Category Archives: Allegiant Travel Company

Allegiant Travel Group reports its second quarter 2019 results

Allegiant Air Airbus A320-214 WL N247NV (msn 7704) FLL (Bruce Drum). Image: 104577.

Allegiant Travel Company (Allegiant Air) has reported the following financial results for the second quarter 2019, as well as comparisons to the prior year:

Consolidated Three Months Ended
June 30,
Percent Six Months Ended
June 30,
Percent
(unaudited) 2019 2018 Change 2019 2018 Change
Total operating revenue (millions) $ 491.8 $ 436.8 12.6 % $ 943.4 $ 862.2 9.4 %
Operating income (millions) 108.1 74.2 45.7 199.2 154.2 29.2
Net income (millions) 70.5 50.0 41.0 127.7 105.2 21.3
Diluted earnings per share $ 4.33 $ 3.10 39.7 % $ 7.84 $ 6.52 20.2 %
Airline only Three Months Ended
June 30,
Percent Six Months Ended
June 30,
Percent
(unaudited) 2019 2018 Change 2019 2018 Change
Airline operating revenue (millions) $ 486.8 $ 434.6 12.0 % $ 935.1 $ 858.9 8.9 %
Airline operating income (millions) 115.5 76.1 51.8 214.0 158.0 35.4
Airline operating margin(2) 23.7 % 17.5 % 6.2 22.9 % 18.4 % 4.5
Airline diluted earnings per share(1) $ 4.81 $ 3.21 49.8 $ 8.80 $ 6.75 30.4
Airline CASM ex fuel (cents)(1) 5.65 6.02 (6.1 ) 6.00 6.17 (2.8 )

(1) Denotes a non-GAAP financial measure. Refer to the Non-GAAP Presentation section within this document for further information.
(2) Percent point change

“I’m happy to report the second quarter of 2019 was Allegiant’s 66th consecutive profitable quarter,” stated Maurice J. Gallagher, Jr., chairman and CEO of Allegiant Travel Company. “We commented last quarter about the benefits of our all Airbus fleet. These benefits are continuing and increasing. We led the industry in Q1 with a 22 percent airline operating margin; this quarter the airline generated a 24 percent operating margin, a six percentage point increase from the previous year. And we accomplished these results with seven fewer aircraft this year compared to 2018. The fuel efficiencies of the Airbus continue to impress. We consumed 4.9 percent more fuel in Q2 compared to last year but produced 13.4 percent more ASMs. Correspondingly, our CASM ex-fuel declined 6.1 percent year over year. I’m comfortable stating we believe we will be the only carrier this quarter who had lower unit costs this year versus last year.

“On the revenue front, scheduled service revenue was $11 million per aircraft during the first six months of the year, over $2 million more than last year’s per aircraft revenue during the same period. Additionally, we generated approximately $3.5 million of EBITDA per aircraft in the same period or about $1.1 million greater per aircraft than the same period last year.

“Our operations continue to excel. We have solely led or tied for the industry lead in completion factor every month in 2019.  One of our challenges in the past few years has been our ability to scale our operations during our peak periods in the summer months and maintain a high completion rate.  In June 2018, we were number five in completion rate; this year we were number one. I’m happy to report we have had only ten days where we have had a mechanical cancellation since the beginning of the year.

“This combination of superior financial results and industry-leading operational performance, along with the proprietary model we have developed and continue to operate is a tribute to our excellent team members. Looking forward, we are excited about the opportunities in front of us including our ability to operate our leisure model to Mexico and the Caribbean in the coming years.”

New Routes:

Airline operational highlights

•         Departures in the second quarter up 13.8 percent year over year despite seven fewer average aircraft in service
•         Average number of aircraft in service decreased 7.6 percent from 92 to 85 year over year
•         Spare aircraft reduced from twelve down to four spares year over year
•         Block hour utilization increased by 20.5 percent to 8.8 block hours per aircraft per day
•         Led industry in completion every month in 2019
•         Maintenance cancellations down 87.6 percent year over year
•         On time performance (A-14) for the quarter was 77.7 percent up 2.8pts year over year
•         Net promoter score is up an average of 8pts year over year
•         Irregular operation costs – second quarter down $7.2 million or 57.6 percent

Airline only second quarter 2019 results

•         Diluted earnings per share were $4.81, up 49.8 percent year over year
•         23.7 percent operating margin for the quarter and 22.9 percent year to date
•         TRASM decreased 1.6 percent on capacity growth of 13.6 percent
•         May TRASM grew 2.4 percent on 11 percent growth in ASMs
•         June TRASM grew 0.7 percent on 13.5 percent growth in ASMs
•         Total fare is down only 0.5 percent despite increasing aircraft utilization by 20.5 percent
•         Year-to-date average total fare has increased 1.0 percent to $120.49
•         Fixed fee flying revenue increased 63.2 percent
•         Fuel gallons used increased only 4.9 percent on ASM growth of 13.4 percent
•         Increase in ASMs per gallon of 8.1 percent to 82.3
•         Airline unit cost excluding fuel decreased by 6.1 percent
•         Maintenance and operational improvements were the largest drivers

Liquidity and shareholder returns

•         Total cash and investments at June 30 were $695 million
•         Paid off high yield bond balance of $102 million in July
•         Currently, we have 26 unencumbered aircraft
•         $81 million available under the revolving credit facility
•         Returned $11 million in dividends in the second quarter
•         Expect to pay dividend of $0.70 per share on September 27, 2019 to shareholders of record as of September 20, 2019

Non-airline highlights

•         Non-airline businesses resulted in a combined operating loss of $7.4 million during second quarter
•         Evaluating strategic alternatives for Teesnap
•         Triggered the business classification of an entity held for sale in July 2019
•         SunseekerResorts FY19 CAPEX reduced to a range between $150 and $175 million
•         Operated two family entertainment centers (FEC’s) during second quarter
•         Rebranded FEC’s from G4CE to Allegiant Nonstop effective June 1, 2019

Aircraft fleet plan by end of period
Aircraft – (seats per AC) YE18 1Q19 2Q19 3Q19 YE19
A319 (156 seats) 32 37 37 37 38
A320 (177/186 seats) 44 47 49 53 55
Total 76 84 86 90 93

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

Top Copyright Photo: Allegiant Air Airbus A320-214 WL N247NV (msn 7704) FLL (Bruce Drum). Image: 104577.

Allegiant Air aircraft slide show:

Route Map:

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Allegiant Travel Company reports its first quarter financial results

Allegiant Air Airbus A320-214 WL N250NV (msn 7743) BWI (Tony Storck). Image: 943561.

Allegiant Travel Company today reported the following financial results for the first quarter 2019, as well as comparisons to the prior year:

Consolidated Three Months Ended March 31,
(unaudited) 2019 2018 Change
Total operating revenue (millions) $ 451.6 $ 425.4 6.2 %
Operating income (millions) 91.1 80.0 13.9
Net income (millions) 57.1 55.2 3.5
Diluted earnings per share $ 3.52 $ 3.42 2.9
Airline only Three Months Ended March 31,
(unaudited) 2019 2018 Change
Airline operating revenue (millions) $ 448.3 $ 424.3 5.7 %
Airline operating income (millions) 98.5 82.0 20.1
Airline operating margin 22.0 % 19.3 % 2.7
Airline diluted earnings per share* $ 3.98 $ 3.54 12.4
Airline CASM ex fuel (cents) * 6.40 6.35 0.8

*Denotes a non-GAAP financial measure. Refer to the Non-GAAP Presentation section within this document for further information.

“I’m happy to report the first quarter of 2019 was Allegiant’s 65th consecutive profitable quarter,” stated Maurice J. Gallagher, Jr., chairman and CEO of Allegiant Travel Company. “This quarter demonstrated the earnings potential of our all-Airbus fleet. Despite having eleven fewer aircraft compared to the same period last year, our airline’s operating income rose more than $16 million and we had a 22 percent margin.  In addition, our operational performance was exceptional, with a controllable completion rate of 100 percent for the quarter.  Our on-time performance for March – one of the busiest months of the year – was 85 percent.  These results were due to the exceptional work of our team.

“In March we broke ground on Sunseeker Resorts Charlotte Harbor in Southwest Florida, and also partnered with TPG Sixth Street Partners to finance some of the construction costs to build the project,” he continued. “We have an ideal location, a database of 16 million customers, and an infrastructure to feed customers to our property through Punta Gorda Airport (PGD) and St. Pete/Clearwater International Airport (PIE). This is a natural extension of our business model. These next two years will be investment years in our non-airline projects such as Sunseeker Resorts, the Allegiant Nonstop family entertainment centers and our golf offering.  All of these products will enable us to interact with an ever-expanding universe of leisure customers, to offer more options under the Allegiant Travel Company umbrella.

“I want to thank all of our Allegiant team members for their excellent efforts the past quarter.  The improvement in our operations, the reliability and the on-time performance could not have been achieved without their exceptional work. They are the most critical component in our continued financial success.”

2019 highlights and trends

  • Maintaining EPS guide of $13.25 to $14.75increasing full year fuel cost to $2.26 from $2.10 per gallon
  • EPS in Q2 should exceed Q1 because of Easter and additional available aircraft
    • Only happened twice before in past ten years
  • Easter shift expected to benefit TRASM for Q2 2019 between 2.0 and 2.5 percent
  • Available seat mile (ASM) growth is expected to be lowest in Q1 and highest in Q2
    ASM growth in Q2 expected to be between 13 and 14 percent
  • Airline CASM ex fuel is expected to be down year over year in each remaining quarter with the largest decrease in Q4
  • Submitted US DOT application for international flying into Mexico and expect to begin selling flights by YE19

Airline only first quarter 2019 results

  • Diluted earnings per share were $3.98, up $0.44 year over year
  • 22 percent operating margin for the airline
    • Highest since the second quarter of 2017 when the fuel price per gallon was $1.71
  • Despite an estimated 1.5 percent TRASM headwind due to Easter shift into Q2, (TRASM) increased by 1.8 percent year over year
  • Better than expected improvement in salary expense and station operations resulted in unit costs excluding fuel (CASM-ex)increasing by only 0.8 percent year over year

Q1 2019 airline network and revenue highlights

  • Ancillary air revenue per passenger highest in company history at $53.10 up 12.5 percent year over year
    Total fare per passenger was $127.75, up 2.9 percent year over year
  • Fixed fee flying revenue was $10.6 million, flat year over year, despite a 6.5 percent decrease in fixed fee departures
    Government shutdown eliminated some expected Department of Defense charters
    • Airbus charter economics superior to the MD-80
  • Announced two new operational bases
    • Grand Rapids, MI
    • Savannah, GA
  • 35 routes announced
    • New service to Anchorage, AK
    • Strong growth to Destin, FL, Nashville, TN and Savannah, GA

Q1 2019 airline cost highlights

  • Fuel benefits with Airbus continue – total fuel costs down by six percent
  • Total gallons down 4.5 percent while block hours up 4.1 percent and ASMs up 4.9 percent
    • Increase in ASMs per gallon of 9.6 percent to 84.1 ASMs per gallon
    • Decrease in the price per gallon of 1.8 percent to $2.14 per gallon
  • Total operating costs excluding fuel were $250.2 million, an increase of 5.8 percent year over year
    Depreciation costs increased 26.9 percent or $7.5 million
    • Q1 2018 MD80s were fully depreciated; were 27.5 percent of ASMs
  • Total unit costs excluding fuel and depreciation were 5.5 cents, a decrease of 2.0 percent year over year
  • $3.7 million of additional interest expense associated with the tender of our $450 million high yield bond
    • Capitalized interest resulted in a $1.5 million reduction in interest expense primarily driven by the capex associated with Sunseeker Resorts
    • Expect the cadence of capitalized interest to increase in direct correlation with incremental Sunseeker capex

Q1 2019 airline operational highlights

  • Departures up five percent despite eleven fewer average aircraft
    • Average aircraft decreased from 91 last year to 80 this year
    Spare aircraft were reduced from eleven to four year over year
  • Controllable completion 100 percent on 24,300 departures
    • Second most quarterly departures in company history
    Total completion factor 99.2 percent
    • No maintenance cancellations for over 120 days since December 16th, record for the company
    On time performance (A-14) for the quarter was 79 percent
    • March on time performance was 85 percent
    • Third-highest versus domestic carriers per flightstats.com
    • Company’s busiest flying month of the year

Q1 2019 capital allocation highlights

  • Capital expenditures:
    • Airline – $108.9 million
    • Heavy Maintenance – $10.0 million
    • Sunseeker – $5.3 million
    • Other – $8.4 million
  • Shareholder returns
    • Returned $11 million in dividends in the first quarter
    • Expect to pay dividends of $0.70 per share on June 27, 2019 to shareholders of record as of June 14, 2019

Q1 2019 balance sheet highlights

  • Ended with $555 million in total cash and investments
  • Ended with $1,236.6 million in debt and $121.1 million in capital lease obligations
    Refinanced $450 million unsecured bond with a five year $450 million term loan
    • Secured by company assets excluding aircraft, engines and Sunseeker Resort
  • At the end of the quarter, we have 28 unencumbered aircraft

Q1 2019 non-airline highlights

  • Non-airline businesses resulted in a combined operating loss of $7.4 million
    • Non-airline operating losses expected to be highest in Q1 due to one-time expenses associated with opening of two Allegiant Nonstop family entertainment centers
    • Allegiant Nonstop revenues are expected to be weakest in Q1
    • Expect improvement in second half of year
  • Sunseeker Resorts
    • Broke ground on resort in Punta Gorda
    • Expect to include 500 hotel rooms, 189 long stay suites, restaurants, bars and other amenities
    TPG Sixth Street Partnersagreed to provide $175 million in two-thirds non-recourse construction financing
    • TPG funds are last funds into the project and drawn monthly with interest paid only on drawn amounts
  • Allegiant Nonstop (family entertainment centers)
    • Rebranded to Allegiant Nonstop for better tie-in to airline
    • Opened first location, Clearfield, UT in Jan 2019
    • Opened second location, Warren, MI in Apr 2019

Top Copyright Photo (all others by the airline): Allegiant Air Airbus A320-214 WL N250NV (msn 7743) BWI (Tony Storck). Image: 943561.

Allegiant aircraft slide show:

Allegiant announces its financial results, will add 17 additional Airbus aircraft

Ex EI-DSD, delivered on January 11, 2018

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

Three Months Ended
December 31,
Twelve Months Ended
December 31,
Unaudited 2018 2017 Change 2018 2017 Change
Total operating revenue (millions) $ 412.1 $ 379.2 8.7 % $ 1,667.4 $ 1,511.2 10.3 %
Operating income (millions) 63.1 26.8 135.7 243.5 230.6 5.6
Net income (millions) 41.4 83.4 (50.4 ) 161.8 198.1 (18.3 )
Diluted earnings per share $ 2.56 $ 5.18 (50.6 ) $ 10.00 $ 12.13 (17.6 )

“I’m happy to report we had our 64th consecutive profitable quarter,” stated Maurice J. Gallagher, Jr., chairman and CEO of Allegiant Travel Company. “The past 18 to 24 months have been challenging as we pushed through a successful onetime changeover to an all Airbus fleet. This was a major undertaking by our team. During this period we sustained a number of one-time transition costs but still maintained among industry leading operating margins on our airline activity of 15.3 percent despite a 27 percent increase in the cost per gallon of fuel in 2018.

“And these returns were accomplished despite the added challenges of our fleet transition years. I couldn’t be more pleased with where we find ourselves today as we look forward to 2019 and beyond. We are also pleased with our EPS-based reporting approach which we started in 2018. You will see our estimates for 2019 below.

“Finally, my hat is off to our team. They not only rose up to the logistical challenge of the fleet changeover during the past 18 months, but at the same time continued to elevate our operational performance and customer service standards across the board.”

Highlights

  • Currently 431 routes
       o Nearly 75 percent no competition – 90 percent of new 2018 routes no competition
    o Have identified an additional 600 routes for possible growth
  • 2019 expect higher EBITDA
    o Revenue improvement from higher number of incremental seats
    o Greater efficiencies in labor and fuel consumption
    o Higher aircraft reliability will enable more flights during peak days
    o Higher number of charter opportunities versus the MD-80
  • 2018 improvement in operations
    o Controllable completion – 99.7 percent, among best in industry
    o Improved operations – over $10 million in cost savings
    o On time arrival 77 percent, up nearly four percentage points over 2017
  • Co-brand credit card
    o Active accounts increased by approximately 60 percent versus 2017
    o Signed marketing agreement with Minor League Baseball participating clubs
  • 2019 high yield bond refinancing
    o $450 million term loan
    o Five year duration
    o Expected to close in early February

Shareholder returns

  • 2018 shareholder returns
    o Returned $45 million in dividends in 2018
    o Will pay dividends of $0.70 per share on March 14, 2019 to shareholders of record as of March 1, 2019
    o $100 million in share repurchase authority

2019 outlook

  • Aircraft
    o Expect to add seventeen Airbus aircraft by the end of the year
    o Have now terminated forward capital leases for eight aircraft due to extensive delivery delays
  • Scheduled and system ASM growth
    o First quarter expected to grow between four and six percent vs last year
    o Expect first quarter ASM growth to be the lowest of the year
    o Expect second quarter ASM growth to be the highest of the year due to later Easter
  • Sunseeker Resort financing
    o Expect $175 million of the estimated $420 millionSunseeker Resort construction cost
    o Provided by a well-known institutional asset manager
    o 2/3 of the loan is expected to be non-recourse to Allegiant Travel Company
    o Expect financing to close by the end of the first quarter 2019
Aircraft fleet plan by end of period
Aircraft – (seats per AC) YE18 1Q19 2Q19 3Q19 YE19
A319 (156 seats) 32 37 37 38 38
A320 (177/186 seats) 44 46 51 53 55
Total 76 83 88 91 93

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

Previously the company announced 16 new routes and plans to establish a two-aircraft base at Gerald R. Ford International Airport in Grand Rapids, Michigan.  The company also announced service to two new cities – Nashville, Tennessee and Savannah, Georgia.

Above Copyright Photo (all others by the airline): Allegiant Air Airbus A320-216 N273NV (msn 3076) LAX (Michael B. Ing). Image: 945314.

Allegiant aircraft slide show:

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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.

Allegiant aircraft slide show:

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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.

Allegiant Air aircraft slide show:

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.