Category Archives: Allegiant Travel Company

Allegiant’s July 2021 traffic exceeds July 2019 traffic by 6.4%

Allegiant Air Airbus A319-111 N319NV (msn 2503) LAS (Gunter Mayer). Image: 954241.

Allegiant Travel Company (Allegiant Air) today reported preliminary passenger traffic results for July 2021. Its traffic is now about 2019 results, before the pandemic impacted travel.

Scheduled Service – Year Over Two-Year Comparison

July 2021 July 2019 Change
Passengers 1,852,193 1,740,997 6.4%
Revenue passenger miles (000) 1,591,306 1,483,724 7.3%
Available seat miles (000) 1,957,736 1,682,024 16.4%
Load factor 81.3% 88.2% (6.9pts)
Departures 13,428 11,832 13.5%
Average stage length (miles) 834 834 0.0%

Total System* – Year Over Two-Year Comparison

July 2021 July 2019 Change
Passengers 1,857,678 1,750,065 6.1%
Available seat miles (000) 1,982,157 1,725,577 14.9%
Departures 13,634 12,165 12.1%
Average stage length (miles) 832 833 (0.1%)

Scheduled Service – Year Over Year Comparison

July 2021 July 2020 Change
Passengers 1,852,193 894,679 107.0%
Revenue passenger miles (000) 1,591,306 768,714 107.0%
Available seat miles (000) 1,957,736 1,516,821 29.1%
Load factor 81.3% 50.7% 30.6pts
Departures 13,428 10,370 29.5%
Average stage length (miles) 834 843 (1.1%)

Total System* – Year Over Year Comparison

July 2021 July 2020 Change
Passengers 1,857,678 896,478 107.2%
Available seat miles (000) 1,982,157 1,533,852 29.2%
Departures 13,634 10,559 29.1%
Average stage length (miles) 832 838 (0.7%)

*Total system includes scheduled service and fixed fee contract.  System revenue passenger miles and system load factor are not useful statistics as system available seat miles include both ASMs flown by fixed fee flying as well as non-revenue producing repositioning flights used for operational needs.  Fixed fee flying is better measured through dollar contribution versus operational statistics.

Preliminary Financial Results

$ per gallon
July 2021 estimated average fuel cost per gallon – system $2.19

Top Copyright Photo: Allegiant Air Airbus A319-111 N319NV (msn 2503) LAS (Gunter Mayer). Image: 954241.

Allegiant Air aircraft slide show:

ALC leases ten used Airbus A320s to Allegiant Air

Air Lease Corporation (ALC) announced on July 28 long-term lease placements for ten used Airbus A320-200 aircraft with Allegiant.

The aircraft are scheduled to be delivered to the airline beginning in the Fall 2021 through Summer 2022.

Allegiant sees a leisure travel demand recovery for May and into this month

Allegiant Travel Company has reported preliminary passenger traffic results for May 2021. 

“We have been pleased to see leisure demand recovery persist throughout May and into early June,” stated Drew Wells, senior vice president, revenue. “Average daily bookings since the beginning of March have continued to exceed 2019 levels. May saw a nearly five-point increase in load factor when compared with April, and peak Memorial Day travel days saw load factors of roughly 80 percent. We anticipate June loads will be in excess of 75 percent on year-over-two-year capacity increases of roughly 15 percent. We continue to expect second quarter scheduled service revenue, excluding fixed fee and other revenue, to be down six to ten percent when compared with the second quarter of 2019.”

Scheduled Service – Year Over Two-Year Comparison
May 2021 May 2019 Change
Passengers 1,040,590 1,269,429 (18.0%)
Revenue passenger miles (000) 888,735 1,093,781 (18.7%)
Available seat miles (000) 1,293,704 1,308,911 (1.2%)
Load factor 68.7% 83.6% (14.9pts)
Departures 8,939 9,086 (1.6%)
Average stage length (miles) 834 843 (1.1%)

Total System* – Year Over Two-Year Comparison
May 2021 May 2019 Change
Passengers 1,046,813 1,281,742 (18.3%)
Available seat miles (000) 1,326,062 1,357,963 (2.3%)
Departures 9,202 9,416 (2.3%)
Average stage length (miles) 831 844 (1.5%)

 

Scheduled Service – Year Over Year Comparison
May 2021 May 2020 Change
Passengers 1,040,590 362,528 187.0%
Revenue passenger miles (000) 888,735 326,748 172.0%
Available seat miles (000) 1,293,704 690,624 87.3%
Load factor 68.7% 47.3% 21.4pts
Departures 8,939 4,654 92.1%
Average stage length (miles) 834 856 (2.6%)

 

Total System* – Year Over Year Comparison
May 2021 May 2020 Change
Passengers 1,046,813 365,519 186.4%
Available seat miles (000) 1,326,062 710,712 86.6%
Departures 9,202 4,795 91.9%
Average stage length (miles) 831 855 (2.8%)

*Total system includes scheduled service and fixed fee contract. System revenue passenger miles and system load factor are not useful statistics as system available seat miles include both ASMs flown by fixed fee flying as well as non-revenue producing repositioning flights used for operational needs. Fixed fee flying is better measured through dollar contribution versus operational statistics.

Preliminary Financial Results
$ per gallon
May 2021 estimated average fuel cost per gallon – system $2.02

Allegiant Air aircraft slide show:

Allegiant loses $57.9 million in the first quarter

Allegiant Air Airbus A319-111 N319NV (msn 2503) LAX (Michael B. Ing). Image: 948907.

Allegiant Travel Company (Allegiant Air) today reported the following financial results for the first quarter 2021, as well as comparisons to the prior years:

Consolidated Three Months Ended March 31, Percent Change
(unaudited) (in millions, except per share amounts) 2021 2020 2019 YoY Yo2Y
Total operating revenue $ 279.1 $ 409.2 $ 451.6 (31.8) (38.2)
Total operating expense 254.5 527.0 360.5 (51.7) (29.4)
Operating income (loss) 24.6 (117.8) 91.1 120.9 (73.0)
Income (loss) before income taxes 8.7 (130.7) 73.9 106.6 (88.3)
Net income (loss) 6.9 (33.0) 57.1 120.8 (88.0)
Diluted earnings (loss) per share $ 0.42 $ (2.08) $ 3.52 120.2 (88.1)
Consolidated – adjusted Three Months Ended March 31, Percent Change
(unaudited) (in millions, except per share amounts) 2021 2020 2019 YoY Yo2Y
Adjusted operating income (loss) (1) (2) $ (59.0) $ 55.1 $ 91.1 (207.1) (164.8)
Adjusted operating expense (1) (2) 338.1 360.9 360.5 (6.3) (6.2)
Adjusted income (loss) before income taxes (1) (2) (74.9) 42.2 73.9 (277.5) (201.4)
Adjusted net income (loss) (1) (2) (57.9) 32.5 57.1 (278.2) (201.4)
Adjusted diluted earnings (loss) per share (1) (2) $ (3.58) $ 2.05 $ 3.52 (274.6) (201.7)
(1) Adjusted excludes COVID related special charges and the net benefit from the Payroll Support Program Extension Agreement (the “PSP2”)
(2) Denotes a non-GAAP financial measure. Refer to the Non-GAAP Presentation section within this document for further information

 

“The momentum reported last quarter picked up in earnest towards the back half of the first quarter with booking trends showing meaningful improvement,” stated Maurice J. Gallagher, Jr., chairman and CEO of Allegiant Travel Company. “We completed the quarter with earnings per share of $0.42 on year over two-year revenue declines of 38.2 percent, continuing the trend of sequential revenue improvement. We were the first domestic carrier to restore capacity to pre-pandemic levels, with first quarter scheduled capacity up 3.1 percent as compared to 2019. Booking trends have been particularly impressive with average daily bookings for the months of March and April exceeding the same time period in 2019. Furthermore, the booking curve appears to be normalizing and more closely resembling what we saw in 2019. April’s results came in as strong as March helped by a ten-point increase in load factor from 54 to 64 percent. We expect capacity in the coming months will be equal to or greater than our 2019 levels.

“During the past year, in the face of this terrible pandemic, we were focused on improving ourselves. I believe we have done that. We have improved our cost structure substantially. Our balance sheet is in excellent shape. As of March 31, our net debt has decreased. Our cash balances have increased, and by the end of the second quarter we expect to have total liquidity of $1 billion, or more than double our year-end 2019 balance. We were able to double our cash balances without an equity raise or substantial increases in debt. We benefited from the payroll support programs as well as federal income tax refunds of the substantial tax payments made in the past years. Our shareholders have seen their company’s balance sheet improve dramatically – perhaps more than any other company in this space – in spite of the setbacks and hardships imposed by this unprecedented event.

“I could not be more bullish on our outlook. Going forward our full-year, 2021 capacity should exceed 2019 capacity levels. We expect sequential scheduled service revenue improvement with revenue down just six to ten percent as compared with 2019 levels. This revenue growth should continue through the remainder of 2021. We continue to separate ourselves from the competition, operating more capacity and generating positive EBITDA and earnings. I believe now more than ever our low-cost, low-utilization model designed to provide affordable leisure travel is our competitive advantage, which will help drive us towards returning to our goal of $6 million in EBITDA per aircraft.

“We would not be in the favorable position we are today without the continued efforts of the 4,000 employees throughout our network. Their hard work has been integral to successfully navigating the most difficult year in the industry’s history. It is their efforts that have enabled us to effectively manage capacity while cutting costs from the business – both critical components to ensuring a sustained return to profitability.”

First Quarter 2021 Results

  • GAAP earnings per share of $0.42
    • Adjusted loss per share(1) (2) of $3.58, adjusted numbers exclude the impact from PSP2 and $1.7 million of COVID related special charges
  • Consolidated EBITDA(2) of $68.2 million yielding an EBITDA margin of 24.4 percent
    • Adjusted EBITDA(1) (2) of $(15.4) million
  • Restored capacity to pre-pandemic levels with scheduled service capacity up 3.1 percent versus first quarter of 2019
  • Total revenue for the quarter was $279.1 million, up 13.2 percent from the fourth quarter
    • Includes fixed fee revenue of $7.7 million, the strongest quarter since the onset of the pandemic
    • Total average fare was $116.35, down 8.9 percent as compared to 2019, with third party product average fare of $5.86, up 17.0 percent year over two-year
  • Adjusted operating expense(1) (2) of $338.1 million, down 6.3 percent from first quarter 2019 on total system capacity increase of 2.7 percent
    • Adjusted Operating CASM, excluding fuel(1)(2) of 6.36 cents, down 4.6 percent from first quarter of 2019
  • Announced the addition of a new base in Austin, Texas, beginning base operations in November 2021, which is expected to create 89 high-wage jobs and house three A320 aircraft
  • Expanded the network by adding 50 new routes, three new cities, and nine event-specific routes, bringing total routes served to 580 and 129 cities
  • Included on Forbes’ list of America’s Best Employers for Diversity in 2021
  • Partnered with The Smith Center for the Performing Arts as a sponsor of the annual Heart of Education Awards honoring outstanding teachers in Southern Nevada by awarding travel vouchers to more than 700 teachers

(1) Adjusted excludes COVID related special charges and the net benefit from the Payroll Support Program Extension Agreement (the “PSP2”)
(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, 2021 were $728 million, up from $685 million at December 31, 2020
    • Cash from operations of $168 million including the benefit from the payroll support program
      • Adjusted cash from operations of $68.2 million, which excludes the $91.8 million benefit from the PSP2 as well as excludes $8 million related to restricted cash balances
    • Received $105 million in debt proceeds
      • Net proceeds received of $50.2 million due to refinance of three A320 aircraft
    • Debt principal payments of $152 million during the quarter
      • Includes repayment of existing debt on three aircraft as well as repayment of existing revolver as the facility matured during the first quarter
      • Entered into a new secured revolving credit facility with a $50 million commitment, which is currently undrawn
    • $69 million used for cash capital expenditures during the first quarter with $13 million related to 2020 accrued capital expenditures
  • First quarter interest expense of $16.8 million, down 7.5 percent from first quarter in the prior year
      • Increased full year interest expense guide driven primarily by A320 refinance arrangement and an increase in LIBOR
  • Second quarter sources of liquidity expected to be received are $260.9 million
    • $112.2 million from the U.S. Treasury of which $13.8 million is related to the PSP2 and $98.4 million is related to Payroll Support Program 3 Agreement (the “PSP3”)
      • Additional PSP2 funds triggered a $1.7 million loan and issuance of 924 warrants at a strike price of $179.23
    • $148.7 million in tax refunds related to net operating losses
  • Air traffic liability at March 31, 2021 was $403 million, compared to $308 million at December 31, 2020
    • Balance related to future scheduled flights is $224 million, up from $86 million on December 31, 2020
    • Balance related to travel vouchers issued for future use is $179 million, a 19 percent reduction from December 31, 2020

Capital Expenditures

  • First quarter capital expenditures related to aircraft, engines and induction costs were $56 million, which included $50 million for the acquisition of three aircraft and induction costs, and $6 million in other airline capital expenditures
  • First quarter capital expenditures related to deferred heavy maintenance were $8.5 million

 

Guidance, subject to revision Previous Current
Second Quarter 2021 guidance
System ASMs – year over two-year change(1) 2.0 to 6.0%
Scheduled Service  ASMs – year over two-year change(1) 2.0 to 6.0%
Scheduled service  revenue – year over two-year change, excluding fixed fee and other revenue(1) down 6 to 10%
Fuel cost per gallon $ 1.99
Full year 2021 guidance
CAPEX
Aircraft, engines and induction costs (millions) $115 to $125 $115 to $125
Capitalized Airbus deferred heavy maintenance (millions) $50 to $60 $50 to $60
Other capital expenditures (millions) $20 to $30 $40 to $50
Interest expense $50 to $55 $65 to $70
Recurring principal payments(2) $170 to $180 $170 to $180
(1) Year over two-year percentage changes compare 2021 to 2019
(2) Excludes $111 million of principal repayments related to the maturity of our revolving credit facility and the refinancing of three A320 aircraft during the first quarter 2021

Aircraft Fleet Plan by End of Period

Aircraft – (seats per AC)                                           1Q21 2Q21 3Q21 YE21
A319 (156 seats) 35 35 35 35
A320 (177 seats) 26 21 21 19
A320 (186 seats) 39 49 52 54
Total 100 105 108 108
The table above is provided based on the company’s current plans and may be subject to change

Top Copyright Photo: Allegiant Air Airbus A319-111 N319NV (msn 2503) LAX (Michael B. Ing). Image: 948907.

Allegiant aircraft slide show:

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)

Allegiant reports December 2020 traffic

Allegiant Travel Company reported preliminary passenger traffic results for December 2020.

“As expected, the fourth quarter highlighted the divergence in strength between peak travel periods and non-peak periods,” stated Drew Wells, vice president of revenue. “Demand remained soft throughout much of December before accelerating during the peak holiday travel period at the end of the month. Load factors during the peak period came in at nearly 60 percent, which aided in completing the quarter with a load factor of 58.2 percent, the best since the onset of the pandemic. Over the last several weeks, we have been encouraged by favorable forward booking trends as flight volumes begin to pick up mid-February and into peak Spring Break travel. We remain cognizant that the situation is fluid and will continue to manage capacity to meet the changing demand environment.”

Scheduled Service
December 2020 December 2019 Change
Passengers 673,041 1,308,341 (48.6%)
Revenue passenger miles (000) 611,429 1,165,902 (47.6%)
Available seat miles (000) 1,128,200 1,411,107 (20.0%)
Load factor 54.2% 82.6% (28.4pts)
Departures 7,281 9,423 (22.7%)
Average stage length (miles) 891 871 2.3%
4th Quarter 2020 4th Quarter 2019 Change
Passengers 2,129,292 3,516,263 (39.4%)
Revenue passenger miles (000) 1,878,831 3,073,055 (38.9%)
Available seat miles (000) 3,226,050 3,745,031 (13.9%)
Load factor 58.2% 82.1% (23.9 pts)
Departures 21,399 25,541 (16.2%)
Average stage length (miles) 868 856 1.4%
YTD 2020 YTD 2019 Change
Passengers 8,553,623 14,823,267 (42.3%)
Revenue passenger miles (000) 7,626,470 13,038,003 (41.5%)
Available seat miles (000) 12,814,080 15,545,818 (17.6%)
Load factor 59.5% 83.9% (24.4 pts)
Departures 85,276 105,690 (19.3%)
Average stage length (miles) 867 859 0.9%

 

Total System*
December 2020 December 2019 Change
Passengers 679,424 1,318,872 (48.5%)
Available seat miles (000) 1,147,534 1,453,592 (21.1%)
Departures 7,471 9,742 (23.3%)
Average stage length (miles) 883 868 1.7%
4th Quarter 2020 4th Quarter 2019 Change
Passengers 2,159,035 3,585,966 (39.8%)
Available seat miles (000) 3,315,599 3,928,536 (15.6%)
Departures 22,189 27,088 (18.1%)
Average stage length (miles) 860 846 1.7%
YTD 2020 YTD 2019 Change
Passengers 8,623,984 15,012,149 (42.6%)
Available seat miles (000) 13,125,533 16,174,240 (18.8%)
Departures 87,955 110,542 (20.4%)
Average stage length (miles) 862 855 0.8%

*Total system includes scheduled service and fixed fee contract.  System revenue passenger miles and system load factor are not useful statistics as system available seat miles include both ASMs flown by fixed fee flying as well as non-revenue producing repositioning flights used for operational needs.  Fixed fee flying is better measured through dollar contribution versus operational statistics.

Preliminary Financial Results
$ per gallon
December 2020 estimated average fuel cost per gallon – system $1.56
$ per gallon
4th quarter 2020 estimated average fuel cost per gallon – system $1.41

Allegiant Air aircraft photo gallery:

Allegiant Air aircraft slide show:

Allegiant loses $29.1 million in the third quarter

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

 

Consolidated Three Months Ended
September 30,
Percent Change Nine Months Ended
September 30,
Percent Change
(unaudited) (in millions, except per
share amounts)
2020 2019 2020 2019
Total operating revenue $ 201.0 $ 436.5 (54.0) % $ 743.5 $ 1,379.9 (46.1) %
Operating income (loss) (33.1) 72.1 (145.9) (257.3) 271.3 (194.9)
Income (loss) before income taxes (44.7) 56.9 (178.6) (321.9) 222.6 (244.6)
Net income (loss) (29.1) 43.9 (166.3) (155.3) 171.6 (190.5)
Diluted earnings (loss) per share $ (1.82) $ 2.70 (167.4) $ (9.75) $ 10.54 (192.5)
Consolidated – adjusted Three Months Ended
September 30,
Percent Change Nine Months Ended
September 30,
Percent Change
(unaudited) (in millions, except per share amounts) 2020 2019 2020 2019
Adjusted operating income (loss) (1) (2) $ (77.4) $ 72.1 (207.4) % $ (128.8) $ 271.3 (147.5) %
Adjusted income (loss) before income taxes(1) (2) (89.0) 56.9 (256.4) (166.8) 222.6 (174.9)
Adjusted net income (loss)(1) (2) (68.5) 43.9 (256.0) (128.4) 171.6 (174.8)
Adjusted diluted earnings (loss) per share (1) (2) $ (4.28) $ 2.70 (258.5) $ (8.07) $ 10.54 (176.6)
(1) Adjusted to exclude COVID related special charges, the benefit from the CARES Act payroll support program, and the portion of the tax benefit (as applicable) attributable to the CARES Act.
(2) Denotes a non-GAAP financial measure. Refer to the Non-GAAP Presentation section within this document for further information.

“As we continue to navigate through the pandemic we have been encouraged by the modest, yet consistent improvements during the third quarter and into the fourth,” stated Maurice J. Gallagher, Jr., chairman and CEO of Allegiant Travel Company. “Consumer confidence towards air travel is improving as seen in our quarterly performance. We completed the quarter beating consensus with a loss per share of $4.28, excluding one-time, special items, and the benefit from the CARES Act. Our scheduled capacity year-over-year was down less than seven percent, perhaps the best showing in the industry. Revenue is also trending in the right direction with September totals down 43 percent versus prior year. Although we still have a long road ahead of us, the progress we’ve seen is a direct reflection of the quality of our people and the nimbleness of the model.

“As we move into the fourth quarter, we remain focused on cash management. Our cash preservation strategy continues to center around maintaining a broad selling presence as well as stripping costs from the business. Our revenue and planning teams have done an exceptional job optimizing our schedule available for sale. We’ve seen average daily gross bookings increase from just over $2 million per day during the third quarter to over $3 million per day thus far in the fourth quarter. On the cost front, we successfully reduced variable operating expenses by nearly 30 percent, excluding the CARES Act payroll support benefit and one-time special items, which outpaces our reduction in capacity more than threefold. These savings are important in paving the way to cash break-even. Our cash preservation strategies coupled with strategic capital raises over the last several weeks have contributed to our pro forma cash balance of $850 million.

“Even though we’re pleased with recent progress, we remain cautious. We have had to make tough decisions the past few months, including a reduction in our workforce. Although difficult, these steps were necessary to right size our organization to better align with demand. This environment has been difficult for our team members, and I cannot thank them enough for their continued hard work and dedication during this trying time. Their efforts to prioritize health and safety for our passengers, and our leadership efforts to bolster the financial health of the company have laid a solid foundation for our recovery. This has been and will continue to be a slow climb out of this abyss known as COVID. At this point, I believe we are leading the way out towards light ahead in the coming months and year.”

Covid-19 Responses – Update

  • Ranked by Safe Travel Barometer as #1 airline among North American carriers and among the top five worldwide for best COVID-19 Traveler Safety Measures, with results based on an independent audit of more than 150 airlines
  • Prioritizing the health and safety of our passengers and crew members by upholding the principles of our Going the Distance for Health and Safety program, which include enhanced cleaning protocols, air purity guidelines, and new service practices and boarding procedures designed to provide additional distancing between customers whenever possible
  • Accommodating travel flexibility by waiving change and cancellation fees for all customers with future travel through the end of 2020, extending the expiry on credit vouchers to two years, and offering an opt-in option within the booking path to alert customers if their flight has reached 65 percent capacity allowing the option to re-book or receive a refund
  • Reduced management and support teams by roughly 300 positions, which includes voluntary leaves
    • 25 percent reduction in these work groups
    • Includes 220 positions previously disclosed
    • Anticipated annual savings of roughly $20 million
  • Furloughed roughly 130 pilots, a 13 percent reduction
    • 100 furloughed as of October 1, with an additional 30 expected November 1

Third Quarter 2020 Results

  • Recorded positive cash inflows for the month of September, excluding a $5 million payment in connection with terminating the loan agreement intended to finance the development of Sunseeker Resorts Charlotte Harbor
  • Reduced scheduled third quarter capacity by 6.5 percent
    • Completed the quarter with load factor in the month of September of 57.4 percent, the highest month since the onset of the pandemic in March
  • Recognized total special charges related to COVID-19 of $33.6 million during the third quarter
  • Anticipate fourth quarter capacity to be reduced by 15 percent from prior year but will continue to adjust based on demand trends
  • Minimal close-in cancellations during the third quarter and anticipate the fourth quarter will be similar
  • Total revenue for the quarter was $201.0 million, down 54.0 percent year over year
    • September total revenue down 42.8 percent, the lowest monthly reduction since the onset of the pandemic
    • Average total ancillary revenue per passenger (includes air-related charges and third party products) remains strong, despite current yield pressure, at $55.70 per passenger, up 1.5 percent year-over-year
  • Operating expense was $234.1 million, down 35.8 percent year-over-year on reduced system-wide capacity of 9.4 percent
    • Variable operating expense, defined as total operating expense excluding the benefit of the CARES Act, one-time special items, aircraft leases, and depreciation and amortization, down 29.2 percent versus prior year
  • Advertising spend down 75 percent year-over-year, yet website visitors derived by either directly typing www.allegiant.com or by clicking on a marketing email promotional link are up 17 percent versus prior year
    • Customer conversion rate is up 36 percent from pre-pandemic levels
  • Named #1 airline co-branded credit card two years in a row by USA Today

Balance Sheet, Cash and Liquidity

  • Total cash and investments at September 30th was $709.8 million 
  • Total sources of liquidity received during the third quarter around $184.9 million
    • Obtained $84 million in financings secured by A320 aircraft and CFM engines
    • Entered into a sale leaseback transaction, which included the sale of four A320-series aircraft, three of which closed in the third quarter generating $30 million
      • Fourth sale closed in October, generating $10 million
    • Federal income tax refund of $48.7 million related to tax net operating losses from 2018
      • Expect a federal income tax refund in excess of $125 million related to 2020 net operating losses to be received during the first half of 2021
    • Additional payroll support related to the CARES Act of $22.2 million
  • In early October, issued $150 million of senior secured notes backed by collateral pledged to existing Term Loan
    • Cash balance pro forma for this financing in excess of $850 million
  • Debt, net of liquidity, as of September 30th was $840 million, down roughly $100 million from December 31, 2019
  • Third quarter interest expense down 38.8 percent versus prior year
  • 3Q20 daily cash burn averaged $1.3 million (1)                       
    • Gross bookings averaged just above $2.0 million per day during the quarter
    • Includes $15 million of payments to Sixth Street Partners (formerly TSSP) to terminate loan agreement intended to finance the development of Sunseeker Resorts Charlotte Harbor
  • As of September 30th, have 22 unencumbered aircraft and 4 unencumbered spare engines
  • Air traffic liability at September 30th was $334 million
    • Balance related to future scheduled flights is $116 million
    • Balance related to travel vouchers issued for future use is $218 million

(1) Daily cash burn defined as cash from operations less scheduled debt and rent payments and capital expenditure outflows excluding aircraft and engine acquisitions as they are expected to be financed. Excludes benefits received from CARES Act such as Payroll Support Program funding and tax refunds from net operating loss carry-backs.

Capital Expenditures

  • Remaining 2020 spend related to capital expenditures is roughly $130 million
    • Includes five previously executed purchase commitments for aircraft
    • Roughly $10 million of deferred heavy maintenance
  • Full year 2021 capital expenditures, including deferred heavy maintenance, expected to be roughly $125 million
    • Includes two previously executed purchase commitments for aircraft
  • Expect to have 93 operating aircraft at year end 2020
    • Does not include owned aircraft currently in storage programs

Allegiant reports a $93.1 million net loss in the second quarter

Allegiant Travel Company reported the following financial results for the second quarter 2020, as well as comparisons to the prior year:

“The second quarter proved to be the most turbulent quarter in the history of the industry,” stated Maurice J. Gallagher, Jr., chairman and CEO of Allegiant Travel Company. “As the virus spread throughout the country in March and April, the industry saw an unprecedented plummet in demand, followed by significant capacity cuts, upwards of 80 to 90 percent. As cases subsided, demand began trickling back in, only to begin recessing again with the uptick in cases beginning late June. It appears demand will continue to ebb and flow along with fluctuations in reported cases for the foreseeable future. We have built a unique way to operate our company as compared to the rest of the industry, which will continue to sustain us throughout the duration of these uncertain times.

“We are experts when it comes to managing capacity to meet demand. Our model was built around flexing capacity up and down to meet differing seasonal demand levels. This quarter proved to be the ultimate test of the model, and I believe our second quarter results highlight its inherent strength. Throughout the quarter, we maintained a very broad network and selling presence, cutting capacity when it made sense, but also capturing demand when it returned. We completed the quarter with roughly 50 percent reductions in capacity, maintaining the broadest schedule of any domestic carrier. Load factors were just over 50 percent, a significant step in the right direction from April lows. During the second quarter, Allegiant passengers accounted for more than five percent of all TSA screenings conducted. That is astonishing given our market share. These results are a testament to our ability to not only manage capacity, but also our ability to manage cost, further highlighting we are best equipped to react to these fluctuations in market conditions.

“Although we were able to manage through the chaos of the quarter, arguably better than most, this environment is unsustainable long-term. It continues to be of utmost importance to strengthen liquidity positions. We completed the quarter with an average daily cash burn of $900 thousand, a 57 percent reduction from our initial forecasts. June bookings were a significant contributor to this reduction, with several days in June exceeding prior year booking levels. In fact, June bookings resulted in cash breakeven for the month of June. We continued to remain disciplined in regard to cost savings and successfully cut more than 38 percent of operating expenses from the quarter. These efforts coupled with funds received related to the CARES Act as well as executed financing arrangements enabled us to grow our liquidity position by nearly $200 million to end the quarter with total liquidity of $663.1 million. Unfortunately, the strength seen in June has since weakened as case numbers have risen. I am comfortable the strides made in building liquidity throughout the quarter will act as a safety net as we continue to manage the ever-changing demand environment.

“In conclusion, I would like to thank our 4,000 team members for their continued hard work. These are difficult times, yet our employees continue to go the extra mile to prioritize the health and safety of our passengers by performing additional cleaning procedures on board our aircraft, encouraging social distancing practices, and exemplifying the principles of our Going the Distance for Health and Safety program. Although I believe the effects of this pandemic will linger well into 2021 and possibly beyond, I firmly believe Allegiant’s flexible model and financial strength will not only sustain us during these uncertain times, but will ultimately uniquely position us to recover quickly upon a normalized return of demand.”

Covid-19 Responses – Update

  • Maintain a comprehensive cleaning program for all aircraft that includes a regular schedule of standard and deep-clean procedures that exceed both CDC and Airbus guidance
  • Utilize VOC (volatile organic compound) filters on board every aircraft, which remove additional organic compounds and ensure that cabin air is changed on average, every three minutes, exceeding HEPA standards
  • Continue to encourage social distancing at check-in, while waiting at gates, and throughout the boarding process as well as offer complimentary health and safety kits to each passenger upon boarding the aircraft
  • Treat hard surfaces in all office areas, including airport station offices, maintenance facilities, headquarters/administrative offices, with antimicrobial disinfectant/protectant, and utilize wall-mounted and handheld thermometers for employee and crew member temperature checks
  • Partner with Quest Diagnostics to provide at-home self-collection COVID-19 test kits to employees in the event local testing is not immediately available
  • Effective July 2, require customers and crew members to wear face coverings through all phases of travel, including at the ticket counter, in the gate area, and during flight
  • Offer opt-in option in the booking path for customers to receive notification that their flight has reached 65 percent capacity with option to re-book on another flight with no fee or receive a refund
  • Continue to waive change and cancellation fees for all customers for future travel as well as extend expiry on credit vouchers to two years
    • $80.7 million in cash refunds have been provided year to date
  • Reduced management and support teams by 220 positions, a 20 percent reduction of those work groups
    • Employees will be paid through September 30, 2020, in compliance with the CARES Act

Second Quarter 2020 Results

  • Reported adjusted loss per share of $5.96, which excludes one-time, non-recurring charges, as detailed in the section below titled “COVID-19 Related Special Charges”, the benefit from the CARES Act payroll support program, and a portion of the tax benefit attributable to the CARES Act
  • Completed the quarter with load factor in the month of June of 56.8 percent, up 38 points from April
  • Total revenue for the quarter was $133.3 million, down 72.9 percent year over year
    • Progressive improvement in revenue throughout the quarter with April, May, and June decreases of 95 percent, 75 percent, and 52 percent, respectively
    • Despite yield pressure, average air ancillary revenue per passenger for the quarter was $51.57, remaining consistent with prior year
  • Total operating expense was $246.6 million, down 35.7 percent year over year on reduced capacity of 50.1 percent
    • Total operating expense, excluding one-time, non-recurring charges noted below and excluding the benefit related to CARES Act payroll support, was $240.0 million, down 37.5 percent

Network

  • Reduced second quarter capacity by 50.1 percent
    • Anticipate third quarter capacity reductions to be 25 percent of planned capacity but will adjust in accordance with demand trends
  • Conducted minimal close-in cancellations for the months of June and July to date

COVID-19 Related Special Charges

  • Recognized total special charges related to COVID-19 of $101 million during the second quarter
    • $81.2 million included as an operating expense and $19.8 million included as other non-operating expense
  • $59 million adjustment resulting from the accelerated retirements of seven aircraft, loss on sale leaseback transaction of four A320 series aircraft, and write-off of other aircraft related assets
  • $10 million adjustment for additional salary and benefits expense in relation to the elimination of 220 positions as well as other non-recurring compensation expense associated with the acceleration of certain existing awards
    • Total cash outlay is expected to be only $1.5 million of the $10 million adjustment
  • $5 million impairment loss related to an investment interest held by the company since 2018
  • $2 million write-down on various non-aircraft assets
  • $20 million accrual on the expectation to terminate the loan agreement with Sixth Street Partners (formerly TSSP)  intended to finance the development of Sunseeker Resorts Charlotte Harbor
    • Expected to be paid throughout the remainder of the year
  • $5 million related to suspension of construction at Sunseeker

CARES Act

  • Received $154.7 million of the $171.9 million Payroll Support Program grant in the quarter
    • Remaining $17.2 million to be received in July
    • Received $17.4 million in loan funds (recorded as debt and warrants) related to the $154.7 millionreceived
      • Expense offset recognized during the second quarter related to the grant was $74.5 million
      • Remaining $62.8 million recorded as an accrued liability to be relieved during the third quarter
    • Future expense offset of roughly $75 million to be recognized during the third quarter
  • $45.6 million of federal income tax refunds related to net operating losses from 2018 and 2019were received in May
    • Additional $48.7 million received during July
  • Expect a federal income tax refund in excess of $125 million related to 2020 net operating losses to be received during the first half of 2021
  • Eligible to receive up to $276 million loan under the CARES Act

Balance Sheet, Cash and Liquidity

  • Total cash and investments at June 30th was $663.1 million 
  • Entered into a sale leaseback transaction on June 23, which included the sale of four A320-series aircraft, generating $48 million
  • Further sources of liquidity received during the third quarter around $65.9 million, including:
    • Federal income tax refund of $48.7 million related to net operating losses from 2018
    • Additional payroll support related to the CARES Act of $17.2 million
  • Federal excise tax refund of $21 million related to net refunds issued during 2020 is expected during the second half of the year
  • Evaluating option to access up to a $276 million loan available through the CARES Act as well as other secured financing options available
  • 2Q20 daily cash burn averaged $900 thousand per day (1)
    • 57 percent reduction from initial expectations of $2.1 million as reported in our first quarter earnings release
    • Gross bookings averaged more than $2.5 million per day during the quarter
  • 3Q20 daily cash burn is expected to be slightly above $1 million assuming gross bookings average roughly $2 million per day
    • Includes a portion of the $20 million accrual related to expectation to terminate the loan agreement with Sixth Street Partners
  • 24 unencumbered aircraft and 10 unencumbered spare engines with approximate market values of $387 million
  • Air traffic liability at June 30th was $355 million
    • Balance related to future scheduled flights is $139 million
    • Balance related to travel vouchers issued for future use is $216 million

(1) Daily cash burn defined as cash from operations less debt and rent payments and capital expenditure outflows excluding aircraft and engine acquisitions as they are expected to be financed. Excludes impact of CARES Act Payroll Support Program funding.

Capital Expenditures

  • Remaining 2020 spend related to capital expenditures is roughly $165 million
    • Includes five previously executed purchase commitments for aircraft during 2020, all of which are intended to be financed
  • Reduced Sunseeker capital expenditures by $300 million for the year
  • Reduced full year heavy maintenance spend by roughly $70 million, compared to initial guidance of $120 million
    • Six planned aircraft retirements within the next ten months and one additional retirement within the next three years
    • Five planned CFM-engine retirements

Allegiant Travel Company will host a conference call with analysts at 4:30 p.m. ET Wednesday, July 29 to discuss its second quarter 2020 financial results. A live broadcast of the conference call will be available via the Company’s Investor Relations website homepage at http://ir.allegiantair.com. The webcast will also be archived in the “Events & Presentations” section of the website.

As a result of the COVID-19 pandemic, we will hold this year’s annual stockholders meeting on Tuesday, August 4, 2020.

Allegiant Air aircraft photo gallery:

Allegiant Air aircraft slide show:

https://airlinersgallery.smugmug.com/frame/slideshow?key=j6jV5d&speed=3&transition=fade&autoStart=1&captions=0&navigation=0&playButton=0&randomize=0&transitionSpeed=2

Allegiant comments on June traffic and trends as it reduces daily cash burn

Allegiant Travel Company today reported preliminary passenger traffic results for June 2020 as well as second quarter 2020.

“We continued to see modest demand improvements throughout the month of June, building upon May’s demand increases,” stated Gregory Anderson, executive vice president, chief financial officer and principal accounting officer of Allegiant Travel Company. “Gross bookings for the month of June averaged more than $4 million per day, bringing the average daily gross bookings for the second quarter to over $2.5 million. June’s bookings exceeded our expectations, thus the average daily cash burn for the second quarter was $900 thousand, down from our previous forecast of $1.75 million.

However, within the last two weeks, several states have reported increases in the number of people with the virus, which has negatively impacted bookings and tempered expectations into the third quarter. Therefore, utilizing the average daily bookings from the second quarter of $2.5 million, we now expect daily cash burn will be approximately $750 thousand during the third quarter.

We recognize the situation is fluid, and that demand could be impacted by additional shutdowns and required quarantines in our markets. As a result, we remain focused on finding ways to eliminate costs and preserve cash. We continue to keep our finger on the pulse and will leverage the flexibility of our model to pull back capacity to match demand levels in the coming months.”

“During the month of June we operated 70 percent of our schedule while increasing load factor by nearly 10 points from May to 57.3 percent,” stated Drew Wells, vice president of revenue. “Capacity was down 17.5 percent for the month of June as compared with 2019, but peak day available seat miles actually grew 3.5 percent from prior year. Allegiant travelers represented roughly 6 percent of all travelers going through a TSA checkpoint in the month, and that trend continued into the Fourth of July weekend. We expect to operate roughly 75 percent of our schedule into the third quarter but will make any necessary adjustments as dictated by demand trends.”

Allegiant Air aircraft photo gallery:

Allegiant Air aircraft slide show:

https://airlinersgallery.smugmug.com/frame/slideshow?key=j6jV5d&speed=3&transition=fade&autoStart=1&captions=0&navigation=0&playButton=0&randomize=0&transitionSpeed=2

Allegiant loses $33 million in the first quarter

Allegiant Air Airbus A320-214 WL N252NV (msn 7868) BFI (Nick Dean). Image: 949885.

Allegiant Travel Company has  reported the following financial results for the first quarter 2020, as well as comparisons to the prior year:

Consolidated Three Months Ended March 31, Percent
Change
(unaudited) (in millions, except per share amounts) 2020 2019
Total operating revenue $ 409.2 $ 451.6 (9.4) %
Operating income (loss) (117.8) 91.1 (229.3)
Income (loss) before income taxes (130.7) 73.9 (276.9)
Net income (loss) (33.0) 57.1 (157.8)
Diluted earnings (loss) per share $ (2.08) $ 3.52 (159.1)
Consolidated – adjusted Three Months Ended March 31, Percent
Change
(unaudited) (in millions, except per share amounts) 2020 2019
Adjusted operating income(1) $ 55.1 $ 91.1 (39.5)
Adjusted income before income taxes(1) 42.2 73.9 (42.9)
Adjusted net income(1) 33.3 57.1 (41.7)
Adjusted diluted earnings per share (1) $ 2.05 $ 3.52 (41.8)
Airline only Three Months Ended March 31, Percent
Change
(unaudited) 2020 2019
Airline operating revenue (millions)(1) $ 404.7 $ 448.3 (9.7) %
Airline operating income (millions)(1) 51.1 98.5 (48.1)
Airline operating margin 12.6 % 22.0 % (42.7)
Airline income before income taxes (millions) (1) $ 38.8 $ 81.5 (52.4)
Airline fully diluted earnings per share(1) $ 1.89 $ 3.98 (52.5)
Airline CASM ex fuel (cents)(1) 6.51 6.40 1.7
(1) Denotes a non-GAAP financial measure. Refer to the Non-GAAP Presentation section within this document for further information.

“The events that have unfolded over the last eight weeks are truly unprecedented,” stated Maurice J. Gallagher, Jr., chairman and CEO of Allegiant Travel Company. “We began to see the first signs of demand weakness at the end of February, with a steep downward demand trajectory by mid-March. Despite March revenues down nearly 40 percent year over year, we finished the quarter with airline-only EPS of $1.89 per share and an airline-only operating margin of 12.6 percent. These numbers are a true testament to the flexibility of our model and our ability to right-size capacity quickly and seamlessly.

“Since the onset of the pandemic, we have been laser-focused on ensuring the health and safety of our employees and passengers. Enhancing our cleaning procedures, adding health precautions and employing smart principles of social distancing, we recently launched our Going the Distance for Health and Safety initiative as a resource to customers, the details of which can be found in the bullets below. It outlines a set of principles which are as much a part of our DNA as flying from small cities to vacation destinations. These principles are designed to evolve with travel needs, as a permanent part of our operation.

“In addition to health and safety enhancements, we took early and decisive action to preserve liquidity and reduce cash burn. These measures, outlined below, have brought immediate and significant progress over the past few weeks. Most notably, more than 25 percent of our team members have strengthened these efforts by participating in voluntary leave and pay reduction programs. I am humbled by their generosity and personal investment in our company. These investments will help preserve jobs and the company alike. The effect of these combined liquidity preservation measures has reduced daily cash burn to roughly $2.1 million a day, in a matter of a few weeks.

“As previously reported, we will receive $172 million in payroll support under the CARES Act, of which $86 million has been received to date, with the remainder being paid in installments. In addition, we will receive nearly $100 million in federal income tax refunds during the second quarter of 2020 related to favorable net operating loss (NOL) carryback rules as outlined by the CARES Act. We anticipate another projected $100 million or more early next year related to 2020 expected losses and capital expenditures. I look at this very material $200 million plus in federal income tax refunds as our ‘equity’ offering other carriers are currently pursuing in the market. With these refunds and our aggressive cost and capital expenditure savings, we believe we have sufficient liquidity going forward. Should we project a need for additional funds, we have up to $276 million of dry powder available through the end of September from the CARES Act loan program.

“Near term is painful and will continue to be painful. But I believe our model, given the current economic impact, is best-suited to withstand the brutal impact from this pandemic. In the near term, we will most likely shrink our fleet by as many as 25 aircraft. These aircraft, particularly the motors, will ‘seed’ our near and long-term ability to materially reduce planned engine overhauls, beginning in 2020 and for years thereafter. Going forward, the market will favor buyers, not sellers as has been the case the past few years. We will be able to use our expertise, as we did with the MD80s, to purchase aircraft and associated parts at what we believe will be substantial discounts to recent prices. We will ‘manage’ planned overhauls via our balance sheet versus expensive overhaul shop visits. Another substantial advantage is that we do not have meaningful aircraft purchase commitments in 2021 and beyond. The combination of our retirements and the greatly reduced cost of used aircraft and their motors is a key part of both our near-term liquidity benefit and long-term – 2021 and beyond –  reduced capital requirements for our growth. Finally, I am reminded of a saying I used with our MD80s, namely ‘we were a non-capital-intensive business in a capital-intensive industry.’

“Going forward, we are prepared to make tough choices and take any steps necessary to adapt and right-size our cost structure. Since the outset of the COVID-19 crisis, we have taken proactive measures to adjust quickly and aggressively to meet the demands of this challenging and changing environment. With that said, our low-cost business model has proven its resilience during past economic downturns, and we expect it will support our ability to rebound here as well. The Allegiant model, based on simplicity, flexibility and optionality is well-suited for these difficult environments.”

Covid-19 Responses – Going the Distance for Health and Safety

  • Enhanced aircraft cleaning, including regular treatment with an advanced antimicrobial protectant that kills viruses, germs and bacteria on contact for 14 days. Our treatment schedule, along with regular cleaning processes, far exceeds manufacturer guidelines
  • Social distancing principles at check-in, boarding and on-board, including limiting adjacent row seating and allowing only customers on the same itinerary to utilize middle seats as practicable
  • Volatile Organic Compound (VOC) air filters that ensure the air quality on our planes exceeds HEPA standards
  • Complimentary health and safety kits, which include a single-use face mask, a pair of non-latex disposable gloves and cleaning wipes, provided to all of our customers
  • Crew members wear face masks on board and gloves during in-flight service
    • All in-flight service offerings consist of prepackaged, factory sealed goods
    • In-flight service frequency has been reduced to once per flight

Network and Customer Experience

  • Reduced April capacity by 87.4 percent
    • Evaluating May and June and expect significant capacity reductions based on diminished leisure demand trends
  • Waived change and cancellation fees for all customers for future travel
  • Extended expiry on credit vouchers to two years

Cash Outlay Reduction – as much as $375 million in cash outlay reductions to our initial 2020 plan

  • Suspended all stock buybacks and dividends
  • Executives reduced salaries by 50 percent and Board members are foregoing cash compensation
    • Neither the chairman and CEO nor the president draw a salary
  • Enacted a hiring freeze and offering voluntary leave
    • More than 1,100 team members are currently participating in some form of pay reduction program
  • Suspended nearly all contractor positions, subscriptions, non-essential training and travel
  • Suspended all non-essential capital expenditures including non-airline subsidiaries
  • Extended payment terms and renegotiating contracts with vendors

CARES Act Relief

  • Payroll support in the amount of $171.9 million comprised of $150.3 million in direct grants and a $21.6 million low-interest, unsecured 10-year loan.
    • Received first installment of $86 million with remainder expected over the next three months
    • Warrants will be issued to the U.S. Department of the Treasury to purchase 25,898 shares at a strike price of $83.33 per share
  • Federal income tax refund of $94 million related to 2018 and 2019 net operating loss carrybacks
  • Anticipated federal income tax refund of $100 million expected to be received between March and May 2021 for 2020 net operating loss carryback
  • Submitted application under the Loan Program with the option to access up to $276 millionsecured loan through September 2020

Balance Sheet, Cash and Liquidity

  • Total cash and investments at March 31st and April 30th were $464 million and $517 million(1), respectively
  • Repriced Term Loan B facility with a 150 basis points rate reduction and upsized by $100 millionin February
  • Obtained financing of $31 millionin April secured by two A320 aircraft
  • Current 2Q20 cash burn is expected to be $2.1 million per day(2)
    • Cash burn assumes gross bookings for 2Q20 average $750 thousand per day
    • 3Q20 cash burn is expected to be $1.5 million per day assuming gross bookings average $750 thousand per day
  • Further sources of liquidity expected during the second quarter around $163 million, including:
    • Additional payroll support from CARES Act in the amounts of $68.7 million
    • Federal income tax refund of $94 million related to net operating losses from 2018 and 2019
  • Reduced full year capital expenditures by $260 million
    • $100 million reduction in airline capital expenditures
      • Expect all remaining 2020 aircraft and engine acquisitions to be financed
    • $160 million reduction in non-airline capital expenditures
  • We currently have 28 unencumbered aircraft and 8 unencumbered spare engines with an appraised value of roughly $431 million
  • Air traffic liability at March 31 and April 30 was $304 million and $305 million, respectively
    • March 31 and April 30 balance related to future scheduled flights are $137 million and $95 million
    • March 31 and April 30 balance related to travel vouchers issued for future use are $167 million and $210 million

(1) April 30 ending cash balance of $517 million includes the first installment payment received under the CARES Act Payroll Support Program of $86 million.

(2) Daily cash burn defined as cash from operations less debt and rent obligations and capital expenditure outflows excluding aircraft and engine acquisitions as they are expected to be financed. Excludes impact of CARES Act Payroll Support Program funding.

Non-airline Subsidiaries

  • Nearly all non-airline subsidiary spend has been suspended indefinitely
  • COVID-19 triggered impairment review and as a result of the uncertainty moving forward, the company recognized a total impairment of $163 million over its non-airline subsidiaries:
    • Sunseeker impairment of $137 million – suspended construction indefinitely
      • No plans for future capital commitments from Allegiant
      • Exploring potential strategic partnerships
    • Nonstop impairment of $18 million – reorganized to be self-sufficient, not requiring future funding from the airline
      • Warren location temporarily closed – produced positive cash flow prior to closing
      • Permanently closed Utah locations
    • Teesnap impairment of $8 million – reorganized to be self-sufficient, not requiring future funding from the airline
      • Remains an asset held for sale

First quarter 2020 results

  • TRASM decreased 13.4 percent
    • March capacity cut 23.3 percent and down 12.2 percent year over year
  • Airline only CASM, excluding fuel increased 1.7 percent on capacity growth of 4.0 percent
    • CASM, excluding fuel had been on track to be down 2.0 percent on capacity growth of 16.0 percent prior to COVID-19 scheduling changes

Top Copyright Photo (all others by the airline): Allegiant Air Airbus A320-214 WL N252NV (msn 7868) BFI (Nick Dean). Image: 949885.

Allegiant Air aircraft slide show: