	(29.9)	(56.2)	46.7 %
Net loss	(25.1)	(46.5)	46.0 %
Diluted loss per share	(1.44)	(2.58)	44.2 %
Sunseeker special charges, net of recoveries ⁽⁴⁾	17.4	35.0	(50.3) %
Airline special charges ⁽⁴⁾	15.2	0.1	NM
Diluted earnings (loss) per share excluding special charges net of recoveries⁽¹⁾⁽⁵⁾	0.09	(0.96)	109.4 %

Airline only	Three Months Ended September 30,		Percent Change⁽²⁾
(unaudited) (in millions, except per share amounts)	2023	2022	YoY
Airline operating revenue	$ 565.4	$ 560.3	0.9 %
Airline operating expense ⁽¹⁾	559.5	553.5	1.1 %
Airline operating income	5.8	6.8	(14.7) %
Airline loss before income taxes ⁽¹⁾	(7.4)	(17.3)	57.2 %
Airline net loss ⁽¹⁾	(5.6)	(15.2)	63.2 %
Airline special charges ⁽⁴⁾	15.2	0.1	NM
Airline net income (loss), excluding special charges ^(1)(3)(6)	5.9	(15.1)	NM
Airline operating margin, excluding special charges ⁽¹⁾⁽⁶⁾	3.7 %	1.2 %	2.5
Airline diluted earnings (loss) per share, excluding special charges ⁽¹⁾⁽⁶⁾	0.31	(0.84)	136.9 %

Consolidated	Nine Months Ended September 30,		Percent Change
(unaudited) (in millions, except per share amounts)	2023	2022	YoY
Total operating revenue	$ 1,898.9	$ 1,690.3	12.3 %
Total operating expense	1,688.5	1,687.8	— %
Operating income	210.4	2.4	NM
Income (loss) before income taxes	160.8	(60.9)	364.0 %
Net income (loss)	119.6	(50.0)	339.2 %
Diluted earnings (loss) per share	6.43	(2.78)	331.3 %
Sunseeker special charges, net of recoveries⁽⁴⁾	4.6	35.0	NM
Airline special charges ⁽⁴⁾	15.2	0.4	NM
Diluted earnings (loss) per share excluding special charges⁽¹⁾⁽⁵⁾	7.22	(1.16)	722.4 %

Airline only	Nine Months Ended September 30,		Percent Change⁽²⁾
(unaudited) (in millions, except per share amounts)	2023	2022	YoY
Airline operating revenue	$ 1,898.8	$ 1,690.3	12.3 %
Airline operating expense⁽¹⁾	1,668.0	1,645.4	1.4 %
Airline operating income	230.9	44.9	414.3 %
Airline income (loss) before income taxes ⁽¹⁾	181.9	(12.5)	NM
Airline net income (loss) ⁽¹⁾	137.3	(11.0)	1,348.2 %
Airline special charges ⁽⁴⁾	15.2	0.4	NM
Airline net income (loss), excluding special charges ^(1)(3)(6)	148.8	(10.7)	NM
Airline operating margin, excluding special charges ⁽¹⁾⁽⁶⁾	13.0 %	2.7 %	10.3
Airline diluted earnings (loss) per share, excluding special charges ⁽¹⁾⁽⁶⁾	8.00	(0.59)	NM


⁽¹⁾	Denotes a non-GAAP financial measure. Refer to the Non-GAAP Presentation section within this document for further information and for calculation of per share figures.
⁽²⁾	Except Airline operating margin, excluding special charges, which is percentage point change.
⁽³⁾	Utilizing an airline-only effective tax rate of 24.5% for 2023 and 12.0% for 2022.
⁽⁴⁾	In 2023 and 2022, we recognized as special charges the full amount of estimated property damage to Sunseeker Resortdue to weather and other insured events less the amount of recognized insurance recoveries through the end of the applicable period. In 2023 we also recognized accelerated depreciation as special charges related to our revised fleet plan. We sometimes refer to these amounts as “specials” in this earnings release.
⁽⁵⁾	Adjusted to exclude the impacts of property damage to Sunseeker Resort, net of recoveries, and aircraft accelerated depreciation charges resulting from our revised fleet plan, as described above.
⁽⁶⁾	Adjusted to exclude accelerated depreciation charges related to our revised fleet plan, as described above.
^NM	Not meaningful
^*	Note that amounts may not recalculate due to rounding

“I am excited to be back in the role of CEO, particularly as the team continues to deliver strong operational and financial performance”, stated Maurice J. Gallagher, Jr., chairman and CEO of Allegiant Travel Company. “The third quarter marked another quarter of airline operating profits, excluding special charges. Year to date we have delivered industry-leading financial performance yielding an adjusted airline-only operating margin of 13 percent. These accomplishments are directly attributable to Team Allegiant. You are the best in the industry, and I thank you for all your hard work and dedication.

“As we move into the fourth quarter, we are all but done with the completion of Sunseeker Resort. Construction crews are wrapping up the last details, and we expect the property to open on December 15. A main driver behind my endorsement of this property was the quality of the management team. They have navigated the project from its inception nearly five years ago and they are world renowned. My conviction around the success of the property remains strong, and I am thrilled to begin realizing the benefits that Sunseeker Resort will provide.

“One of our primary focuses remains on enhancing our brand. The Allegiant credit card continues to materially impact the bottom line through new cardholder acquisitions and continued increases in cardholder spend. Year to date, we have received $88 million in remuneration from our partner, Bank of America. We expect this number to continue growing. Our investment in the Allegiant Extra product also continues to surpass our expectations. Currently 14 aircraft have been retrofitted with this product and we expect roughly one-third of the fleet to be retrofitted by the end of 2024. These diversified revenue streams, coupled with our unique, low-utilization model will continue to differentiate us from our peers.”

“I am proud of the teams’ efforts to deliver another profitable quarter in what is historically our weakest quarter of the year,” stated Gregory Anderson, president of Allegiant Travel Company. “Despite fuel costs rising nearly 30 percent intra-quarter, the team delivered an airline-only adjusted earnings per share of $0.31 driven by an increase in TRASM of 1.4 percent over the prior year. This increase in unit revenue was extra impressive given the unprecedented strength of off-peak leisure demand during the same period last year. While leisure demand during our peak periods continues to outperform pre-pandemic levels, we experienced a return of normalization during the off-peak periods. Our ability to match capacity with leisure demand trends was nicely put on display as we reduced capacity by 45 percent during the off-peak period of September versus the peak season of July.

“We are continuing to strengthen our foundation by reinvesting back into the airline’s future. During the third quarter, we successfully launched SAP and Navitaire – technology enhancements that will support our planned growth for years to come. Furthermore, we have readied ourselves for the delivery of our first Boeing 737 MAX aircraft in early 2024. This aircraft will strengthen our flexibility by providing more diversity in fleet composition further enabling us to deploy the right gauge aircraft in the right markets at the right times.

“It’s an exciting time to be part of Team Allegiant. Several of our major initiatives will take shape in the coming months. These initiatives, coupled with our differentiated model, will help drive the long-term success of the company. This could not be achieved without the dedication and efforts of our team members throughout the organization. You are inspiring, and I extend my sincerest thanks.”

Third Quarter 2023 Results and Highlights

Income before income tax, excluding specials^(1)(3)(4) of $2.7M, yielding a pre-tax margin of 0.5%
- Airline-only income before income tax, excluding specials⁽¹⁾⁽⁵⁾of $7.9M, yielding a pre-tax margin of 1.4%
Operating income, excluding specials^(1)(3)(4) of $14.7M, yielding an operating margin of 2.6%
- Airline-only operating income, excluding specials⁽¹⁾⁽⁵⁾of $21.0M, yielding an airline-only operating margin of 3.7%
Consolidated EBITDA, excluding specials^(1)(3)(4) of $70.3M, yielding an EBITDA margin of 12.4%
- Airline-only EBITDA, excluding specials⁽¹⁾⁽⁵⁾ of $76.6M a 13.5% margin
Total operating revenue of $565.4M, up 0.9% over the prior year and the highest third-quarter total in company history
- Total fixed fee contracts revenue of $17.7M, up 11.7% year-over-year
- TRASM⁽²⁾ of 12.78 ¢, up 1.4% year-over-year on scheduled service capacity decrease of 0.8% year-over-year
  - When compared to 2019, we are the only US carrier, among carriers having reported third quarter results, to be up more than 10 percent in both system available seat miles (ASMs) and TRASM⁽²⁾ during the quarter as well as year to date
Total average fare of $129.23, up 2.6% year-over-year
- Total average ancillary fare of $71.80, up 11.0% year-over-year
$88 million in year-to-date remuneration received from Bank of America, up 26% from the prior year
- Announced a collaboration with global entertainment icon Carrie Underwood in support of the company’s Allways Rewards Visa® card and loyalty program
Allways Rewards program enrolled 478K new members during the quarter, bringing total members to 16.7M
Airline-only operating CASM, excluding fuel and special charges⁽³⁾, of 8.49 ¢, up 9.5% year-over-year
- Includes $18.7M in incremental cost related to accrual of pilot retention bonuses
- Excludes $15.2M in accelerated depreciation related to the early retirement of 21 airframes to be retired between 2023 through 2025

Year to date 2023 Results

Income before income tax, excluding specials^(1)(3)(4) of $180.6M yielding a pre-tax margin of 9.5%
Operating income, excluding specials^(1)(3)(4) of $230.2M, yielding an operating margin of 12.1%
Consolidated EBITDA, excluding specials^(1)(3)(4) of $394.4M, yielding an EBITDA margin of 20.8%

⁽¹⁾	Denotes a non-GAAP financial measure. Refer to the Non-GAAP Presentation section within this document for further information and for calculation of per share figures.
⁽²⁾	TRASM represents total passenger revenue per scheduled service available seat mile.
⁽³⁾	In 2023 and 2022, we recognized as special charges the full amount of estimated property damage to Sunseeker Resortdue to weather and other insured events less the amount of recognized insurance recoveries through the end of the applicable period. In 2023 we also recognized accelerated depreciation as special charges related to our revised fleet plan.
⁽⁴⁾	Adjusted to exclude the impacts of property damage to Sunseeker Resort, net of recoveries, and aircraft accelerated depreciation charges resulting from our revised fleet plan, as described above.
⁽⁵⁾	Adjusted to exclude accelerated depreciation charges related to our revised fleet plan, as described above.

Balance Sheet, Cash and Liquidity

Total available liquidity at September 30, 2023 was $1.3B, which included $1.0B in cash and investments, and $279.9M in undrawn revolving credit facilities and PDP facilities
$24.5M in cash from operations during the third quarter 2023
Total debt at September 30, 2023 was $2.3B
- Net debt at September 30, 2023 was $1.3B
- Secured $412M in financing commitments during the quarter of which $196M was used to refinance seven Airbus A320 aircraft and $216M is committed to finance four Boeing 737 MAX aircraft to be delivered in 2024
Debt principal payments of $143.5M during the third quarter
- Includes $113M prepayment of aircraft-secured facilities during the quarter
- Year-to-date principal payments of $293M, including a total of $174M in prepayments
Issued notice to call $150M, 8.5% senior secured notes with the balance to be paid during the fourth quarter
Returned $11M in dividends during the third quarter
Air traffic liability at September 30, 2023 was $395.8M

Airline Capital Expenditures

Third quarter capital expenditures of $157.6M, which included $112.1M for aircraft purchases and inductions, pre-delivery deposits, and other related costs, and $45.5M in other airline capital expenditures
- Third quarter deferred heavy maintenance spend was $13.8M

Sunseeker Resort Charlotte Harbor

Total capital expenditures⁽¹⁾as of September 30, 2023 were $653M
- Third quarter capital expenditures⁽¹⁾ were $71.6M
Recorded a special charge, net of insurance recoveries, of $17.4M during the third quarter 2023 related to estimated property damages at Sunseeker Resort resulting from various weather events, including Hurricane Idalia

⁽¹⁾

Total capital expenditures is inclusive of Sunseeker Resort, Aileron Golf Club, remediation work related to weather and insurance events, accrued expenditures not yet paid and pre-COVID expenditures included as part of the COVID impairment. Capitalized interest, operating expenses, special charges related to COVID, and estimated losses related to insurance events have been excluded from these figures.

Guidance, subject to revision

*Full-year 2023 guidance*	Previous	Current

System ASMs – year over year change	0 to 3%	~1.8%
Scheduled service ASMs – year over year change	0 to 3%	~1.5%

Fuel cost per gallon	$ 2.90	$ 3.12
Available seat miles (ASMs)/gallon	~84	~84
Depreciation expense (millions)	$230 to $235	$225 to $230
Interest expense (millions)	$145 to $150	$145 to $150
Capitalized interest⁽¹⁾ (millions)	($30) to ($35)	($40) to ($45)
Interest income (millions)	$40 to $45	$40 to $45
Earnings per share – airline only, excluding specials⁽²⁾	$10.50 – $13.00	$7.75 to $8.50
Loss per share – Sunseeker, excluding specials ⁽³⁾	~($1.25)	~($1.75)

*Airline CAPEX*
Aircraft, engines, induction costs, and pre-delivery deposits (millions)⁽⁴⁾	$490 to $500	$430 to $440
Capitalized deferred heavy maintenance (millions)	$60 to $70	$60 to $70
Other airline capital expenditures (millions)	$140 to $145	$150 to $155

Recurring principal payments (millions)	$210 to $215	$150 to $155

*Sunseeker Resort Charlotte Harbor Project (millions)*
Total projected capital expenditures ⁽⁵⁾	$695	$720
Capital expenditures funded or expected to be funded by Allegiant		$370
Project debt incurred through September 30, 2023		$350


⁽¹⁾	^{Includes capitalized interest related to Sunseeker as well as on pre-delivery deposits on new aircraft.}
⁽²⁾	^{Earnings per share calculation is airline only. It includes accruals for increases in pilot and flight attendant compensation beginning in May. Actual results will differ based on economic terms agreed upon and the timing of the collective bargaining agreements. These differences may be material.}
⁽³⁾	^{Excludes recoveries that may be received related to business interruption insurance claim.}
⁽⁴⁾	^{Excludes capitalized interest related to pre-delivery deposits on new aircraft.}
⁽⁵⁾	^{Total projected capital expenditures does not reflect the impairment or special charges related to COVID or insurance claims. Excludes amounts to remediate physical damage to the property resulting from Hurricane Ian, or other subsequent insurance events.}

Aircraft Fleet Plan by End of Period

Aircraft – (seats per AC)	1Q23	2Q23	3Q23	YE23
A319 (156 seats)	35	35	35	35
A320 (177 seats)	19	19	19	19
A320 (180-186 seats)	70	72	73	73
Total	124	126	127	127

The table above is provided based on the company’s current plans and is subject to change. The numbers exclude aircraft expected to be delivered before the end of 2023 for revenue service beginning in 2024.

Top Copyright Photo: Allegiant Air Airbus A319-111 N322NV (msn 2528) SNA (Michael B. Ing). Image: 961849.

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