Category Archives: Allegiant Travel Company

Allegiant Travel Company releases its third quarter 2018 financial results, the last MD-80 to be retired after Thanksgiving holiday period

Allegiant Air McDonnell Douglas DC-9-83 (MD-83) N411NV (msn 53245) RDU (Ton Jochems). Image: 944220.

Allegiant Travel Company (Allegiant Air) has reported the following financial results for the third quarter 2018, as well as comparisons to the prior year:

Three Months Ended September 30, Nine Months Ended September 30,
Unaudited 2018 2017 Change 2018 2017 Change
Total operating revenue (millions) $ 393.1 $ 350.2 12.3 % $ 1,255.3 $ 1,132.0 10.9 %
Operating income (millions) 26.2 44.3 (41.0 ) 180.4 203.9 (11.5 )
Net income (millions) 15.1 23.4 (35.2 ) 120.4 114.8 4.9
Diluted earnings per share $ 0.94 $ 1.45 (35.2 ) $ 7.45 $ 6.99 6.6

“We are proud to announce our 63rd consecutive profitable quarter,” stated Maurice J. Gallagher, Jr., chairman and CEO of Allegiant Travel Company.  “Our transition to an all-Airbus fleet is nearly complete.  Our decision to move the transition up by a year from 2019 to 2018 has proven to be an excellent one given the higher fuel cost environment.  Compared to our all-MD-80 fleet from 2010, we expect our ASMs per gallon to increase by almost 40 percent in 2019, from 59 ASMs per gallon to the low 80s.

“This has been a busy couple of years across the Company as we transitioned our fleet.  Since the end of 2016:

We will have purchased and inducted 43 Airbus aircraft, while retiring 47 MDs.  We will have trained more than 350 Airbus pilots and 300 maintenance technicians as well as our flight attendants, ground staff and other operations personnel by the time we fly the final MD-80 flight at the end of November.

We have grown the Company 20 percent in capacity (ASMs), adding 51 routes and carrying 13.6 million passengers during the last twelve months, an increase of 1.64 million passengers over 2016.

We have dramatically improved our operations.  Since last October, we have led the industry in monthly completion factor six times and have been among the top three except for a few months.  Our on-time performance is improving nicely as well; this September we were up ten percentage points in A14, from 72 percent to 82 percent.

“I couldn’t be more excited about where we are at this point in our history.  As we outlined in our Sunseeker Resort investor day, we are ready for Allegiant 2.0.  Stay tuned!

“Needless to say, we couldn’t have accomplished this difficult transition without our great group of team members.  They have done an amazing job this quarter – as well as over this entire past year – with the highly complex effort to transition our fleet and improve our operations.  Hats off to the entire team for their tireless professionalism in any environment.”

Shareholder returns

  • 2018 shareholder returns – over $33 million in the first three quarters of the year through dividends
    ° Will pay dividends of $0.70 per share on December 5, 2018 to shareholders of record as of November 23, 2018

2018 outlook

  • Fourth quarter scheduled and system ASMs are expected to grow between four and six percent vs last year
    ° The remaining MD-80s will be retired immediately after the Thanksgiving travel period
  • 2018 full year ASM growth is expected to be between 9.5 and 10.5 percent
  • 2018 full year tax rate is expected to be between 18 and 19 percent
  • 2018 full year average fuel cost is expected to be $2.38 per gallon using the forward curve as of October 23, 2018
  • Due to several one-time maintenance events, 2018 maintenance per aircraft per month is expected to be between $90 and $95 thousand
  • 2018 EPS is expected to be between $9 and $10 per share even with the higher than expected fuel cost
Guidance, subject to revision
Full year 2018 guidance Previous* Current
Fuel cost per gallon $2.35 $2.38
Available seat miles (ASMs) / gallon 77.5 to 78.5 77.5 to 78.5
Interest expense (millions) $50 to $60 $50 to $60
Tax rate 21 to 22% 18 to 19%
Share count (millions)  15.9  15.9
Earnings per share $9 to $10 $9 to $10
System ASMs – year over year change 9 to 11% 9.5 to 10.5%
Scheduled service ASMs – year over year change 9 to 11% 9.5 to 10.5%
Depreciation expense / aircraft / month (thousands) $115 to $120 $115 to $120
Maintenance expense / aircraft / month (thousands) $80 to $85 $90 to $95
Full year 2018 CAPEX guidance
Capital expenditures (millions) ** $300 $300
Capitalized Airbus deferred heavy maintenance (millions) *** $45 $45
Sunseeker CAPEX
2018 year to date (millions) $15
Project since inception (millions) $46

* – Previous guidance as of July 25, 2018
** – Excludes Sunseeker Resorts
*** – Not included in capital expenditure total

Aircraft fleet plan by end of period
Aircraft – (seats per AC) 1Q18 2Q18 3Q18 YE18
MD-80 (166 seats) 32 27 19
A319 (156 seats) 26 31 31 32
A320 (177/186 seats) 30 35 43 44
Total 88 93 93 76

Aircraft listed in table above include only in-service aircraft, planned retirements and future aircraft under contract (subject to change).

Top Copyright Photo: Allegiant Air McDonnell Douglas DC-9-83 (MD-83) N411NV (msn 53245) RDU (Ton Jochems). Image: 944220.

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Allegiant reports its second quarter results

Allegiant Air Airbus A320-214 WL N248NV (msn 7781) BWI (Brian McDonough). Image: 941699.

Allegiant Travel Company has reported the following financial results for the second quarter 2018, as well as comparisons to the prior year:

Three Months Ended
June 30,
Six Months Ended
June 30,
Unaudited 2018 2017 Change 2018 2017 Change
Total operating revenue (millions) $ 436.8 $ 401.8 8.7% $ 862.2 $ 781.9 10.3%
Operating income (millions) 74.2 85.8 (13.5) 154.2 159.5 (3.3)
Net income (millions) 50.0 49.0 2.0 105.2 91.4 15.1
Diluted earnings per share $ 3.10 $ 2.97 4.4 $ 6.52 $ 5.51 18.3

“We are proud to announce our 62nd consecutive profitable quarter,” stated Maurice J. Gallagher, Jr., chairman and CEO of Allegiant Travel Company. “This is the second consecutive quarter of EPS growth, despite seeing our fuel cost per gallon increase by over 39 percent in the second quarter. This is a wonderful testament to the hard work of our team members as we navigate another busy summer.

“We are continuing our transition to an all-Airbus fleet. We have done an excellent job year-to-date but this summer was the critical period in this transition, including the timely delivery and induction of fifteen Airbus aircraft, and retirement of six MD-80s.

Today we are on our schedule as planned, though some delayed deliveries in late May impacted our peak June period, in terms of top line and operations reliability.  Looking forward, we should complete our transition at the end of November as scheduled.

“Our CASM-ex fuel results came in nicely. Our improved operational results as well as efficiencies from the Airbus fleet are beginning to pay dividends, and we are pleased with where the cost trend line is headed. Additionally, fuel efficiency continues to improve with the transition, with 76 vs. 72 ASMs per gallon this year compared to the same period last year.

“The Sunseeker resort project continues to move ahead. We are closing in on a financing plan and hope to announce the specifics in the next 60 to 90 days. We continue to be impressed with the many synergies and business alignments between Sunseeker and our air service presence on the west coast of Florida. Our Punta Gordadestination – a 15 minute drive from our Sunseeker location, grew over 30 percent in capacity on a trailing twelve month basis. We are on a pace to carry over 1.5 million passengers in and out of Punta Gorda this year.”

Shareholder returns

  • 2018 shareholder returns – over $22 million in the first half of the year through dividends
    • Will pay dividends of $0.70 per share on August 31, 2018 to shareholders of record as of August 17, 2018
    • Current share repurchase authority of $100 million as of July 25, 2018

2018 outlook

  • Third quarter scheduled and system ASMs are expected to grow between thirteen and fifteen percent vs last year
  • 2018 full year ASM growth is expected to be between nine and eleven percent due to slower than expected aircraft deliveries
  • 2018 fuel cost is expected to be $2.35 per gallon using the forward curve as of July 24, 2018
  • 2018 EPS is expected to be between $9 and $10 per share due to the expected higher fuel cost
    • Fuel expense is expected to increase approximately $35 million from when guided in November 2017
Guidance, subject to revision
Full year 2018 guidance Previous* Current
Fuel cost per gallon $2.20 $2.35
Available seat miles (ASMs) / gallon 77.5 to 79.5 77.5 to 78.5
Interest expense (millions) $50 to $60 $50 to $60
Tax rate 21 to 22% 21 to 22%
Share count (millions) 15.9 15.9
Earnings per share $10 to $12 $9 to $10
System ASMs – year over year change 11 to 15% 9 to 11%
Scheduled service ASMs – year over year change 11 to 15% 9 to 11%
Depreciation expense / aircraft / month (thousands) $120 to $130 $115 to $120
Maintenance expense / aircraft / month (thousands) $95 to $105 $80 to $85
Full year 2018 CAPEX guidance
Capital expenditures (millions) ** $300 $300
Capitalized Airbus deferred heavy maintenance (millions) *** $45 $45
* – Previous guidance as of April 25, 2018
** – Excludes Sunseeker Resorts
*** – Not included in capital expenditure total
Aircraft fleet plan by end of period
Aircraft – (seats per AC) 1Q18 2Q18 3Q18 YE18
MD-80 (166 seats) 32 27 19
A319 (156 seats) 26 31 31 32
A320 (177/186 seats) 30 35 44 45
Total 88 93 94 77
Aircraft listed in table above include only in-service aircraft, planned retirements and future aircraft under contract (subject to change)

Top Copyright Photo: Allegiant Air Airbus A320-214 WL N248NV (msn 7781) BWI (Brian McDonough). Image: 941699.

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Allegiant: The company seeks “federal court order to quash Teamsters’ unlawful pilot strike threat”

Allegiant has issued this statement:

Allegiant today announced the company is seeking a court order affirming that a pilot strike threat recently announced by International Brotherhood of Teamsters (IBT) Local 1224 is unlawful.  The company has filed a complaint in United States District Court, District of Nevada, requesting a Declaratory Judgment affirming that pilots represented by the Teamsters may not strike as a remedy for a dispute over the timeline of negotiating an agreement on and implementing a new preferential bidding system.  Under both the Railway Labor Act (RLA) and the collective bargaining agreement (CBA) between IBT and Allegiant, the IBT does not have a legal right to strike under these circumstances. Rather, this matter is considered a “minor dispute,” requiring resolution through the grievance and arbitration procedures of the CBA and the RLA.

“It’s unfortunate the union would utilize an unlawful strike threat during the peak summer travel season for what is ultimately considered a ‘minor dispute’ under the RLA.  Our customers look forward to long-planned vacations and the IBT’s unnecessary actions have resulted in many of our customers thinking their travel plans are at risk,” said Scott Sheldon, Allegiant executive vice president, COO and CFO. “The Teamsters have left us no choice but to take this action.”

The current collective bargaining agreement between IBT and Allegiant calls for an agreement on the software requirements for a preferential bidding system, which schedules pilots for flying by taking into consideration their personal preferences for such elements as days of week and times of day they like to fly – and ranks those preferences by seniority.  The IBT’s selected PBS vendor, Crewing Solutions, has been working towards making changes to its program required for implementation at Allegiant.

“The preferential bidding system, in its current form, doesn’t support the CBA as agreed upon by the company and the IBT,” said Sheldon. “The company has already committed a significant amount of time and resources to fulfilling our obligation under the CBA by customizing the PBS solution of the IBT’s choice.  The final build specifications have been outlined and are under development by Crewing Solutions. We hope to have the final product ready for deployment in the near future.”

Allegiant pilots scheduled for flying duty currently work an average of 58 hours per month, with an average of 14 days off per month.  In addition, Allegiant flies a unique “out-and-back” system where pilots return to their home base after each day of flying, and only rarely have an overnight away from home.

“We are in the process of customizing our SmartPref bidding software to meet the submitted requirements of Allegiant’s pilots,” said James Fasso, CEO of Crewing Solutions.  “Crew scheduling software is highly sophisticated and complex by nature, and requires specific customizations to match the needs of each particular client, and to properly integrate with the company’s other systems.  We are pleased to be the IBT’s scheduling software of choice, and we have been, and continue to be committed to working with both Allegiant and its pilots to deliver a product that not only meets every requirement but provides enhanced functionality and efficiency for all involved.”

Allegiant taps Micah Richins to lead its new Sunseeker Resorts

Allegiant President John Redmond announced that Micah Richins has been named executive vice president and chief operating officer for Sunseeker Resorts. In this role, he will oversee all operational aspects of the company’s resorts division. Richins, who most recently served as chief commercial officer for MGM Resorts International, brings more than 25 years of experience in the hospitality industry to this new role.

At MGM Resorts International (MGMRI), Richins operated some of the world’s largest and most successful integrated resorts, including MGM Grand, New York-New York and Luxor. In his most recent role as chief commercial officer, he and his team were responsible for developing and implementing the corporate strategy for pricing, segmentation and promotions for all of MGM Resorts Las Vegas properties. Richins previously served as the company’s senior vice president of revenue management for more than eight years.  His experience in hospitality also extends to entertainment, including opening Cirque du Soleil productions “Zumanity” and “Criss Angel: Believe,” and developing a corporate group that leveraged analytics and revenue management to revolutionize the way entertainment was scheduled, priced and promoted in Las Vegas.

Allegiant in 2017 announced plans for Sunseeker Resorts, including its inaugural development – a one-of-a-kind hotel/condo resort in Charlotte Harbor, on Florida’s Gulf Coast. The project marks an important step in Allegiant’s evolution as a travel company, offering customers more opportunity for leisure experiences.

Allegiant reports its 3Q results, will now retire its last McDonnell Douglas MD-80 by the end of 2018

Allegiant Air McDonnell Douglas DC-9-83 (MD-83) N884GA (msn 49401) BWI (Tony Storck). Image: 939690.

Allegiant Travel Company (Allegiant Air) has reported the following financial results for the third quarter 2017, as well as comparisons to the prior year:

Three Months Ended
September 30,
Nine Months Ended
September 30,
Unaudited 2017 2016 Change 2017 2016 Change
Total operating revenue (millions) $ 348.8 $ 333.5 4.6 % $ 1,125.2 $ 1,026.9 9.6 %
Operating income (millions) $ 42.9 $ 76.8 (44.1 )% $ 201.0 $ 302.4 (33.5 )%
Net income (millions) $ 22.3 $ 45.5 (51.0 )% $ 112.4 $ 178.3 (37.0 )%
Diluted earnings per share $ 1.39 $ 2.75 (49.5 )% $ 6.85 $ 10.73 (36.2 )%
Return on capital employed* 14.7 % 24.8 %

* – see appendix for calculation, represents twelve months ended September 30

 

“Lastly, our board of directors approved a more aggressive retirement plan for our MD-80s. We now plan to retire our last MD by the end of 2018. This is one year earlier than was previously expected. A hearty ‘thank you’ goes out to the members of our fleet team, who through hard work were able to source enough used A320 aircraft to make this happen. This is the end of an era for our company. The ‘80’ has been critical to our success and growth for the past 15 years – it will be missed.”

Notable highlights

  • Operational improvements – 61 percent reduction in controllable cancellations in the quarter
  • Airbus growth – Added five A320s and one A319 into revenue service during the quarter
  • MD-80 retirements – Retired five MD-80s during the quarter – remainder expected to be retired by the end of 2018
    ◦ MD-80s and related assets have a net book value of $42 million and are being reviewed for impairment
  • Sunseeker Resorts – In August, announced plans to develop a hotel/condo resort in Charlotte County, Florida
  • Network growth – As of September 30, 2017 the company is operating 373 routes versus 337 last year
  • New aircraft base – Announced Indianapolis, Indiana as an aircraft base to support the growth in that area
  • Shareholder returns – $11 million was returned through its recurring dividend paid in September 2017. The company:
    ◦ Will pay dividend of $0.70/share on December 5, 2017 to shareholders of record as of November 22, 2017
    ◦ Has share repurchase authorization of up to $100 million

Third quarter 2017 revenue

  • TRASM results – Third quarter TRASM increased 0.7 percent in spite of:
    Increased MD-80 spares during the quarter, which resulted in a three percent decline in peak period capacity
    Hurricane Irma:
    ▪ Approximately two percent of scheduled ASMs for the quarter were canceled
    ▪ TRASM – Expected benefit from reduced ASMs – offset by refunds and decreased demand to Florida

Fourth quarter 2017 revenue trends

  • TRASM guidance – Expect a decline between three and 0.5 percent which is influenced by:
    ◦ Hurricane Irma and the Las Vegas mass shooting
           ▪ Approximately 80 percent of fourth quarter ASMs touch Las Vegas or Florida
    ▪ So far a decrease in demand during fourth quarter
    ▪ Impact on fourth quarter TRASM expected to be approximately between 3 and 3.5 percentage points
    ◦ Peak period flying – Fourth quarter peak capacity expected to increase nine percentage points

Third quarter cost

  • Third quarter CASM ex fuel increased 16.7 percent versus the same period last year, primarily driven by:
    ◦ Transition costs added four percentage points to increase, including:
    Reduced ASMs from fleet transition through lower utilization of MD-80s
    ▪ Other operational inefficiencies driven by the transition to an all Airbus fleet
      ◦ New pilot agreement – Added one percentage point
    Incremental depreciation from additional Airbus aircraft – added three percentage points
    Elimination of the credit card surcharge product
    ▪ January 2017 discontinued credit card surcharge which had offset sales and marketing expense
    ▪  Added four percentage points in quarter
    Hurricane Irma – Added almost two percentage points due to flight cancellations

Fourth quarter 2017 cost trends

  • Fourth quarter 2017 CASM ex fuel is expected to increase between seven and nine percent, primarily driven by:
    ◦ Transition costs – Expected to add three percentage points to increase, including:
    Reduced ASMs from fleet transition through lower utilization of MD-80s
    ▪ Other operational inefficiencies driven by the transition to an all Airbus fleet
      ◦ New pilot agreement – Expected to add one percentage point due to increased benefit costs
    Incremental depreciation on additional Airbus aircraft – Expected to add two percentage points
    Elimination of credit card surcharge – Expected to add three percentage points

Full year 2017 cost trends

  • Full year 2017 CASM ex fuel
      ◦ Expected to increase between eleven and twelve percent
    ◦ Previously guided range of plus ten to twelve percent
  • Maintenance and repairs expense
    ◦ Expected between $105 and $110 thousand per in-service aircraft per month for 2017
    ◦ Previously guided range – between $100 and $110 thousand
  • Total ownership expense per aircraft per month
      ◦ 2017 ownership expense per in-service aircraft – between $125 and $130 thousand per month
    ◦ Previously guided range between $125 and $135 thousand

Balance sheet activity and full year 2017 trends

  • Full year CAPEX guidance is expected to be $604 million, versus prior guidance of $525 million
    ◦ Higher amount driven by expected commitment for five additional Airbus A320 aircraft in the fourth quarter
    ◦ Excludes Airbus heavy maintenance and Sunseeker resort
  • Raised $158 million in debt proceeds during the third quarter
    ◦ Includes monies drawn from existing $56 million revolving credit facility
    ◦ Seven Airbus aircraft remain unencumbered at end of third quarter
    ▪ Includes one new A320 which was collateralized in October

Copyright Photo: Allegiant Air McDonnell Douglas DC-9-83 (MD-83) N884GA (msn 49401) BWI (Tony Storck). Image: 939690.

Allegiant reports its 3Q net profit increased 213.4% to $44.5 million

Allegiant Travel Group (Allegiant Air) (Las Vegas) reported its third quarter net income jumped by 213.4 percent from $14.2 million in 2014 to $44.5 million for this year.

Allegiant logo-3

Aircraft fleet plan by end of period:

Aircraft – (seats per AC) 3Q15 4Q15 YE16
MD-80 (166 seats)         51       51      46
757 (215 seats)                6          5        4
A319 (156 seats)              7       10      17
A320 (177 seats)           10        15      16
Total                                74        81      83

Aircraft listed in table above include only in service aircraft, planned retirements and future aircraft under contract

Read the full report: CLICK HERE

Copyright Photo: Keith Burton/AirlinersGallery.com. Allegiant continues to expand its Airbus fleet. The company increased the number of Airbus aircraft in service by seven versus last year. According to the company, Airbus aircraft flew over 77 percent of the incremental scheduled service ASMs in the third quarter. In addition, Airbus aircraft flew over 32 percent of the third quarter ASMs versus 22 percent a year ago. Airbus A319-112 HB-JZN (msn 2387) became N302NV with Allegiant.

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Allegiant acquires three former Hamburg Airways Airbus A320s

Allegiant Travel Company (Allegiant Air) (Las Vegas) has announced that it has purchased three additional Airbus A320 aircraft. The aircraft were most recently operated by Hamburg Airways in Europe and are scheduled to enter the Allegiant operating fleet in 2015.

Specially the three aircraft are N227NV (msn 714, ex D-AHHH, N228NV (msn 716, ex D-AHHD) and N229NV (msn 730, ex D-AHHG).

On the financial side, the company reported first quarter net income of $64.9 million, up 89.8 percent from the same quarter a year ago.

The CEO commented on the results:

Allegiant logo-3

“We are very proud to report our 49th consecutive profitable quarter, a record quarter for the company, both in absolute terms and on a percentage basis,” stated Maurice J. Gallagher, Jr., Chairman and CEO of Allegiant Travel Company. “I especially want to thank our team members for their contributions. Their everyday efforts delivering customers safely and reliably is critical to our continued success. It’s nice to start the year off with such strong results after coming off one of the most operationally challenging years in recent memory.

“I’m also pleased to announce our pilots will be receiving a pay increase as a result of our continued success. Excluding a $43.3 million non-cash impairment change in the fourth quarter of 2014, our trailing twelve month operating margin was 21.8 percent as of March 31st. As part of our pilots’ variable pay band structure, pilot pay scales will increase between 5 and 7 percent per hour effective May 1st.

Finally CEO Gallagher commented on the on-going dispute with its pilots and additional focus by the FAA:

“And lastly we have had recent labor/legal issues with the representative of our pilots, the IBT. We expect a successful outcome on our Preliminary Injunction request before the Las Vegas Federal court in the coming weeks. In conjunction with these labor activities, our local FAA office has stepped up surveillance of our operations. We are not aware of any findings from the FAA related to this increased surveillance. However, the FAA has indicated their heightened focus and surveillance associated with the labor activity will continue until the outcome of the litigation is known. While this increased surveillance is in place, the FAA has indicated it will not process any current or additional requests for work that may relate to our planned growth. At the current time, we do not expect any immediate effect on our operations.”

Copyright Photo: Bruce Drum/AirlinersGallery.com. Airbus A320-214 N218NV (msn 1229) in the special “Make-A-Wish” livery arrives at Sanford (near Orlando).

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